Full text of "Banking and Currency and the Money Trust - By Charles A. Lindbergh"

Banking and Currency and The Money Trust By Charles A. Lindbergh OMNI PUBLICATIONS P. O. BOX 216 HAWTHORNE, CALIF. DEDICATED TO THE PUBLIC The market prices of commodities vary from day to day and often several times a day. This occurs when there is no radical difference in the proportion of the supply and the natural demand. This fact is conclusive proof that our system is controlled by manipulators and fundamentally wrong. I have sought to elucidate this problem within this volume and have suggested a plan which if adopted would make the people the master of the world, instead of the present master-THE MONEY TRUST. By Charles A. Lindbergh, Author of 'The Money Trust Investigation' CONTENTS GENERAL OBSERVATIONS INTRODUCTION IN CONTEMPLATION WHAT IS THE MATTER WITH US? CURRENCY, BANKING AND THE MONEY TRUST INTEREST, DIVIDENDS AND RENTS SHORT SELLING THE POLITICAL ASPECT OF THE PROBLEM OF FINANCES GOVERNMENT GUARANTEE OF BANK DEPOSITS MONEY THE REMEDY A TWO-FOLD REMEDY REQUIRED THE PRACTICAL SIDE OF A BETTER FINANCIAL SYSTEM APPENDIX A APPENDIX B Page 4 5 7 11 14 55 63 66 69 72 76 86 104 110 116 Copies may be secured from A. J. Porth Box 7083 Wichita, Kansas 67201 GENERAL OBSERVATIONS The material production and consumption by the people, and industries of the world go on continually. In the aggregate there is no perceptible difference from day to day or even from month to month. All things considered the proportion of supply and demand does not vary greatly from year to year The catastrophes which occur in the world are usually confined to different localities at different times and do not, on the whole change the general result. Nature seems to keep the balance fairly well, at least well enough so that man need not fear that Nature will fail to respond to the needs of men. We meet a different condition when we study the personal and commercial relations of the people with each other. When we do that we find an intensely variating condition, which works rapidly backward arid forward with no - at least comparatively little, relation to the material conditioning. These human conditions seem to have exhausted the patience of men and they are reaching out to make great changes: BANKING AND CURRENCY (A) A change in the banking and currency conditions (B) A readjustment of our industrial relations (C) A change in the political conditions so that the people as a whole may direct their own political affairs Bankers, merchants, professional men, farmers, and wage earners all know that a change in our banking and currency laws is imperative. Such a change is sure to come, and Wall Street is endeavoring to foster ideas in the public mind which will insure the adoption of a plan favorable to frenzied finance. Civilization has reached the point where the people ought to consider the following facts: That we are slaves of a money system; that market quotations fluctuate up and down at times when there is no corresponding change in the supply and natural demand; and that the Wall Street financiers have suddenly found time to leave their speculative schemes long enough to direct the work of educating the people in the mystery of finance. Are these financiers working in the interests of the people or in their own interests? They were content to deal only with the boss politicians until the people themselves began taking an interest in legislation, but now that the people have admonished the bosses, Wall Street is trying to mould public opinion in order to make it favorable to some disguised Wall Street plan These questions are all answered in this little volume. Also, a plan is proposed which if adopted will make the people the master of the world and the builders of their common fortunes, instead of leaving that power in the clutches of its present master-the Money Trust. We live in an age of mechanical devices and have the use of methods by which the natural elements are harnessed and, made use of in general production, and in the establishment of conditions that serve to produce whatever is necessary, convenient and proper to the enjoyment of life, and it is natural that men shall look forward to the time when the people themselves will secure the full benefit of all these things. I have taken these problems up for consideration in three separate volumes. This volume on Banking and Currency and the Money Trust is the first. The second will be on "The Industrial Relations", and the third on "The Political Relations". INTRODUCTION It would seem that one could not state and analyze so difficult a problem as that of banking and currency within the scope of a small volume, but I believe that it can be done and can be easily understood if properly treated. No civil matter that has arisen out of our present social condition was ever of greater importance than that which is contemplated as a basis of our first study, which is really the money problem. But this first study ii only one of several that we shall make while investigating the highways and byways of business, politics, and those affairs of life which force men into the environments that are not of their own choosing. We shall study conditions that are quite ordinary and show their relations to others that are extraordinary and not generally understood. I have examined and know about the subjects to which we shall give our thoughts, and if a majority will join me in these considerations, I am certain that within a very short time we shall all understand much more clearly the present conditions, and learn to make the best use of the advantages that are common to all mankind. We shall also discover the reason for their being daily neglected. We shall not be able, in a short study to cover the entire field, but it will present to us such things as are not commonly known to exist. Some of us have suspected that conditions exist about which we know very little or nothing, but the most of us have looked calmly on and decided eventually that there was something wrong. What is it? Our studies will tell. The fact that I am a congressman and seeking to force these matters before Congress for correction will cause me to be publicly censured for exposing the nature of affairs of certain interests which have been prospering for a long time by appropriating the products of our toil. Numerous fires have been and will continue to be set under me by those who are selfishly interested in maintaining the present Money Trust, which not only includes many of the greatest bankers, but all others, in whatsoever business, who are beneficiaries of the system. As well as the political bosses subservient to the great interests. Of course they know that when the public once realizes how outrageously it has been, and is being, fleeced it will not permit it any longer, and they resort to desperate and tricky methods in their attempt to force me out of public office, because they realize that in my present position I have an excellent opportunity to direct public attention to the truth relating to the practices of the banks and other special interests. It is a well-known fact that in forcing through Congress the investigation of the Money Trust, I laid bare one of their innermost secrets, even though the investigating committee was composed of men selected by them after the interests were unable to prevent the passage of a resolution to investigate. But regardless of this fact, the environment surrounding the committee's work forced out facts which will aid in ultimately exposing the whole piratical system, This seems to them to be the great offense that I have committed, and therefore they do all that they can to weaken me before the public. Already by means of their agents, they have begun to spread stories. These stories they wish the people to unwittingly peddle from one to another. Underhandedly they start one or more falsehoods in each locality and hope that by the time these are peddled among my constituents enough of them will be believed to be true so that each voter shall find something to which he objects. In that way they hope that at least a majority of the voters can be secured who will vote against me. That is a scheme that is in operation, and for the same reason a certain portion of the press was subsidized to oppose me, Newspapers print scurrilous articles and others in the same employ copy them. Some articles are inserted which contain a few complimentary words about me for having done some unimportant thing, but these are diplomatically inserted in order to impress the reader with the idea that the editor is impartial. The impression is what they rely upon to give the color of truth to the opprobrious and derogatory matter. My fight against graft in politics and special privileges in business has not resulted in my landing in a bed of roses. The public has seen that and I knew from the start that I would have to fight every inch of the way as well as pay my own expenses, while those who opposed me, and consequently my plan, would have their campaign and other expenses paid, including other advantages which would be extended them. I observe, for instance, that the stand-pat Senators and Representatives, all of whom are more or less under the domination of the special privileges, and stand-patters generally have received recognitions and courtesies from the Administrations that have been absolutely refused to me. All sorts of dishonest and unfair means have been resorted to in order to injure me, while, on the other hand, every kind of deception has been used in the attempt to make the public believe that the Senators end Representatives who have supported the special interests were all right. This fight has not been easy nor has it been personally profitable tome from a financial standpoint. My purpose in calling attention to these facts is, that almost everyone who undertakes to establish reforms, that involve substantial property rights or personal privileges, receives the knocks and the least material reward. Further, the attacks made upon them by the special interests often mislead the public. That, of course, is the real purpose of the attacks, and every person must endure them who assails with vigor the system under which the special interests are able to levy tolls upon us for their maintenance. Lest there might be some misunderstanding, I wish the real attitude of the bankers on this subject of Money Trust be known. Many of them, and more especially those from the country districts, are not opposed to reform. They know that they have special privileges that they ought not to have. In fact, the greatest number of them are opposed to the Money Trust. I have received letters from hundreds of then, but in nearly every instance they request that I keep secret the fact the fact that they oppose the Money Trust. They dare not endanger them selves, and they do well not to as long as the present system is continued, for no bank would be safe if the Money Trust sought to close its doors. I do not intend to arouse any distrust of your banker. He is a citizen the same as the rest of us. I am not assailing him, but I am assailing with all the vigor of my life the system of banking and currency that so taxes our existence, and I am seeking to prevent the Money Trust from fooling us into adopting changes that will allow it to retain its power. And I further seek to bring about a change that will enable us to retain the products of our own energy and give therefrom such moiety to those who render service as they may be entitled to by reason of their services. We do not expect perfection either in ourselves or in others, but we should at least fulfill the plain necessities of life to the extent of not being ridiculous in our failures. For that reason there should be no delay in pressing the fight for our common rights and enforcing them through the intelligence of our conduct. We should not waive our individual rights in sup port of other's vanity, nor give them undeserved wealth or authority. IN CONTEMPLATION To America: What a grand expanse of territory! Behold the majesty of her mountain; the vastness of her plains; her enormous forests; her wealth of soils and minerals; the number of her lakes; her splendid rivers leading to the natural highways between all lands and continents-the mighty oceans, and all - all of these are the free gifts of God to Man To Man: Behold him in his application with the free gift - America. He has gone out over the plains and through the forests; developed the farms; built beautiful villages and great cities; constructed highways; furnished communication between them all; and then developed them by his ingenuity. All these are the expressions of his own energy - the results of his toil, but notwithstanding the gifts of God and the giving by Man of his own energy, he is burdened with a huge debt - the greater because of the largeness and richness of Nature, the expenditure he has made of his energy, and the accumulation by the few of the products. Why should we all labor to produce material wealth called capital, when it is appropriated by the few and made the basis on which they tax us and collect from us more interest and dividends! TO THE JOKER: Here I Hold A Gold Coin What a false illusion thou art to human mind! How cruelly thou deceives thy possessor and those who covet thee! Thou buyest for me by thy betrayal of mankind. Thou didst tax my energy to gain thee, and thy discount has lost to me and my fellow-men the greatest blessings of a continent, as well as the principal products of our toil. Few indeed are they who know and understand thy seductive power. We shall expose thy falseness so that our children shalt not be deceived by thee. To Ourselves: The fact, that we did not prevent the various evils of which we now complain from becoming parts of our system, should make us considerate of those who are operating under it, and remove from us .all personal prejudice. The practices that are allowed at present, and which are contrary to what we know to be for the beet interests of mankind as a body are almost wholly due to the process of adaption and not to the mere personal choices of some particular individuals. Men are compelled to employ the methods and systems that are used in their times. No one can set up an independent system for him self and operate under it without the help and consent of the majority of his fellow-men, He must abide by, and operate under, the recognized systems regardless of the fact that neither the means nor the method may suit him. For that reason it is neither uncommon nor improper for us to do many things of which we do not ourselves approve. It is impossible for anyone to have a successful business career who does not conduct it in accordance with and in systematic concert with the prevailing methods and therefore in the study and discussion of the affairs connected with the general conduct of business we should be broad in our interest and honestly try to understand everybody whether they conduct their business in the way that we think proper or not. We should remember that we are dealing with systems and not with individuals, and that we have no right to blame individuals for the present system nor because they use it, but we have a right to ask them to examine it carefully and if they find errors, to join in an endeavor to correct them and not make an unfair use of the opportunities such errors may present to them. Radical changes are not possible until they come by common consent. Mankind is restless, and the broad field presented to the human intellect and selfishness combined with the ambitious desire for prominence and leadership, impels it onward in a great and endless struggle. Individuals drop out as time advances, but humanity as a body presses onward. We inherit, fit into, adjust and renew the establishments and systems of our fathers, and what changes we do make are made through natural evolution, which is slow or rapid according to our inventive and creative energy and our acceptance, as a whole, of the change. War has been one of mankind's greatest occupations, or, in other words, the exercise of government by the law of physical force. It has been esteemed a manly art and all men have paid the toll, including the numerous toilers who provide provisions and munitions of war and supplement those in the actual field of combat. It has been the mighty burden that the past has had to carry, and we still carry war obligations because the general understanding of the problem has not been sufficient to cause it to be absolutely abandoned. The comparatively few who have understood have had to fight the same as those who did not, somewhat on the same principle that we are forced to do business as business is done, or stop trying, which men will not do until they can no longer push as hard as they are pushed. But, even now, although we know that war is merely a legacy from the earlier generations, we realize that we cannot prevent it merely because we no longer think favorably of it. Civilization has advanced, almost to the period of framing a plan for abandoning it, but all men and all peoples do not reach the same plane of understanding at the same time. We must still keep prepared for war because it is not improbable that we shall have some great wars long after we have finally concluded that war is an improper method to use for the settlement of disputes. So, too, in the world of business, some unsatisfactory, in fact bad, methods will continue, and it may be necessary far then to continue long after we know them to be neither just or desirable. The great struggle of the present is centered in the world of commerce and trade. It has become so intense that the outlet for human ambition has shifted notably from the field of war to that of commercial struggle. In fact the commercial struggle often produces the cause of war. This industrial struggle is another and much more humans diversion, I say diversion because whenever commerce is resorted to for speculation rather than for the purpose of supplying needs, it becomes a diversion. Some interesting comparisons may be drawn between the respective leaders and workers in these two fields of action, comparisons which may serve to make more clear the difference between the social and financial conditions of the governed and the governing. History records the glorious achievements and victories gained by the military generals. But although it relates the honors and positions that were given the leaders as rewards for their initiative, it gives no specified individual record of the plain soldiers who fought the battles and \suffered the privations and tortures incident to war. These were considered as an army, merely the force with which the generals fought The great wizards of finance and the captains of commercial industry also direct battles and seek the same sort of acclamation growing out of an entirely different application of human energy and for another kind of victory Their wealth and their struggle repays them and its buying and ruling properties win for them applause, position, and power. It is probably easier to be e toiler in some branch of commercial industry than to be a soldier or sailor and direct the sword and cannon against one's fellow- mortals, but the toilers the same as the soldiers, are the plain people. On them depends the result of the struggle. On them rests the greatest part of the work the denials and the sufferings, but contemporaneous history makes no more individual recognition of them than it did of the private soldier. Notwithstanding this seeming inconsistency, we owe thanks to the financial wizards and the captains of industry for leading us out into the industrial field and away from that of war, because it provides a better outlet for human energy. It was the next move in the march of civilization, and these captains of industry have been leaders in the struggles. Often it is the cruel and unreasonable who accomplish more for us than the kind and generous. They reveal to us our limitations. But there is no more reason to condemn the industrial generals than there has been to condemn the generals who fought in the world's great army and navy battles. The highest purpose of civilization should be to conserve and protect humanity, and what ever defeats that purpose should be condemned and eliminated. No such destruction of human life can ever result from the industrial struggles as resulted from those of armed battle. The element of construction is far greater than that of destruction, and regardless of the cruelty which results from an abuse of the opportunities which the present system presents to men, it remains evident that many of the captains of industry who lead men into the field of industrial struggle are using their brains in an effort to better conditions. Their first motives may be even more selfish than those of the military generation but the results are far more desirable, and humanity secures far better proceeds. They are the leaders in one of the great struggles in the climb toward a more splendid and altruistic civilization and the struggle is fraught with lessons. Yes, the struggle has its teachings, and that is what we demand. These lessons exemplify the force of human energy, and the value of consistent action. The next great problem for mankind to demonstrate is that of converting the energy of men and the consistency of thoughtful plans into benefits to be derived by the plain toilers themselves as a result of their toil. We concede that the captains at the head of the great industrial trusts were and are the great advance teachers of 10 the world, but humanity has followed long enough. It now ought to be able to direct its own actions, and that must happen before the present problems can be satisfactorily dealt with. At the present time there is nothing to be gained in war that could not be acquired by some other method. Its results are death, destruction, and despair. In the commercial and. industrial field we find elements of production, construction, distribution, and accumulation. The ambitions of the leaders themselves furnish the elements of destruction, but not in the degree in which we find it in the field of war. In the case of war the results of the battle revert to the government of the country that has been successful in the engagement. The financial kings seek to, and do, secure the substantial profits and the principal products resulting from the labor of the plain toilers. They take their chance in the game of life and gather in the fruits from others' labor. War means destruction and leaves little or nothing to distribute to the soldiers of the ranks, but the activity of men in the field of industry, when applied in connection with the latest mechanical devices, approved methods of application, methods of association, etc., results in an enormous increase in the productive energy of the masses, as well as an enormous daily accumulation of real wealth. But however great the accumulated wealth may be or become, it is a mere bagatelle when compared with the results that must come from the daily expenditure of the energy of the working people, and it is the results of the wealth that is thus brought forth that should be equably distributed, in so far as it can be to the individuals participating in its production (principally those who labor) as a reward for their industry. They are entitled to it, and in our studies we shall find out why they it have not received it. At the same time we shall consider ways and means by which they may, in the future, secure what is properly due to those who honestly industriously and intelligently apply themselves. WHAT IS THE MATTER WITH US? Business is conducted on a plan that makes it difficult for the most of us to secure the time in which to increase our information and enjoy the appropriate recreations and pleasures that are necessary in order to properly develop our intelligence and give us a correct mental and physical balance, it is true, however that most of us are, and all men should be, capable of filling better positions in life than most of them occupy, but we are still forced to remain in the same condition because we allow a false system to continue in practice rather than bestir ourselves and enforce the institution of a proper system which would enable us to follow a natural order of things and stop receiving underpay for working overtime throughout the entire journey of life. One reads in newspapers, books, and other sources of information the various views and conclusions of persons very much like ourselves. Some of those write 11 prove to be capable judges, some poor. Some people judge honestly, some look through clouded glasses and come to strange conclusions. Sometimes the writers are honestly mistaken in their conclusions, but many of them are actually dishonest in the views that they apparently would have other men embrace. One cannot adopt any one of these conclusions as his absolute guide; neither has one the time to read all of them before the necessity arises for him to come to some definite conclusions about present conditions. We shall observe first hand some of the things about which we read. In that way we shall read with our own eyes and by using our own brains be able to understand daily occurrences that go to make up our lives; understand why there is so much difference in the conditions and reach sane conclusions on which to base our further actions. A few of us are able to travel a little, some extensively, but the most of us are forced to remain at home. Some men do very little work, but the most of us are forced by present conditions to work all of the time. A few men live by their wits at the expense of mankind as a whole. Some have no wits but are supported by others who have, or by inherited wealth but the majority of us earn more than we receive and work to support others as well as a system that keeps the most of us overworking and living amid poor conditions. Why is that so? All who will join in making these studies will eventually understand. We shall find evidences of the whole system in every community. We shall recognize then whether our studies extend into distant regions or are confined to our own neighborhood. If men would candidly consider conditions as they are and as they would be if we were given a square deal, the result would be a united effort to secure a system that would provide the greatest common benefit. We have three principal thoughts upon which to center our considerations: First: The actual facts on which the present conditions are based Second: The true principles that should have been followed in the formation of our social and industrial systems. Third: The principles that should now govern in devising and instituting systems that will most successfully promote the general welfare. The true economic basis is different now from what it would have been if people had, from the beginning, followed a system of social order based on natural conditions. We have been following erroneous practices for generations and they have finally become a part of our established system. It would not be practical to change immediately to what ought to have been done originally. To do that would bring about such confusion as to defeat the very aims of reform, because there are too many rebels to truth and justice to permit of our going straight to the goal. We would have distress if that were undertaken, such distress that many, perhaps most 12 people, would turn back and defeat reform and become its actual enemies. But there is no reason that can be successfully upheld against our knowing the truth, and after once knowing and understanding it, we should strive to adjust our affairs to what is the true economic basis of our present relations, and seek to reform the present system as rapidly as it can be done without creating social confusion. I repeat, "social confusion." There is some thing strange about us as peoples of this earth. I might say unaccountable. History proves that the people of all nations take pride in their national existence. That is well. It shows that the patriotism of every true lover of his country is the basis on which national existence depends. If a foreign country discriminates against us or offers an insult to our flag or to American citizenship, it brings forth a united response in the form of a demand for justice - simple justice. These demands are sometimes of trifling significance when compared with the injustice and discrimination practiced in our own country between our own citizens, the special interests and the plain people, but we back up a demand on a foreign people with the power of our nation. We go to the extent of raising great armies, sacrificing our lives and the treasures of our land, as well as enduring great hardships and confusions of war, in order to sustain what we believe to be our national dignity. That is not strange. Neither is it unaccountable. But lest we confuse the purpose of national existence, the strange and unaccountable thing is that we tolerate the social conditions resulting from tire domination of special interests, and become enraged as a nation about external facts that sometimes are of far less importance. We are stirred by the glitter of brass buttons, uniforms with gold braid, glistening swords, musketry and parade, and all of these are things which might be compared with the toys that are given to children and have no purpose beyond that of the mere satisfaction of a desire for something with which to arouse enthusiasm and amusement. But what about the plain common things, the necessities of daily life, the things that are required in our homes, the necessity for consistent action in our social institutions and the results that come from the expenditure of our energies? We ought to be willing to make great sacrifices in order to secure permanent improvements of the most substantial kind in this respect. But even though we do not, we should at least attempt to put into practice a better system and be willing to endure the temporary confusion that the Money Trust could bring about by forcing a panic in order to retain, if possible, all the most valuable results of our work. As for myself, having studied the relations of these things, I would be willing to endure the confusion, but I recognize from observation that the soldier who will willingly go hungry, risk his life on the battlefield, and leave his family suffering and starving at home, will not endure so much as the temporary flurry that the special interests make every time a substantial reform is undertaken, even though that flurry would give to us the fruits of our energies instead of allowing the interests to continue taking them. But notwithstanding this fact, I am forced to recognize that this attitude of the soldier, and the laborer and people generally is a condition, and I shall not 13 unduly propose remedies that would bring about even a temporary confusion, although that could be speedily overcome and permanent welfare established by the people if they would positively insist upon the justice in their own rights and interests. I am constrained to go along as slowly as the majority of the people do, but we should not remain ignorant of what ought to be done. Our studies will prove how easily we could accomplish much better results and add to the blessings of life if we were willing to endure for a brief period the financial disturbance of business that the Money Trust can force upon us if we exercise those governmental functions which a dignified people should. CURRENCY, BANKING AND THE MONEY TRUST There is a man-made god that controls the social and industrial system that governs us. We know him as the "Money Trust. He is offended if given or called by his true name, and being jealous of his power, he opposed an investigation of its sources. At the present time he has an almost illimitable influence upon our daily actions and is seeking to increase it by framing new currency and banking laws to suit his purposes. For that reason our first study will be of the banks and the Money Trust in order that we may understand their power and the meaning of money. A few of us have bank accounts, but the most of us have none. Some of us borrow from the banks, but most of us do not and cannot. But we are all concerned with the accounts and the loans, because they affect business, and, consequently, the conditions of us all. In fact they control the general business with which we are materially concerned, regardless of our occupation and whether we are rich or poor. Bankers Personally Bankers are well-informed and enterprising business men, and are generally good citizens who take a great interest in the welfare of the communities in which they live. They are our acquaintances - the same kind of people that we are, and they generally accommodate and aid us whenever it is possible. That entitles them to a consideration equal to what we expect for ourselves, but they should receive no special favors, and neither should we. They should be under the necessity of responding to the common welfare, and we should be also. But if we were on an equality with them in doing business, we, as well as they could go on through the journey of life and all would secure better results than even they do now. It does not require any unusual capacity to become a banker. Any one who possesses ordinary intelligence and common sense can learn to conduct a banking business as easily as he can learn almost any other particular branch of work. 14 The actual money with which bankers conduct their business belongs largely to the depositors. It is the money that some of us have deposited. The banks merely loan it out. This money is used in business and speculation. We shall see how it is used to control prices. These prices affect us. We get less for what we sell because the speculators manipulate the markets against us, and what we buy costs us more because the speculators control the prices of commodities. We take the losses and they take the profits both ways. Anyone who can impress the citizens of a locality with confidence can start a bank. It has often been done without capital. Even strangers can present to business men letters of introduction, and after securing their confidence and aid, start banks. It is true that permission must be obtained from the Comptroller of Currency in order to start a national bank, but until I opened my fight on the Money Trust, even that had been a mere matter of form, and it is very seldom that anyone is refused permission when the application is accompanied by recommendations which are easily obtainable. Bank Capital When a bank is organized the letter of the law requires that fifty per cent of the capital should be paid in cash, but that is often a mere matter of form, for the stockholders choose their own directors and officers and sometimes accept their own notes instead of cash. Strings of banks have been organized by individuals associating in that way. Of course, in order to do so, they must in some way secure the confidence of at least a part of the people in the places where they organize, and a sufficient amount of cash with which to pay the expenses of organization and buy the required bonds on which to base bank notes, but temporary loans are often secured for that purpose and they frequently depend upon the deposits to pay these loans. Further, the law makes it legal to make loans equal to one-tenth of the capital to a single person, and if there are enough associates they are enabled, in addition to borrowing the capital, to borrow the deposits as well, even including the greater part of the reserve, if reserve banks be included in the scheme. Such loans may even be made to certain of the organizers who are without capital. You might ask, "'What are the bank examiners doing if banks can be filled with paper originally worthless?" It would require very many more examiners to be given the time to learn the value of bank assets; in fact, so many more that each would, have time to tabulate the assets and make inquiries into the solvency of the makers of the paper held by the banks. They would require time to check up and detect the kiting of notes and accounts going on between those who manipulate that game. Bank examiners ordinarily visit banks only three or four times a year, and often examine banks with even a million dollars assets consisting of hundreds, and sometimes thousands, of notes), list their amounts, subtract payments, count the cash, and examine the books, all in a day. 15 Almost all banks, however, organize with substantial capital; that is, what we commonly accept as such. Banks never start with intent to defraud depositors. But there is no law to prevent them from starting without substantial capital, and they often do. The system itself has robbed us, and the bankers themselves are not, as a rule, aware of it. But they are the beneficiaries of a false system, one that makes them rich, very rich as a class. Their wealth is created through a burden placed upon us and the wonderment of it all is that we should be so foolish as to supply other individuals who possess no more intelligence than ourselves with both the law and the deposits on which to base issues of currency and systems of credit that tax our life necessities more than all other things combined. That is not an extravagant statement. It is the absolute truth and the object of our first study is to make it so clear that everyone will understand it. Banks are not generally organized, by the note-kiting system, but they can be, and many are and have been. Even dummy notes are sometimes used, and the extent to which these practices have been resorted to, directly and indirectly is considerable; but the general public has never realized that it has been done at all. The law providing for bank capital has been of comparatively little protection tof depositors. The bankers themselves have protected their depositors and charged for doing so. Bankers are under the necessity of protecting themselves from failure, and it is due to their diligence and their self-interest that there has been so little direct loss to depositors. Many banks were originally started and capitalized on the paper of individual makers which was worthless at that time, but these banks got our deposits and charged those who borrowed them so much that the profits finally made the paper good. The careful banker usually becomes rich regardless of the fact that he often starts without capital. In other words, the business itself is carried on according to a system which allows the public to be so heavily taxed that failure generally speaking, is visited on the careless and incompetent only. It is impossible to determine how many banks started without the actual amount of required capital, but since most banks so started have become financially strong by reason of their accumulated profits, no great good could come from a knowledge of which of the existing solvent banks were originally organized on paper which was actually worthless at the time of the organization. We wish principally to understand the system because it is a false one. Even if the letter and the spirit of the law were followed, still the using of the system is a greater wrong by a thousand times than the mere technical violation of its law. The fact is that our laws are so ridiculous that the bankers have often warped the law to the advantage of the public when it involved no loss to themselves as a consequence. 16 The Greatest of all Burdens is the Banking and Currency System The speculation and gambling that is incidental to our banking and currency system is simply appalling, and it is absolutely ridiculous that we should tolerate it, and pay the cost of its continuance. Before considering a few of its details let us make a partial review of the burdens that accrue to us as a result. When we examine our losses, even in part only, and see how great is our sacrifice because of our stupendous stupidity in supporting such a system, no doubt we shall be more interested in the manner in which it is operated. Of course it is not a pleasure for one to feel that he has been fooled, but our appetite for information ought to increase when we realize that we could double, yes multiply many times, the advantages we would receive in return for our daily expenditure of energy if a proper system were to be instituted. It is worth while to know that there are simple remedies which would, if applied, overcome certain conditions that are immensely complicated and tremendously cumbersome because of their falsity. It is always easier to deal in truth and honesty and follow these to their legitimate ends, than it is to construct and adjust a false superstructure upon a false base. But even if no remedy were possible we should still seek to know about the game that is being played by the speculating interests. We certainly do not wish the financially fat fellows to be able to look beguilingly into our eyes, and with the concealment of their innermost amusement and delight at our stupidity in permitting ourselves to be so bamboozled talk brazenly about the game that they are playing, knowing all the time that we do not understand it We wish to know the truth about this even if we do feel humiliated because of our having previously been ignorant of it. Here are some figures. In the year ending June 14th, 1912, the 7,372 national banks cost us $450,043,250.04 to operate, pay their losses, dividends, surplus, etc. Up to June 14th, 1912, 17,823 State and private banks had reported and approximately 4,000 banks had failed to make any report. The 25,195 reporting banks operating in 1912 held individual deposits of $17,024,067,606. Including those not reporting there were 28,995 banks conducting business in 1912, and the sum it cost the people to operate these, pay losses, dividends, surplus, etc. (I believe it a conservative estimate) would exceed $1,300,000,000, or approximately $14 for every man, woman and child. This is more than it costs to run the U. S. Government, all things included. But large as this sum is, it does not include any report of the operations entered into by the bankers for their individual consideration. That, no doubt, far exceeds the mentioned sum, because bankers have unusual opportunities to speculate and many of them do speculate on a large scale. On January 1st, 1911, the report of 7,140 national banks showed that they had $1,005,740,915 of capital stock paid in, and $662,090,881.82 surplus. The surplus is that part of the profits not declared as dividends. On September 4 th , 1912, there were 7,397 national banks, and their capital stock was increased to $1,046,012,580, their surplus to $701,021,452.71, and their undivided profits on 17 the last date, less expenses and taxes, were $242,735,174.87. The dividends on the stock of national banks in 1912 were 11.66%. But large as these dividends, surplus and undivided profits are, we have not reached the climax of this system of extortion. The Juggling of Credits to Create Capital We seem never to have learned the value of credit or to know that we ourselves form the basis for it. We are capitalized as so much stock on hand owned by the trusts. A few of us get into the deals, some on a small scale and a comparatively few on a large scale, and a half dozen or so have become the real kings of finance. Of course, it is necessary for the kings of finance to have scattered throughout the land underlings who help them gather in the products of our applied energies, and these involuntary contributions of ours are afterwards distributed among the favored. Naturally the underlings are given some crumbs and some of them even fair slices, but considered in a general way all of the crumbs and slices are distributed in proportion to the capacity the underlings possess for playing the game well. The whole loaves are only handled by the kings of the system, and it is through the expenditure of our united energy that they are enabled to amass this so-called wealth. Now, in 1913, there are approximately 30,000 banks. Their number, capital and surplus continually increases. On the basis of that fact the Wall Streeters tell us that the capital of the banks is less concentrated now than it was formerly. They intend by that assertion to lead, us to believe that they have less control. I shall prove, however, that the banks are merely the nests from which the Wall Streeters gather the people's financial deposits; that these deposits and the credits built upon their use as a means of amassing capital and levying interest are ever so much more serviceable to the bankers than the capital stock. A large part of the capital stock is consumed in the purchase of fixtures and buildings that serve the banks for offices. The more numerous the banks are, and the more widely scattered through all communities, the greater is the control the Wall Streeters obtain. The people deposit their money in these banks and a large part of the money is used by the Wall Streeters as if they actually owned it, and upon its use they base an enormous credit system. No bank is organized with the idea that its capital is the basis upon which it secures its main profits. No bank would be organized unless its organizers believed that they could secure the use of the people's savings in a larger amount than the bank's capitalization. Take for instance, the following six banks in New York City: First National; Chase National; Hanover National; National Bank of Commerce; National City and National Park, Their deposits on September 4, 1912, amounted to $839,444,142, while their capital stock was only $73,000,000. Approximately the deposits equal 111/2 times their capital, exclusive of surplus. Is it not very foxy of them to try to divert our attention from this fact to a consideration of the location of bank capital? When I use the phrase "Wall Streeters," I do not confine it to those having offices in Wall Street. The 18 Wall Street system maintained in all of the large cities, and I include within the term Wall Streeters all those supporting the Wall Street system, wherever they may be. In 1900 there were 13,977 banks, which includes non-reporting banks. In 1912 there were 28,995 banks and in that time the deposits increased from $7,688,986,450 to $17,494,067,606. Their surplus increased in a still greater ratio and in the meantime they paid large dividends. It must be apparent to anyone that the money with which to pay the expenses incurred by operating this system (by which I mean to include the whole system of trusts) is collected from the people by capitalizing the products of our energy and even discounting the future in the form of stocks, bonds, and securities issued, on which they collect dividends and interest. This is being accomplished by a reduction of our wages and of the prices for which we sell our products, or the services we render as well as by increasing the price of what they control that we must buy. By inversion this prevents a proper reduction in the hours of labor. These have not decreased, nor has our pay increased proportionately with the new mechanical devices and the new methods of application which have immensely increased our productive energy, but the additional product which has resulted from their use has been capitalized in order that the dividends which we pay shall increase. All of these things were scientifically figured out, then commercialized, then speculatized, and finally gamblerized both as to the present and the future. All have been overdone and all pooled as a common charge against the products accruing from the expenditure of our life's energy. Many of us were children when the extortion began, and we can hardly blame our parents for permitting the initiation of what we have allowed to be developed into a full-fledged, scientific, legalized system of extortion. But now, since we understand its effects, our children ought to look back on us with shame if we permit its continuance. It is not the bankers who have primarily fastened upon us this system of capitalizing our life energies for their own selfish use. It is the banking and currency system, which we have allowed to remain in operation, and create special interests. The people alone have the power to amend or change it. Therefore we and not the bankers are responsible for the existence of the present system. Omitting the banks not reporting of which there were more than 4,000 in 1911, the 25,195 that did report up to June 1 st , 1912, showed, Capital stock paid in $2,010,843,505.43 Surplus 1,584,981,106.44 Undivided profits 581,178,042.47 Total accumulations, capital included $4,177,002,654.34 Over four billion dollars bank capital! That is approximately $44.40 for each man, woman and child, and the bankers actually believe we owe them that, notwithstanding that it is practically a capitalization of ourselves, the same as a 19 farmer capitalizes the growth of his hogs, but with the advantage to the hogs, because the farmer takes good care of the hogs until they are sold to be slaughtered. And what is more, this $44.40 is the nest egg only. We have already paid several times that to them in dividends. But greater than both combined are the profits from the speculation and gambling indulged in by the king bankers, and by many of those to whom they loan the people's deposits. We shall study their operations at another time. The banks are merely the nest eggs of the whole system. Those who gather from these nests have the greatest opportunities. If we were to look into the banks just before they close, we would find in them persons from the business houses depositing their daily collections. In the earlier banking hours we would find such people making deposits as the farmers, wage earners and others who do not collect each day the returns of their labor and business affairs. Out of the 94,000,000 of us, all who are engaged in work or business of any kind for which we receive cash, are trotting immediately to the receiving windows of the 30,000 banks and trust companies and passing over their counters our hard- earned cash. This cash is flowing from these 30,000 banks into Wall Street and other speculating centers like a flood stream. It is the use of these deposits by the speculators that gives the Money Trust its power over the people. Indeed the Wall Streeters have had all the greatest opportunities, for this practice has been going on for a long time. You may say "Yes, but the banks loan part of the people's deposits back to them." That is true, but eventually it works out to the satisfaction of the Wall Streeters. Of course they want enough cash left back in the respective communities from which it pours in, so that our country's industries, whatever they may be, may be operated. That is on the same principle that a farmer will always keep breeders to replenish their live stock. The Wall Streeters know that the harder we work in order to produce commodities of whatever kind, the more we will have to turn over to the rich. The industries must be active everywhere in order to concentrate the cream of their products into the vaults of the banks and finally into the control of the trusts and special interests. In our studies this will become as plain as the noonday sun on a clear day. Yes, there are 30,000 banks in the small towns, villages, and great cities, that serve as nests into which the eggs are dropped, - that is, our cash. The total of our individual deposits for the year of 1912, in the banks making reports to the Comptroller of Currency, was $17,024,067,606. Add to that the deposits in banks not reporting, and the total will be correspondingly increased. That enormous amount was supplied by us as a result of the expenditure of our energy and labor, and it is important that we should know what good, if any comes from our supplying these banks with working material to be used under the present system. 20 Banks are divided into three classes: First, New York, Chicago, and St. Louis form a class by themselves, and are called the Central Reserve Banks. Second, 47 of the other large cities are Reserve Cities, and in those, banks are designated as Reserve Banks. Third, all of the banks not in the first two classes are called Non-Reserve Banks. This classification gives the greatest elasticity to the system of speculating and gambling with the deposits. It is this classification also that gave the Money Trust its start. It secured the use of the people's money just the same as if it had actually owned, it. How, you ask? . . . Simple enough! It is worked by a rule of self interest-profit to the banks. The law requires the non-reserve banks to keep 15% reserve. This they are prohibited from loaning to borrowers in the locality from which the banks get their deposits, but they may keep 3/5 (or over half) of it in reserve banks, and the latter may loan 75% of that 3/5 out to anybody. Further, the Reserve Banks offer the Non-Reserve Banks 2% interest and that inducement secures for them the greater part of these reserves, and much of the time even more than is required for the reserve. The Reserve Banks are required to keep 25% reserve, but all except those in the three Central Reserve cities, New York, Chicago and St. Louis, may keep 50% of their reserves in these three cities. From this it will be seen that a practical working out shows that the actual reserves of the banks are, in non-reserve banks, approximately 6% of their deposits; and in the other banks, except New York, Chicago and St. Louis, 12 Vz% of their deposits. The rest is principally sent to the banks in Central Reserve cities which pay 2% interest and loan it out largely to speculators and promoters. To those not knowing the tricks of the business, the practice of keeping reserves in other banks may seem harmless. But upon examination we find it to be a most clever device and operated in order that the banks generally shall supply the financial speculators and gamblers with the people's money. It is true that that is not the real purpose of most bankers, but it results in that. Editorials in that portion of the press that is subservient to the Money Trust, state that we plain people have billions of dollars deposited in the banks, and seek to make the list of depositors appear to be a general one. But any one person having deposits in two or more banks was listed as many times as his name appeared in the list of depositors in different banks, and some business houses have hundreds of accounts in one form or another. After this process they boldly proceed to ask, '"Who is the Money Trust?" . . . This is their brazen answer to their own question: "The people are." Thousands of newspapers are supported by the interests for the very purpose of beguiling us into believing the things that 21 these interests want us to believe. This question of who owns and who uses the money is the one on which they expend the greatest efforts in order to deceive. It is a fact that the people own a part of the bank deposits, but the banking system is so cleverly arranged in the interest of the banks that the people have comparatively little benefit from their own deposits. On the contrary, the people's money placed in the banks is principally used as a basis for credit and on that credit the banks collect the interest which operates to reduce the prices of what we sell and increase the prices of what we buy. General business is transacted on approximately $24 credit to each dollar in cash, ... and under the highly specialized system of Wall Street there is a still greater elasticity of credit. We all know that business is not carried on wholly with the actual money; in fact business is almost wholly conducted on credit. Yes, ... the people do own considerable of the money deposited in the banks, but they do not use the credit that is based upon it. They deposit the money, but the banks in conjunction with the speculators, appropriate and manipulate the credit based upon that. We support that credit and during normal times that practice has a vastly greater effect in the control of business than does the actual money. That is where we plain folks get left. If any of us wish to use the credit we must pay the bank 6% and upwards, and yet the value of that same credit is based upon the products of our own energy. The banks do not, ordinarily, part with the money when they make loans. The borrower gives his note and the sum for which it calls is placed to his credit on the bank books, after which he checks on that account to pay bills. These checks are usually deposited by the payee in the same or some other bank and in the general average of business each bank gets back as much as it loans. The money that we deposit forms the basis for an amount of credit many times greater than the amount of actual money. The bankers have the advantage of all that, and it is pyramided and sold and resold many times. The banks are specialists in the manipulation of that credit and as a matter of fact they are required by the exigencies of business to dbo so, as long as we allow the present ridiculous system of money and credit supply to continue. On June 14th, 1912, all told, there was only $1,572,953,579.43 of actual money in the reporting banks, but in these same banks there was credited to individual depositors over seventeen billions. The banks have never had at one time, much in excess of one and one-half billion dollars of real money. The banks are properly the clearing houses for money and credit exchanges, but they have misapplied their trust and have become our commercial masters. Many of them have associated themselves with the gambling speculators and are now speculating for themselves. Further, the people's deposits are being used by them and those to whom they loan to pyramid in stocks, bonds, and other securities, which aggregate at the present time approximately amounts to. $50,000,000,000 and is rapidly nearing the $100,000,000,000 mark. Excessive dividends and interest are charged and compounded semi-annually and annually on this sum that decreases our net earnings, increases the price of 22 the commodities we buy, and prevents a proper reduction in the hours of labor required Against this $50,000,000,000 on which the Money Trust combination charges us exorbitant maintenance expense, in addition to interest and dividends, we own merely a part of the $17,000,000,000 of deposits, and a few of us are drawing 3% and 4% interest on small balances. You can now begin to appreciate how comparatively insignificant the little deposits a few of us plain folks are able to make for ourselves are, when we measure the interest we get with the maintenance expense, dividends, interest and profits which the bankers, trusts, and speculators obtain on the credits they create on these deposits, and realize that all of these are deposits by the products of our energy expenditure. To give a concrete illustration, take, for instance, the increasing reserves held by the following central reserve banks: Hanover National, National City, National Bank of Commerce, First National Bank, and Chase National. These are the six principal banks in New York City and we can apply the principle that governs them with that which governs other banks without going into tiresome details. Covering a period of 15 years, notice how diligently they have been skimming the country for the reserves of other banks. The growth of these reserves held by the six banks are as follows for the period named: September September September September September September September September September September September September September September 1898 $94,394,210 1899 164,514,691 1900 176,731,918 1901 216,763,488 1902 253,516,055 1903 227,780,147 1904 258,558,149 1905 291,732,471 1906 334,660,214 1907 336,553,788 1908 311,499,877 1909 399,058,140 1910 400,740,817 1911 461,060,673 The capital of these six banks has been increased from time to time during the last fifteen years by means of adding a part of their profits. In 1912 it was $73,000,000 (the larger part of which was the profits that had been previously made on a smaller capitalization), and in addition they had $82,000,000 surplus; in other words, profits piled up. Besides all that they had $26,332,698 of undivided profits, or profits that have not been declared as dividends or placed to the credit of surplus. In the meantime, these six banks had paid enormous dividends to the stockholders. The profits of the First National, one of the banks mentioned above, amounted to $86,000,000 in fifty years. The original investment was $600,000. The total deposits of the "Big Six" now, in 1913, approximates a billion dollars. 23 We should not overlook the fact that this is largely actual money, as the New York banks secure more of that than banks elsewhere, and that by Wall Street's system of credits it may support many billions of credits for the Wall Streeters. There is a group of banks in each of the large cities working the same game with the credit supported by the people, and yet, enormous as the aggregate amount of these bank profits may seem, they are almost insignificant when compared with profits that we pay the other special interests which have grown out of our monstrous banking and currency system. We now have fixed, as a part of our knowledge, the fact that bankers have by law and by practice special privileges which enable them to handle the people's money and juggle with credits in such a way that they become rich, but we have not yet seen the greatest of their advantages. We have already found that banker as a class, are rich, made rich by the use of the credit that is supported by us, and they are organized for the very purpose of using that. We should mention something about the personalities of the bankers whom we meet upon the journey of life, and strive to learn of what rule or right they secure the privilege of converting into their own control the credit that is necessary in order to carry on the business and commerce of the country. Why should the bankers have the power to contract and expand at their pleasure the credit that the people themselves support? Under the present order of civilization it is the greatest privilege in existence. The manner of its exercise by bankers and speculators is continually sending to their graves thousands of poverty-stricken persons for each person that it aids to competency. Is it not extremely important that we should know by what method these bankers become the arbiters of our destinies? They were not selected by us to do this. Just so long as we allow them to dominate by the system they employ the road to success is absolutely closed to the vast majority of farmers, wage earners, and others employed in different pursuits of life. In the earlier part of our study we made some observations about bank capital. We are now prepared to know more about it. In order to obtain the controlling advantage in the banking business, it is not sufficient to own a little bank stock. Many people own bank stock and some control banks without knowing much about their actual power. These, however, are the ordinary banks, such as most of us patronize if we have occasion to do a direct business with banks. These banks serve as supply stations for the larger city banks. They are not designed for that purpose, but that is the result of the system under which they operate. We have already observed that any person of ordinary capacity, bearing a fair reputation, and possessing actual nerve, can start a bank without capital, in any place where a bank is needed, and that they frequently do at points where no additional bank is necessary. We have also learned that the greater part of the 24 banking capital has been created out of profits obtained from the use of the people's labor and credit; that the surplus of the six largest New York banks exceeds their stated capital, it being $73,000,000, while the surplus is $82,000,000; that much of their stated capital was created out of earlier surplus accounts; and that, in addition, they have $26,332,698 of undivided profits. What is commonly thought of as actual capital is simply the notes, or the proceeds from the notes, of some of the principal incorporators who borrowed from banks, or from others, and paid them with money out of the dividend collections. The whole thing is, and. Has been based almost entirely upon a system of credit and we have remained ignorant of the fact that instead of allowing a few men with average capacity, supposed fair reputation; and actual nerve, to appropriate the credit that the rest of us have supported by hard labor, we should have utilized that credit for the benefit of those plain people who really support it. We should become firmly imbued with the truth of that statement. Indeed, the most of us who are over 21 years old and have voted will become more and more humiliated as we proceed and realize how we have been beguiled into supporting the very things that have robbed us of thee best results of our life's energy. But it is better to be once humiliated and become thereafter ashamed of our own past stupidity, than it is to continue in ignorance and place the increasing burdens upon the shoulders of our children. It is time that we realized that our banking and currency system is not only rotten in its application but that it is absolutely false in its basis, and must be changed. It is because of that condition that I introduced a resolution providing for an investigation of the Money Trust. The interests saw the danger in which such an investigation would place them if the public should learn the actual facts, and they immediately started that portion of the press controlled by the trusts to laughing at my resolution. An attempt was made by those interests and the subservient political bosses, irrespective of party to ridicule it out of Congress. They recognized that the resolution was aimed at the very heart of all the trusts and combinations. The political bosses do not always keep so well informed about the ways of business as they do about the jugglery of politics, nor the means by which the public may be prevented from understanding their operations, but they do juggle the rules of both Houses of Congress in order to restrain action against and promote action favorable to the trusts. The trusts inform the politicians of how they wish them to act upon matters which affect the trusts, and in the case of my resolution they were induced to pigeon-hole it. But the public had heard the alarm. The independent press was insistent on information . . . sought to obtain facts from me, searched for other facts themselves and heralded to the world the purposes of the resolution. Thousands of letters and telegrams were sent to the Members of Congress from their constituents . . . The political bosses soon found it necessary to cover the tracks the trusts had made when coming to their offices . . . Something had to be done, and that quickly or the indignation aroused 25 at the failure of Congress to act would run riot and the heads of political bosses tumble. Secret meetings were held by the representatives in Congress of the trusts and bosses. The doors of the innermost and least suspected offices were barred to the public, and so guarded that none should enter who were interested on behalf of the public. In these offices plans were laid for the drafting of a new resolution, the purpose of which was to defeat the appointment of a special committee, and to substitute for it The Banking and Currency Committee, which was chiefly composed of bankers, their agents and attorneys, and the interests expected that that committee would faithfully protect the wrongs committed against the public, in so far as it could be done without arousing public suspicion. It could not whitewash the whole of the Money Trust operations, but much could and would be concealed by that means, and was in fact, as was shown by subsequent developments. The next step was to secure the passage of this substituted resolution, which really amounted to the investigation being made by the secret friends of the Money Trust. This committee, as well might be expected, . . . because of the special personal interest of its members, ... did not select an attorney to aid them from among the many able attorneys who are Members of the House and who would serve without further pay than that to which I they are entitled as Members, but they selected a Wall Street attorney paid him a very high salary allowed him to manage the whole investigation and practically draft the committee's report. I do not make that statement as a reflection upon the attorney so selected, but merely to indicate the fact that the Bank and Currency Committee did not view this subject from the standpoint of the general public. At first it was supposed that the public would be appeased with such a proceeding and the whole subject be easily handled under the sacred boss system. A secret caucus was resorted to. . . In a later study we shall consider these caucuses and ascertain the method by of which the politicians have so long served the trusts while being maintained in office by the public. The caucus on the Money Trust resolution was attended by many well-meaning but misguided followers of bossism. The substituted Money Trust Resolution was adopted, and on a later day passed by the House. Those Members who bound themselves by the gag caucus rule were guilty of perjury and treason, ... but that has been so common a result of the caucus rule that it is no longer considered as such by them. They believe that anything founded in precedent is justified, and each believes that he is justified and his conscience satisfied when once he yields his convictions to the will of the bosses. But the people will awaken their asphyxiated consciences on this caucus system once they learn the cost it entails on national efficiency. The Money Trust won, ... of course, . . . and the Banking and Currency Committee took charge of the investigation on behalf of their masters, the 26 bankers. Probably not one of the men on this committee is really dishonest. I believe that each one of them believes that he is conscientious and that he does not intentionally wrong the public. But they have developed the selfish viewpoint to a degree that enables them to believe that the public is really mistaken. That is almost always the case, however, with those who have become the beneficiaries of a system. The Banking and Currency Committee had to be forced by public opinion to do more than make a pretense at action. It was presumed by its members that the public was ignorant of the facts, but the truth was that too many things had already been exposed. The public demanded proof. A great political party was in danger. The bosses saw the danger and they made a feint at investigation, as a result of which they gathered in a few morsels to be spread broadcast before the general election. Then all was silent and, the committee would meet and adjourn and meet again and adjourn, and so on, over and over again. While that continued the Money Trust and the subservient politicians were safe. All was quiet until Congress convened. Then, on December 2nd, 1912, I introduced the following resolution: WHEREAS, Congress created in 1908 a National Monetary Commission with authority to investigate monetary problems in general, and WHEREAS, said Committee bas been discharged, but first made and filed a report and recommendations for certain legislation embodied in a bill now pending in Congress known as the Aldrich plan, but the report failed to disclose any facts in relation to the monopolistic control exercised by certain great special interests of the principal money and credit that enters into commerce, business, and speculation, and WHEREAS, it is vital that Congress should know the facts relating thereto before permanent remedial financial legislation should be undertaken, and WHEREAS, there is a pressing demand for early legislation and for other good and sufficient causes, the House authorized the Banking and Currency Committee to investigate the Monet Trust which exercises a potential and injurious influence in the control of the principal sources of money and credit supply entering commerce, business and speculation, and; WHEREAS, the Committee, in the many months that have passed since it was so authorized, seems not to have undertaken the investigation for the purpose of securing facts to-aid in framing early remedial financial legislation, but rather to have been planning an investigation as if for indictment or some other remote purpose, and in which it is blocked by offenders against honest and impartial rules of business and Government officials who deem the personal privilege of banks so sacred that their business shall not be inquired into even for the benefit of the public, and WHEREAS, this action on the part of the special interests, supported by the refusal of the Government officials to help the committee, is important in itself the facts shall become a part of the committee report, but should in no way delay the investigation which is important in that its purpose is to secure the facts and circumstances that interfere improperly interfere with legitimate commerce and business, If the committee intends to secure information for other purposes and has not sufficient power, it nevertheless should secure the information which is of the most vital importance and which was the moving cause for its authorization; that is, information which will 27 enable Congress to intelligently enact remedial laws relating to the control of money and credits; and WHEREAS, it has never been claimed that there is, or ever was an organized or even an unorganized association that can be specifically pointed to and named as the Money Trust, it is therefore useless to undertake to prove such an organization exists for the purpose of punishing Neither formal nor informal organization is necessary its potential existence. In fact, its power is the greater because it exists without actual material rules of organization, for by the methods of its existence it is immune from prosecution. It nevertheless can and does by indirection what it could not do by direction. The very fact that the business interests know that there is a money power which can make or unmake business for them gives that power its greatest efficiency of control. Silently and surely that power is exerted, and its force is realized by all industrial agencies. Because of its peculiar yet potent, force, it is important that we have early legislation. The main facts and circumstances by which the Money Trust is maintained may be easily proven to the intelligence and understanding of the public by a proper compilation of the facts that are now obtainable, and it was for that purpose principally that the committee received its authority from The House; Now, therefore, be it RESOLVED, That the Committee on Banking and Currency request to proceed without delay with an investigation of the Money Trust influence, for the purpose of securing all the practical information and data that may reasonably be had in regard to the influence exercised by the Money Trust in the control of banks and of money and credits. RESOLVED FURTHER, That said committee shall report the results of its investigation to the House from time to time with reasonable promptness. The press immediately published broadcast the substance of the above resolution. As a result of the strong public sentiment, the committee was forced to act with more diligence. (The same as the politicians in the old political parties became progressive when public opinion forced it.) The party in control scented danger. The fear of adverse public sentiment, the only thing that boss politicians fear, aroused them to action. The committee was now forced, to subpoena witnesses and hear their testimony, some parts of which were afterwards published by the press. In the speech that I made in support of my first resolution, I disclosed the conditions that the subsequent evidence of the kings of finance proved to exist. But the committee soft pedaled, and brought out only those things that every student of the financial conditions already knows and such information as had been substantially published in magazines and discussed in Congress by Senator LaFollette, myself, and others. It was only the fact that it was furnished verbally by the fellows in the actual game that aroused a new and more general interest. The committee did not seek out the most crafty arts of these speculators and gamblers in order that the public might secure a correct view of the false system of laws that govern the banking and currency business; but what was to be expected from a committee that was controlled by bankers, and whose chairman was a banker? . . . Naturally it avoided questions upon the most important economic truths which should have been disclosed as a result of the investigation. The tricks of the witnesses will die with them, but the system that 28 permits the tricks still remains for others to operate under until it shall be remedied. A sub-committee was created to propose a remedy. This committee is also controlled by the bankers, and has a banker for chairman. These men have personal financial interests in the legislation. Our - that is, the peoples' concern in changing the system is to promote the general welfare. The bankers have a special interest, and since they control the committee, what show have we against them? . . . Since their interest is to collect interest from us. . . They go as far as they dare without arousing a hurricane of public indignation as a result of the favors they extend to their own business. The friendliness that the Banking and Currency Committee displays, toward the Money Trust was apparent to anyone who had given any time to the study of the problems placed before it for investigation. Their work was as mere play when compared with the importance of the subject. Nevertheless, it served a good purpose, although its service was of a weak nature. Jacob H. Schiff, one of New York's greatest financiers, and one of the witnesses who testified before the committee, is an example of a man with the kind of mind and over-selfish viewpoint which prevails among the men who had a personal financial interest in the result of the Committee's investigation, such as the banker members of the Banking and Currency Committee may be expected to have. Mr. Schiff, under oath, told the committee in substance that: If individuals can accomplish a monopoly he believes they should not b hampered by law! The laws of nature, he told the committee, are best for preventing too gigantic projects; and he cited the fall of the Tower of Babel as in example of the futility of human effort extended too far. Among the articles expounded by Schiff in his creed of business and finance was the assertion that the minority in all corporations should not be allowed representation among the officers and directors by law. The majority should always rule.' he said, 'and the minority should protect their rights as best they can.' Is it not easy to see by this statement of Mr. Schiff's that it is preposterous for Congress to appoint mostly bankers, their agents and attorneys on its Banking and Currency Committee? Mr. Schiff is not cut from a different cloth, nor by a different pattern than the rest of humanity. Acting in our individual capacity, we look after our own interests, but in a collective sense we have not carried this interest far enough, and, consequently, we have such financial wizards as Mr. Schiff. Now, let us analyze the last sentence of the quotation from Banker Schiff's testimony to his brother bankers when the committee examined him. He said: "The majority should always rule and the minority should protect their rights as best they can." Now suppose we consider our own case - that is, the interests of the public - in the light of the statement of a king banker, which statement bears inference to 29 the smaller stockholders in corporations. There are 30,000 banks in this country. There may be 200,000 bankers. I do not know their exact number, but I know that there are approximately 94,000,000 of us. In the percentage of human beings the bankers are not equal to 1 per cent of the population. There is, on the average, perhaps not more than one banker to 2,000 other people. Suppose we should take Mr. Schiff at his word, and let the minority "protect their interests as best they can" and we, the people, take the power which we possess, - and the Constitution contemplates that we should exercise as a government, and Lincoln proposed, . . . namely . . . coin the people's national credit", . . . instead of letting the bankers coin it for their own selfish use. What would happen to Mr. Schiff and his brother bankers who control the Committee on Banking and Currency if we did that! . . . That is one of the questions that will be answered before this study ends" The Aldrich Plan Lest the purpose of my starting the original Money Trust probe be misconstrued, I here state that it was not for the purpose of discovering the Money Trust. Long before that time it was known by those who had carefully studied the problem that there was a money power combination that operated and controlled the country's finances and carried on its operations in a shameful manner. The purpose and actual effect of my original resolution was a flank move, to defeat the special interests in their attempt to fasten on the people of this country the so-called Aldrich Banking and Currency Plan for 50 years. This plan was an attempt on their part to make the greatest steal from the people that has ever been made. In the panic of 1903 I began taking notice of the operations of the larger banks. At that time, as far as I could see, there had been no attempt to form combinations in order to centralize deposits. Each banker seemed to be working out his separate business existence along that line, and at the same time getting all that he could in return. There were, however, banking associations which brought the bankers together, and in these meetings they discussed ways and means for their mutual advantage - even to the extent of maintaining sufficient influence over legislation. Ever since the Civil War, Congress has allowed the bankers to completely control financial legislation. The membership of the Finance Committee in the Senate and the Committee on Banking and Currency in the House, has been made up of bankers, their agents and attorneys. These committees have controlled the nature of bills to be reported, the extent of them, and the debates that were to be held on them when they were being considered in the Senate and the House. No one, not on the Committee, is recognized under the practice of the House as long as a member on the committee wishes recognition, and one of them is sure to hold the floor unless someone favorable to the committee has been arranged for. In this way the committees have been able to do as they pleased. 30 The men who have appointed the committees in the last 50 years have not had the clear and earnest viewpoint of our forefathers. On Tuesday, January 14th, 1794, the following resolution was introduced in the U. S. Senate: Quotation "A." - "Nor shall any person holding any office or stock in any institution in the nature of a bank, for issuing or discounting bills or notes payable to bearer or order, under the authority of the United States, be a member of either House whilst he holds such office or stock." It passed the Senate two days later, after being fought by the bankers, and amended at their instigation in order that they might be allowed to sit in Congress, but it still remained a protest to bankers controlling legislation in which they were personally interested. At the present time we possess a dulled and worn appreciation of the general fitness and consistency of these things, and we have surrendered all of our finances, including the actual control of legislation in Congress to the bankers, their agents and attorneys. At the earlier date above stated, when people were less commercial and more ethical than now , . . they feared to trust the bankers even as plain Members of Congress. We of this age allow them to absolutely control all of the committees in Congress that make the laws of finance. Some of the members of these committees belong to banking associations that lobby in Congress in order to secure action favorable to the bankers. Are we satisfied that the bankers to whom we pay enormous tributes from our very life's necessities, . . . should control financial legislation? . . . Shall the Senate and House continue to give the representatives in Congress who are supported by the financial usurers a monopoly of the committees that deal with this most important subject? . . . Shall the people supinely pay the constantly increasing usury, and still cheer their popularly elected representatives for permitting bankers to control the bills that are to be reported to the House, as well as the debates on them? . . . Are the people to have no hearing on the questions of banking, currency, and usury? On two different occasions within the last two years I have, by the introduction of resolutions, called the attention of Congress to the fact that no Senator or Representative should be a member of a committee that controls or influences legislation in which he has a personal interest, and especially that no banker should be on either of the committees controlling financial legislation. But Congress, notwithstanding such notice, has failed to act and goes right on filling up the committees with members who are personally financially interested in the legislation that their committees control, and even appointing such members chairmen of the committees. In 1893 the large Wall Street banks, and the large affiliating banks in other centers, determined to make some changes in the banking and currency laws, and especially in regard to the purchase of silver by the Government. They began by creating a stringency which we shall refer to later. It resulted in a general business and financial scare to all of the smaller banks and the business interests. It became a real panic which continued with its disastrous results for a 31 period of years. During that period the special interests squeezed many of the small banks and some large ones, and some of these, and many business concerns, were forced into bankruptcy. Time and time again before that the bankers had been able to secure many special favors from Congress. But even with all these to their advantage they had some sleepless nights during that panic. They went through an experience that gave them further suggestions as to what would be required in their interests in the way of legislation. Immediately they began to form powerful affiliations among themselves in order to further protect themselves against the disadvantages of panics. But instead of seeking safety for themselves and protection for the general public by means of a modification of the methods of the banking business, as a reward for the special favors that had been given to them by Congress, they did not consider for a moment the protection of the public, but sought diligently for a method, by which they could secure the privilege of fleecing the public whenever a panic should be in progress. That is, they would have panics, if they did occur, profitable to the favored bankers and disastrous to the public, and a panic may happen at any time under present conditions. As a matter of fact the bankers may cause a panic whenever the public seeks to enforce its rights. In the last twenty years the banking business has grown enormously. About 1898 the signs of affiliation between the larger and more powerful banks and trust companies began to multiply. It is doubtful if at that time there was any intention on the part of the active management of the banks to associate together for any but legitimate purposes. Their affiliation was due principally to the fact that the wily heads of the big business and speculative interests decided to buy in bank stocks with a view to controlling their deposits in order that they might possess the means with which to exploit the people. They were after the deposits, and the ownership of the bank stock was necessary if they were to accomplish their purpose, but, it was merely incidental. About the year 1900 there was some open talk of combinations being favored between the larger banks in New York City and some of the large trust companies in that and other cities. Steps were also taken to link with those interests the largest of the life insurance companies. That is why J. P. Morgan & Co. bought the control of a great life insurance company. Cash was coming in to the companies from the policyholders everywhere. The interests, of course, wished to control that. Combinations of various kinds rapidly increased to include all of the greater concerns in large cities as well as many of the concerns in smaller towns, and in many cases it included even those in the villages. The large operators do not enter extensively into this ownership of the small institutions. These are controlled through a mutuality of business interests. Employees are frequently given the control of the smaller concerns. One can easily understand why this same selfish purpose of making the biggest profits possible causes institutions, separately owned, to co-operate as completely as they do when the stock ownership is identically the same. 32 The consequence is that the capitalists and financiers of Wall Street who do their "High Finance" stunts and are known as "Big Business" now dominate the banking system. It requires a little patience for those not familiar with business methods generally, to understand the facts and their bearings as they are presented, but since we know that a knowledge of those things will make us more successful in a business way, make, our lives better, happier, and more intelligent, and require of us less hours of labor, and give us more equable returns for our labor, we should not fail to give a great deal of attention to the subject. If once convinced that it intimately concerns our daily existence, we will do so. We shall not take the time to review the scandals that grow out of the Wall Street control of the funds of the life insurance companies and the manipulation of the finances by insiders. All this manipulation is done in order to compel the liquidation of many solvent banks, and industrial as well as transportation companies. We already know that it has caused numerous suicides and other desperate acts on the part of the owners and managers. These things serve as examples of what occurs to those who dare to disobey the command of the financial kings. Many of the men at the head of, or managing big business interests possess the spirit of friendliness toward all the people of the world, but they, too, in many cases have been forced to fall into line. Neither verbal or written contract is necessary for the existence of a money trust. The power to punish without trial is a sufficient weapon in the hands of the money kings. The late J. Pierpont Morgan swore that he did not loan money on security, however perfect or valuable it might be, unless he knew the borrowers personally or had an individual knowledge that satisfied him. That was the substance of his statement before the Money Trust Committee in December, 1912. Mr. Morgan was the world's greatest banker. Many of the institutions that he controlled have had special privileges conferred upon them by the Government and yet this king of bankers, who was financially the most powerful in the world, proved by his testimony given under oath, that the institutions controlled by him and to which the public through its Congressmen (who are subservient to his and other special interests), have surrendered a sacred trust, - this man, by his statement proved that he was only partially performing the trust when he stated that he refused money to all who were not known to him - known, you will understand, by the law of selfish interest to be subservient to J. P. Morgan & Co. It mattered not how honest the applicants, or how much or how valuable their security. They had to be known to be subservient to that firm. If that is not a proof of partiality in the application and business administration of the law, and the trust reposed in banks, when we give them special privileges, - then, by the great heavens, what proof do we want? It shows that they have the power, and Banker Morgan did choose to exercise it. The others who were associated with him had to do the same thing as he, or he did not accept them as associates. Others who were associated with J. P. Morgan & Co. naturally followed the same practice. By that method it passed along, and with a 33 comparatively few exceptions there is favoritism from the dominant to the servient, and the rest of us are only goats. How easy it is to understand the Money Trust when we catch the spirit of Morgan's answer, and when we realize its resources we begin to understand the silent but no less effective force, which commands, without word or act to which we can point specifically and say, "This is the identified power." The refusal of a loan to those who would secure it because they were not favorably known to bow to the king banker was sufficient proof. Shall we, notwithstanding that fact, continue to allow the banks to control the finances, a power which the Constitution gives to the government only? Banks may properly conduct the financial transactions between the people and receive a reasonable compensation for the service, but should neither control the legislation nor the issue of money. Of course, no one who has given the subject proper study claims that there is an organized or even an unorganized association that can be specifically pointed to and named as the Money Trust but formal organization is not necessary to its potential existence. As a matter of fact its power is greater because it exists without organization. It gains its purpose by indirection more effectively than it could by direction It derives its greatest efficiency from the very fact that the business interests are aware of the existence of a power which can make or unmake them at its will. Silently and grimly, that power is exerted, and it is recognized and felt by all of the industrial interests of today. That is a condition, and while I do not spare my criticism of the system, I do not blame such men as Mr. Morgan was, nor do I blame any of the bankers, because they are doing the things that are quite natural for human beings, to do when opportunity is presented without limitations. For the sake of argument let us try to see as Mr. Morgan did and consider these facts from the viewpoint that he probably took. None of us will have the opportunity to do what he did in his time, because when we really understand we will not permit anyone to fleece us as J. P. Morgan & Co. and other bankers have fleeced us. Surely when we see how these bankers have impoverished us by selling to us, - at usury prices, - the credit that is supported by our own toil, we will demand the privilege of controlling that credit for ourselves. We are willing to pay the bankers for their actual services, and for the skill which they exercise in facilitating exchange that is incidental to the legitimate commerce of the country, but further than that we are not obligated. The king bankers put in motion, in 1907, a great scheme. They had gambled and speculated on Wall Street until so many watered stocks and bonds had been manufactured on speculation, that numberless speculators, big and small, sprang up all over the country and stocks, bonds, and credits were pyramided and 34 re-pyramided, and re-re-pyramided. Of course such a condition could not last and a crash was inevitable, because it was not natural for such gambling to continue. The largest crop ever grown, up to that time, was harvested in 1907 and all of the natural conditions were favorable to the greatest prosperity, - but speculation, unnatural and false had expanded to a point where it offset all of the natural advantages. The king bankers knew the conditions and informed the most favored of their friends what was to come. There was to be a panic in the fail of 1907 that would be advertised as the result of our bad banking and currency laws. They are bad, we admit, but it was the general speculation and the manipulations of the king bankers that was directly responsible for the panic. The bad laws were merely used as an excuse for covering their acts. But while that is the truth, it does not settle the question. We must make laws to fit the people, for we cannot make people to fit the laws. Ever since civilization began, that has been tried without success. The so-called "trust busters," who generally have been former attorneys for the trusts, do make a pretense of trying it, but they often secure their government retainers through politicians subservient to the trusts, and educated as they are in the interests of the trusts, we cannot expect much from their efforts. None of their prosecutions have resulted in lessening the cost of living. It is rather strange that anyone would believe that the cost of living will be lessened by the prosecution of the trusts. Prosecutions will serve only to establish the majesty of the law. They will not remedy the high cost of living. We have already stated that an enormous amount of watered stock, bonds and securities were issued prior to 1907. The old laws had aided the trusts in the manufacture of these, but at that time they decided that they must have new laws favorable to their operations if they were to aggrandize and monetize their securities as they wished. They had indeed secured great holdings - the largest ever. This 1907 panic was to be the means by which the people were to be forced to enact new laws, guaranteeing the full face-value of the watered stocks and bonds. That guarantee would make the people pay the interest and dividends on them forever. By this method the greatest steal ever contemplated since tbe beginning of humanity would be accomplished. Thus, in 1907, when Nature had responded most bountifully and, when there was due to us the greatest prosperity, we were given a panic as the initial move for the proposed steal, - the Aldrich Plan That portion of the press subsidized by the Money Trust blamed the panic to the bad banking and currency laws. A majority of the independent press unwittingly fell into the trap, and helped the interests by also blaming the laws. The failure of the latter to express the truth about it is accountable to the fact that it requires more study to understand the banking and currency laws than most editors have 35 the time, or opportunity to give on short notice. All, except the few who had been prepared for' the panic, suffered more or less loss and struck back at random without really knowing what or who to blame or hit at. That is what the special interests wanted the