Full text of "Triumphant plutocracy; the story of American public life from 1870 to 1920"

TRIUMPHANT PLUTOCRACY The Story or American Public Life from 1870 to 1920 By R. F. PETTIGREW Formerly United States Senator from South Dakota Printed by THE ACADEMY PRESS 112 Fourth Avenue, New York City FOREWORD AMERICAN PUBLIC LIFE The American people should know the truth about" 1 American public life. They have been lied to so much and hoodwinked so often that it would seem only fair for them to have at least one straight-from-the- shoulder statement concerning this government "of the people, by the people and for the people," about whose inner workings the people know almost nothing. The common people of the United States, like the same class of people in every other country, mean well, but they are ill-informed. Floundering about in their ignorance, they are tricked and robbed by those who have the inside information and who therefore know how to take advantage of every turn in the wheel of fortune. The people voted for Roosevelt be cause he talked of "trust-busting" at the same time that he was sanctioning the purchase of the Tennessee Coal and Iron Company by the Steel Trust. They sup ported Wilson "because he kept us out of war" at the same time that Wilson was making preparations to enter the war. The rulers can negotiate "secret treaties" at home and abroad. The people, knowing nothing of either the theory or the practice of secret diplomacy, commit all sorts of follies for which they themselves must later foot the bill. At the present moment the American people are being taught "Americanism" taught by the same gentry who are making away with billions of dollars, sometimes "legally" and sometimes without any sanc tion in the law. The most prominent among the leaders of the Amer icanization campaign were the most prominent among war profiteers. They are the owners of resources and industries the owners of America. It is from them that the preparedness agitation came in 1915 and 1916, and it is from them that the new preparedness agitation is coming now. Here is a newspaper story in the New York Herald (November 7, 1920) which illustrates the point. The story, evidently inspired by the War Department, is; devoted to a description of certain big guns and cer tain new forms of tanks that the government is at the present time busy manufacturing. The country was caught napping once, says the writer, but the War Department is going to be sure that the same- thing does not happen again. Therefore, it is build ing up its machinery now, while the country is stil at peace. In this work the War Department is as sisted "by some of the leading industrial spirits of the country, who are keeping up the same enthusiastic devotion to the service of their country they displayed, in the war. A little army of dollar-a-year men, headed by Benedict Crowell, former Assistant Secretary of War, has mobilized itself under the name of Army Ordnance Association and is giving its valuable time: to the country without costing the government a single cent." Who are the members of this "little army" of pa triots? The Herald gives the answer in full. Besides Mr. Crowell, there are, in the Army Ordnance Asso ciation, William Wheeler Coleman, president of the Bucyrus Company of Milwaukee, Wis. ; Charles Eliot Warren, past president of the American Bankers As sociation; Ralph Crews, of the law firm of Sherman & Sterling, New York City; Guy Eastman Tripp, chair man of the board of directors of the Westinghouse Company; Samuel McRoberts, of the National City Bank of New York; Waldo Calvin Bryant, president of the Bryant Electric Company; Frank Augustus Scott, former chairman of the War Industries Board; Robert P. Lamont, president of the American Steel Foundries of Chicago, and C. L. Harrison, of the First National Bank of Cincinnati. What do these patriotic business men hope to gain by their devotion to the preparedness program of the War Department? The answer appears later in the same articles: "It is this desire to keep abreast of the world s performances in ordnance that has prompted the War Department to ask for an increased appropriation next year. The department s appropria tion last year was $377,246,944. The estimates for this year call for an appropriation of approximately $814,000,000." The difference, or $435,000,000, repre sents the value of contracts that will go to the business interests of the United States. Again, bankers, lawyers, manufacturers and busi ness men are going to save the country not by keep ing us out of war, but by getting ready for the next war. It is these men who dominate the life and thought as well as the industries . of these United States, and it is just such men that have been in control of the United States ever since I entered the Senate thirty years ago. It is fifty years since I began to take an interest in public affairs. During those years I have been par ticipating, more or less actively, in public life first as a government surveyor, then as a member of the Legislature of Dakota; as a member of the House of Representatives and, finally, as a member of the United States Senate. Since 1880 I have known the important men in both the Republican and Democratic parties ; I have known the members of the diplomatic corps; I have known personally the last ten presidents of the United States, and I have known personally the lead ing business men who backed the political parties and who made and unmade the presidents. For half a century I have known public men and have been on the inside of business and politics. Through all of that time I have lived and worked with the rulers of America. When I entered the arena of public affairs in 1870, the United States, with a population of thirty-eight millions, was just recovering from the effects of the Civil War. The economic life of the old slave-holding South lay in ruins. Even in the North, the Panic of 1873 swept over the business world, taking its toll i:i commercial failures and unemployment and an increase in the number of tenant farmers. The policy of send ing carpet-bagging rascals into the embittered Sout i hindered reconciliation, and sectional differences pre vented any effective co-operation between the two por tions of the country. The result was a heavy loss i:i productive power and in political position. Throug i this period, the United States was an inconsequential factor in international affairs. The transformation from that day to this is com plete. With three times the population; with .sectior- alism practically eliminated; with the South recoverei economically and the economic power of the Norti vastly increased ; with more wealth than any other five nations of the world combined; with the credit of the world in her hands; with large undeveloped, or only slightly developed resources ; with a unified population and a new idea of world importance, the United States stands as probably the richest and most influential among the great nations. I witnessed the momentous changes and participated in them. While they were occurring I saw something else that filled me with dread. I saw the government of the United States enter into a struggle with the trusts, the railroads and the banks, and I watched while the business forces won the contest. I saw the forms of republican government decay through disuse, and I saw them betrayed by the very men who were sworn to preserve and uphold them. I saw the empire of business, with its innumerable ramifications, grow up around and above the .structure of government. I watched the power over public affairs shift from the weakened structure of republican political machinery 8 to the vigorous new business empire. Strong men who saw what was occurring no longer went into politics. Instead, they entered the field of industry, and with them the seat of the government of the United States was shifted from Washington to Wall Street. With this shift, there disappeared from active public life those principles of republican government that I had learned to believe were the means of safeguarding liberty. After the authority over public affairs had been transferred to the men of business, I saw the machinery of business pass from the hands of indi viduals into the hands of corporations artificial per sons created in the imagination of lawyers, and given efficacy by the sanction of the courts and of the law. W T hen I turned to the reading of American history, I discovered that these things had been going on from the beginnings of our government, that they had grown up with it, and were an essential part of its structure. From surprise and disgust I turned to anal ysis and reason and, for the past twenty years, I have been watching the public life of the United States with an understanding mind. For a long time I have known what was going on in the United States. Today I think that I know why it is going on. When I look back over the half century that has passed since I first entered public life, I can hardly realize that the America, which I knew and believed in as a young man in the twenties, could have changed so completely in so short a time. Even when I know the reason for the change, it is hard to accept it as a reality. Many of the public men who have lived and worked in the United States during the past century have writ ten their impressions of public affairs. Bentpn, Elaine, Grant and Sherman discussed the public life of the middle of the last century. Since then, there have been many autobiographies and memoirs. I have read these books carefully, and it seems to me that not one of the writers is at the same time a student and a realist. 9 First of all, they have written about politics, with very little or no attention to the economic forces that were shaping politics. In the second place, too many of them have written the agreeable things and left the disagreeable ones unsaid. In the third place, they have written what they believed should have happened rather than what actually did happen. Fourth, and by 1 far the most important, each of these men has written I as a member of a ruling class, pleased with himself, i and satisfied that rule by his class was the best thing j for the community. The pictures that these men give are like the decisions of our courts built of prece dents rather than of realities. It is my ambition to tell my fellow-countrymen what has happened during the half century that I have known public life. I know what went on, because 1 saw it. I want others to have the same knowledge During my public career I have received very definite impressions, and I am anxious to pass those impres sions on to others. I want to do this because I believe that my country is in danger; I believe that the liber ties of the American people are already well-nigh de stroyed; I believe that we are moving forward to i. crisis of immense significance to the future of the American people, and the ideas and ideals for whict the United States has stood before the world. We are; far along on the road to empire, and we are traveling- faster towards that goal than any nation in history ever traveled. It is with that purpose and in that spirit that I have written this book, and it is in that spirit that I ask them to consider and ponder what I have said there. 10 1. LAND GRABBING My first struggle with the business interests, after I entered the Senate in 1889, came over the question of land-grabbing. At that time the Federal Government still owned millions of acres of valuable timber, mineral and agricultural land that might easily have been util ized for public advantage instead of for private gain. The attorneys and other representatives that the vested interests maintained in Washington were busy grabbing this land. I set myself to save it for the people. I was thoroughly familiar with the public Land Laws of the United States as I had been a practicing lawyer before the Land Department, a surveyor on the public domain, and beside that I had planted a timber claim with white ash trees which stand today. I, therefore, sought appointment upon the Senate Committee on Public Lands, of which Preston B. Plumb, of Kansas, was Chairman. In that position I had an excellent op portunity to see land grabbing from the inside. The House passed a bill to repeal the timber culture law "and for other purposes" in February, 1890. When the bill reached the Senate it was referred to the Com mittee on Public Lands, and Chairman Plumb appointed Senator Walthall of Mississippi and me as a sub-com mittee to consider the bill. I gave the matter very careful attention and, after some weeks of study and work, I reported the bill to the Senate in such a form that it involved a complete revision of the Federal land laws. The bill, containing nineteen sections, finally passed the Senate on the 16th of September, 1890. Immediately, upon its passage, a conference was re quested and Senators Plumb, Walthall and Pettigrew were appointed as Conference Committee on the part of the Senate. In the House the bill was referred to the Committee on Public Lands, which reported it back, early in the next session of Congress, agreeing to the Conference asked for by the Senate and appoint- 11 ing three conferees, Payson of Illinois, Holman of Indi ana and Pickler of South Dakota. Plumb did not act with the Conference Committee. Walthall of Missis sippi and myself took full charge of the work and, after many conferences, we finally agreed upon and did report to each house a bill just as the Senate had passed it, with five additional sections, making twenty- four in all. The 24th section was as follows : "SEC. 24, p. 1103, 51st CONGRESS, MARCH 3, 1891. "That the President of the United States may from time to time set apart and reserve, in any State or Territory having public land bearing forests in any part of the public lands wholly or in part covered with timber or undergrowth, whether of commercial value or not as public reservations and the President shall by public proclamation declare the establishment of such reservations and the limits thereof." I give this section in full, first, because it resulted in departure in public policy that was highly advanta geous to the people of the United States, and second, because it led to one of the most bitterly fought par liamentary struggles in which I have ever participated. Section 24 was placed in the bill at my suggestion to take the place of the timber culture law, which never had produced any timber. I had offered this section in the Senate Committee on Public Lands, but the West ern Senators were opposed to "locking up" the country in forest reservations. In conference, while I had some difficulty, I secured an agreement which included this section in the bill. Nothing was done under Section 24 until after Cleve land commenced his second term and then he, as Presi dent, appointed a commission of eastern people to go out into the Western country Dakota, Wyoming, Colorado and establish the forest reservations. These men rode about the country in a Pullman car, and pre scribed the boundaries of forest reservations without any discriminating judgment. For example, they established the reservation of Black Hills in South Da kota, and embraced within its boundaries the city of 12 Deadwood, and the towns of Leed, Custer and Hill City, which contained thousands of people who were mining, home-building and getting the timber necessary for these activities from the surrounding forests. Once these reservations were established it became impos sible to cut any timber upon them; consequently the people who had made their homes in the reserved area were practically compelled to move. Since no law had been passed for the administration of these newly created reserves, the country was com pletely locked up. No new people could go in and settle, and those already there found themselves re stricted on every hand. The result was a general dis satisfaction with the whole policy of forest reserva tions. I realized that, unless some change was made, the whole policy would be discredited, and therefore I se cured legislation suspending reservations already lo cated until proper legislation could be secured for their administration. Finally, at my request, Walcott, who was then at the head of the Geological Survey, prepared an amend ment to the Sundry Civil Appropriation Bill, which I offered in the Senate, providing for the administration of these forests. After this law for administration was enacted, the Secretary of the Interior informed me that he would make the boundaries of the Black Hills Forest Reservation whatever I might recommend. I went out to the Black Hills, held meetings of the people, and ex plained to them the purpose of the Forest Reservation. In every instance they passed resolutions in favor of being embraced with the Forest Reservation as admin istered under the new laws. By this direct appeal to the people most intimately concerned I was able to en large the reservation by over 200,000 acres. When I returned to Washington, the Secretary of the Interior asked me to suggest such rules and regulations as would best enable his Department to administer the forest reservations laws. In accordance with this re- 13 quest I wrote out the rules and regulations which were afterwards adopted by him. I remember in one of the regulations that I provided for sowing the Black Hills spruce seed upon the snow in all the open parks and denuded places, so that when the snow melted these seeds would sink down into the moist ground and immediately sprout and grow; and today, there are many thousands more acres of forest in the Black Hills reservations than there were wher the law was enacted. Thus far matters had gone very nicely. I had had a hard fight to get the policy of forest reservation adopted and the reservations themselves established Now came the real fight to hold them for the people In the amendment which was added to the Sundry Civil Appropriation Bill I inserted a provision that per mitted any settler, who was embraced within a Foresl Reservation, to exchange his land, acre by acre, foi other government land, outside of the reservation Such a provision enabled settlers who had taken lane before the establishment of reservations to take up a new quarter section in case they did not care to live under the reservation regulations. The Conference Committee of the two houses thai considered the Sundry Civil Bill changed the wording i of this section in such a way that the land grant rail- i roads, which had received in all nearly two hundred \ million acres of land, could exchange their land, if em braced within a forest reservation, for the very best land the Government had remaining on the public do main outside of the reservation. Allison of Iowa was Chairman on the part of the Senate and Joe Cannon of Illinois, Chairman on the part of the House. The Con ference report came to the Senate the day before the end of the session. Therefore it was not printed, but was rushed through after having been read hurriedly by the clerk. I listened to the reading, but I did not no tice this change of wording in my amendment, and so this monstrous proposition became a law. 14 Of course, the conferees knew what they were doing when they slipped through this provision. Under it, the Interior Department ruled that the land grant rail roads could exchange their odd sections, embraced within a forest reservation, for the best remaining acres of the public domain. The right to make this exchange was worth at least fifty millions of dollars to the land grant railroads. I did not discover this change, made by the Confer ence Committee, until I learned that the Department of the Interior was permitting the railroads to make these exchanges. As soon as I discovered this, I looked up the law and found what an enormous fraud had been practiced through the cunning of Senator Allison of Iowa, Chairman of the Committee on Appropriations, and Joe Cannon, Representative from Illinois, a banker and lawyer, and Chairman of the Committee on Appro priations in the House. Nearly ten years had dragged along, from the time I began the fight in favor of forest reservations, until this fraud was perpetuated on the American people by these two representatives of busi ness. In order to meet the situation I presented an amend ment to the Sundry Civil Bill on May 31, 1900 (56th Congress, 1st Session, pages 6289 to 6298 of the Con gressional Record), which reads as follows: "And said superintendents, assistant inspectors, super visors and rangers shall, under the direction of the Secretary of the Interior, examine all lands within the boundaries of any forest reservation that belong to any land-grant railroad company, and have not heretofore been sold in good faith for a valuable consideration, and report to the Secretary the character and value of said land, and pending such examina tion and report none of said lands shall be exchanged for other lands outside of said reservation." It may be well to state at this point that the Central and Union Pacific Railroad had received grants by an Act of Congress, 20 miles wide, from the Missouri River on the west boundary of the State of Iowa, straight across the continent to the Pacific Ocean, 15 through the length of the States of Nebraska, Wyo ming, Utah, Nevada, and California. The road has th 3 odd sections on a strip 10 miles wide on each side of the tracks. The Northern Pacific Road received a grant of land 40 miles in width from some point in the State of Minnesota, clear through to the Pacific Ocean. This grant extended through the States of Minnesota, North Dakota, Montana, Idaho and Washington, and the area granted included the odd sections throughout this entire region. These grants embraced the good and the bad land alike. Of necessity they included large areas on the tops of the Rocky Mountains and the Cas cade Range and a great deal of desert land. Whether by design or not, when the forest reservations wen; created, they embraced, indiscriminately, forested and non-forested districts. By ,some chance they also em braced large areas of desert land. These deserts were probably embraced intentionally so that the railroads could exchange their odd sections of worthless deser ; land for lands of great value outside the reservation. After I had presented the amendment just referred to, I made a statement of these facts, after which the following significant debate took place. I quote it in order to show where certain Senators lined up when r-; came to an issue between private interest and the pub lic welfare. (Cong. Record, May 31, 1900, 1st session. 56th Congress, p. 6288.) Mr. PETTIGREW: "Mr. President, the amendment I propose is a provision for the protection and admin istration of forest reservation. Three years ago in an appropriation bill we provided for the protection and administration of these reservations, and provided that any actual and bona-fide settler who had taken a claim within a forest reservation afterwards created could exchange his land if he desired to do so, for a like area of the public domain. It was the intention of the law to allow a settler whose land was embraced in any for est reservation to exchange his land, if he desired to do so, for lands outside of the reservations, acre for acre. 16 "But certain words were inserted under which the Department has decided that a land-grant railroad can exchange the worthless lands lands from which the timber has all been cut, tops of mountains, the inacces sible and snow-capped peaks of the Rockies and Sierra Nevadas for the best land the Government has, acre for acre. So they have swapped lands on the Cascade Range, which are covered forever with ice and snow, not worth a tenth of a cent an acre, for lands worth from six to ten dollars in the valleys of Washington and Oregon and Idaho and Montana, thus depriving the settlers of a chance to secure these lands, besides en larging the grants of the railroads to that extent. "Now, my amendment simply provides that these lands shall be inspected and examined by the officers who have charge of the reservations, and they shall re port to the Secretary the character of the lands that belong to these companies, .so that in the future we can make a proper adjustment not an adjustment by which they shall receive a thousand times more *than which they surrender and that while the appraise ment is going on no more exchanges shall be made. That is all that the amendment aims to accomplish, and it is one in the interest of the public beyond all questions, suspending the operation of a law which Congress would never have passed if it had been dis cussed." Mr. ALLISON : "I wish to say that this amendment, as it appears to me, is general legislation. Certainly on the statement made by the Senator from South Da kota, it changes the existing law. I hope he will not press it on this bill, because if he does we shall be obliged to make the point of order that it is proposed general legislation." Mr. PETTIGREW: "I wish to say that I do not be lieve it is subject to the point of order, because it pre scribes the duties of these officers who are provided for and the method of the expenditure of the appropri ation now in the bill. Therefore, I do not believe it is 17 subject to the point of order. It seems to me if it is possible to insert the amendment we ought to do it and protect the Government and the people of this country against the execution of a law which we never would have passed if we had known what it contained." Mr. PETTIGREW : "I should like to ask the chairman of the Committee on Appropriations if the Secretary of the Interior did not think the law should be entirely re pealed?" Mr. ALLISON: "The Secretary did." Mr. PETTIGREW: "Did he not think there were great frauds being practiced under it ?" Mr. ALLISON: "I have no doubt that is all true, but that is a subject we cannot deal with now." (The amendment is read again.) Mr. PENROSE: "I make the point of order that this is general legislation and contrary to the rule." THE PRESIDENT (protempore) : "The Chair has overruled that point of order. It has already been made. The question is on agreeing to the amendment." "The amendment was agreed to." Allison of Iowa, Tom Carter of Montana, Chandler of New Hampshire, Platt of Connecticut, Aldrich of Rhode Island, Penrose of Pennsylvania, Walcott of Colorado, Hawley of Connecticut, all joined in the fight against me to see that the land-grant railroads were given this vast graft at the expense of the people of the United States and against the public welfare. This is but a typical case. The lawyers in the Senate always lined up against the people of the United States and in favor of the railroads and the other predatory interests who are the real government of the United States. This Senate debate is significant because it shows that ras cality, graft, and public plunder are not political ques tions, especially in so far as the Senate of the United States is concerned. Observe that Allison of Iowa, who had inserted the amendment making possible the exchange of these rail road lands, was among the first to attack my amend- 18 ment and to insist that it should not go into the bill. Observe further that Tom Carter, Chairman of the Re publican National Committee, took the same side. It was he who figured in the scandalous affair during Harriman s second campaign for election, at which time he collected from Cramp, the shipbuilder, $400,- 000 and told Cramp where the money was to be ex pended. When Tom Carter died he left a large fortune. This same debate was participated in by Bill Chandler of New Hampshire, Stewart of Nevada and finally by Penrose of Pennsylvnia, who arose and for the sec ond time raised the point of order against my amend ment. Penrose is still in public life and he is still a faithful servant and representative of the great preda tory interests. He has never been a representative of the people of Pennyslvania or of the United States. Despite all of this opposition my amendment was adopted without a roll-call. The reason is plain. Neither these men nor their backers desired to have the amend ment become a law, but the scandal connected with the exchange of the railroad lands had gained such publicity, and the amendment was so clearly in the public interest that they did not dare to kill it openly. Besides, this was an amendment to the Sundry Civil Bill and could be changed in conference, and the con ference report forced through the Senate on the last day of the session. Allison of Iowa was called "Pussy foot Allison" by his fellow Senators because of his cun ning, his unscrupulous rascality, and his suavity, and he could be relied upon to throw out of the bill as re ported from the conference committee anything that threatened property interests. So the bill passed the Senate and went to conference. Allison was chairman of the conference on the part of the Senate and Joe Cannon on the part of the House. The conference struck out my amendment, adopted by the Senate, and inserted in its place the following: "That *11 selections of Land made in lieu of a tract cov ered by m unperfected bona-fide claim or by a patent in- 19 eluded within a public forest reservation as provided in the Act of June 4, 1897, shall be confined to vacant surveyed non-mineral public lands which are subject to Homestead entry not exceeding in area the tract covered by such claim or patent." The conference simply struck out the Senate amend ment and inserted the original clause that they had placed in the Sundry Civil Bill of 1897 and under which the fraudulent exchange had taken place. The change would have permitted the railroads to continue the ex change of their worthless lands for the best of the government land and thus to plunder the public domain. The Conference report came up in the Senate on the day before adjournment. I was watching to see what had been done with my amendment, for I knew Allison and Cannon were but paid attorneys of the railroads. When the amendment was read (56th Congress, 1st Session, Congressional Rec., p. 6690) : Mr. PETTIGREW: "I should like to understand the paragraph in relation to non-mineral lands. As I un derstand it, as read from the Secretary s desk, it per mits a continued exchange by the land-grant railroad companies of the worthless lands in the forest reserva tions for the best land the Government has. Is that correct ?" Mr. ALLISON: "I do not so understand it. The amendment provides for the exchange of surveyed lands only, and not of unsurveyed lands/ Mr. PETTIGREW: "But it allows the exchange?" Mr. ALLISON : It allows the exchange of surveyed lands." Mr. PETTIGREW : "Mr. President, this conference report provides that lands where a railroad company has cut off all the timber or the land on the snow capped peaks of the mountains, if they are within a forest reservation, can be exchanged for the best lands the Government owns, acre for acre, for timber lands. Hundreds of thousands of acres have already been ex changed, and yet, although the Senate placed upon this 20 bill an amendment which would stop that practice, the conference committee brings in a report to continue it." I wish to call particular attention to the statements made by Allison and Wolcott, that only surveyed land could be exchanged. This statement is specifically con tradicted by the wording of their own amendment. The falsity of the statement was well known to them, yet they made it for the purpose of deceiving the Senate. A number of the faithful friends of the plutocrats distinguished themselves signally in this debate. Among them were Senators Wolcott of Colorado and Hawley of Connecticut. Senator Wolcott, who came into the Senate without a dollar, retired from that body with a large fortune. He was always eager to get into the Record as having produced laughter on the part of the Senators. He considered his effort in the interest of the robbery of the public domain particularly worthy of credit. Old Hawley of Connecticut was always a champion of the interests. As long as I know him he was men tally incapacitated from comprehending anything ex cept the interests of the big business groups with which he always acted. He had an intellect like the soil of Connecticut, so poor by nature that it could not be exhausted by cultivation. The amendment, as modified by the Committee on Conference was finally agreed to, because if we did not agree to the Senate Civil Sundry Bill with this amend ment in it, an extra session would have been necessary. Thus the fraud was perpetuated, and the continued grabbing of public lands made possible. The frauds thus deliberately ratified by Congress after all the facts were known caused me to wonder what forces were in control of the Government, and convinced me that the lawyers who composed two- thirds of both Houses of Congress were but the paid attorneys of the exploiters of the American people, and that both political parties were but the tools in the 21 hands of big business that were used to plunder the American people. The frauds begun under Cleveland, a Democratic President, were enlarged and completed under McKinley, a Republican President. Millions o:: acres of forest reservation were established in Mon tana, all within the grant of the Northern Pacific Rail road, where there was no timber or forests, only a little scrub pine that never was and never will be of any value for lumber or any kind of forest products, and that was done so that the Northern Pacific Railroad could exchange its odd sections of worthless desert for scrip, acre for acre, and this scrip sells for from $8 to $10 per acre, and can be located on any land the Government owns anywhere within our broad domain, and the desert for which this scrip was exchanged was not and is not worth ten cents per acre. This is the story of one small event in the great drama of American public life that had been unfolding all around me. I have told it in detail because it shows, as well as anything that I ever learned, the fate thai; lay in wait for any measure aimed to promote the pub lic welfare. When I began this fight for the enactment, of forest legislation, I believed that we were enjoying a system of popular government in the United States. By the time the fight was ended, I understood that the-, country was being run by plunderers in the interest of capital. 22 II. THE LAND FOR THE PEOPLE Powerful interests were out to plunder the public domain. I had felt their grip. They were shrewdly advised. I had faced their spokesman in the Senate and the House. They were sinister. Many a man, under my eyes, had tried to thwart them, and not one such had remained an enemy of the vested interests and at the same time continued in public life. Never theless, I went straight ahead, trying to save the land for the people. I knew how enormously rich was the public domain; I had an idea of its possibilities. I wanted to have it used in the future, not for the enrich ment of the few, but for the well being of the many. In order to protect the public in their .sovereign rights over the remainder of the public domain, I worked out what I believed was a feasible plan for keeping the public domain in the hands of the public. After I had secured the forest legislation and the pas sage of the law administering forests, I introduced the following bill in the Senate on March 22, 1898 (55th Congress, 2nd Session) : A BILL To preserve the public lands for the people. Be it enacted by the Senate and House of Repre sentatives of the United States of America, in Congress assembled, That the public lands of the United States, except reser vations, be and they are hereby donated to the States and Territories in which they may be located on the sole con dition that all such public lands shall bo held in perpetual ownership by such States and Territories to be used by the people residing therein free of rent under such regula tions as may be prescribed by the legislatures of such States and Territories each for itself. This bill had three purposes: 1. To make use and not ownership the criterion in the distribution of nature s gifts to individual citizens. 2. To keep the title to the public domain, including agricultural land, mineral land, timber land, water- 23 power, and all other natural gifts, perpetually in the whole people, and thus to prevent any greater quanti ties from getting into the grip of the few. 3. To localize control over the administration of the lands, so as to bring the problem closer to the people. Could this first step be taken, I believed that we should be in a position to go forward with a general program for the conservation of all resources. The bill was referred to the Committee on Public Lands, of which I was a member, and to the members of that committee, individually and collectively, and on the floor of the Senate, I presented my arguments. In support of my proposition that the public domain should be leased but never sold, I stated that the pub lic domain in my own state amounted to 20,000,000 acres of grazing land. Then I showed that if these lands were conveyed to the State of South Dakota, with the privilege of leasing, they could be leased to cattlemen for ten cents an acre, which would produce a revenue of $2,000,000 a year. Then I showed that this money derived from farm leases could be used to build great reservoirs on the heads of all streams and store the flood-water, and thus irrigate and make productive large areas of this semi-arid land. In my own state, the opportunities for irrigation by means of artesian wells were unusual. I pointed out to the Senate that almost anywhere in the middle half of the state the artesian basin could be tapped at depths varying from 300 to 2,000 feet, each well releasing a flow almost marvelous in quantity. Many of these wells exhibit a pressure strong enough to drive heavy machinery, and from most of them water could be elevated 30 or 40 feet into reservoirs by the force of the head behind the artesian supply. Nature had thus made provision for irrigation on an extended scale in South Dakota, and all that was needed was the money with which to provide for the distribution of the water. I called the attention of the Senate to the fact that Dakota land was only one part of the public domain, 24 and that the Dakota problem was only one aspect of the whole problem of conservation. I showed them that the United States had 500,000,000 acres of arid and semi-arid land, large areas of which could be irri gated to advantage, either through stream conserva tion or through the sinking of artesian wells. Furthermore, I showed that the Government, through its control of the lakes and streams of the country, had an opportunity to adopt constructive re lief measures designed to meet the recurring floods and droughts in the lower reaches of the rivers. Many of the streams are navigable. Successful navigation depends on the maintenance of a steady flow of water. Many were used for the generation of power. Again, there is a need to conserve the spring surplus to cover the needs of the late summer. Each spring this water, so sorely needed later, is allowed to run off from the land, not only wasting the .supply but, through floods, overflowing the banks and destroying temporarily or permanently large areas of fertile and cultivated land. For the purpose of preventing this destruction, par ticularly along the Mississippi, Congress had for many years appropriated money for the construction of dykes and levees, under the theory that such work was for the benefit of commerce. Here was a twofold prob lem: Millions of acres of arid land, on the one hand, required only water to make them produce splendid crops. On the other hand, the interests of commerce, of power development and of the dwellers along .some of the larger rivers, demanded an intelligent regulation of stream flow. It was estimated at that time by the Government authorities that 72,000,000 acres of land could be thus reclaimed and made to produce crops sufficient to sup port 15,000,000 people. The benefit that commerce, industry and agriculture would derive from such a plan would be incalculable. Therefore, I moved an appro priation of from one to two hundred million dollars to begin the building of such reservoirs as were most ur- 25 gently needed and the establishment of irrigation proj ects in the districts that would yield the most imme diate results. I further showed that if the storm water was all stored in these reservoirs, it would reduce the floods on the great rivers the Missouri and the Mississippi and obviate the necessity of building embankments to reclaim the lands heretofore flooded by these great rivers. Thus, the leasing of the land held the title for all the people, while it made the land available for such as were able to utilize it. For my part, I stated that I would prefer to have Congress turn over its arid and semi-arid land, lying within its boundaries, to the State of South Dakota, because I believed the problem would be practically and honestly worked out to the great advantage of the people of that state. The same thing I insisted was true of Idaho, of Montana, of Wyoming, of Colorado, of Nevada, of Utah, New Mexico, Arizona, Western Kansas, Western Nebraska and North Dakota. I in sisted that the nation could not afford longer to neglect this great opportunity for material advancement, which I considered of fully as much importance, if not of more importance, to the future greatness and pros perity of this country than the clearing out of harbors along the small streams of the coast, or even the devel opment of the great harbors themselves. The arguments fell on deaf ears. These questions arose during the days following the Spanish War and preceding the conquest of the Philippines. We had started upon a career of conquest rather than one of internal improvement. The Administration, backed by many of the people, believed that it was of great benefit to this country that we should annex 10,000,000 people in the Philippines. Instead of spending hun dreds of millions in conquering the Philippines, it would have been far better economy and better busi ness judgment to spend it in reclaiming the arid lands of the west. 26 At the time that I presented these arguments to the Senate, I considered them weighty. I consider them weighty today. I believe that they represented the only statesmanlike approach to the problem of resource conservation and that they suggested a line of action that might have been followed to the advantage of the people of the United States. Yet I was unable to per suade the committee to report the bill back to the Sen ate in any form. There was no question of choosing between two poli cies. The committee had no policy on this subject. On the subject of the public domain they had only one conclusion that the only way to make a state or terri tory prosperous was to get the title of the public domain put of the Government and into the hands of some private interest, by selling it, or giving it away, or doing anything to get rid of it. There was not a single member of the committee on public lands that was in favor of the sovereign owner ship of the natural resources. They wanted to deed not only the land, but the minerals underneath the land, and also to convey the water power so that these utilities, of no value except that which the community gave them, could be used to enrich individuals and ex ploit the whole population. Everyone was opposed to public utilities being used for any other purposes than that of enriching individuals, and corporations were being rapidly formed for the purpose of more thor oughly performing this work of exploitation. Two-thirds of both houses were lawyers, and they believed that the rights of property, no matter how acquired, were the only sacred thing in connection with humanity, and the only legitimate subjects for the consideration of a well-ordered legislative chamber in an intelligently directed state. The same point of view has prevailed ever .since, and therefore no policy of re claiming and utilizing the public domain for the benefit of the people of the United States has ever been adopted. Instead, the 65th Congress, at its second 27 session, passed the infamous Shield s Water Power Bill. The natural resources of the United States, a hun dred years ago, were the richest possessed by any mod ern nation. Like the air and the sunlight, they existed in almost limitless abundance. But the "land-hog," in his multitude of corporate forms, came upon the scene and today the timber (except 170,000,000 of acres em braced within the forest reservations), coal, copper, iron and oil that once belonged to the American people are in the hands of a few very rich men who, with their agents and attorneys and hangers-on, administer these free natural gifts for their own profit. At the present moment, the one great resource remaining in the hands of the whole people the "white coal" of our streams and rivers is being gobbled up by the public utility corporations, which plan to charge four prices for a commodity that should go to the people at its cost of production. I made my fight in the land because it was so basic and so important from the point of view of economic strategy; because it was so rich; because, by holding and using it for their common advantage, the Ameri can people might have remained free; because this same land, in the hands of a small and unscrupulous ruling caste, will not only enable the members of that caste to live parasitically upon the labor of the remain der of the community, but will give them the right to decide who among the citizens of the United States shall be able to earn a living and who shall be con demned to slow starvation. I lost my fight on the land because every branch of the government machinery was manned by the agents and attorneys of the interests which were busy grab bing the public domain; because, through their control of the press, they kept the public in ignorance of the things that were really transpiring, and because the people, lulled by soft words such as "liberty" and "con stitutional rights," were busily pursuing their daily 28 occupations, secure in the belief that the Government would protect them. So I lost the fight because those who wanted the land were keen and powerful, though few in number: while the many, from whom the few stole it, were basking in the belief that they were citi zens of a "free country." 29 III. BANKS AND BANKERS My life in the West taught me the power of the land- grabbers. My experience in the East gave me an in sight into the power of the banker. The land-grabber cornered land. The banker corners money and credit. Both are able through their monopolies to plunder the producers of the product of their toil. We learned, through our experiences with the East ern bankers, that the institution which can issue money and extend credit holds the key to the whole business world. The banks, under the present laws, can do both, and this fact makes them the dictators of business life. Perhaps a little story, "The Evolution of a Banker," will help to show what the banker does to his fellow- men. In 1868 placer gold was discovered high up on the sides of Mount Shasta, in Northern California. The report of this discovery was quickly known in other placer mining camps farther ,south, and a great stam pede occurred. Five or six hundred miners, at one time, went to Shasta, staked out their claims, and com menced mining. Of course there was every variety of the genus homo, from the saloon-keepers, gamblers and highway men to miners, speculators and prospectors a motley crowd. Among the others there was Robert Waite, an educated fellow a sort of graduate who could talk on every subject from the Bible to Hoyle. Then there was Silver Jack who, when he was not mining; was shooting up the mining camps or robbing stage-coaches. When they arrived at Shasta, all of the members of the crowd, with one exception, staked out claims and went to work. The diggings were good. The returns were high. In the camp lived the usual hangers-on, and among them there was one man who among all of his fellows had staked out no claim. Everybody else worked at something. He never worked. The others were equal and democratic. He held himself aloof. He was 30 better dressed than the others; he was never about in the daytime, but in the early evening he might be seen loitering about the gambling houses. He neither swore nor drank; he talked but little, and he was known by everybody. As the weeks went by he opened a little office and began to lend money to miners who had a good claim and who were dissipating their earnings, at four per cent a month. Time passed, and he opened a bank. Because of his personal habits and rather agreeable appearance, the miners deposited their savings with him. He paid the depositors ten per cent a year, and loaned the money to other miners, who were willing to give their claims as security, for four per cent a month. Under these conditions the bank flourished and the banker made money. But one day he sold the bank and moved to San Fran cisco, and there opened a bank on a large scale, and became known as one of the great financiers of the Pacific Coast. A few years afterward, when he had become famous, he removed to New York and entered the circle of the great financiers of the world, and became widely known as a manipulator of moneys and credits. At a banquet which he gave to celebrate the thirtieth year of his entry into the banking business, he grew enthused with wine, and in his speech gave a sketch of his life and told how he was the first banker in Shasta in 68. Thereupon the miners at Shasta those of the oldtimers who still remained held a meeting to dis cuss the question. And they .said : "Why this man is not the man who started the first bank in Shasta ; or, if he is, then his name was ,so-and- so, and we remember him well." And they thereupon appointed a committee of three to make an investigation and ascertain how the great banker got his start, and the committee reported that he had gone with the stampede to Shasta, had taken no claim and done no work whatever; but that he slept 31 days and crawled around at night and stole from each of the miners so little of the day s production that he did not mis,s it. The committee therefore resolved that he had changed his name but had not changed the methods of doing business which he inaugurated at Shasta in the early days. He was still stealing so little from each of his fellow men that they did not miss it, and had thus accumulated an enormous fortune and become one of the greatest financiers of the world. The committee further concluded that no person or corporation should be permitted to do a banking busi ness under any circumstances; that the medium of ex change was the life-blood of business and the most important of all public utilities and that, therefore, it should be controlled by the government alone; that every post-office should be a savings bank, and that the government should establish commercial banks every where and loan money to the people at just what it cost to do the business above w r hat was paid the depos itors who placed their surplus in the Postal Savings Banks, so that if the Postal Banks paid three per cent to depositors, the Government commercial banks would loan this money to the people of the locality where i ; was deposited for not to exceed three and a half per cent. And thus this great engine of exploitation, now operated to plunder the producers of wealth in the United States, would be turned into a great public benefaction and compel the bankers parasites on society to join the ranks of the producing classes. The banking business is a parasite business; the banker is a member of a parasite class; yet >so com pletely does he dominate the present order of society that, instead of being punished by society and com pelled to take a position and earn his living like the masses of the people, through the pursuit of some use ful occupation, the banker is generously rewarded; laws are passed in his favor and he is encouraged and assisted in his efforts to pluck his fellow men. For years, under our National Bank Act, the banker 32 could subscribe for Government bonds, deposit them in the Treasury, and have the Treasury issue to him the full face value of the bonds in currency. Thus he retained the bonds and at the same time was able to .secure an equal amount of money which he could use for his private profit in the banking business. The issue of money was thus made a function of private banking institutions. They could not only lend money; they could actually create it. During my visit to Japan, I received some interesting sidelights on our banking business as the Japs saw it. Before going to Japan I talked with the Japanese Minister in Washington, and secured from him all of the books published in English giving the history and the economic development of Japan. I also secured two large volumes on the Japanese banking system written by Soyeda, a Jap educated in England, who was then the Treasurer of Japan. When I arrived Soyeda met me; and he not only entertained me very gra ciously, but talked with me on many occasions. I had noticed in reading his book on Japanese bank ing that Japan had at first adopted the American Na tional Banking system, but had abandoned it after four years of trial. I asked Soyeda why this was. He explained that four years had convinced them that the system was entirely unworkable because under it the bankers could cause an expansion of the currency whenever it was profitable for the bankers to expand, and a contraction of the currency whenever it was profitable for them to contract. The resulting panics benefited the creditor class and ruined the pro ducing class: that in fact our banking system worked in Japan just as it worked here expanding the cur rency to gratify the greed of the bankers when expan sion was to their profit, and contracting it in the inter est of the bankers whenever it was to their advantage to contract the volume of money. Japan has concluded that all money should be issued by the Government and its volume regulated by index 33 numbers so as to maintain a steady range of prices ; that is, when the volume of money was unduly ex panded, it would cause a rise in all prices and lead to the expansion of business and a new credit ; that when ever the money was unduly contracted in volume, it would lead to a decline of all prices, cause panics, and allow the creditors to take possession of the property of the producers. And so the Japanese established a central bank and branches, and the nation issued its own currency. In other words, the Japs discovered a great economic law, well known to some people of the United States, but the officials of Japan had the honesty and character to act upon this law instead of following our example of leaving the issue of money and the control of its vol ume in the hands of a few manipulators to be used as an engine for exploiting the producing population. This Japanese situation was interesting to me. I had left the Republican party in 1896 on this very issue. The Japs with their keen sense of values and their willingness to experiment learned in four years what the American people had not learned in forty that the banking power in private hands makes the bankers the autocrats of the business world. This lesson came to me with double force. When I returned to America I found Congress debating the ex tension of National Bank charters. Aldrich of course was for the extended charters. In the Senate (March 2, 1901), two days before my term as Senator expired, he said: "The present charters of the National Banks expire from time to time, commencing July 14, 1920. The law is that new plates shall be issued to all banks in ex tending their charters. The preparation of these plates will take nearly a year, and it is desirable that this bill should be passed at this session. There can be no objection to it. It is simply a matter of form, as cer tainly the time of the charters will be extended in the next Congress." 34 Mr. PETTIGREW: "Mr. President, I do not believe that the charters ever ought to have been issued, and I am certainly opposed to their being renewed. I be lieve the system is a pernicious one and has a tendency to breed panics, to expand the currency when it ought to be contracted, and to contract it when it ought to be expanded. Japan adopted this system, and after thor ough investigation repealed the lav/, and for this very reason. "Under this system, which is a branch of our finan cial system, the banks can produce a panic whenever they please, and wreck the property of this country or any other country where the system exists. The sub ject ought to be studied and thoroughly investigated. These charters never should be renewed, and a remedy should be offered by which we could have an elastic currency rather than one which produces too much when there is already too much and too little when there is already too little, and puts the control of the volume of the money of the country in the hands of a combination of national bankers. I therefore object to the bill." The bill therefore went over to the next session. Then, after my term of service in the Senate expired, the bill was passed. The experiences of the American banking system during the great war confirmed my view in every par ticular. The Federal Reserve Act, passed in 1913, had made possible the centralization of banking power. The war did the work. As Roger Babson recently stated the matter: "In 1914 we had 30,000 banks, functioning in a great degree in independence of one another. Then came the Federal Reserve Act, and gave us the machinery for consolidation, and the emergency of five-years war fur nished the hammer-blows to weld the structure into one." Mr. Alexander is right about the strength of the American banking system. Under the Federal Reserve 35 Act the vast power of the thirty thousand American banks is concentrated in the hands of a little club with headquarters in Wall Street. This club holds in its hands the power to make or to destroy any business man in the United States ; the power to make or wreck financial institutions and inaugurate panics ; the power to issue credit, even money. The bankers at the center of the financial web are endowed with the power of government. The right to issue money is, as I have said, funda mental. This right is exercised by the New York Bankers Club, thinly disguised as the Federal Reserve Board. On November 3, 1920, the amount of Federal Reserve notes outstanding was $3,588,713,000. What was the basis of this huge issue of paper money? Commercial paper! The member banks were permitted to lend money (or credit) to their patrons ; to take commercial paper in exchange for their loans ; to deposit this paper under the authority of the Board, and to issue currency against it. This currency was again loaned out, the paper redeposited, etc., so that the Federal Reserve Bank of New York was able to earn, by this pyramid ing of credits, over 200 per cent in the frugal year of 1920, in a market where the rate of interest never ran over 8 per cent on standard securities. Through their authority over money and credit, the bankers thus became the arbiters of the business des tiny of the United States. No one elected them. No one can recall them. There is no way in which they can be made the object of public approval or disap proval. They are as far above public responsibility as was William Hohenzollern in Germany before 1914. Self-elected dictators of American life, they make and unmake; they wreck and rule. They are the heart of business America the center of the exploiting .system that sits astride the necks of the people. The United States emerged from the Great War with the best credit of any of the larger nations. Its wealth 36 was the greatest; its income the largest, and its bank assets and resources exceeded those of any other coun try ; but this very economic position, centered as it is in the hands of bankers, will be used by them to exploit the peoples of Latin America and Asia as they have during recent years exploited the people of the United States. Exploitation is the profession of the banker, and those in charge of the American banking institu tions have the greatest exploiting opportunity that has ever come to the bankers in any of the modern nations. 37 IV. MONEY My experiences with the world of affairs have con vinced me that the power in our public life was exer cised through the bankers. My study of banking showed me that the grip which the bankers were able to maintain on the economic system depended largely upon their ability to control money. There were two ways in which they exercised this control. One was by determining who should issue money. The other was by specifying its character. The bankers of the United States have been in a position to decide both of these questions in their own interest. The Constitution of the United States says that the Congress shall have power to coin money, to regulate the value thereof and of foreign coins, and to fix the standard of weight and measures. The Constitution does not empower Congress to delegate the right to issue money to any person or combination of persons. Yet the Congress has always delegated the right to issue money to the banks. The power thus conferred by Congress upon the banks to issue money has been used by the bankers to exploit and plunder the people of the United States. While I was a member of the House of Representa tives (1880) I had become acquainted with Peter Cooper of New York. The renewal of the National Bank charters was under discussion in the House at the time and of course the whole question of currency and of our economic system was covered in the debate. One day Peter Cooper of New York placed upon our desks a pamphlet dealing with the money question. I read this pamphlet with great interest, because Peter Cooper was called a "greenbacker" and was supposed to be in favor of what they called "fiat" money. Again and again throughout the debate his name had been men tioned and he had been abused by the speakers. The foundation theory of Peter Cooper s pamphlet was that the law of supply and demand applied to money just as it applies to other commodities, so that 38 an abundance of money would be registered in the rise in the price of all those things whose value is measured in terms of money. In other words, that the law of supply and demand (the theory that quantity affects price) applies to money as well as to corn, oats, and potatoes. Therefore, the proof of a too great abun dance of money lay in the universal rise of prices ; and, conversely, the proof of money scarcity was the univer sal decline in prices. Following this theory, it became evident that while the price of any one commodity would rise or fall, according to the variations in the supply of and the demand for that commodity, a gen eral rise or fall of all prices indicated that money was too abundant or too scarce. Peter Cooper held that money was redeemed whenever it was exchanged by the possessor for the things which he desired more than he desired the money, and that there .should be no other form of redemption. In other words, money should be issued by the government and its volume so regulated as to maintain a steady range of prices. I was so interested in this pamphlet that I went to New York, made the personal acquaintance of Peter Cooper, and talked with him many times and quite fully upon social and economic questions. These talks, and the ideas which I had secured from my reading, convinced me that so long as the banks controlled the issue of money, they would be able to determine the economic life of the United States. Shortly after my entrance into the Senate, the whole question was dramatized in the struggle over the free coinage of silver The big business interests had become convinced that if the United States was to take her position as one of the great exploiting nations of the world she must follow the example of England the world s premier empire and establish a gold basis for the cur rency. It was in opposition to this policy of imperial ism that we advocated the free and unlimited coinage of silver. 39 We were demanding that, in this respect, the United States should take a position worthy of her great tra ditions and refuse to strike hands with the interna tional plunderers who were busy with their work of economic aggression in all parts of the world Tho.se of us, who were opposing British or any other brand of imperialism, were, with equal insistence, demanding that the United States adopt a money system calcu lated to protect the borrower as against the lender, and so designed as to take out of the hands of private indi viduals the huge power that money-lending conferred. Many of the leaders of American public life were urging that the United States must wait for England to move, but the absurdity of such a proposition was apparent on its face. Indeed, her leading statesmen declared that fact in so many words. Thus Gladstone is credited with the following statement in a speech to the House of Commons. (London Times, March 1, 1893) : "I suppose there is not a year which passes over our heads which does not largely add to the mass of British investments abroad. I am almost afraid to estimate the total amount of property which the United King dom holds beyond the limits of the United Kingdom, but of this I am well convinced, that it is not to be counted by tens or hundreds of millions. One thousand millions ($5,000,000,000) probably would be an ex tremely low and inadequate estimate. Two thousand millions ($10,000,000) or fifteen hundred millions than that, is very likely to be nearer the mark. ( Hear ! Hear! ) I think under these circumstances it is rather a serious matter to ask this country to consider whether we are going to perform this supreme act of self-sacrifice. I have a profound admiration of cosmo politan principles. I can go a great length, in modera tion (laughter), in recommending their recognition and establishment, but if there are these two thousand millions ($10,000,000,000) or fifteen hundred millions ($7,500,000,000 of money which we have got abroad, it 40 is a very serious matter as between this country and other countries. "We have nothing to pay them; we are not debtors at all ; we should get no comfort, no consolation, out of the substitution of an inferior material, of a cheaper money, which we could obtain for less and part with for more. We should get no consolation, but the con solation throughout the world would be great. (Loud laughter.) This splendid spirit of philanthropy, which we cannot too highly praise because I have no doubt all this is foreseen would result in our making a pres ent of fifty or a hundred millions ($500,000,000) to the world. It would be thankfully accepted, but I think the gratitude for your benevolence would be mixed with very grave misgivings as to your wisdom. I have .shown why we should pause and consider for ourselves once, twice, and thrice before departing from the solid ground on which you have, within the last half century, erected a commercial fabric unknown in the whole his tory of the world before departing from the solid ground you should well consult and well consider and take no step except such as you can well justify to your own understanding, to your fellow countryman, and to those who come after us." (Cheers.) How could England be expected to abandon an eco nomic system that was yielding hundreds of millions in yearly profits to her bankers and investors ? Again and again this issue has been raised at inter national conferences. The first conference was held in 1867 at the invita tion of France, and met at Paris on June 17, 1867. Eighteen of the principal European countries and the United States participated They voted unanimously against the single silver standard, and every nation participating in that conference voted in favor of the single gold standard but the Netherlands, and they also voted to establish the 25-franc gold pieces as an international coin. The next conference met, at the invitation of the 41 United States, at Paris, August 16, 1878. Twelve coun tries were represented. Germany refused to send dele gates. It was proposed by the United States, first, that it is not to be desired that silver shall be excluded from free coinage in Europe and the United States ; second, that the use of both gold and silver as unlimited legal tender may be safely adopted by equalizing them at a ratio fixed by international agreement. Then the convention resolved what? Simply this, and nothing more : That the difference of opinion that had appeared excluded the adoption of a common ratio between the two metals, and then adjourned. The next, or third, conference was called by France and the United States, and was held in 1881, nineteen countries being represented. The delegates from Swe den said that they had better reaffirm the declaration of 1878, and the conference reaffirmed that declaration and adjourned never to meet again. The declaration of 1878 was that the differences of opinion which had appeared excluded the adoption of a common ratio be tween the two metals. The next conference was held at Brussels in 1892. At that conference the United States proposed, not the free and unlimited coinage of silver at any ratio, but simply this: The United States had at first sent an invitation to Great Britain, asking that government to join us in a convention to adopt both metals at a ratio to be agreed upon. Great Britain refused to ac cept the invitation to the conference to discuss the question of agreeing upon a ratio for the coinage of the two metals, but, when we changed the invitation so as to provide for simply meeting and discussing the ques tion of the enlarged use of silver, Great Britain joined in the conference, and this was the program of the United States in the conference of 1892: That in the opinion of this conference it is desirable that some measure should be found for increasing the use of silver in the currency system of the nations. 42 That was all. No greater or broader resolution would be accepted by Great Britain. Neither would she join us in a conference to discuss the question of the ratio. But what more? Mr. Wilson, a delegate from Great Britain, immediately said: "Her Majesty s Government did not find it possible to accept an invitation conveyed in terms which might give rise to a misunder standing by implying that the Government had some doubt as to the maintenance of the monetary system which had been in force in Great Britain since 1816." Speaking of Sir Charles Freemantle and himself, he said: "Our faith is that of the school of mono metallism pure and simple. We do not admit that any other than the simple gold standard would be applicable to our country." Early in the session the leading delegate from Ger many declared: "Germany, being satisfied with its mone tary system, has no intention of modifying its basis. ... In view of the satisfactory monetary situation of the Empire, the Imperial Govern ment has prescribed the most strict reserve for its delegates, who, in consequence, cannot take part either in the discussion or in the vote upon the resolution presented by the delegates of the United States." Germany, in that conference, then refused to dis cuss or vote one way or another upon a proposition simply for the enlarged use of silver. Austria-Hungary, although represented in the con ference, instructed their delegate to take no part in the conference, in its discussion or votes. The delegate from the Netherlands declared: 43 That Holland would not enter into a bi metallic union without the full and complete participation of England, is a part of the formal instructions furnished us by our gov ernment." France made the same declaration practically; in fact, absolutely the same declaration, that she would not participate in any agreement unless England joined. The convention adjourned to meet again at some fu ture time, to be called again, some time within the then coming year, but it never reassembled. Afterwards, the Congress of the United States passed a bill provid ing for nine delegates to a monetary conference when ever we could find anybody who would confer with us ; and we were unable to find anyone who would join in a conference and who would talk with us about this question, and the law lapsed by limitation of time. The United States had become a capitalist nation producing surplus wealth; exporting it in the form of goods and investment funds, living on the interest that these investments produced, and thus saddling upon the backs of the undeveloped countries of the world the burden of taking care of those nations which were rich enough to bind the poorer peoples to them by the lend ing of money. The gold standard was a part of the harness that the eastern bankers had used to drive the western farmers. The fight was lost by the free silverites. The gold standard won the day and with that victory went the triumph of protection, the establishment of a trust- controlled government, the degradation of labor, and the assurance of plutocracy s power. The Government of the United States has allowed interested parties creditors and bankers to manipu late its credit and volume of money in such a way as to produce panics and, by this means, to plunder those who toil. These panics have come at stated intervals. 44 M. Juglar (a French authority) has fully analyzed the three phases of American business life into prosperity, panic and liquidation, which three constitute them selves into a business cycle" which ordinarily occupies about ten years. These ten years may be apportioned roughly as follows: Prosperity, five to seven years; panics, a few months to a few years ; liquidation, three or four years. Here is a list, with dates, of all the panics in the United States during the last century, with the corre sponding dates for France and England : France England United States 1804 1803 1810 1810 1813-14 1815 1814 1818 1818 1818 1825 1825 1826 1830 1830 1829-31 1837-39 1836-39 817-39 1847 1847 1848 1857 1857 1857 1864 1864-66 1864 1873 1873 1882 1882 1884 1889-90 1890-91 1890-91 1894 1894 1893-94 1897 1897 1897 1903 1903 1903 1907 1907 1907 1913 1913 1913 What evidence could be more conclusive of the utter failure of a system of economic life than these succes sive breakdowns in the machinery of production and exchange ? Yet here is the record upon which the pres ent economic system must stand condemned in the eyes of every thinking human being the record of disaster following disaster, with neither the inclination nor the ability, on the part of the masters of business life, to 45 put a stop to these successive stoppages of economic activity. The figures just cited show that, during the past century, panics have occurred in England and France at the same time that they occurred in the United States. These three countries are linked together by the "gold standard/ and their governments are capital istic governments administered by the banks and creditor classes for the benefit, not of the people, but for the benefit of the rich. Furthermore, all three countries have the same, or about the same, distribu tion of wealth. In each of these countries the workers are robbed of what they produce by the same process. The creditor classes, through their privileges, are able to manipulate the money and credit through panics, so as to produce, first, a rise in prices by expansion of money and credit, then a withdrawal of both, followed by a sudden drop in prices, and then liquidation. Or, in other words, a gathering in of all property produced by toil. With the liquidation, the cycle is completed and there follows a new cycle of ten years more, of pros perity, panic and liquidation. I have had an excellent opportunity to observe the effect of these successive economic disasters upon the producing class. I went to the Territory of Dakota in 1869 and located at Sioux Falls, near the northwest corner of the State of Iowa. At that time, all of the land in Dakota was owned by the Government and was subject to entry under the Homestead and Pre-emption laws, and could only be secured by actual settlers. The result of the panic of 1873 caused very many of these homesteaders to commute their homesteads, because the price of farm products had declined below the cost of production. As a result, the movement for farm ten ancy was begun. The United States publishes no fig ures on farm tenure previous to 1880, but by that year the percentage of tenant farmers in the rich Middle West was for Illinois, 23.7 per cent; Michigan, 31.4 per 46 cent; Iowa, 23.8 per cent; Missouri, 27.3 per cent; Ne braska, 18 per cent, and Kansas, 16.3 per cent. The next great disaster to the producing classes cul minated in the manufactured panic of 1893. Grover Cleveland had been elected President of the United States upon the tariff issue in 1892, and when he took office in 1893 he called a meeting of Congress for the purpose of repealing the purchasing clauses of the Sherman law of 1890, which provided that the Treas urer of the United States should purchase and coin not less than two million dollars worth of silver and not more than four and a half million dollars worth during each month, thus adding to the volume of circulating medium. The cutting-off of four and a half millions of silver by the repeal of the Sherman law purchasing clauses, with its consequent decline in the volume of money, proved disastrous. The prices of all farm prod ucts fell sharply, causing the ruin of the agricultural classes and a prolonged panic nearly as disastrous as that of 1873. The members of the House of Representatives, who believed in bimetallism, called a meeting a day or two before Congress was to assemble, and 201 members of the House declared that they were in favor of both gold and silver as money, because there was not gold enough in the world to furnish a circulating medium. Two weeks afterwards, when the vote was taken in the House of Representatives on the bill to completely de mocratize .silver by repealing the purchasing clause of the Sherman Act, one hundred of these members had been bought over, through patronage and money and party pressure, to the interests of the bankers, and thus the bill was passed. The panic of 1893, resulting from this act, which involved a contraction of the volume of money and a reduction in prices, again drove large numbers of people from the land and reduced agricultural produc tion below a remunerative point. As a result of this panic and the panic of 1873, the lands in Dakota, which 47 had all been owned by the cultivators, passed into the hands of the mortgage companies, the banks, the cred itors, so that in the county where I reside Minnehaha County, South Dakota 52 per cent of the farms now are cultivated by tenants. Within my memory, every acre of land in that county belonged to the Govern ment. Both in the panic of 1873 and in that of 1893 the results were the same. The owners and monopo lists of money used their monopoly power to squeeze the small producer and to enrich themselves. The panic of 1893 was followed by the discovery in South Africa of the richest gold deposit in the world and within the next few years these mines produced vast sums of gold to be used as money, and caused a rise in the price of everything that is the product of human toil. These were the two outstanding economic disasters that occurred during my connection with public affairs. Both arose from similar causes and both produced like results the concentration of wealth in the hands of the few ; the bankruptcy of the small business man and of the farmer; unemployment, distress and lowered wages for the worker ; crime, suicide and murder. The great deposits of gold which had been poured into the currency of the world by the discoveries in California in the early fifties endangered the mortgage- holding classes of all the capitalist nations. Chevalier, one of the most prominent financiers of Europe, published a book in which he contended that gold must be demonetized; that the continuous use of gold as money would work universal repudiation; that it was dishonest and wicked to pay debts in gold under such a flood as was coming from California and Austra lia. His voice was potent. Germany and Holland creditor nations closed their mints to gold and adopted the silver standard. Maclaren of England, representing the bondholders of the British Empire, made the same argument in the early fifties against the use of gold, which has since been used by gold 48 standard contractionists for more than sixty years against the use of silver. In his argument in favor of the bondholders, Chevalier said : "Our neighbors on the Continent received the announcement of these remarkable discov eries in a different spirit. From the first they have considered them of the greatest impor tance and have expressed great solicitude for the maintenance of the standard value." Immediately that the fact of a great increase in the production of gold was established, the Government of Holland "a nation justly renowned," says M. Cheva lier, "for its foresight and probity," discarded gold from its currency. "They may," says the same author, "have been rather hasty in passing this law, but in a matter of this nature it is better to be in advance of events than to let them pass us." France appointed a monetary commission which con sidered the question of demonetizing gold for several years and, finally, reported that it was necessary to demonetize one or the other of the precious metals that the supply was violating contracts by depreciating money with which debts were paid. Up to this time the creditor classes in England, France and the United States had accepted bimetallism. The rush of Califor nia gold endangered their monopoly. The discovery of the Comstock lode threatened to deluge the world with silver, and Mr. Lindeman, Director of the United States Mint, reported in London that there were fifteen hun dred millions of silver in sight in one mine on the Comstock. When gold became very abundant in the middle of the century, the creditor classes wanted to demonetize that metal in order to make money scarce. Then came the flood of silver, and they feared that more than gold. John Sherman undertook the duty of carrying into effect in the United States the demonetizing of silver. John J. Knox, Comptroller of the Currency, a crafty, 49 scheming, money-making individual, got up a codifica tion of the mint laws. John Sherman introduced the bill, and continually talked about the silver dollar, the inscriptions on it, etc. But when the bill became a law it was found that there was no provision for a silver dollar in the bill, the trade dollar containing 120 grains taking the place of the silver dollar, and thus silver was demonetized, and it was made easy for the creditor classes of the world to corner gold and thus to control money. How conscientiously this control over money has been exercised is indicated by the actions and utter ances of the bankers themselves. The American Colonies had been in the habit, for a number of years before the Revolution, of issuing what were then known as Colonial Treasury notes ; the notes were made receivable by the several provinces for taxes. These Colonial notes being adopted by all the Colonies led to an unexpected degree of prosperity, .so great that when Franklin was brought before the Par liament of Great Britain and questioned as to the cause of the wonderful prosperity growing up in the Colonies, he plainly stated that the cause was the convenience they found in exchanging their various forms of labor one with another by the paper money, which had been adopted: that this paper money was not only used in the payment of taxes, but in addition it had been de clared legal tender. After Franklin explained this to the British Government as the real cause of pros perity, they immediately passed laws forbidding the payment of taxes in that money. In 1862, the creditors of the United States, the Bank of England, sent the following circular to every bank in New York and New England : "Slavery is likely to be abolished by the war power, and chattel slavery destroyed. This, I and my European friends are in favor of, for slavery is but the owning of labor and carries 50 with it the care for the laborer, while the European plan, led on by England, is for capi tal to control labor by controlling the wages. THIS CAN BE DONE BY CONTROLLING THE MONEY. The great debt that capital ists will see to it is made out of the war must be used as a means to control the volume of money. To accomplish this, the bonds must be used as a banking basis. We are now waiting for the Secretary of the Treasury to make the recommendation to Congress. It will not do to allow the greenback, as it is called, to circulate as money any length of time, as we cannot control that." In 1872, the ring of bankers in New York sent the following circular to every bank in the United States : "Dear Sir: It is advisable to do all in your power to sustain .such prominent daily and weekly newspapers, especially the agricultural and religious press, as will oppose the issuing of greenback paper money, and that you also withhold patronage or favors from all appli cants who are not willing to oppose the Gov ernment issue of money. Let the Government issue the coin and the banks issue the paper money of the country, for then we can better protect each other. To repeal the law creat ing National Bank notes, or to restore to circu lation the Government issue of money, will be to provide the people with money, and will therefore seriously affect your individual profit as bankers and lenders. See your Con gressman at once, and engage him to support our interests that we may control legislation." The panic of 1893 was a bankers panic and in their interest and the ring of gambling bankers in New York sent out the following circular to every bank in the United States: 51 "Dear Sir: The interests of national bank ers require immediately financial legislation by Congress. Silver, silver certificates and Treasury notes must be retired and National Bank notes upon a gold basis made the only money. This will require the authorization of from $500,000,000 to $1,000,000,000 of new bonds as a basis of circulation. You will at once retire one-third of your circulation and call in one-half of your loans. Be careful to make a money stringency felt among your patrons, especially among influential busi ness men. Advocate an extra session of Congress for the repeal of the purchasing clause of the Sherman law, and act with the other banks of your city in securing a large petition to Congress for its unconditional re peal, per accompanying form. Use personal influence with Congressmen and particularly let your wishes be known to your Senators. The future life of National Banks as fixed and -safe investments depends upon immediate ac tion, as there is an increasing sentiment in favor of Government legal tender notes and silver coinage. * Mr. Alexander is right about the strength of the American banking system. Under the Federal Reserve Act the vast power of the thirty thousand American banks is concentrated in the hands of a little club with headquarters in Wall Street. This club holds in its hands the power to make or to destroy any business man in the United States ; the power to make or wreck financial institutions and inaugurate panics ; the power to issue credit, and even money. The bankers at the center of the financial web are endowed with the power of government. The right to issue money is, as I have .said, funda mental. This right is exercised by the New York 52 Bankers Club, thinly disguised as the Federal Reserve Board. On November 3, 1920, the amount of Federal Reserve notes outstanding was $3,568,713,000. What was the basis of this huge issue of paper money? Commercial paper! The member banks were permitted to lend money (or credit) to their patrons ; to take commercial paper in exchange for their loans ; to deposit this paper under the authority of the Board and to issue currency against it. This currency was again loaned out, the paper re- deposited, etc., so that the Federal Reserve Bank of New York was able to earn, by this pyramiding of credits, over 200 per cent in the frugal year of 1920, in a market where the rate of interest never ran over 8 per cent on standard securities. Through their authority over money and credit, the bankers thus became the arbiters of the business des tiny of the United States. No one elected them. No one can recall them. There is no way in which they can be made the object of public approval or disap proval. They are as far above public responsibility as was William Hohenzollern in Germany before 1914. Self-elected dictators of American life, they make and unmake; they wreck and rule. They are the heart of business America; the center of the exploiting system that sits astride the necks of the people. The United States emerged from the Great War with the best credit of any of the larger nations. Its wealth was the greatest; its income the largest, and its bank assets and resources exceeded those of any other coun try; but this very economic position, centered as it is in the hands of bankers, will be used by them to exploit the peoples of Latin America and Asia as they have, during recent years, exploited the people of the United States. Exploitation is the profession of the banker, and those in charge of the American banking institu tions have the greatest exploiting opportunity that has ever come to the bankers in any of the modern nations. The banks are again issuing circulars and in April 53 or May, 1920, the order went out from New York, from this club which is our government, to all the Reserve Banks throughout the United States, to call their loans and to refuse credit on all the products of human toil not controlled by the combinations. The result has been, of course, the reduction in the price of everything that is produced in the way of food and raw material, and to a very low point, causing the ultimate ruin of all those who cultivate the soil. And it was not because there was not plenty of money, for there is more money .several times over in circulation in the United States than ever before in our history. We have secured most of the gold of Europe, and I know of my own knowledge positively that these bankers are financing the bank rupt nations of Europe. For instance, they loaned France a hundred millions a few months ago, and within the last six months they have loaned Norway twenty millions. And so another panic is in progress. The banking system of this country is so organized and constituted as to take from the producer the result of his effort; purposely so organized; organized with the intention of controlling the volume of money ; con tracting and expanding credit so as to produce a panic, or apparent prosperity, as suits the purpose of its or ganizers and managers. This system of banking was the invention of Lord Overstone, with the assistance of the acute minds of the Rothschild bankers of Europe, and was so con structed as to enhance the importance of capital and overshadow the importance of toil. The system is one based upon a small volume of legal tender money, and the limit of this volume they would make as small as possible, in order that they may control it absolutely. Expansion by the issue of credit, not legal tender; con traction by the withdrawal of credit. Expansion that they may sell the property of the producers, which they have taken in with the last contraction, and then contract again in order to wreck the enterprising and once more reap the harvest of their efforts. This is the 54 banking system of Great Britain, and the banking sys tem of every gold standard country in the world today. It is the banking system of the United States. This is the system the Republican party is pledged to strengthen and perpetuate. There is no hope of relief for the people of this agricultural country in any pos sible thing the Republican party can or will do. In 1873, fearing that the volume of metallic money would become too large, these manipulators of panics, these gatherers of the products of other people s toil, set about to secure the demonetization of silver and make all their contracts payable in gold. The result has been, as the thinking ones of every nation agree, that in every gold standard country on the globe, agricul tural prices have fallen steadily until we have reached a point where the cost of production is denied the pro ducer. The present Federal Reserve law adopted by the United States is but a culmination of all the infa mous banking systems ever invented by any age or people, and it has already produced the practical en slavement of the people of the United States. Banking and the issue of money and credit are the duties of the sovereign and should be performed by the Government for service and not for profit, and for the equal good of the whole population. Section 8, Para graph 5 of the Constitution of the United States says : 1 Congress shall have power to coin money, regulate the value thereof and of foreign coins. Congress is not by the Constitution au thorized to delegate the power to any person or corporation." The functions of money are created by law and are legal tender, a measure of value and, as a result, a me dium of exchange, and the value of the unit of money depends upon the law of supply and demand, and the volume of money should be regulated so as to maintain a steady range of prices, and this can be done by the use of index number. No substance should be used as 55 money that has any value besides its money value. And, above all, no metal should be used that has a commodity value, as the volume of money is liable to be affected by hoarding and by being shipped away to other countries, and by being consumed in the arts. In fact, money should never be international. It is the most important tool that a nation can possess for the transaction of its business, and it is more idiotic to ship it out of the country to pay balances than it would be for a farmer to .ship his implements, plows and reaper away and sell them for seed ; or a manufacturer to strip his factory of its machines and sell them for raw material. 56 V. THE TARIFF Next, perhaps, to the money system, the tariff is the handiest weapon that the American business interests have at their disposal. I believe in a tariff, provided it is accompanied by a free and untrammeled competitive system of production. The purpose of such a tariff would be to give temporary assistance to such indus tries as are necessary to the sound economic life of a country. Once the competitive system is destroyed, however, the tariff falls to the ground, becomes merely an instrument in the hands of the Government for the plundering of the people through the agency of their monopolistic combinations. Under such circumstances a tariff cannot be justified unless a man is in favor of stealing. The tariff bills that I .saw enacted, two by Republican Congresses and one by a Democratic Congress, aimed to distribute favors and special privileges to those indus tries that were strong enough to demand them and to enforce their demands. The Wilson Bill, passed by a Democratic Congress, provided almost as much protec tion as the McKinley and Dingley bills, passed by the Republicans. The commodities on the free list were changed, but the principle of protection was accepted by both great parties. Both were serving business and business demanded protection. It was to meet this situation that I urged (May 29, 1894) a tariff commission with power to examine the books of every protected industry in order to ascertain the cost of producing these goods in the United States ; to compare this cost with the cost of producing them abroad, and thus to determine a fair rate of protection for the home industries. I urged at that time that the tariff commission be established as a permanent bureau in order to make protection a science. The business interests, who were clamoring for protection, did not wish it to be a science. On the contrary, they looked upon it as a sinecure. 57 I had a further reason for believing in a protective tariff as a means of preventing nations which produced similar lines of goods from trading with one another. Commerce is a tax on industry. The act of produc ing wealth has already been finished when commerce begins. A nation should therefore trade only with na tions .so situated as to soil and climate that their prod ucts are different, and are naturally necessary to comfort and happiness. The United States should, therefore, trade chiefly, not with Europe, but with the countries of the tropics, and our industries should be so adjusted that our surplus would pay for those things which we cannot produce ; and this would be our condi tion today if we produced everything to which our soil and climate are adapted. We should insist that the man who produces the things we can produce shall live here, if he wants us to buy them ; shall help support our Government ; shall be a taxpayer and a defender of our institutions; we should have the art and the artisan as well as the article, and thus be able to reproduce it. In this way, by varied industry alone, can we bring out all that is in our people, every trait of character, every variety of talent, and can produce an unmatched race of men and an unparalleled civilization. The United States is endowed by nature with the greatest natural resources of any equal area of the earth s surface. We have the most intelligent, free, vigorous and active people. Our wealth and prosperity depend upon the amount we draw from nature s inex haustible storehouse and that, in turn, depends upon the industry, frugality and sobriety of the living gen eration. Little is left over from one age to another; the nearer we can bring consumer and producer together, the smaller the friction and the less the wear and tear and the expense of energy in making the exchange, and the greater the amount of production. It makes no difference what price we pay each other for our prod- 58 nets; if our laws are just there will be an equal and fair distribution of wealth, and, as a result, universal happiness. The theory of free trade is beautiful, and if all the people on earth had an equal chance, were all equally intelligent, moral and industrious, and lived to gether under the same just laws, free trade might be universally enacted with profit to all. But these conditions do not exist. Therefore, if we enact free trade our great natural resources and our accumulated wealth would be dissipated throughout the earth, resulting in a slight rise in the scale of living and civilization of all mankind and a great fall in the .scale of living and civilization of our own people. An old illustration is apt. If you connect two ponds of water, one large and at a low level, the other small and at a high level, they will both reach the same level the large one rising a little and the small one falling very much. So 