CORNELL UNIVERSITY LIBRARY BOUGHT WITH THE INCOME OF THE SAGE ENDOWMENT FUND GIVEN IN 1891 BY HENRY WILLIAMS SAGE arV1882 The farmer's side Cornell University Library „„ 3 1924 031 175 460 olin.anx Cornell University Library The original of tliis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924031175460 THE FARMER'S SIDE HIS TROUBLES AND THEIR REMEDY BY W. A. PEFFER NEW YORK D. APPLETON AND COMPANY 1891 V A. M-3M- I I /CORNELL^ UNivLRS-rrv LIBRARY/ Copyright, 1891, By D. APPLETON AND COMPANY. CONTENTS. PAGB Introduction i PART I. WHERE WE ARE. CHAPTER I General Average Progress of the Country. — Com- pared WITH Particular Industries . . . .10 II. Progress of Agriculture 21 III. The Mortgage Burden 34 IV. Labor the Great Problem 43 PART II. HOW WE GOT HERE. I. Changed Condition of the Farmer . . . .56 II. The Farmer's Competitors 61 III. The Farmer is not to blame 64 IV. Settlement of the New West 08 V. The Destroying-Power of Usury 75 VI. Interest Rates in the United States . . . .82 VII. Financial Legislation 87 VIII. Decline of Values from i86g to 1878 . . . .103 IX. Contraction of the Currency 106 X. Effect of Contraction 113 XI. The Bland Silver Law 116 XII. The Hand of the Money Changer is on us . . 121 PART III. THE WAY OUT. I. Partisan Remedies proposed 124 II. Government Revenues must be provided for . . 131 III. Duties on Farm Products imported will afford Relief ^. 138 iv CONTENTS. CHAPTER PAGE IV. Reciprocity. — Overproduction 141 V. Organization 148 VI. Stringency in the Money Market .... 162 VII. No Relief to be expected from the Old Parties . 168 VIII. Government Control of Transportation. . . 172 IX. The Debt Burden 179 X. Money a Necessary Instrument of Commerce . . 185 XI. Congress may regulate Instruments of Commerce 193 XII. Discrimination in Favor of Money .... 196 XIII. Regulation of Commercial Agencies .... 200 XIV. A Change necessary in our Financial Legislation 204 XV. Congress has Authority to provide Money for THE People 211 XVI. Money when used as a Commodity is a Dangerous Thing 214 XVII. Government ought to supply Money to the People on Just and Equal Terms .... 218 XVIII. How Much Money is needed 226 XIX. Three Ways to raise the Money .... 230 XX. Distribution of the Money 241 PART IV. Objections answered 257 PART V, Benefits expected to follow ....... 272 THE FARMER'S SIDE. INTRODUCTION. I. — STUDY BY COMPARISON — THE FARMER. We learn much, and as to a great many things we learn best, by comparison. Contrast impresses the mem- ory and sinks into the heart. If there were nothing white nobody would know that there is anything red or green. If the sky' were never blue we would not know that it is ever black or gray. Without pain we would have no con- ception of pleasure. The sweetness of hope is intensified by the gloom of despair. Looking upon an object with- out knowledge of other objects with which to compare it, we have no satisfactory method or test of measurement. And this is true of properties and qualities as well as of form, dimension, and color. While any particular thing may be of a certain shape, size, and hue, without reference to the observer's capacity for discernment, yet, as to the observer himself, he will measure all these properties by his knowledge of things with which he may properly com- pare them. A farmer's estimate of the quality and value of his products is based upon what he knows of the qual- ity and value of other similar articles with which he com- pares them. He recognizes the greater worth of improved methods in agriculture in their superiority over other methods with which he was once familiar. He measures the value of pure-bred Durhams, Devons, Herefords, Gallo- 2 THE FARMER'S SIDE. ways, and Jerseys, by the merits of " scrubs " which he handled in his younger days. The merits of the steel plow impress his mind more forcibly when he notes the contrast between that and the sheet-iron mold-board of a century ago. The value of a self-binder is best meas- ured in comparison with the sickle and the cradle which our fathers used to cut their grain with. The man of toil whose wasting energy follows him through the cheer- less years, who shivers in the storm while hunger is gnaw- ing at his vitals, knows he is poor because he feels all these cruel pangs. But how shall he measure the extent of his poverty ? By what means shall he learn how poor he is ? Let him watch currents flowing in the highway where all sorts and conditions of men are passing to and fro through the hours of the busy day. There he sees what accompanies ease and affluence, what follows wealth and fame. And as he looks upon the sparkling eyes and ruddy cheeks of playful children, and as he listens to the joyous laughter of merry-making sons and daughters of the well-to-do and rich, he turns toward the pale face, the sunken eye of the thinly clad child of his own home; how he sickens at the contrast, how his heart bleeds, how his soul weeps, how the poor man groans in agony when he be- holds the depth of his poverty ! He sees it in comparison. Is the farmer in trouble ? To what extent ? Is he really poor ? How shall we know ? Is he worse off than men engaged in other lines of work ? By what rule shall we measure the rate of his progress ? Let him but look at the world about him and note the contrasts. Let him hold up a mirror, if you please— a mirror which reflects what has passed, what is passing, and foreshadows what is yet to come. Look and think. Behold, compare, and learn. Follow the guide. Two hundred and seventy years have we been at work in this country. We conquered the wilderness, we peopled STUDY BY COMPARISON— THE FARMER. 3 the solitudes, we civilized the continent. We cleared away forests, opened highways, established commerce, and builded a nation that leads all the rest in agriculture and manufactures, having half the railroad mileage of the world, with an internal trade which, measured either in dollars or in tons, exceeds the foreign commerce of any half-dozen other countries. Yet, with all that we have done, we find our necessities are multiplying while our profits are dividing. Society makes more demands upon us than our incomes will satisfy. Our ancient preroga- tives have been wrested from us, our statesmen have been led away from the people, and money presides over the destinies of the republic. One hundred years ago, when Benjamin Franklin was at the head of our postal system, there were only seventy-five post-offices in the country, and the aggregate length of all the mail routes was 1,875 miles. The entire cost of the serv- ice for the year 1790 was a little over $22,000, while the receipts for the year were nearly $28,000. The mail was carried mostly on horses. The trip from New York to Boston required five days, and from New York to Phila- delphia the time was three days. At the beginning of the present century it required thirty-two days to carry a letter from Philadelphia to Lexington, Ky., and to reach Nashville on the same trip the time was extended to forty- four days. Now fifty-six railway mail trains, each with a post-office aboard, go into .Chicago every day, and an equal number go out. The mail from Philadelphia to New York runs thirteen times daily, and from New York to Philadelphia ten times daily ; the time is about two hours, with an aggregate weight of forty tons of mail. On the 30th day of June, 1890, the number of post-offices in the country was 62,401. The number of mail routes was over 26,000, and their aggregate length is 428,000 miles. The total length of all the trips made on all the routes 4 THE FARMER'S SIDE. both ways daily is equal to a line that would encircle the earth at the equator forty-one times. Packages sent through the mails during the year, all told, amounted to 4,500,408,206 — over four thousand million — ^^more than half of which were letters. The total expense of the sys- tem last year was $66,645,083, and the tot\l revenue amounted to $60,858,783. The estimated cost of carrying mails on railroads alone for the year 1891 is $22,610,128. The first passenger locomotive was put on the track sixty years ago. On the 30th day of June, 1889, the ag- gregate length of our railroads was 157,758 miles, and the entire railroad system of the country was capitalized at $9,015,175,374. (Total mileage January i, 1891, was 160,- 554 miles.) In 1834, upon completing connection between Philadelphia and Pittsburg, it cost $1.12^ to carry a barrel of flour eastward over the route ; now a bushel of wheat is carried from Kansas City to New York for 25 cents. One hundred years ago there was not a cotton or a woolen factory in the United States outside of the dwellings of the people, and as late as fifty years ago cards and spinning wheels and weaving looms were in use on more than half the farms. Now. we have about 260,000 manu- facturing establishments. In 1880, the number was 253,- 840, with a capital of $2,790,223,506, using raw material valued at $3,394,340,029, turning out a finished product valued at $5,369,667,706. It required 2,738,930 persons to perform the wi)rk, and they received $947,919,674 wages during the year. A hundred years ago 90 per cent of our population lived on farms, and transportation was so expensive that surplus wheat and corn had no market value fifty miles away from a market town. Now great cities have grown up, the market has been distributed all over the country, and distance is practically annihilated. From a small area STUDY BY COMPARISON— THE FARMER. 5 along the Atlantic coast, we have spread across the conti- nent, and we travel in palace cars from Boston to San Francisco in less than six working days. We have about 5,000,000 farms, though less than half of our people live on them. They are valued at something over eleven thousand million dollars. Ten years ago the value of farm machinery was $406,520,055, and our farm live stock on hand was worth $1,500,464,609. Our average annual production of wheat the last ten years has been about 500,000,000 bushels, and of corn we raised nearly four times that much. Learning, enterprise, and invention have added 75 per cent to the productive power of the people in the last fifty years. The opening of the Su ez Canal shortened the distance between Bombay and Liver- pool 10,000 miles and cheapened transportatio n~"5o~per cent. Wheat gr own in India can be landed in JSritaih foF 50 cents a bushel total cost^ .Many men now living re- member when wheat, one hundred miles west of p ^r la,rgg cities on the seaboard, was valueless except for home use^- its carriage that distance being worth its full value in the market- One man and three horses plow as much ground with one plow as two men and four horses did with two plows formerly ; one man with a seed drill will sow seed on twice as much ground as he could if sowing broadcast by hand; one man with a self-binder will put in sheaf as much wheat as twelve persons did before the reaper was invented. On the whole, one man does as much work on the farm now as two men did under the old regime, and more in some lines of work. The farmer produces as much grain to the acre, raises as many cattle, hogs, sheep, and horses, works as hard and steadily as he did then — but is he gaining ? Has he saved anything ? On the con- trary, is he not in debt and falling behind ? Is he not losing rather than gaining ground compared with his fel- low-men ? His crops have not fallen off, but their value in 6 THE FARMER'S SIDE. the market is less by .•^o to t;o per cent t han they were a dozen years ago, and before that time. He is paying all the way from 8 to 40 per cent for the use of money. — money which goes up in value while his products go down. His taxes have not diminished a penny, while his crops are cut short one-half in paying power. The census reports have shown well for the farmer. In number and vklue farms have increased, farm implements have been multi- plied many times, and live stock increases yearly. But the average farmer is not growing richer. In the last thirty-eight years railroad interests in the United States have developed 1,580 per cent, banking 918 per cent, manufactures 408 per cent, while agriculture has not gone beyond 200 per cent. He plows and sows and reaps with machines. A machine cuts his wheat and puts it in sheaf, and steam drives his thrashers. He may read the morning paper while he plows, and sit under an awning while he reaps. Surely, considering all these things, and in view of them, the farmer ought to be in his best estate, but he is not. He ought to be the richest, the most happy, the most ' influential and powerful citizen in the republic. Who is bold enough to assert that he is ? II. — THE WAGE WORKER. And what shall we say of the wage worker, the artisan, the mechanic, the farm-hand, the common day laborer? Machinery has invaded his kingdom also. It does 75 per cent of his work ; but how much better off is he than his father was fifty years ago ? Who gets the benefit of invention — the hired man or his employer ? One person now accomplishes as much work in a given time as four persons did before muscles were made of iron and nerves of steel. And what has become of the displaced hands, and what better off are the workers to-day in view of the altered conditions of living ? The farm tenant, with his garden and THE WAGE WORKER. 7 potato patch, his cow pasture and fire-wood, his pigs, and his home-spun clothes, is not common now. A man's work is worth more than it was when everything was done by hand, because he can do more in a given time, and he receives more in wages ; but things over which he has no control have so changed that his expenses are now necessarily greater than they were then, so that, while it need not, yet in fact it does cost him more to live than it did in the days of the flail and the hand loom. It is true that the farm laborer of to-day, whatever be his wages, is no better off — does not save any more money — than his predecessor of half a cefftury ago. And how is it with the wage worker in other lines — mechanics, builders, and skilled workers? They, too, are apparently better off than they were in the days when blacksmiths and wagon-makers and shoe-makers were in every neighborhood, and carders- and spinsters and weavers in every home. For these the figures show well on paper. Manufactures have developed enormously. One person in many instances can now do as much work in a factory as a dozen did in the same line when hand work was common. An engineer and his fireman will haul as much wheat or corn at one load over a railroad as would have required 100 wagons, 600 horses, and 100 men on the Philadelphia and Pittsburg turnpike only fifty years ago. Speaking generally, one person now does as much work in manufactures and commerce as four persons did when everybody was his own master But, though the produc- tive power of individual workers has increased 300 per cent in forty years, their wages have not gone beyond 50 per cent on the average — taking the census figures of 1850 and 1880 as authority. Cost of manufactured products has been reduced 25 per cent, and of transportation 75 per cent on the general average, and to that extent the people have reaped substantial benefits from the use of machinery. But what has taken the place of the little shop at the cross g THE FARMER'S SIDE. roads, and what became of the worker there ? Our wage workers earn more and receive more than they did for- merly. But do they receive enough ? Do they receive as large a share of the profit on their labor as their fathers did when they worked in their own little shops by the way- side, half a century ago? What profit is there for the workman on a 33-cent pair of shoes, or on a 3-cent yard of cloth ? The shoe factories and the cloth factories are owned by rich men. Do they receive mo^e than their proper share of the profit, what little there is, on the men's work ? And the women — ah, yes, the women ! Three cents for making a shirt, 13 cents for a pair of trousers, 50 cents for a coat^there is no need of asking what share of the profit they get. Work and starvation the daily round all through the weary years. We have steam engines and electric motors. We have sewing machines, perfecting printing presses, and telephones. We have pneumatic tubes to carry our mail. We talk over a wire to a friend a hundred miles distant. We preserve speech on a cylin- der, and have music repeated to us by a machine. We travel at the rate of a mile a minute and dine as we go. The lightning carries messages for us, and we float ships on the air. But what good has all this wrought for the man of toil ? Is he any the richer, happier, or more con- tent than his ancestor was when the old-fashioned wagon shop stood by the highway, and the carpenter made his own sashes and doors, and the neighborhood mechanic owned the house he lived in ? Briefly, while the world has been moving ahead with long and rapid strides, while invention has multiplied ma- chinery a thousand fold, giving every worker ten hands and increasing wealth at marvelous rate ; while the coun- try has advanced without parallel in the history of na- tions ; while statisticians flood reports with bewildering figures ; while politicians grow big with patriotic concep- THE WAGE WORKER. g tions and eloquent with fervid speech, the men and women who do the manual work are growing relatively poorer, and the few who live off of the profits of other men's la- bor, or off of the interest on money, or rent on buildings and land, and they who gamble in labor's products and play with the fortunes of men as if they were foot-balls or dice, and to whom the toil and sweat of the poor have no more value than the drip of the roof, are growing richer. Advances in waefes. real though they are, have not kept pace with the growing necessities of the working people!" Is not the workman worthy of h is hire? Ought not t h e produce r to be first paid ? Who maynghtfully despoil him ? PART I. WHERE WE ARE. CHAPTER I. GENERAL AVERAGE PROGRESS OF THE COUNTRY — COM- PARED WITH PARTICULAR INDUSTRIES. What is the real condition of American farmers, and how do they stand when compared with men conducting Other great industries — as, for example, railroading, bank- ing, and manufactures ? And what is the present con- dition of wage workers in comparison with that of their class during the first half of the century, and when com- pared with the wealth of their employers ? These are pertinent questions ; much depends upon the answers to them. Let us trace the general progress of the people as a whole and use that as a standard of comparison. The total estimated wealth of the people of the United'*' in 1850 and every tenth year afterward was as follows: 185b $7,135,780,228 i860 i6,i59,6i6,o58 1870 30,068,518,507 1880 43,642,003,000 i8go (estimated) 66,000,000,000 (The figures for 1890 have not yet been published. They will probably be about $66,000,000,000.) It will be seen from this statement that the increase of our wealth, all items included, was, for the first period of ten years, 126 GENERAL AVERAGE PROGRESS OF THE COUNTRY. 1 1 per cent ; for the second period, 86 per cent ; for the third period, 45 per cent ; for the fourth period, 50 per cent ; and for the whole period, 825 per cent. From 1850 to 1880 the increase was 511 per cent. This shows the gen- eral development and growth of the country when all the great industries were considered as one. Now, let us compare a few of the leading lines of business — railroad- ing, banking, manufactures, and agriculture — with the general average, and see whether any of them exceeded it or fell behind. Railroading. The following tables show the progress of railroad building in the United States : Table I. Year, 1S30 1840 1830 1S60 1S70 iSSo 1890 Miles in operation. 23 2,818 9,021 30.63s 52,914 93.349 i^'3 3^ $2ii,239,siS 41 During the year $181,096,804 was retired from circu- lation, but not destroyed, as appears from page 168 of the same report, as follows : CONTRACTION OF THE CURRENCY. 107 Demand notes redeemable in coin $288,121 One-year s-per-cent notes 2,151,287 Two-year s-per-cent notes S>209.33S Two-year 5-per-cent coupon notes 1,078,55° Three-year compound-interest notes 172,369,511 $181,096,804 On the 30th day of June, 1866, as appears on pages 25 and 26 of the report, the amount of Government paper money out was $1,550,506,311.61, as follows : Compound-interest notes due 1867-68 $159,012,140 00 Treasury notes, 7-30's, due 1867-68 806,251,550 co Temporary loan, ten day's notice 120, 1 76, 196 65 Certificates of indebtedness past due 26,391,000 00 United States notes 400,891,368 00 Fractional currency 27,070,87696 Gold certificates of deposit 10,713,18000 $1,550,506.3" 61 At the beginning of the year the amount of national- bank notes out, as appears from the Treasurer's report, was $179,595,210. Adding these several amounts together, we have a total of paper money out on the ist day of July, 1866, of $2,122,437,841.02, as above stated. The population of the country in 1866 was 36,000,000 in round numbers. The circulation at the beginning of the year was, therefore, equal to $58.95 per capita. Ex- cluding national-bank' notes, the per capita circulation of Government paper alone, at the beginning of the fiscal year 1865 (July ist), was $53.90. At the end of the year (June 30, 1866), the circulation, including bank notes, amounted to $55.80 per capita ; excluding bank notes it was $48. In the statement of the public debt found on pages 41 and 43 of the report (1866) it appears that the amount of 5-20 bonds outstanding June 30, 1866, was $722,205,500 By reference to page xvi of Finance Report for 1869, it I08 THE FARMER'S SIDE. will be seen that the amount of 5-20 bonds on the ist day of December, 1869, had increased to $1,602,671,100, show- ing an absorption of currency in the three years equal to $880,465,600, leaving Government paper circulation at the end of the year 1869, $670,040,711, equal to $17.85 to the head of population. Adding national-bank notes out ($299,789,895) to the Government paper, we have $969,- 830,606, a per capita circulation of $25.86 September 30, 1869.* On the 14th day of June, 1870, a general funding act was approved : Sec. I. That the Secretary of the Treasury is hereby authorized to issue, in a sum or sums not exceeding in the aggregate two hun- dred million dollars, coupon or registered bonds of the United States, in such form as he may prescribe, and of denominations of fifty dollars, or some multiple of that sum, redeemable in coin of the present standard value, at the pleasure of the United States, after ten years from the date of their issue, and bearing interest, payable semi-annually in such coin, at the rate of five per cent per annum ; also a sum or sums not exceeding in the aggregate three hundred million dollars of like bonds, the same in all respects, but payable at the pleasure of the United States, after fifteen years from the date of their issue, and bearing interest at the rate of four and a half per cent per annum ; also a sum or sums not exceeding in the aggregate one thousand million dollars of like bonds, the same in all respects, but payable at the pleasure of the United States, after thirty years from the date of their issue, and bearing interest at the rate of four per cent, per annum ; all of which said several classes of bonds and the interest thereon shall be exempt from the payment of all taxes or duties of the United States, as well as from taxation in any form by or under State, municipal, or local authority ; and the said bonds shall have set forth and expressed upon their face the above * The estimate here given of currency in circulation in 1869 may be too large by $238,178,948 — the difference between $670,040,711, the amount above given, and $431,861,763, the amount given by the Secre- tary as the aggregate non-interest-bearing debt. CONTRACTION OF THE CURRENCY. 109 specified conditions, and shall, with their coupons, be made pay- able at the Treasury of the United States. But nothing in this act, or in any other law now in force, shall be construed to au- thorize any increase whatever of the bonded debt of the United States. Sec. 2. That the Secretary of the Treasury is hereby authorized to sell and dispose of any of the bonds issued under this act, at not less than their par value for coin, and to apply the proceeds thereof to the redemption of any of the bonds of the United States outstand- ing, and known as five-twenty bonds at their par value, or he may exchange the same for such five-twenty bonds, par for par ; but the bonds hereby authorized shall be used for no other purpose whatso- ever. And a sum not exceeding one half of one per cent, of the bonds herein authorized is hereby appropriated to pay the expense of preparing, issuing, advertising, and disposing of the same. This was followed by an act approved January 20, 187 1, as follows : Be it enacted by the Senate ana House of Representatives of the United States of America in Congress^ assembled, That the amount of bonds authorized by the act approved July fourteen, eighteen hundred and seventy, entitled " An act to authorize the refunding of the national debt," to be issued bearing five per cent- um interest per annum, be, and the same is, increased to five hun- dred millions of dollars, and the interest of any portion of the bonds issued under said act, or this act, may, at the discretion of the Sec- retary of the Treasury, be made payable quarter-yearly : Provided, however. That this act shall not be construed to authorize any in- crease of the total amount of bonds provided for by the act to which this act is an amendment. Approved, January 20, 1871. The condition of business in the country during the years included in this period of currency contraction may be inferred from the following : 8 no THE FARMER'S SIDE. Table XV. — Showing number and amount of business failures in the United States in the years named. Year. 1865.. 1866.. 1867.. 1868.. 1869.. 1870. . 1871.. 1872. . 1873.. In Northern States. In all THE States. Number. Liabilities. Number. Liabilities. 53° 632 2,386 $17,625,000 47.333.0CO 86,218,000 1,503 2,780 2,608 2.799 3.5SI 2,91s 4,069 5,183 $53,783,000 96,666,000 63,694,000 75,654,000 88,242,000 85,252,000 121,036,000 228,499,000 — American Almanac, 1889, page 48. Concerning the business situation in 1873, the Secre- tary of the Treasury, in his report for that year, at page xii, said : " The suspension of certain large banking hoiises, the first of which occurred on the i8th day of September, alarmed the people as to the safety of banks and banking institutions in general. Suddenly there began a rapid call- ing in of demand loans and a very general run on the banks for the withdrawal of deposits. Entire confidence was manifested in United States notes, and even in na- tional-bank notes, and they were drawn wherever they could be obtained, and were largely hoarded with as much avidity as coin was ever hoarded in times of financial dis- tress when that was the circulating medium of the coun- try. The banks found themselves unable to meet the demands upon them, currency in circulation became ex- ceedingly scarce, and the business of. the country became greatly embarrassed. " In this condition of things, great pressure was brought to bear upon the Treasury Department to afford relief by the issue of United States notes. The first application came from a number of gentlemen in New York, suggest- ing that no measure of relief would be adequate that did not place at the service of the banks of that city twenty CONTRACTION OF THE CURRENCY. m million dollars in United States notes, and asking that the assistant treasurer at New York should be authorized to issue to those banks that amount of notes as a loan upon a pledge of clearing-house certificates secured by ample collaterals, and for which certificates all the banks were to be jointly and severally responsible. . . . Exchange on Europe having fallen to unusually low rates, and, indeed, having become almost unsalable in the market, to the em- barrassment of our foreign and domestic trade, applica- tions were made to the Secretary of the Treasury to use the money in the Treasury in the purchase of exchange. . . . Subsequently the New York Produce Exchange made a proposition to accomplish the same result in a different form, and also requested, as others had before, that the Secretary should pay at once the twenty million loan of 1858." On page xv the Secretary said : " It should be stated that in the excitement there were many persons in the city of New York who insisted with great earnestness that it was the duty of the Executive to disregard any and all laws which stood in the way of affording the relief sug- gested by them — a proposition which indicates the state of feeling and the excitement under which applications were made to the Secretary of the Treasury to use the public money." And again, on the same page as above : " The Ex- ecutive Department of the Government was anxious to do everything in its power, under the law, and with due re- gard to the protection of the Treasury and the mainte- nance of the public credit, to allay the panic and prevent disaster to the legitimate commercial and industrial inter- ests of the country ; but it was found impossible to afford the relief in any of the many forms in which that relief was asked. It was decided, therefore, to adopt the only practicable course which seemed to be opened to it, the purchase of bonds for the sinking fund to such an extent 112 THE FARMER'S SIDE. as the condition of the Treasury would allow, and thus re- lease a considerable amount of currency from its vaults." Under that decision thirteen million dollars of bonds were bought, " without the use of any part of the forty- four millions of United States notes, generally known as the reserve." The contraction of the currency volume from the be- ginning of the fiscal year 1867 (July i, 1866) to the first day of December, 1873, was $881,265,600, or 56 per cent, taking the figures first above given. While that process was going on the volume of business was constantly in- creasing, as the following brief exhibit shows : Foreign commerce. 1866— $880,415,731. 1873— $1,270,705,643. Wheat produced. 1869 — 260,146,900 bushels. 1873 — 281,254,700 busheb. Com produced. 1869 — 874,520,000 bushels. 1873 — 932,274,000 bushels. Miles of railroads built. 1867 — 2,449 miles. 1873 — 4,097 miles. CHAPTER X. EFFECT OF CONTRACTION. From this state of facts it must be evident to all studi- ous persons that a rate of interest equal to lo per cent in 1866 was equal to 20 per cent in 1873. It was because of the withdrawal from circulation of so large a part of the currency that business became stagnant, trade paralyzed, and bankruptcy overtook the people. It was a perilous journey to take, but our statesmen entered upon it delib- erately, plainly foreseeing and frankly foretelling the dreadful consequences, well knowing that ruin would fol- low in their wake. Creditors alone would profit by the wreckage, for they would absorb every dollar that debtors would lose. Nothing is better settled in political econo- my than that a long-continued diminution of the currency volume leads to disaster. This has been the universal ex- perience of men. Our public men understood it well, and they gave warning of the coming destruction. Senator Sherman, in an able argument delivered in the Senate on a bill relating to the public debt and the currency, as printed on page 628 of the Congressional Globe, under date January 27, 1869, told the people what was coming. Here are some extracts : Practically, any law requiring a resumption of specie payments is a law adding to the amount of a currency debt the full deprecia- tion of the currency, unless you either scale the debt or allow the parties to adjust the matter between themselves. . . . All contracts 114 "^^^ FARMER'S SIDE. to pay money are contracts for the delivery of gold, and a contract in currency is only a contract to pay an indefinite amount of gold, depending upon the uncertain depreciation of the currency at the time of the payment. Page 629.— But the distress caused by an appreciation of the currency falls mainly on the debtor class ; others suffer only by reason of his inability to pay. What does specie payments mean to a debtor.' It means the payment of $135 where he has agreed to pay $100, or, which is the same thing, the payment of $100 where he has agreed to pay $74. Where he has purchased property and paid one fourth of it, it means the loss of the property ; it means the addition of one fourth to all currency debts in the United States. A measure to require a debtor now to pay his debt in gold, or currency equivalent to gold, requires him to pay 135 bushels of wheat when he agreed to pay 100, and if this appreciation is extended through a period of three years it requires him to pay an interest of 12 per cent in addition to the rate he has agreed to pay. When we con- sider the enormous indebtedness of a new country like ours, where capital is scarce, and where credit has been substituted in the place of capital, it presents a difficulty that may well cause us to pause. We may see that the chasm must be crossed, but it will make us wary of our footsteps. Good faith and public policy demand that we appreciate our currency to gold, but in the process we must be careful that bankruptcy, distress, and want do not fall upon our fellow-citizens, who have based their obligations on your broken promises. The debtors of this country include the active, enterpris- ing, energetic men in all the various employments of life. It is a serious proposition to change their contracts so as in effect to re- quire them to pay one third more than they agreed to pay. They have not paused in their business to study questions of political economy. They have based their operations upon this money which you have declared to be lawful money. You may change its relative value, but in doing so you should give them a reasonable opportunity to change their contracts so as to adapt them to the new standards of value you may prescribe for them. . . . The appreciation of the currency is a far more distressing operation than Senators may sup- pose. Our own and other nations have gone through this process before, and always with the sorest distress. ... To every bank it means the necessity of paying $1 50 for one hundred of its notes and EFFECT OF CONTRACTION. nj deposits, except so far as the bank may transfer this to its debtors. It means the ruin of all dealers whose debts are twice their capital though one third less than their property. It means the fall of all agricultural productions without any very great reduction of taxes. To attempt this task suddenly by a surprise upon our people, by at once paralyzing their industry, by arresting them in the midst of lawful business and applying a new standard of value to their property without any reduction of their debt or giving them an opportunity to compound with their creditors or distribute their loss, would be an act of folly without example in evil in modern times. It is sometimes said that we did this in the passage of the legal- tender act ; that we inflicted the same loss on the creditor that we now deprecate for the debtor. This is not true. The effect of the legal-tender act was undoubtedly to depreciate our notes, but the process was very slow and gradual. For more than a year it scarcely operated as a depreciation, and during all the time the capital paid off by depreciated notes was invested in bonds, bank stock, railroads, and manufacturing pursuits created by the war, which yielded as much in gold as capital produced before the war. Capital lost nothing by the war, even when paid in greenbacks, for the demands for capital during the war made ample amends for the loss by the depreciation in greenbacks. It is estimated that the interest-bearing capital of this country now is, upon the gold basis, more than double the capital in i860. And if it be true that appre- ciation now will only work the same injury to the debtor that depre- ciation did to the creditor, we would not be justified in peace in inflicting the same injuries justified by war ; and the creditor, who is usually the holder of property, is better able to bear the loss of a portion of the money due him than the debtor is to bear an addition to his burden. Our power over the creditor is unlimited. We may levy taxes upon him to any amount, but we have no power to vary a contract or add to the burden of an existing debt. . . . During the war a greenback would purchase an equal amount of bonds of any character offered in the market. It paid at par for the five-twenties, the ten-forties, and the seven-thirties. It is now less valuable than these bonds only because it is dishonored paper. . . . You give the bond the benefit of the improving credit of the country, but you deny this to the note. CHAPTER XI. THE BLAND SILVER LAW. The people having discovered that silver dollars had been discarded by Congress (it seems that nobody — not even members of Congress nor the President who ap- proved the bill — knew that it was intended to drop silver dollars from the coinage of the country), there was a strong demand for its restoration to its old place in our monetary system. The condition of the people was such that they had little patience with their law makers, and they demanded prompt relief. All that had been predict- ed concerning business prostration had come to pass ; and when it was found that, in addition to the withdrawal of paper money, Congress had demonetized one of the coins that had descended to us as full legal-tender money from the fathers of the republic, a feeling of indignation grew aggressive among the people. A bill was introduced in Congress in 1876 to remedy the wrong which had been done, but its course was obstructed until early in 1878, when the temper of the people was recognized.* * By way of showing the condition of the country and the tension of the public mind at the time, here are extracts from two speeches deliv- ered in the Senate while the silver bill was pending — one of the speakers being a distinguished member of the Democratic party, the other equally distinguished in the Republican party — Messrs. Voorhees, of Indiana, and Ingalls, of Kansas. Mr. Voorhees (January 14) said : " Sir, thus far I have spoken in pointing out what I conceive to be the ruinous legiiilation of this country THE BLAND SILVER LAW. 117 The sil'\?'er bill — commonly known as the Bland Bill — which was passed by both houses and vetoed by President Hayes, was reconsidered, passed again by both houses, and became a law February 28, 1878. It provided that the Secretary of the Treasury is authorized and directed to purchase, from time to time, silver bullion, at the market on the great and paramount question of its finances. There are two op- posing ideas on this subject now thoroughly aroused into vigilance and activity. On the one hand is the vast money power, in all its various de- velopments of bonds, banks, and loaning associations, and on the other are the great industries, the active business, and the laboring people. The issue has been years in making up, but is now joined. Nobody need be deceived. All the wide-spread influences of capital are organized and combined. The holders of public securities in America and in Europe work together. They think and act in concert. " The national banks of the United States have a solid organization to protect what they have and to get as much as possible. They are asking now to be relieved from paying taxes on their circulation and deposits in order that they may enjoy their enormous profits free from all burdens for the support of the Government. "Associations of capitalists engaged in obtaining mortgages at 12 per cent interest on Western farms, on account of the scarcity of money in that section, are not only striving to make all such mortgages payable in gold a year hence, but they are threatening those in pecuniary distress that they shall have no further favors at the same rates unless they agree in advance to pay gold in return for greenback loans. The power ot money in the midst of times like these is very great ; but I am much deceived in the people if they have not turned at last in defiance and bold warning upon their oppressors. They are not in favor of re- pudiating a single dollar of their public or private debts. They intend to pay everything they owe, but they intend to submit to no more changes .of contracts, violations of obligations, and breaches of public faith in order to increase their indebtedness or to take away their means to pay it. They demand, too, that certain specific wrongs shall be re- dressed." Mr. Ingalls (February 14) said : " Our demands for justice have been met with indifference or disdain. The laborers of the country asking for employment are treated like impudent mendicants Tsegging for bread. The Senator from Connecticut informs us that hundreds of millions of Il8 THE FARMER'S SIDE. price thereof, not less than two million dollars' worth per month, nor more than four million dollars' worth per month, and cause the same to be coined monthly, as fast as so purchased, into standard dollars. Resumption was supposed to have taken place on the first day of January, 1879, and on the 30th day of June following the banks had increased their notes to $329,- 691,697, and the increase was continued four years. At the end of the fiscal year 1882 (June 30th) the amount of bank notes out was $358,742,034. The increase from 1878 added $8,556,937 yearly to the circulation of the country, and the silver coinage under the act of 1878 added about $25,000,000 every year. Small as waS the increase of the currency from these two sources, it gave stimulus to trade and prices grew better. Corn sold^for 31.8 cents a bushel in 1878 ; in 1881 the price was 63.6, and in 1882 it was 48.5. Wheat rose from 77.7 cents in 1878 to 88.4 in 1882. (It had been $1.10 in 1879 and $1.19 in 1881.) Trade re- vived generally ; all classes of people felt the good influ- ences of what were believed to be evidences of returning prosperity. In 1882 the national banking law was re- enacted, thus continuing the system another twenty years. Government bonds were worth 112 to 121, and banks dollars are lying idle in New York and Hartford which can be borrowed, on good security, at 4 per cent, and asks, with something like a sneer, how the coinage of a dollar worth 90 cents will benefit the poor unless they can give good security for their loan. The laborers of the West do not want to borrow; they want to earn. They do not wish to pay interest on other people's capital, but to sell their labor, and, if possible, acquire some capital of their own. " The opening of this era marks the epoch of the emancipation ot the West and South from their bondage to the capital of the East, and in asking the iassage of this bill they are asking less than they will eve} ask again. " When I reflect upon the burdens they have borne, the wrongs they have suffered, I am astonished at their moderation." THE BLAND SILVER LAW. ng began to withdraw their circulation, which process was steadily continued down to the present time. The amount of notes out on the 31st day of October, 1890, was $124,- 958,736- . The silver law authorized the Secretary of the Treasury to purchase $4,000,000 worth of silver bullion every month and coin it into standard dollars, but that ofScer and his successors persistently refused to go beyond the minimum limit of the law — $2,000,000 worth — and the actual silver- dollar coinage amounted to a yearly average of only about $25,000,000, less than the annual decrease of the volume of bank-note circulation. The only source of increase in the amount of money in the country was gold coinage, an annual average of about $25,000,000. But there has been no increase of the circulation. The amount of money in actual circulation among the people is not half as much per capita now as it was in 1878, when it was $17.85. Senator Plumb, in a careful estimate presented to the Senate on the 6th day of June, 1890, put the amount of money " available for delivery or other use in the transaction of the business of all the people " at $S5°,°°o.ooo, "or a trifle over $8 per capita." He added : " If I were deciding this case upon what I consider the best evidence, I would be bound to say that I believed the money in actual circulation did not much, if at all, exceed $500,000,000." While the business of the people has doubled in the last twelve years, and the population has increased at least 30 per cent, our money volume has shrunk from $17.85 per capita to $8. We had gone down far below the danger line in 1878, and the way was strewn with disaster; we have been since following the same perilous way, going deeper and deeper in debt, until now Mr. Porter tells us that during the last ten years 9,000,000 mortgages were put on the lands of our citizens — equal to one for every seven persons — and the average mort- I20 THE FARMER'S SIDE. gage is about $i,ooo. The private mortgage debt of the people, judging from census reports thus far published, probably amounts to between $3,000,000,000 and $4,000,- 000,000, and the average interest rate to the borrower is at least 10 per gent. The owner of the money does not de- mand or receive more than 7 per cent ; the rest is taken by the loan agent. The borrower pays 10 per cent, and has, in thousands of cases, given separate mortgages for the excess above legal rates, or above what the owner of the money receives. CHAPTER XII. THE HAND OF THE MONEY CHANGER IS ON US. From this array of testimony the reader need have no difficulty in determining for himself " how we got here." The hand of the money changer is upon us. Money dic- tates our financial policy ; money controls the business of the- country ; money is despoiling the people. The au- thor of Twenty-eight Years in Wall Street boasts that in the wonderful commercial and industrial development of the age, and which, he says, exceeds that of all past time since Herodotus wrote, Wall Street was a prime factor. He claims, and truthfully too, that the power of the men who assemble there to catch the driftwood of trade is greater than that of monarchies. He says they "move the money which controls the affairs of the world." We see plainly that behind all the commercial villainies of the time this power rests in placid security while the robbing of the toilers proceeds. These men of Wall Street, posing as missionaries conquering deserts and building republics, men piously assuming universal dominion, religiously dic- tating the financial policies of nations, moving in an at- mosphere of radiant morals, self-appointed philosophers teaching honor and honesty to an ignorant world, these men of fabulous fortunes built upon the ruin of their fel- lows, are in fact the most audacious gamblers in Christen- dom. The poor fool who with a few dollars opens a faro bank or sets up a monte table in a country town is by 122 THE FARMER'S SIDE. common consent an outlaw ; every man's face is set against him, and he is liable to arrest and imprisonment at any hour ; he is denied admittance to the houses of people who are clean ; even the street gamins pass him by as if he were a leper. No man so little esteenied, no man so thoroughly loathed and despised as this fellow, the common gambler. Yet here in the very heart of the best civilization on earth, at the very center of business life and activity, living in luxury and ease, renting costly pews in splendid churches and hiring their worshiping done ; men petted and feasted by the rich and easy everywhere, with millions of dollars at their call, governments at their com- mand, and a loyal people in their service ; these men who produce nothing, who add not a dollar to the nation's wealth, who fatten on the failures of other men, whose acquisitions are only what their fellows have lost ; these men without conscience, who believe they are specially commissioned to prey upon the people, who act as a sort of continuing self-appointed civil-service commission to examine candidates for important offices before their names are submitted to the voters ; this pampered aris- tocracy living off the wreckage of commerce, who rake in a railroad, a state, or a nation with equal complacency ; these men "whose private dwellings are more splendid than the public buildings," and whose "happy homes" are the fruit of other men's toil ; these men who boast of their patriotism in lending a few millions of their ill- gotten gains to the government of their imperiled coun- try at " 12 per cent " interest, when thousands of farm- ers and wage workers of all sorts and conditions were voluntarily in the army at risk of life and home — all without question as to pay ; these men masquerading as philanthropists and patriots while they are despoiling a nation and robbing the poor — these are the men who en- gineered the train that brought us where we are. They THE HAND OF THE MONEY CHANGER IS ON US. 123 hold the bonds of nearly every State, county, city, and township in the Union ; every railroad owes them more than it is worth. Corners in grain and other products of toil are the legitimate fruits of Wall Street methods. Every trust and combine made to rob the people had its origin in the example of Wall Street dealers. Touch any spring along the keyboard of commercial gambling and a Wall Street sign appears. This dangerous power which money gives is fast undermining the liberties of the peo- ple. It now has control of nearly half their homes, and is reaching out its clutching hands for the rest. This is the power we have to deal with. It is the giant evil of the time. Money is the great issue — all others pale into in- significance before this, the father of them. PART III. THE WAY OUT. CHAPTER I. partisan remedies proposed. Silver Legislation. There have been so many remedies proposed for ex- isting conditions that it may be well to consider the most prominent ones suggested by partisans, before taking up those which the people themselves as a body, more espe- cially the farmers, propose. Assuming that the difficulties arise in part from a shortage of currency, a very large number of our public men have suggested several plans of adding to the volume of our circulating medium. The proceedings of Congress along that line have been so re- cent that they are fresh in the public memory, and need not be referred to here at length. Upon the meeting of the Congress which adjourned on the 4th day of last March a large number, some twenty-five or more, bills were in- troduced in the two houses proposing the free and unlim- ited coinage of silver money. That was in response to a very general demand of the working people of the country. It is not saying too much to state that at least ninety per cent, of the men who toil with their hands had in one form or another expressed themselves in fa.vor of such PARTISAN REMEDIES PROPOSED. 125 legislation. The free-coinage bills were referred to ap- propriate committees, but were never reported to the full Houses. Instead thereof, measures were reported pro- posing to increase the currency, not by the coinage of sil- ver money, but by issuing treasury notes in payment for silver bullion. The Senate finally passed a free-coinage bill upon the earnest and persistent urging of Senator Plumb, of Kansas. When the bill went to the House it was immediately referred by the presiding officer of that body to the Coinage Committee, without any action of the House whatever, and it was decided in caucus by the mem- bers belonging to the dominant party that whatever meas- ure upon this subject should be presented to the House should be a measure that would be known and recognized by the country as a measure coming from that party, and for which that party alone is responsible. It was stated in caucus — so the records show — by the Chairman of the Coinage Committee, that there were enough members of the opposite party favoring free coinage who, with those members of the dominant party of like mind, would amount to a majority of the House, and who could therefore by uniting pass a free-coinage bill. He hoped that, taking that view of the case, the members of his party would pre- serve the party alignment, and present to the House only such a bill as a majority of the members of that party could agree upon. So the free-coinage bill was defeated, and a measure passed which was not what the people had asked for, and which was not what the people wanted. It differs from the old law very materially, and is not in any sense as satisfactory to the people or as productive or as well suited to the object for which financial legislation was asked. By reference to the silver act of 1878, it will be seen that under that law the Secretary of the Treasury was required to purchase not less than $2,000,000 worth, nor more than $4,000,000 worth of silver bullion every month 9 126 THE FARMER'S SIDE. at the market price, and to coin the same into standard silver dollars. Under that law the lower the price of sil- ver bullion in the market, the more money would be made out of it in proportion to the cost of the bullion, which was of itself a great gain to the people, giving them more money and putting more money into circulation than was paid for the bullion. It operates in this way. According io the standard fixed by law by which silver is to be meas- ured when gold and silver are at " parity," as the late law has it, one ounce of pure silver bullion is worth one dollar and twenty-nine cents and twenty-nine hundredths of a cent ; that is the value of silver bullion when it is at par with gold. The silver dollar contains 371^ grains of pure silver, or, with an alloy of 10 per cent, 412^ grains of standard silver — as it is when coined. When, therefore, the price of bullion in the market is less thari $1.29^, and standard dollars are made out of it, the value of the bullion in the dollar being less than the standard value of the dol- lar, more money will be made out of the same worth of bullion. To illustrate : President Harrison, in his message of December, 1889, made an estimate that silver dollars at that time were worth but 70 cents each, because, he said, the price of silver bullion in the market was 90 cents an ounce. If the reader will take those figures as a basis and estimate the amount of money of standard weight which could be coined from silver bullion that $4,000,000 would purchase, the maximum of the monthly allowance under the law, and multiply that by twelve, in order to ascertain the year's product, he will find that for $48,000,000 paid out for silver bullion the Treasury could turn out 68,571,408 silver dollars, a clear gain of $20,571,- 408 to the people, at the same time giving them money of full weight as had been adopted by law under the first coinage act passed by Congress in 1792, and continued from that day to this. PARTISAN REMEDIES PROPOSED. 127 The new bill passed in place of the act of 1878, which was repealed, requires not that there shall be so many dol- lars' worth of silver bullion purchased and coined, but that a certain number of ounces of bullion shall be purchased — 4,500,000 ounces every month, or as much thereof as may be offered ; that it shall be purchased on the best terms which the bullion owners will accept, and paid for in treas- ury notes. The actual value of the bullion, or, perhaps it would be better to say, the actual amount of money agreed to be paid for the bullion, is paid in treasury notes, and the only coinage required under this law is 2,000,000 ounces a month until the ist day of July, 1891, and after that such additional amount as may be necessary to re- deem the treasury notes issued in payment for bullion. Under this law there can be issued only as much money, dollar for dollar, as the market value of the bullion is at the time it is purchased, and the purchase must not exceed 4,500,000 ounces monthly. If the monthly purchase of bullion amounts to $4,000,000, say, the issue of notes will be just $4,000,000. If the amount of purchase is $3,000,- 000, the amount of notes issued will be $3,000,000, so that in every case and in all cases the value of the bullion pur- chased controls the amount of money which is given to the people. The price of bullion first offered to the Sec- retary under the new law was about $1.15 an ounce. At that rate, allowing the maximum purchase under the law — 4,500,000 ounces per month — to continue a year, the total amount of money would be but $62,100,000, or $6,- 471,408 less than the amount which might have been coined under the law that was repealed. The price of bullion, however, dropped soon after the conspiracy to increase its price and amass fortunes for its owners had spent its force, to about $1 an ounce. Now, if it continue at that rate, and it probably will, or go lower, 4,500,000 ounces of silver would cost $4,500,000 in money. Multiplying that 128 THE FARMER'S SIDE. by twelve you have $54,000,000 which the people will ob- tain under this law in one year; whereas under the old law, as above shown, if the Secretary had seen proper to enforce it to the full limit of his discretion, the coun- try would have obtained, at the President's figures, $68,000,000, a difference of $14,000,000 in favor of the old law. Aside from the effect which this dissection of the case shows to be against the people, there is another feature that will be discussed more at length hereafter. It is this : That so long as our present financial methods are continued in practice, it will afford no permanent relief to the indus- trial world whether one thousand or one thousand million dollars of silver money be coined, because it goes imme- diately into the banks or is put into the hands of money changers or other persons whose business it is to lend it to the people on interest, and it is the exorbitant rate of interest for the use of money that has brought the people to where they are. It is evident now to all observing men that the great mass of the people who are in debt, and who are needing money because of their indebtedness and for little else, are unable to borrow because they can not afford to pay ruling rates of interest, and for that reason money in the country has been accumulating in the vaults of banks and of persons who are in comfortable circumstances, until, as was shown in the last chapter, the average per capita circulation of the country does not ex- ceed eight or ten dollars, if as much as that. There is a money famine in a very large portion of our territory. For that reason a mere increase in the amount of money in the country will be of but little benefit to the masses of the people, because they can not get it. In connection with the coining of money there must be a reduction of interest rates before the people will be permanently bene- fited. PARTISAN REMEDIES PROPOSED. Tariff. 129 There are two views taken of the tariff question, and it is upon the line between those views that the two great parties are divided, and likely to remain so until an inde- pendent political movement attracts the attention of the people in other directions. In the first place, one party- insists that the farmers' troubles arise chiefly from excess- ive taxation through our tariff laws, and yet it is history that, when that party undertook to frame a bill embodying the party's views upon tariff reform, their bill proposed to reduce duties from an average of 47 per cent to an average of 4272 per cent, or really a reduction of about 4Y3 per cent. The other party embodied its viSws in the bill which is now the law of the land upon this subject. That, while it reduces duties upon some articles, and puts sugar of low grades on the free list, it yet raises the average rate of duty on woolens of all grades from about 66 per cent to 91 per cent, an increase of about 33Y3 per cent. It increases the duties on cutlery, such as pocket knives, butcher knives, table knives, razors, and the like, fully 100 per cent. It increases the duties on some grades of glassware from 25 per cent to 50 per cent. Below is given a statement of a reliable dry-goods merchant, doing business in one of the Western States, in answer to a ques- tion from the writer hereof as to how the new tariff law affects prices in the line of goods in which he deals : " We paid this spring an advance over what we paid last fall. The same goods, and bought from the same parties : " Ingrain carpets, an advance of S <^'s. a yard. Tapestry Brussels carpets, an advance of 5 " Body Brussels ( an advance of, on low grades ao " carpets, 1 an advance of, on best grades 10 " Moquette carpets, an advance of lo " I30 THE FARMER'S SIDE. Rugs, an advance of lo per cent. I an advance of , on cheap goods i8 " I an advance of, on good grade goods. . . ii " „, , , J 1 an advance of, on low grades. 14 " Wool dress goods, ■( , / ,.■ ■l. , c » (an advance of, on high grades, o " Hosiery, | ' " Blankets, I don't know yet how much. I offered the mill to duplicate my last year's bill at last year's prices, and they refused it. I then offered them the order at 10 per cent advance, and they refused that, and said they had not established their prices for the present year. " Pearl buttons, 100 per cent advance ; and so it goes all through the entire stock." CHAPTER II. GOVERNMENT REVENUES MUST BE PROVIDED FOR. Farmers have no objection to high duties being levied upon luxuries of whatever sort. Not being given to luxu- rious living themselves, they are not particular who is, pro- vided it is not at the expense of the people who do the hard work. What the workers want, what the farmers demand, and what they have resolved to attain, is justice in this matter, and only justice. They understand very well that taxes for the support of the General Government must be raised in some way, and they are not disposed to be particular about the method, so long as they are not dealt with unjustly ; but, when they are placed in compe- tition with the "cheap farm labor of India and Italy and Austria and Russia and South America, they do not see why they should be asked to protect any other particular class of their fellow-citizens against cheap labor in other countries. The farmer himself is not making, as has been shown abundantly in these pages, as much as a dollar a day net for each member of his family, nor half that much. It is shown that, by the time he pays his taxes and his in- terest and his necessary farm expenses, he does not have left one half as much for his own personal support as he is compelled to pay for the support of a convicted criminal in the State prison. It is understood by all of us that the Government of the United States is a very expensive institution, and that 132 THE FARMER'S SIDE. it is a pauper. It is not a foreign entity, governed by some outside power with which we have no connection. It is not, as some imagine, a great father sent to us to take care of our interests without any action upon our own part, but is simply the agent of the people. It is just what the people themselves have made it. It is an instrument to express and to interpret and to execute their will. It is composed of vital forces acting through living men selected by the people in regularly organized election campaigns. The two Houses of Congress constitute the legislative de- partment ; the President, with his Cabinet and subordinate officers, constitute the executive department ; the Supreme Court, with the inferior courts, marshals, and clerks, con- stitute the judicial department. Together they form a machinery of government through which the people oper- ate. This government is but an agent. Let the reader fix that thought indelibly in his mind — that the Government of the United States is simply the ag«nt of the people of the United States. It is poor. It has no available means of supplying the necessary means to carry forward the work with which it is charged. It requires money, and a great deal of it, to keep the machinery in motion. Money is the oil which lubricates these vast forces in action, and the necessary means must be provided through taxation of some kind. Our tariff legislation began early in our history. The first general act passed by the first Congress was a tariff act. It was approved by President Washington on the 4th day of July, 1789. The object of the law, as stated in the preamble, was, first, to raise revenue to support the Government ; second, to pay the debts of the United States ; and third, for the encouragement and protection of manufactures. Duties were very low, ranging from 5 to 15 per cent. It is proper to say in this connection that one of the leading causes which led to the formation GOVERNMENT REVENUES MUST BE PROVIDED FOR. 133 of the Constitution and the organization of the Govern- ment under it was the effect upon our commercial condi- tion of excessive importation of goods from other nations, more especially from Great Britain. Under the new Gov- ernment the first object, as stated, in the levying of tariff duties was to raise revenue for the Government, and the protection desired to home manufactures was not for the purpose of benefiting any particular class of people, but simply to establish national industries in order that we might become as soon as possible commercially independ- ent of foreign influences. Our political independence had been established, yet we were commercially slaves to the power which had so long oppressed us. That idea of rais- ing revenue by the taxation of foreign goods has been common with our people from the beginning. It seems latterly, however, that there is a very strong disposition in certain quarters to pervert our tariff legislation from its original design into one for the benefit of a particular class of people, and that class represented by a very small number of persons. Let us get back as soon as possible to the original idea, and stay there as long as we find it to our advantage to raise revenue in that way. Now let us see how tariff taxation works. The last Congress estimated that the necessary expenses of the Government for the fiscal years 1891 and 1892 will amount to, in round numbers, $1,000,000,000 — that is, $500,000,000 a year. If that amount were raised by direct taxation upon the property of the people, they would realize how heavy a burden it is. The total valuation of all the tax- able property in the United States in 1888, that being the last year fully reported, was $22,000,000,000 in round numbers. To raise $500,000,000 on that basis would re- quire a levy of nearly 2'/, per cent. For ease of calculation we will call it 2'/,. If the tax payer would ascertain just how much he individually would be required to pay for 134 THE FARMER'S SIDE. his part of that vast sum, let him compute 2'/, per cent on the amount of his taxable property as returned by the assessor. For example, if his property be worth $1,000, his share of the general taxation would be $25. If his property were assessed at $2,000, his tax would be $50, and so on — $25 of tax for every $1,000 worth of property. This all goes to the General Government, not a dollar of it being applied to State or any other local uses. This is in addition to all of the State taxation to which we are ac- customed, and that on an average is about 3 per cent ; so, if we were raising by direct taxation the revenue neces- sary to carry on the Government at the rate of $500,000,000 a year, it would require $25 upon every $1,000 of our property assessment in addition to State, county, town- ship, school district, and city taxes. Say a citizen's State and local tax amounts to $30 on a valuation of $1,000. In addition to that, if we were paying the Government tax, he would have to pay $25 more — in all $55. If his local taxes were $60 on a valuation of $2,000, when the Government tax is added it would be $50 more, or in all $110. It is a question, then, whether it is better for us to raise our revenue as we have been doing it, largely by duties levied upon foreign goods imported, or whether we should repeal our tariff laws, abolish our custom houses, and raise the necessary funds by direct taxation. It would be reasonable, and that is the view which farmers take of this matter, to relieve as far as possible from tariff taxation all articles which are in general use among the common people ; and what is meant by the common people is the masses who toil with their hands — farmers, mechanics, builders, wage workers generally. For example, lumber, coal, salt, sugar, wire used in fencing, low grades of clothing, common cutlery and table wear, shoes, hats, etc., ought not to be taxed at all ; while levying high duties — so high as not to pre- GOVERNMENT REVENUES MUST BE PROVIDED FOR. 135 vent importation — upon all sorts of articles which may be classed in the category of luxuries, as dress goods of all varieties, fine cloth and clothing, embroidery, drapery, laces, fancy glassware, ornaments, jewelry, diamonds, precious stones, sporting implements, liquors, tobacco, tropical fruits, and every kind and description of mer- chandise which is in special demand by rich and fastidious people. For this purpose a duty of say 10 per cent levied upon plain goods, such as plain people want, would be suf- ficient to retain the home market for the benefit of home manufactures, and at the same time be so low as not to affect the price to any appreciable extent. Fifty per cent, 75 per cent, and 100 per cent, or more, as the case may be, upon the higher grades of goods and those v/hich are more costly would bring in a very large amount of revenue without costing the common people a dollar. Lumber and coal and salt and sugar ought to be absolutely free. The lower grades of wool, such as is known in the tariff law as carpet wool, a great deal of which is used in the manufact- ure of common grades of clothing, ought to be free. Our own farmers are raising very little of that sort of wool. It is produced in other countries at such low rates as to be able to pay any reasonable duty. It will not do to levy duties without discrimination, because if we do the tax will fall most heavily upon the poor people. A poor family uses, or is entitled to use, as much sugar and coffee and tea as a wealthy family of the same number of persons, and if we were levying duties without discrimination we would levy them upon all goods imported ; that would tax the poor man's sugar and his tea and his coffee just as much as it would tax the rich man's, though the expenses of the rich man's family, 'per- haps, do not amount to i per cent of his income, while the expenses of the poor man's family amount to 99 per cent or 100 per cent of his income. A just theory of tax- 136 THE FARMER'S SIDE. ation will in every case exclude the very poor man. When his country is in need of his services it commands them, and he makes no complaint ; he offers his body and all the strength of his muscles. That is all he has, and he offers it freely. Farmers understand that a great many articles which they need can be and are produced in this country as cheaply as in any other. This applies to agricultural im- plements, to many sorts of hardware (as stoves, screws, nails), low grades of cotton cloth, some grades of cheap flannels, to furniture, to tinware, and some sorts of lumber. They understand, too, that the question as to whether the producer or the consumer bears most of the burden of tariff taxation is determined by this general rule : Current prices of commodities are affected by duties on imports according to the proportion which the amount of the home product bears to the amount of the imports of like com- modities which are brought in to make up the difference between the home product and the home demand or con- sumption. If the home product and the imports (of like articles) are about equal in amount, the duty is about equally divided between the foreign producer and the home consumer; if the imports are greater in amount than the home product, the consumer pays the greater part of the duty and in about the same proportion (inversely) ; if the home product is greater in amount than the imports, the duty falls more heavily on the importer ; if the imports supply the entire demand, then the consumer pays all the duty ; and if the home product supplies all the home de- mand or substantially so, then the importer pays all the duty. The farmer wants the people of the country all em- ployed at not only living wages, but at profitable wages. He wants a reasonable profit upon the labor of his own hands. He wants a liberal income from the capital which GOVERNMENT REVENUES MUST BE PROVIDED FOR. 137 is invested in his farm. He wants to see his neighbor, the mechanic and the wage worker, fare as well as he. We are all toilers together. We are entitled to what we earn, . and that is all we ask for. We do not want the profits of our labor to be absorbed by men who do not work at all. We want to live ourselves, while we assist others in living, and we do not care to spend our energies in a life work which is to end in enriching other men and impoverishing us. We are willing to be taxed, but we want the whole people to get the benefit of it. CHAPTER III. DUTIES ON FARM PRODUCTS IMPORTED WILL AFFORD RELIEF. While the farmer does not expect sufficient relief from a reduction of tariff duties on manufactured goods, he does not, on the other hand, expect any considerable benefit from an increase of duties on farm products. By the last tariff act the duty on wheat was raised from twenty cents to twenty-five cents a bushel. The duty on corn was in- creased from fifteen cents to twenty cents, with a propor- tionate rise on a great many other articles, including oats, barley, potatoes, cheese, butter, eggs, beef, pork, hams, bacon, and so on. By reference to the Statistical Abstract of the United States for 1889, it will be seen that compara- tively a very small amount of farm products of any sort were imported into the United States that year, and the Table XVI. — Showing the quantity of wheat, corn, oats, and barley pro- duced on the farms of the United States in the year i8Sg, and the value thereof ; with the quantities of same crops imported that year, the rate of increase of duties on such crops under the tariff law of i8go, and the amount of increased revenue which would have been gained on said importations if the new rates had been in force then. Crops. Quantity produced on farms. Value. Quantity imported. Increase of duty. Increase of revenue if new duties had been in force. Wheat— bushels... Com — bushels Oats—bushels Barley — ^bushels. . . 490,560,000 2,113,892,000 751,515,000 63,884,000 3p342,49ii707 5.:?7,9i8,82g 171,781,008 37,672,032 130,649 2,401 22,301 11,368,414 5Cts. 5 cts, S cts. 15 cts. »6,53=.45 ISO. 05 1,708,261.70 Total 3,418,851,000 $1,149,862,576 "i543.774 $1,716,028.70 DUTIES ON IMPORTED FARM PRODUCTS. 139 report for that year does not differ materially from the reports of other years. There is a greater or less importa- tion every year, but those of 1889 are a fair average since 1880. In order that the reader may see for himself just what there is in this tariff-increase argument, Table XVI is appended showing the home production, the export, and the import of certain articles of grain. It will be seen from Table XVI that the total amount of duties which would be received under the new rates in addition to the old rates is but a very small proportion, almost infinitesimal, of the value of our home products, and for that very reason it is useless to expect any sub- stantial benefit to the farmers of the country, or to any other class of citizens, by so trifling a matter as this. With such an immense production it is utterly out of the question to expect any appreciable increase of the prices of our farm products by reason of the small amount of duties levied on the limited importations of those articles. It is alleged, however, that upon meat and the products of animals a very considerable benefit will be derived by the farmers. Let us see how that is. The reports show as follows : Table XVII. — Showing the value of animals, meats, and meat products imported into the United States during the fiscal year i88g, not in- cluding animals admitted free of duty. Articles. Value. Animals $3,917,031.84 Provisions — meats and meat products 530,802.01 Total $4,447,833.85 — Com. and Nav., 1889, pp. 703 and 704. Table XVIII. — Showing the value of animals, meats, and meat products exported from the United States during the fiscal year i88g. Articles. Value. Animals $18,288,664 Provisions — meats and meat products 89,476,338 Total $107,785,002 — Special Bulletin of Agl, Dept., 1890. I40 THE FARMER'S SIDE. While we were importing animals and meats to the amount of $4,447,833, we were exporting the same class of articles to the amount of $107,785,002, or more than twenty-five times as much. If a tax of 100 per cent were levied on foreign commodities of this class imported, it could not offset our home prices to any serviceable extent, because our home production is so large. During the last ten years the entire importation of animals and meats and meat products amounted to only $60,000,000, and during the calendar year 1889 we exported $123,000,000 of like articles. And, besides this large exportation, we still had a few animals left, as the following table shows : Table XIX. — Showing the number and value of live stock on hand among the farmers of the United States in iSSg. Number. Value. Horses 14,213,837 2,331,027 15,952,883 36,849,024 44,336,072 51,602,780 $978,516,562 182,394,099 352,152,133 560,625,137 100,659,761 243,418,336 Mules Other cattle Sheep Total 165,285,623 $2,418,766,028 —Special Bulletin 0/ Agl. Dept., 1890. CHAPTER IV. RECIPROCITY. — OVERPRODUCTION. In addition to the increase of duties upon farm prod- ucts, it is predicted that by opening trade, under the name of reciprocity, with the American nations south of us our farmers will be materially benefited. This, however, is a mistaken notion, as the farmers have already discovered. It is a mistaken notion upon the part of those who honestly believed in the professions of the politicians. It is not a mistake, however, upon the part of those who did not ex- pect any beneficial results for the farmers, but who did expect to deceive them into continued party loyalty by promises of relief in impracticable directions. It was not intended, as will be seen hereafter, that the farmer should obtain anymore out of this sort of legislation than he does out of any other. Reciprocity with only the Ameri- can nations means a benefit specially to manufacturers, and not to farmers. It was made for manufacturers, as will appear further along. The value of all of our exports in 1889 to the American nations south of us was a little over $68,000,000, but little over one third of that was farm produce, and nearly two thirds of it was made up of manufactured articles, while at the same time the little island of Great Britain, which is only a trifle larger than the State of Kansas, took from us $382,000,000 worth of products, and nearly all of that was produce of the farm, while a very small proportion of it was manufactured goods. What satisfactory reason can be urged why we should have reciprocal relations with our neighbors to the 10 142 THE FARMER'S SIDE. south of us when they need but a small quantity of our agricultural productions, and not establish. the same sort of reciprocity with our neighbors to the east of us, who use and are continually in need of a very large amount of what our farmers raise ? This of itself is enough to sat- isfy any observer that the scheme of reciprocity is not in- tended for the farmer. The following table will show our to- tal commerce with the nations south of us, during the fiscal year 1890, and the portion of it which was agricultural : Table XX. — Showing a statement of the exports to the countries named and imports from those countries during the fiscal year i8go. Agricultural. Total. EKports. Imports. Exports. Imports. Central America : Costa Rica $351,366 314,091 138,223 283,413 212,195 191,448 $1,380,382 2,264,410 1,050,689 1,016,099 1.636,913 180,524 $4,146,511 362,623 Guatemala $8,414,019 SanSalvad-)r British Honduras. . . 211,465 Total 1,490,736 304,102 2,100 275,672 341,763 4,903,421 82,943 1,231,151 171,76a 112,531 984,115 360,412 1,805,194 7,529,017 4,509.134 8,625,484 South America : Argentine Republic. Bolivia 5,193,741 1,477 480,797 103,492 52,642,737 8,376.077 762,546 2,967.254 9.276,511 5,454,618 Ecuador 695,005 2,622,625 60,403,804 Chili ■ Brazil British Guiana ... . Dutch Guiana Peru 4,512,593 458,925 202,965 3,669,996 2,847,828 10.156,454 2,038,643 773,244 3.728,961 2,027,383 3.703.705 4,526,181 460,243 314,032 4,263,519 2,986,964 10,392,569 U. S. of Colombia. . Venezuela West Indie*! • 10,575,164 80,271,005 33,654,324 92,119.560 Danish West Indies. French West Indies. British West Indies. Dutch West Indies. . Hayti 335,959 1,326,232 5,539,461 365,121 1,955,406 390,845 5,099,954 1,327,026 513.787 99.382 14,579.986 SO. 123 2,948,295 1.285,873 47.294.203 3.672,274 29,941.525 77.947.333 San Domingo Cuba Porto Rico Total 16,340,004 70,483,923 29,941,525 77.947.333 Grand total 28,405,904 158,283,945 68,104,983 178,692,377 RECIPROCITY.— OVERPRODUCTION, 143 The total exports amounted to $68,104,983, of which farm products amounted to only $28,405,904, leaving $39,699,079 of manufactured goods, which is 25 per cent of our total exportation of manufactures to all countries. During the same year our total exports to Great Britain amounted to $444>459>°°9. oi which $369,973,564, or 83 per cent, was direct from American farmers. Here are the items and their values : Exports of farm products to Great Britain, iSgo. Animals $29,912,728 Breadstuffs 93.592i96o Fruits and nuts ii^fiSiQ^S Beef products 24,004,482 Pork products 52,094,615 Dairy products 9i5S8,973 Tobacco 7>9°8,i76 Seeds 863,787 Cotton 148,297,781 Miscellaneous 2,474,099 Total $369.9731564 About seven eighths of this went to England and one eighth to Scotland and Ireland. Total imports from Great Britain in 1890 was $186,488,956. It may be said, further, that some of the South Ameri- can nations produce more wheat and corn than they need for their own use ; indeed. South American corn has been already successfully imported into the United States. The Argentine Republic exports wheat. The quantity of wheat exported from that country to Great Britain in 1887 and 1888 was equal to one eighth of the quantity exported to the same country the same years from the United States. There is but little demand in South America for our wheat. The total taken in 1889 was 4,249,374 bushels, and Brazil took 3,055,374 bushels of that. The climate of South America and the soil are very much like those of our own country at the same distance from the equator, Wheat 144 "^^^ FARMER'S SIDE. grows as well there as it does here ; so does corn. They also produce cattle and sheep and swine. Wool has been exported from South America many years. Cattle and beef and sheep and mutton and wool are now being ex- ported. As the country improves, as population increases, and settlements advance, all of the productions to which the climate and soil are adapted will be produced in in- creasing quantities, just the same as it has been in this country ; so that the farmers of the United States have very little to hope for even from an unlimited and abso- lute free trade with the people south of us. But in order that it may be made to appear more clearly that the scheme of reciprocity is for the manufacturer and not for the farmer, here is a copy of the first and, so far as the writer hereof knows, the only important petition that was ever forwarded to Congress asking for the opening of trade with the South American people. The petition was presented to Congress in 1889, about the month of Feb- ruary. It was printed in Export and Finance, November I, 1890, with an editorial introduction, from which a few extracts are taken : Honor to whom honor is due. Those who were pioneers in this now popular movement should not be overlooked. . . . Now igno- rance of the resources of Mexico, Venezuela, Brazil, the Argentine, Chili, and Peru is the exception, not the rule, among persons claim- ing to be educated. For this changed condition many of the most prominent merchants of New York and surrounding cities are more largely responsible than the general public has any idea of. It was in February, 1889, that a petition was drawn up, signed, and pre- sented to the Congress then in session at Washington. . . . That petition to the Congress of the United States was the start of that grand movement which has since grown to such fair proportions, and which will not cease until it has united the continent, commer- cially, into one mighty, homogeneous whole. The signers should be remembered now that reciprocal trade relations with the other American countries is the foremost question in national politics. RECIPROCITY.— OVERPRODUCTION. 145 They spoke their convictions at a time when politicians and states- men looked askance at their proposal and when popular support could not be expected. It is for this reason that Export and Fi- nance reprints the document to which they affixed their signatures, and their signatures as well. These last form a veritable roll of honor.* * Following are a few paragraphs of the petition : To the Honorable Senate and House of Representatives of the United States of America in Congress assembled : May it please your Honorable Body : Your petitioners, repre- senting a corporate body of American merchants and manufacturers, known as the " American Export and Trading Company, of New York," and organized for the express purpose of encouraging, developing, and Increasing American foreign commerce, especially with the countries of Mexico, Central and South America, and the West India islands and Brazil, most respectfully beg to submit the following facts for the con- sideration and prompt action of your honorable body. The manufacturing industries of the United States have now reached that condition in their development when it has become necessary that a large portion of its leading representatives should seek new and advan- tageous foreign markets for the disposal of their surplus stocks of manu- factured articles. The United States has become a great manufacturing nation, ranking second to no other in the extent, variety, and quality of its manufactures, and the great manufacturing concerns throughout the entire country are being rapidly increased and multiplied. The supply of products manufactured in this country of almost every kind, exceed the demand for home consumption, and the all-important question arises, " Where shall we find desirable and profitable new mar- kets for the disposal of our surplus stock of goods ? " The intelligent solution of this question lies in the advantages which enterprising American merchants and manufacturers may enjoy by culti- vating closer and more friendly commercial relations with the people of Mexico, Central and South America, the West Indies and Brazil, and other foreign countries where foreign goods are in demand, and where goods of American manufacture can find ready sale at advantageous prices by a judicious cultivation of better trade relations such as herein suggested. It has frequently been asserted that the greater cost of labor in the 146 THE FARMER'S SIDE. Another remedy proposed is that the farmer shall di- versify his industry, that he shall produce a greater variety of articles, and that he shall shorten his production in wheat and corn and cattle and swine and sheep, and all other principal products of his farm ; for the wise men say that he has been producing too much, and that it is over- production that ails him ; that if he will but curtail his production in these directions, and start out in something new, for a few years at least, prices of his commodities will rise, and that that alone will lift him out of the slough of despond and also relieve him of the mountain of indebted- ness now resting upon him. A very brief examination of a few well-known facts will dispose of this argument. Below a table is submitted, showing the production of wheat and corn since 1879, together with the prices at which they sold in the market. This will determine whether the fall in prices has been consequent upon an increase in production. It will appear from an examina- tion of the table that we produced more on an average of wheat and corn in 1881, 1882, 1883, 1884, and 1885, than we did in 1886, 1887, 1888, and 1889; yet the prices of those articles were less in the years last named than they were in the years first named, and we had a larger popu- lation. If the overproduction argument were good the prices ought to have been higher when the production was less. United States forbids successful competition with Europe in these foreign markets ; but the experience and testimony of those who have tried the experiment prove this claim to be fallacious, for they agree almost unan- imously that with equal trade facilities, enterprise, ami a knowledge of the ■wants of the people in the countries named, Americans can compete success- fully with any foreign nation in the world. Signed by sixty-seven large business firms and manufacturing compa- nies of the East. RECIPROCITY— OVERPRODUCTION. 147 Table XXI. — Showing production of cereals and the market prices thereof from iSjg to iSSg, CORN. Calendar Yeab. Production, Area of crop. Total value of crop. Average price per bushel. Average yield per acre. Average value of yield per acre. 1879 1880 1881 1882 1883 1884 1885 1886 1887 1888 1889 Bushels. 1,547,901,790 1,717,434,543 1,194,916,000 1,617,025,100 1,551,066,895 1,795,528,000 1,936,176,000 1,665,441,000 1,456,161,000 1,987,790,000 2,112,892,000 Acres. 53,085,450 62,317,842 64,262,025 65,659,545 68,301,889 69,t83,78o 73,130,150 75,694,208 72,392,720 75,672,763 78,326,050 Dollars. 580,486,217 679,714,499 759,482,170 783,867,17s 658,051,485 640,735,560 635,674,630 610,311,000 646,106,770 677,561,580 597,918,829 Cents. 37-5 39.6 42.0 36,0 41.4 38.1 28.3 Bushels 29.2 27.6 18.6 24.6 22.7 25.8 26.5 22.0 20.1 26,2 27.0 Dollars 1093 10 91 11 82 II 94 963 i J? 869 806 8 93 763 WHEAT. 1879. 1880. 1881. 1882. 1883. 1884. 1885, 1886. 1887. 1888. 448,756,630 498,549,868 383,280,090 504,185,470 421,086,160 512,765,000 357,112,000 457,218,000 456,329.000 415,868,000 490,560,000 32,545,950 37,986,717 37,709,020 37,067,194 36,455,595 39.475,885 34,189,246 36,806,184 37,641,783 37.336,138 38,123,859 497,030,142 474,201,850 456,880,427 445,602,125 383.649.282 330,862,260 275.320,390 314,226,020 310,612,960 385.248,030 342,491,707 no. 8 13-8 95-1 I3-I "9-3 10. 1 88,4 13.6 91,0 11.6 65.0 13.0 77.0 10.4 68.7 12.4 68.1 12.1 87.3 11. 1 69.8 12.9 15 27 12 48 12 03 12 02 10 56 838 8 OS 8 54 82s 10 30 8 08 CHAPTER V. ORGANIZATION. Having considered plans which the farmers do not re- gard as a safe way out, let us now proceed to consider some methods converging to one general outlet. The. great thing, the essential matter, that overshadowing all others, and before which everything else pales, is the money power. That must be dealt with and disposed of at all hazards ; not that there is to be any destructive method ; not that there is to be any anarchistic philosophy about it ; not that there is any disposition on the part of farmers or any considerable portion of the working masses to. take away from any man his property, or to distribute the existing wealth of the country among the people ; not that there is any disposition to repudiate debts, to get rid of honest obligations, to rashly change existing forms or customs, or to indulge in any sort of disloyalty ; but sim- ply that the influence of money as a power in society must be neutralized in some way, and there is only one way to do it ; that is, to remove from money its interest-bearing function to the extent, at least, of bringing the value of money as a profit-bearing investment to the same level with land and labor and other agencies of production. That is to say, there must be an equalizing as nearly as possible of the profits on money and on profits of other investments. To illustrate : If, as it is generally assumed, upon reasonable ground, the annual net profit on labor and labor's productions generally is about 3 per cent ; if ORGANIZATION 149 that is true — and it is not disputed anywhere — interest on money ought not to be any higher than that. The use of money ought not to be any more profitable than the use of land or the use of machinery, or the use of a railroad, or of any other sort of productive force. This phase of the subject will be treated more fully further along. The first step necessary in reaching this great consum- mation of equality in profits is for the persons interested in the movement to organize themselves into a political force. This can not be done at once nor primarily. It must come through the formation of local bodies organ- ized in the first instance for purposes of mutual improve- ment and benefits socially. This brings men and women into closer social relations with one another in communi- ties. It is one of the best educating agencies ever adopted in any stage of social advancement. The church is organ- ized for religious purposes exclusively ; that trains the mind in the direction of religious thought ; its methods all appeal to the religious sentiment. But there is not ■ time enough in religious meetings for the people to be- come well acquainted socially, and there are not enough of auxiliary methods to assist the people materially in de- veloping their social natures ; there must be' some other arrangement by which this can be done, and the primary object in this kind of association must be social, purely social, having connected with it enough of the religious habit to leaven the whole work with the highest and best motives. Indeed, it is found now that in many of these local bodies, where the proceedings are opened and closed with prayer, that the highest form of devotional feeling is manifested throughout all of the exercises, even though they be largely devoted to what is supposed to be purely social enjoyment. It does really appear that in thousands of this class of meetings the atmosphere is so much tinged with religious feeling that the meetings take the place of I50 THE FARMER'S SIDE. religious worship in the churches. It further appears that these meetings to a large extent, and in many instances wholly, take the place of churches in the religious enjoy- ment of the people. Fashion and the influence of dress have become so much a power that a great many persons of refined natures and of good education find themselves uncomfortable among people in fashionable churches for the reason that they are not able, as they believe, to adorn their persons in costly apparel fitly corresponding with that of their associates ; hence they prefer to remain away. But here in these neighborhood assemblies among the farmers, out where the pure air of heaven sweeps over the fields, they meet together upon a plane of perfect equality. They are all neighbors and friends of one grade socially, and they have grown large enough to understand that they need no longer quarrel over differences in mat- ters of religious belief ; so they come together in the Grange, in the Alliance meetings, in 'the Farmers' Mutual Benefit Association, in the assemblies of Knights of Labor, in the anti-monopoly leagues, and in many other bodies ■ where people of the same plane in social life meet and develop their best local advantages. The Grange. Here, then, is the beginning of the great work that the farmers and their fellow - workers have to accomplish. Fortunately, this has been already largely begun. The Patrons of Husbandry, commonly known as the Grange, began their organization about twenty-four years ago in the city of Washington. The Grange grew rapidly about nine years, then quite as rapidly for a time receded from view ; but in the mean time it had accomplished a noble work, much wider in its scope and grander in its propor- tions than people generally have ever been willing to admit. From the Grange came what is known as the ORGANIZATION. 1 5 1 " Granger " railroad legislation, the establishment in our laws of the principle that transportation belongs to the people, that it is a matter for the people themselves to manage in their own way, and that the Congress of the United States, under authority vested in that body by the Constitution, is authorized and empowered to regulate commerce among the several States as well as with for- eign nations. That principle, once advocated and urged by the Grange, finally became permanently, ingrafted in our laws. Then came the Interstate Commerce Commis- sion ; that was another outcome of the Grange movement. Opposition to conspiracies of wealth against the rights of farmers — of labor in general, but of farmers in particular — was among the first and best works of the Grange. The footprints of that first and best organization of farmers ever effected up to that time — are seen plainly in much of the legislation of this country during the last twenty years, Grange influence revived in recent years, and is again growing. It is now one of the most earnest, active, and efficient agencies in the agitation of measures in the inter- est of agriculture. It lacks but one element of strength, and that will come in due time — namely, the uniting with other bodies of organized farmers in one great political movement to enforce themselves what they have long been trying ineffectually to enforce through their separate party organizations — the dethronement of the money power. Aside from the political influence of the Grange,"it has been a powerful factor in the social development of farm- ers. Go into a Grange neighborhood any place where the members have maintained their organization during all the troublesome, trying years that followed their first or- ganization, and you find a neighborhood of thrifty, intelli- gent, well-advanced farmers, their wives and daughters enjoying all of the comforts and conveniences which have 1^2 THE FARMER'S SIDE. been brought into use through the multiplication of inven- tions for the saving of labor and the production of wealth. Their meetings have been schools in which the best sort of education comes, and now the Grange as a body is one of the most fruitful social institutions in the country. As fast as its members see their way clear to a union with their fellow-farmers generally for political purposes they will have accomplished a grand mission, and they will finally come to that. The Farmers' Alliance. The Farmers' Alliance is a body in many respects quite similar to that of the Grange. In both bodies women are equal with men in all of the privileges of the association. They are fast training jvomen in channels of political thought. Many of the best essays and addresses read and delivered in their meetings are prepared by women, and it is beginning to dawn upon the minds of men long incrust- ed by custom and usage that the women who were chosen in early life as partners and companions — women who first became wives and then mothers and guardians of the best families upon earth, women who have nurtured children and trained them up to useful manhood and womanhood, looked after their interests when the days of childhood were numbered, and never forgot them " even until death " — these same women who of all persons have a fonder at- tachment, a warmer affection, and a deeper love for their children, in the midst of mature life as well as in child- hood, are quite as capable of looking after the interests of men and women when they are grown as while they are prattling infants about the play-grounds of the old home- stead. These social bodies of farmers, where men and women are at last made equal in public affairs, even though to a limited degree, are fast, very fast, educating the rural mind to the belief that women are as necessary ORGANIZATION. 1 5 3 in public affairs as tiiey are in private affairs. Their in- fluence is constantly growing stronger as the years come and go, and, strange as it may seem to some persons, they are losing none of their womanhood, but are constantly adding graces to lives already beautiful and useful. The Farmers' Alliance was organized primarily — just as the Grange had been — for social purposes ; but yet im- mediately in connection with its inception was an effort to defeat the absorption of State lands of Texas by specu- lators. One great object of the association was to save the public lands for the people. It has always been a leading idea among farmers that the public lands ought to be saved for homes for the people. They foresaw what the end would be in case speculators, whether individual or corporate, were allowed to monopolize the land. In time settlers would be required to pay exorbitant prices for what they are entitled to at cost. The homestead law embodies the true theory of Government disposition of the public lands. They belong to the people, in the right of the people. Whatever they cost in money, if anything, was paid by the money of the people through a system of taxation which was supposed to be just, bearing equally, as far as possible, upon all classes and conditions of the people. It was, as the farmers believed, a stupendous wrong inflicted upon the people of the country generally when lands were given away in immense quantities to corporations. All of that was so much money thrown in- to the coffers of rich men and wealthy corporations, and taken away from the poor ; and now that our public lands are so much curtailed as that there is hardly room enough in fertile areas left to locate a single homestead, a great question comes up of taxing the people to inaugurate a general system of irrigation to reclaim arid lands, and to supply the demand for homes by increasing the produc- tiveness of the public lands which are yet left for the use 154 THE FARMER'S SIDE. of the people ; and this idea of " land for the landless and homes for the homeless "—once so noisy a party war cry will again be made part of the platform of a national party which will rise into view within the next year or two. The Farmers' Alliance is in two bodies now. One was begun in Texas about the year 1875 ; it is known as the " Southern Alliance." It has absorbed the " Farmers' Union " of Louisiana, the " Agricultural Wheel " of Ar- kansas, and some other local organizations of farmers in different parts of the Southern States, with Kansas, Mis- souri, and Kentucky. It has a very large membership in Iowa, Ohio, and New York, and is spreading into all the other States. Thirty-five States now have organized alli- ances. While the body is strongest in Southern States, if its growth in the Northern and Western States continues to be as rapid the next year or two as it has been in the last two years, it will soon have a large membership in every State in the Union. Its principles, socially and politically, are almost exactly the same as those taught by the Grange — namely, good fellowship and obliteration of sectional prejudices, a nationalizing of the people, a spirit of friendly feeling among the masses, abandonment of old issues, with the discussion of new problems of the present and the future, all based upon the fundamental idea which angels sang to shepherds when the Babe of Bethlehem was born — " peace on earth, good will toward men." The " Southern Alliance," as it is commonly called by outsiders, is the " Farmers' Alliance and Industrial Union " ; it is builded upon principles broad and deep as humanity. National Farmers' Alliance. Then there is another body, known as the " National Farmers' Alliance." It originated about the year 1877 in Illinois. It differs from the Southern Alliance practically only in this, that the Southern Alliance has a "secret ORGANIZATION. 155 work " ; it transacts all of its business with closed dooirs ; the members know one another outside as well as inside by means of " grips " and " pass-words," just as Masons and Odd Fellows do. This is true likewise of the Grange. The National Farmers' Alliance, commonly known as the " Northern Alliance," transacts its business openly, the same as any ordinary public assembly. The objects and aims of both bodies are practically the same — opposition to all private monopolies and the better dispensing of jus- tice among the people. One of the tenets of all these or- ganizations is " equal rights to all, special privileges to none." Farmers' Mutual Benefit Association. There is another rapidly growing body of farmers. It took form in the southern part of Illinois about four years ago. It is known as the Farmers' Mutual Benefit Associa- tion, with objects the same as the other bodies before named. It, too, has a secret work, but it differs from the Alliance and the Grange in that it does not admit women to mem- bership ; that will doubtless come later, for it seems that no considerable body of men in the discussion of matters which are largely social to begin with can very well get along without the help of women, who have been so serv- iceable to them in their home life. There is a considerable number of other local bodies of farmers, as the " Farmers' League," the " Farmers' Union," the " Farmers' Protective Association," "Anti-Monopoly League," etc. These are mostly in Ohio and States to the eastward. The difference between the Alliance and other bodies of farmers named is about this : The Alliance is more aggressive along political lines than any of the others, and the Alliance has taken more advanced grounds in favor of independent political action. Alliance men and women in very large numbers have come to the conclusion that they have exhausted all 156 THE FARMER'S SIDE. of -their means for effecting, through the agency of the old political parties, the needed changes in our legislation and customs. The Kansas Movement. The lesson learned by the movement of Alliance men in Kansas in 1890 has been one of very great profit to the brethren in other parts of the country. It was discovered in Kansas that the party machinery was so completely in the hands of a few men as to make the party's policy sim- ply what was dictated by the little circle of leaders, and it was evident that they were completely wedded to the ■power which has been absorbing the substance of the toil- ers. Kansas is an agricultural State, one of the most beau- tiful regions under heaven, with soil rich as any that the sun shines upon, with a climate salubrious, with an atmos- phere balmy, with bright skies bending over a landscape delightful in its magnificent proportions, peopled by a rug- ged yeomanry, industrious, enterprising, sober, intelligent, a body of men and women unsurpassed anywhere in dispo- sition to move forward and upward, men and women who in less than the period of a generation have builded an empire, have produced 50,000,000 bushels of wheat and 250,000,000 bushels of corn in one year, have opened 200- 000 farms, have builded 9,000 miles of railroad and 8,000 school-houses ; and the farmers of that State came to the conclusion that they were entitled to at least a fair share in the benefits of legislation. They found, however, that it was practically impossible to control the course of politi- cal parties, for the reason that the machinery was in the hands of men living in the towns, and connected in one way or another, to a greater or less degree, with railroads and with corporations engaged in the business of lending money for people in the East, deeply immersed in real- estate transactions, and in one way or another interested in matters that were directly and continually and power- ORGANIZATION. 1 57 fully in opposition to the interests of the farmers. Look- ing the situation over carefully and deliberately they came to the conclusion that the best way out of their troubles was through an independent political movement ; so the Alliance submitted that proposition to their fellow-workers inside and outside of the Alliance, to members of the Grange and of the Farmers' Mutual Benefit Association, to the Knights of Labor, to the Federation of Labor, and to other workers in different departments. The result was the formation of a political party known locally as the Peo- ple's party, and when the votes were counted after election day it appeared that the party was made up about as fol- lows : Republicans, 45,000 voters ; Democrats, 35,000 vot- ers ; Union - Labor men, 33,000 voters ; Prohibitionists, 2,000 voters ; making a total vote of 115,000. The politi- cal complexion of the State was changed in six months to the extent of 100,000 votes. At the election in 1888 the Republican majority over all opposition was about 42,000 votes; at the election in 1890 that party fell short of a majority sixty-odd thousand votes. The People's party in Kansas elected one State officer — Attorney-General — five out of the seven members of Congress, 95 of the 125 members of the Lower House of the Legislature (the Sena- tors elected in 1888 holding over to 1892), and secured the election of a United States Senator on the 28th day of January following. The following matter descriptive of the Kansas cam- paign is copied from an article in the Cosmopolitan Maga- zine for April, 1890, beginning at page 697 : Let it be understood that this new party was not the Farmers' Alliance any more than it was the Knights of Labor. The move- ment was suggested by the Farmers' Alliance, it received its in- spiration largely from that body, but its members were perfectly free to co-operate in the movement or to refrain, just as they de- sired. It is quite generally assumed, among people on the outside, 158 THE FARMER'S SIDE. that there is an oath-bound requirement in the Alliance that its members shall follow in all matters the steps marked out by a ma- jority. This is in no sense true. When an applicant for member- ship in the Alliance takes his obligation, the person who adminis- ters it to him states, in plain, unmistakable language, that the obligation will in no respect " conflict with the freedom of your (his) political or religious views " ; and this freedom in politics and re- ligion follows along the course of the Alliance member wherever he goes. He js absolutely and to all intents and purposes a free man. The only obligation which rests upon him, as to his political action, comes from a voluntary acknowledgment on his part of the binding force of an agreement made by a body to which he belongs. He is expected to keep its secrets, he is expected to respect his obligations as a man and a brother, but he is at perfect liberty to vote as he pleases ; he is never regarded as out of order in this respect unless, after having agreed with his brethren to a proposition or to a par- ticular course of action, he afterward betrays them. Having determined to operate upon an independent line, the Topeka meeting called a State convention, to be held in the same place, in August. The convention held at that time placed in the field a regular State ticket, and adopted a platform based on four fundamental ideas — land, labor, transportation, and money. As to land, it was asserted that " The earth is the common heritage of the people ; every person bom into the world is entitled equally with all others to a place to live and earn a living, and any system of government that does not maintain and protect this inalienable right is wrong, and should be changed or abolished." As to labor, it was affirmed that " Labor is the begfinning of progress and the foundation of wealth ; that the laborer is entitled to a good living and a fair share of the profits which result from his labor ; that the use of labor-saving machinery should shorten the hours of toil and inure to the benefit of the employed equally wilh the employer." It was demanded that the " means of communication and trans- portation shall be owned by and operated in the interest of the people, as is the postal system." It was demanded, further, that national banks be abolished; that treasury notes take the place of hank notes ; that the currency volume should be expanded to satisfy the needs of business, and ORGANIZATION. 1 59 that money issued by the Government should be legal tender in payment of all debts, public and private. Free and unlimited coinage of silver was urged ; alien ownership of land opposed ; option dealing denounced ; just taxation favored ; and a service pension recommended, with the following statement added : " We believe that justice demands the depreciated currency in which they (the soldiers) were paid should be made good, and as full and complete faith be kept by the Government with the soldiers as with the bondholders, and that ex-prisoners of war be remuner- ated for the time served in prison." To these were a:ppended a few declarations concerning local matters — time for redemption of homesteads sold under orders of court, usurious interest, trusts and combines, salaries of public offi- cers, Australian ballot system of voting, and the Crawford County system of primaries — the whole concluding with these words: " People of Kansas, we come to you on this platform. Our candi- dates, speakers, and writers Will waste no time in discussing minor matters. The past is gone, the present is with us, the future is be- fore us ; old issues are dead ; we come to you with new ones." Upon that platform the most remarkable State campaign in our history was fought. Three party tickets were actively supported. Republican, Democratic, and the People's. All the trained stump speakers were with the old parties ; they discussed old party issues, while farmers, mechanics, and laborers, with a few preachers, doc- tors, and editors, took up things of present and pressing interest to the people as they were outlined in their platform. Men, women, and children by thousands met in groves, and by hundreds in school-houses and halls, to listen to people of their own class and grade who talked about these new issues. Meetings of five thou- sand and six thousand people were common, and frequently as many as ten thousand persons met at one time and place to hear the " new. gospel " taught. This outpouring of the masses, however, was limited to the People's party. The old party meetings were generally small, often discouragingly so ; the most distinguished speakers failed to draw large audiences. The Cincinnati Conference. The result in Kansas encouraged farmers in other States, and soon a movement was set on foot looking to the l6o THE FARMER'S SIDE. organization of an independent political movement cov- ering the whole country. The first step in that direction was the National Union Conference, held at Cincinnati May 19, 1891, composed of nearly 1,500 delegates represent- ing thirty-two States and two Territories — Alabama, Ar- kansas, California, Colorado^ Connecticut, Florida, Illi- nois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New York, North Carolina, North Dakota, Ohio, Penn- sylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Washington, West Virginia, Wisconsin, Wyoming, Oklahoma, and District of Columbia.* * That Cincinnati conference adopted the following declaratory and doctrinal resolutions ' 1. That in view of the great social, industrial, and economical revolu- tion now dawning on the civilized world and the new and living issues confronting the American people, we believe that the time has arrived for a crystallization of the political reform forces of our country and the formation of what should be known as the People's Party of the United States of America. 2, That we most heartily indorse the demands of the platforms as adopted at St. Louis, Mo., in i88g, Ocala, Fla., in 1890, and Omaha, Neb., in 1891, by industrial organizations there represented, summarized as follows : a The right to make and issue money is a sovereign power to be maintained by the people for the common benefit. Hence we demand the abolition of national banks as banks of issue, and as a substitute for national - bank notes we demand that legal -tender treasury notes be issued in sufficient volume to transact the business of the country on a cash basis without damage or especial advantage to any class or calling, such notes to be legal tender in payment of all debts, public and private, and such notes, when demanded by the people, shall be loaned to them at not more than 2 per cent per annum upon non-perishable products, as indicated in the sub-treasury plan, and also upon real estate, with proper limitation upon the quantity of land and amount of money. b. We demand the free and unlimited coinage of silver. c. We demand the passage of laws prohibiting alien ownership of land, and that Congress take prompt action to devise some plan to obtain all ORGANIZATION. l6i A national central committee was appointed and ar- rangements made for a general union of all the industrial forces of the country in a convention in 1892 for the pur- pose of completing organization and putting a national ticket in the field. lands now owned by alien and foreign syndicates, and that all land held by railroads and other corporations in excess of such as is actually used and needed by them be reclaimed by the Government, and held for actual settlers only. d. Believing the doctrine of equal rights to all and special privileges to none, we demand that taxation — national, State, or municipal — shall not be used to build up one interest or class at the expense of another. e. We demand that all revenue — national, State, or county — shall be limited to the necessary expenses of the Government, economically and honestly administered. /. We demand a just and equitable system of graduated tax on in- come. g. We demand the most rigid, honest, and just national control and supervision of the means of public communication and transportation, and if this control and supervision does not remove the abuses now existing we demand the Government ownership of such means of communication and transportation. h. We demand the election of President, Vice-President, and United States Senators by a direct vote of the people. CHAPTER VI. STRINGENCY IN THE MONEY MARKET. This matter of a combination for political purposes of the industrial forces of the country is now being discussed in every county and in nearly every township and school district in the country. Farmers and working people of all classes are fast learning that their interests are iden- tical. Men of great wealth, men having large estates, whether of one kind or of another, and men dealing in money, have always operated in common. They do not care anything about the platforms of parties provided they may name the candidates, and during all of the years since our great war began what is commonly known as the " money power " has had almost exclusive control of our financial legislation. Its footprints are seen in the statute books every year. Its views go out through the reports of the Secretaries of the Treasury, through inaugural ad- dresses and messages of Presidents, through official docu- ments of the heads of departments, through the columns of the metropolitan press, and through every channel which can operate to spread among the people the doc- trine that men whose interests are involved in the accumu- lation of wealth must always be consulted when any sort of financial legislation is proposed. We have seen, very much to our astonishment, in late years that the public treasure is used as a fund by the highest officersof the Government to accomodate the temporary needs of men STRINGENCY IN THE MONEY MARKET. 163 whose interests are directly at variance with those of the common people. Beginning with the great crash in 1873, and continuing down to the present time, the Secretary of the Treasury has been in the habit of visiting New York city and conferring with bankers and other capitalists there upon every occasion of what is termed a " stringency in the money market." When there is trouble among speculators over there the Government officers are noti- fied, the Secretary kindly goes among them, and asks how much of the people's money is needed to ease the situation. In the last report of the Secretary of the Treasury, bear- ing date December i, 1890, at page xii to xiv, that officer calls attention to the course of his department in relation to the interests of the " money market " during a portion of the last year. He mentions the fact that there was a demand for money among the capitalists of New York (although in justice to the Secretary it must be said he did not state it in exactly the way it is here put), that after having tried to relieve the situation in July, 1890, by the purchasing of nearly seven million dollars' worth of bonds, he says, on page xxix : " It was soon apparent that these purchases were inadequate to meet existing condi- tions; therefore, on August 19, the department gave notice that 4Y3-per-cent- bonds would be redeemed with interest to and including May 31, 1891 ; and two days later the circular of August 21 was published, inviting the surrender for redemption of twenty millions of those bonds, upon condition of the prepayment, after September i, 1890, of all the interest to and including August 31, 1891, on the bonds so surrendered. Under this circular there were re- deemed $20,060,700 4Y8-per-cents." Then he proceeds : "Notwithstanding the disbursements resulting from pur- chases and redemptions of bonds under the circulars of July 19 and August zi, the industrial and commercial interests of the country required that large additional 164 THE FARMER'S SIDE. amounts should be at once returned to the channels of trade." It appears from this last sentence that the Secre- tary had in mind, firmly fixed, the belief that it is the duty of the national Treasury to fly to the rescue of the " in- dustrial and commercial interests of the country " when- ever any disturbance in financial affairs indicates a money pressure in that particular part of the country where New York city is located ; and this conviction, honest though it be, and from the Secretary's standpoint, purely patriotic and unobjectionable, yet, as the farmers and the workers view it, one of the most pernicious doctrines ever imbibed or taught by any American statesman, has become part of our financial policy. Think, dear reader, think ; take one good long thought about the suggestion that whenever the men represented by "Wall Street," men engaged in the business of dealing in money because of the profits that come out of usury, men who have no more hesitancy in drawing a mortgage over a railroad system involving millions and millions of dollars, or over a county, or a State, or over the homes of millions of the people, than they have of sailing in a costly yacht on the calm waters of the ocean, or of eating a breakfast of " blue pointers," that when that class of men, after having brought upon themselves " stringency " through a gigantic system of the most brazen gambling, it is the duty of public officers to use the people's money to relieve the " stringency," and to furnish those men with money enough to continue their process of spoliation. Where is the country drifting when our public men stand ready to dip out of the Treasury the people's earnings and hand it over to be traded in by men of this class, who have piled up fabulous fortunes but of the crystalized sweat of toil ? While the Secretary of the Treasury, the trusted custodian of the people's treasure, is dealing it out by millions in the purchase of bonds not yet due, and in the advancing of a year's interest, amount- STRINGENCY IN THE MONEY MARKET. 165 ing to twelve million dollars, all to relieve what he is pleased to believe a " stringency in the money market " in New York city, while millions of people scattered all over the country are famishing for money. In the Western States farms are being sold by thousands and thousands every year under the sheriff's hammer, turning out a family from every one. Cruel as the process is, and dangerous as such a system must be in rapidly placing our land in the hands of landlords and making renters of our farmers, we find that most of our public men do not recognize the existence of the dreadful fact. We call the attention of our party leaders to these things, and they remind us that it is our business to do the voting, it is their business to do the thinking ; it is their business to make the laws, and our business to obey them. When we call attention to the weight of our misfortunes, they tell us we are produc- ing too much wheat, too much corn, we are raising too many cattle, too many horses, too many swine and sheep ; that we are forcing upon the market too much cotton, too much tobacco, too much wool, and that we must change our methods of farming ; that, being farmers and laborers, we know nothing about great matters of statecraft, and especially that we are endangering our interests and stand- ing by meddling with financial aifairs. If the reader will now go back to the last paragraph quoted above from the Secretary's report, he shall have, the remainder. " This," says the Secretary, " was followed by another " (another purchase of bonds and prepayment of interest upon the same terms as before), " dated Septem- ber 6, inviting holders of the 4-per-cent bonds to accept prepayment of interest on those bonds to July i, 1891, a privilege which was subsequently extended to the holders of currency sixes. Under this circular of August 30 there were redeemed $18,678,100 4y2-per-cent bonds, and under that of September 6 there was prepaid on the 4-per-cent 1 66 THE FARMER'S SIDE. bonds and currency sixes interest amounting to $12,009,- 951.50." The reader will observe here one item, the last one, of $12,009,951.50 of interest prepaid to July i, 1891, an advance of that much money to men who have no need of it. The purchases of outstanding bonds not due and payable might be excused upon the ground of paying a debt out of an overflowing treasury, but what excuse can be offered for the advance of a year's interest as a gratuity upon the part of the Government in order to assist men who are engaged in a business, as the Secretary very well knows, and as the rest of the world knows, not of provid- ing the people with money, but of providing themselves with means of getting more money. It is a brazen out- rage, utterly inexcusable from any point of view, a course of conduct which ought to be condemned in the strongest terms ; and parties and policies which have originated such a system, and which maintain it and propose to continue it, ought to be utterly wiped out of American politics. It is time that labor should be emancipated, the money power dethroned, and the authority of the people restored. The farmer, the working man, the toiler in any and in every department of industry, may ask and plead until he grows hoarse and poor for relief from the " stringency in the money market " in his own case, while the men of Wall Street, at whose beck and call the Government of a great nation goes and comes, are living in luxury and ease at their expense. Quoting again from the Secretary on the same page (page xxix) : " The amount of public money set free with- in seventy-five days by these several disbursements was nearly $76,660,000, and the net gain to circulation was not less than $45,000,000, yet the financial conditions made further prompt disbursements imperatively neces- sary. A circular was, therefore, published September 13, 1890, inviting proposals, to be considered on the 17th, for STRINGENCY IN THE MONEY MARKET. 167 the sale, to the Government, of $16,000,000 of 4-per-cent bonds. The offerings under this circular amounted to $3S>5i4,9°°, of which $17,071,150 were offered at 1263/^, or less, and were accepted." Here we have six different applications of the people's money, amounting to but little short of a hundred million dollars in less than three months to assist the financial operations of money changers in New York city, when farmers in every State in the Union are pleading for re- lief from an overpowering depression. Property values are depressed, farmers are scarcely able to pay their neces- sary expenses, including taxes and interest on their mort- gages ; wages among working men are being reduced con- tinually, and it is probably safe to say that two million men, besides an army of women, are out of employment, the number of idle people steadily increasing. The writ- er desires to urge this important matter upon the atten- tion of the people, so that they may see it and study it in all its enormity. The consequence of such a system long continued is inevitably the absorption of all the wealth of the country in the hands of a very few persons. It is going that way now with unprecedented speed. Wealth is accumulating in the large cities, more especially in those of the East, and those accumulations are continu- ally fed by drains flowing away from the country people and working forces in the towns. Dark, deep lines are already visible between wealth and poverty, and they are becoming more and more conspicuous from year to year. It is time that this gigantic system of spoliation be stopped. CHAPTER VII. NO RELIEF TO BE EXPECTED FROM THE OLD PARTIES. Seeing these things, farmers are casting about to dis- cover remedies ; and looking, as they have always be- lieved they have a right to look, to their party leaders and to the statesmen whom they have made for advice and for leadership, they find themselves under the influence of a power like that of a serpent which charms its victims and holds them fast to the spot. Viewing the situation calmly and without prejudice and passion, it is evident to any thoughtful observer that there is absolutely no ground to expect relief from either of the two great political parties as they are now officered. The party leaders are wedded to the power which is crushing the people. Most of the leaders are old men who have been in the public service a generation or more. They have been moving in one channel, and that channel was opened by the economists of past centuries. Our public men have studied the old systems, systems planned and established by rpen who, through the lending of money to governments, controlled the legislation of their several countries. All the old works on political economy teach the same doctrine in reference to the dis- tribution and circulation of money. They have taught others as they themselves had been taught — that it is not only lawful but right that after the Government prepares money for the use of the people it shall be given to bank- ers and to money changers, through whose hands it shall NO RELIEF EXPECTED FROM THE OLD PARTIES. 169 go to the people, and that these bankers and money changers shall be permitted to charge for their services a rate of interest which, presumably, is fixed by the law. Public men and statesmen of later days were trained up in that school, and now they are too old to depart from it. Talk about changing the opinions of a man like John Sherman, who has been following one line of thought and action before the people a period of thirty years. Take George F. Edmunds as another case. These men will not change their views on money. Many others might be named ; these are given simply as instances to illustrate the thought that the honor and integrity of our public men need not be questioned in criticising their policies as they have been formulated in our legislation. We must, if we would change this condition of things, bring forward new men, young in the newer and better philosophy that the function of money is a public function, that money is as much an instrument of commerce as railroad cars and ships and vehicles laden with produce passing forward and backward along the public highway upon the same principle that the handling of the people's correspondence is a public matter, and that the transportation of the peo- ple's property is a public function. Taking this view of the matter, farmers are fast coming to see that per- manent relief to them and to the country must come through a change in our legislation ; that this can be brought about only through the medium of a powerful political movement, manned and officered by the people themselves. Hence it is that they are consulting one with another as to the best method of getting together. It is submitted to the workers that by dividing their forces, as they have been doing in the past time among the old political parties they are simply wasting their energies and frittering away their opportunities. The thing to do is to strike hands and pledge themselves one to the other, I/O THE FARMER'S SIDE. as the patriotic fathers did, that come what will they will stand together until this great work of emancipation is ac- complished. This does not imply or even suggest the disintegration of any one of the labor organizations which are now in existence. Let the Granger remain a Gran- ger ; let the Alliance man remain with his Alliance ; let the Knight of Labor stay with his own assembly ; and so of every other body of organized workers. Let them go along with the local work, every one doing his utmost to bring in new workers and to spread the leaven of liberty and equality among the masses ; but let us get together delegates occasionally and see upon what common ground we can meet and unite our forces for combined political action. The railroad companies and the cattle dealers united their forces years ago for the purpose of making money. So it has been with the ranchmen of the West. So it is with manufacturers. So it is with bankers. While their individual and local interests are separate and dis- tinct from one another, yet they have a common interest. Hence they form organizations. There are bankers' asso- ciations, manufacturers' associations, importers' associa- tions, railroad associations, and the great father of all of them is the Stock Exchange in Wall Street in New York city. Now, let the" farmers and their co-workers learn from the lessons which these things teach ; let them or- ganize, not only for social purposes (for the railroad builders and bankers and manufacturers did not organize for social purposes only), but for business; let us or- ganize for business, and let that business be one of in- tense political power; let us organize ourselves into one grand national body for political purposes only, each separate organization maintaining its own individuality for its own special purposes^ doing its own line of work ; but inasmuch as our political interests are identical, let us strike hands and make common cause until we have re- NO RELIEF EXPECTED FROM THE OLD PARTIES. 171 Stored the Government to its rightful inheritors, the peo- ple, and until we have achieved a victory which will give to us that which is ours. We ask for nothing that we are not willing to give to our fellows. We are not clannish ; we want only that which is due us. Let us unite with that great object in view, and we can not help suc- ceeding. CHAPTER VIII. GOVERNMENT CONTROL OF TRANSPORTATION. One of the avenues of escape from present difficulties is through the public control of transportation. This does not mean Government ownership of existing means of carriage, whether on Tand or water. When political platforms urge Government ownership of railroads they state the case not only loosely, but somewhat wildly. It will be observed that so far as the present new political movement among the masses of workers is concerned, the language used concerning this matter of public control of transportation is more guarded. It is control of transporta- tion that the people are talking about, and not the Govern- ment ownership of existing railroads and boat lines. The difference is important, as will be seen further along. There are several reasons why the Government ought not to obtain ownership of existing lines of transportation. A few of them may be mentioned. In the first place, the railroads of the country are indebted about four times as much as they are worth, and the first step in negotiating a purchase would be the ascertainment of the exact amount of indebtedness. The second step would be to pay that amount to the persons entitled — stockholders as well as bondholders. By reference to table on page 23 of Statistics of Railways in the United States for l88g, prepared by the Interstate Commerce Commission, it will be seen that the amount of indebtedness shown on the GOVERNMENT CONTROL OF TRANSPORTATION. 173 books of companies reporting, representing 153,385 miles of road, is $9,015,175,374; this is the capitalization of the roads, and it is equal to $58,775 per mile of line. For one half of that sum the entire mileage could be duplicated, so we would be paying for the roads twice as much as it would cost to build them. Second, there are too many railroads in the country now. If railroads were builded under Government surveillance so that none were permitted where they are not really needed, we would to- day have not more, perhaps, than 75 per cent of the mile- age that we are now operating. Then, most of the lines are unnecessarily crooked. Nearly all of the roads builded by the aid of land grants or by municipal sub- scriptions to stock are crooked, not lying on lines which would have been selected had there been nothing in view but the building of a road for profit upon the capital in- vested. Third, if the roads were purchased the money to pay for them would go into the hands of men and women who are now wealthy, and who would use the money for purposes of investment in some other sort of securities in order to draw interest out of the labor of their fellow-men. These are good reasons why the Government should not undertake to purchase the roads, the first one being all- sufficient. It would be folly to pay for anything more than it is worth when there is no necessity for it. In place of that method of obtaining control of transporta- tion, let the people build such roads as they need. At this point it may be well for a moment to stop and consider what is meant by the word " Government " when used in this and like connections. We say the Govern- ment should build railroads ; the Government should own transportation ; the Government should issue money, etc. It is common for persons to use the word " Government " in these connections as if it were some foreign entity, some great power wholly disconnected from the people, 12 174 THE FARMER'S SIDE. in no way responsible to them, whereas in truth it is sim- ply the agent of the people ; it is an organized machinery through which the people execute their will ; it is made up of officers elected or appointed in pursuance of estab- lished law or usage, representing the people and the peo- ple only. The three great departments of Government, legislative, executive,' and judicial, operating as one, form the Government of the United States. Understanding the word in that sense, we see that when the Govern- ment does anything it is being done by authority of the' people, and presumably for the general welfare. Now, then, let the people, through their agent the Government, build such railroads as they need for their own use. To illustrate the proposition suppose that we build a double- track freight railway north and south across the country between the Mississippi River and the Rocky Mountains — say, extending from a convenient point along the north- ern line of North Dakota to a convenient point on the southern line of Texas, so that the grain, the meat, the cotton, and the fruit of that magnificent region could be transported to the Gulf and commodities shipped in from other countries brought back to supply the people. Let a dozen or more sections of the road be under process of construction at the same time; let a hundred thousand men be employed, if that many are necessary, or more ; let them be paid Government money at the end of every week for all the labor they perform; let every manufact- ured article used in the work be paid for as it is pur- chased, so that, as the work proceeds, no debts are left. When the road is completed, say it has cost $50,000,000 ; it is all paid ; there is no debt upon it ; there are no stock- holders; there are no bondholders; the people own the road ; it is public property, the same as a public building or a common highway. It is not only paid for, but the people who builded it have the money that paid for the GOVERNMENT CONTROL OF TRANSPORTATION. 175 building. Not only that, the road and its equipments may be considered a basis of value for the money which was issued for its building, so that if persons insist upon having some sort of labor basis or property basis for the paper money they use, here you have it in perfection. If the road cost $50,000,000, it is worth $50,000,000. The money which was paid out for its construction may be said to rest upon the road for its basis. Not a dollar was paid until labor to its full value had been performed. The money represents labor, and there is the property — labor's product — to show for it. In this case we have not expended a dollar which was not necessary ; there is no watered stock ; there is no investment upon which to base charges; the people, besides having their own road and having the money that paid for the work, have the use of the road for just what the handling of their property will cost, without reference to capitalization. This would bring transportation down to actual cost, the people them- selves using the road, upon the same principle that the traveler uses the public highway. He is not charged anything for the present use of the way ; he is charged, however, in taxes a fair proportion of what it costs to keep it in repair. We pay for the building of the new road as it proceeds. After it is builded the only expense attending its use is the cost of keeping it in repair and handling the property which passes over it. These charges the people pay when they use the road. The prmciple involved in public ownership of railways and other necessary agencies of commerce is well stated in Prof. Ely's Introduction to Political Economy on page 82 : « It may, perhaps, be laid down as a general rule that when in any class of business it becomes necessary to abandon the principle of freedom in the establishment of enterprises, this business should be entirely turned over to the govern- ment, either local. State, or Federal, according to the na- 176 THE FARMER'S SIDE. ture of the undertaking." In the beginning it would have been folly for the General Government or the State gov- ernments, or even a county or town government, to go into the building of railways ; because only a very few persons, comparatively, needed any other means of transportation than were then at hand in wagons and ordinary vehicles used about farms and on streets of towns and cities. The first three years of railroad building in this country gave us but about 30 miles of roads, and they were used chiefly to connect stone quarries, coal mines, and the like — a mile or two in length, the cars drawn by horses. Passenger rail- way traffic was not dreamed of. In time it became im- portant to connect distant points for general purposes of trade. Between 1830 and 1840 our railroad mileage was extended from 23 miles to 2,816, increased to 9,015 in 1850, to 30,600 in i860, and now we have something over 164,000 miles. In course of time, from a private conven- ience railroading became a public necessity ; and, as it has been always with the development of any great industry, as it became more general it attained greater power over the people and their interests. We find now that this vast system of railroad mileage, capitalized at an amount very nearly, if not quite, equal to the value of all the farm lands of the country, is practically controlled by half a dozen- men, whose power is in some respects greater than that of all the people. A great railroad company, like the Pennsylvania, for example, has a little army of trained lawyers at its command — at least one in every county where the road has any interests. A system like that controlled by Jay Gould has in its employ probably not less than one thousand lawyers, and they the most competent to be ob- tained at the places where they are employed. When any question of great interest to a wealthy railroad company is brought forward, it is found that all the important ave- nues to the courts are brought under control of the inter- GOVERNMENT CONTROL OF TRANSPORTATION. 177 ested corporation. So strong have these great corporate bodies become that a poor man is wholly at their mercy, and they will flay a community, a county, or a State, not only mercilessly, but without ceremony. Millions and millions of dollars have been taken from the people by this organized rapacity. So dangerous have these great corporations become that they are a standing menace to our institutions ; the people are largely in their power. The time has come, in accordance with the principle above laid down, when it is necessary in the public interest for the people to take control of public transportation. The same rule applies in the matter of street railways, and in the lighting of cities and the furnishing of water. It will not be long until the heating of dwelling houses in the large cities will be a matter of public concern. It is for these reasons, summarized in the two words — public ne- cessity — that the people should own and manage all public' transportation and communication, just as they now do the means of handling the people's correspondence through the transportation of mails. In connection with this sort of legislation, Congress should at once open the way for commercial reciprocity with all nations trading with our people. Let our en- terprise cover the whole earth, giving our artisans and mechanics, as well as our farmers, the whole world to work in. The tariff laws should be so modified as to distribute the burdens and benefits more equally. Give farmers and working men an even chance with manufacturers and sala- ried officers. Protect all or protect none. As a further preliminary arrangement, let Congress assert its constitutional authority over interstate com- merce by protecting the people against fraud and imposi- tion in trade. Let every article of general use, as grain, flour, cotton, live stock, meat, fruit, tobacco, etc., be de- 178 THE FARMER'S SIDE. clared articles of interstate commerce, and prohibit by severe penalties all unlawful interference with traffic in them. Let all combinations to affect prices of commodi- ties be declared to be conspiracies against the common rights of the people, punishable by imprisonment and heavy fines. Treat all species of stock and grain specula- tions not in the ordinary course of legitimate trade as gambling ; declare that and dealing in futures to be felo- nies punishable by imprisonment. Organize the railroads into one great system, and let reasonable and uniform charges be made for like service in all parts of the coun- try. If transportation cost more in one part than in an- other, there will be an easy way of adjustment when all the balances are struck in one office. We need such a change in our election laws as to insure an honest expression of the popular will. Let every citi- zen vote intelligently, let his vote be counted fairly and re- turned honestly. CHAPTER IX. THE DEBT BURDEN. The most pressing want of the farmer is to get rid of debts for which his home is mortgaged. It was not gen- erally believed until recently that the clamor about indi- vidual indebtedness of our people had much foundation in truth. The most extravagant guesses upon the subject came short of the cold facts, which Mr. Porter, of the Census Bureau, is giving to us. The writer of this made an investigation of the subject, examining such sources of information as were within his reach, and came to the conclusion that $1,000,000,000 would about cover the entire indebtedness of the people in town and country for which their homes were mortgaged ; but enough has already been shown by the Census Bureau to make it probable that the estimate is too short by at least 60 per cent. While the census figures have been given for only two States — Iowa and Alabama — yet such general state- ments are made in the bulletin reporting those two States as to show with reasonable certainty that the aggregate debts resting upon the people's homes will reach the enor- mous sum of $3,750,000,000. This seems incredible, yet how are we to avoid that conclusion in face of what really appears? There are 2,785 counties in the United States; every one of those counties was visited by one or more agents of the Government, who searched the records care- fully, taking the entire period between 1880 and 1890, esti- "l8o THE FARMER'S SIDE. mating as nearly as possible the amount of debt due on the ist day of January, 1890 ; and those agents forwarded ■from their respective counties abstracts of mortgages — 9,000,000 in number — covering ten years. At least 2,500,- 000 of them were in force on the ist day of January, 1890. There are thousands of cases where a second mortgage was taken to secure the commissions and fees of the agents who negotiated the loans. The second mortgages, how- ever, are not included in the list given in the census re- port ; they are all taken as interest, and included in the interest account. For example, one county in Kansas — to wit, Linn County — reported about a year ago some 2,500 farm mortgages on record, of which 1,000 were of the class known as " second mortgages," given for com- missions and other fees of the agents. In the census report all such second mortgages are included in the in- terest account, so that the report as given shows 9,000,- 000 original mortgages in sums which are unquestion- ably a lien upon the homes of the people. Two thirds of the mortgages, or about that proportion, rest upon farms, one third upon city and town lots. That gives us now 1,666,666 on farms and 833,333 on lots.* * The Census Bureau has not yet published a detailed report on this important matter. It appears, however, from what is already known that in some portions of the country the amount of mortgage debt due on the first day of January, 1890, was nearly, if not quite, one half as much as the aggregate amount recorded during the ten years. I had put the general average at two fifths, or 40 per cent. That gives us 3,600,000 mortgages due January i, 1890, of which 2,400,000 may represent farm mortgages and 1,200,000 town mortgages. But it appears from Mr. Por- ter's recent statement, before referred to, that no mortgages are counted except only those on lands and lots occupied by owners, and that the total number of such mortgages in force January i, 1890, does not exceed 2,500,000, or 28 per cent. Not more than two thirds of our 5,000,000 farms, or 3,333,333 farms, are occupied by their owners ; and if, as ap- pears, there are 1,666,666 mortgages on them, one half of them are mort- THE DEBT BURDEN. l8l Again the thought is repeated that this seems incredible, and yet here are the figures before us. But why should we be startled ? Farmers are not reputed as accomplished financiers like men in other lines of business. It is gen- erally conceded that railroad managers stand at the head of the best educated class of business men. For shrewd- ness, for foresight, for careful and close management, they are placed in the very forefront of commercial men ; and yet it appears that the railroads of the country are indebted at least four times as much as they are worth. It is not usual among a certain class of economists to consider the stock account of a railroad company as in- debtedness. It is regarded rather as a source of gov- ernmental power to be used in the political management of the road, not having reference to politics in the or- dinary acceptation of that term, but the handling and manoeuvring of the business independently of persons who have a direct claim upon the assets of the company in the way of recorded indebtedness, or such indebtedness as is evidenced by paper that can be put upon the market, and paper that can be presented and payment upon it demand- ed ; but there is no good reason for setting the stock account to one side and using only the bonded indebtedness when we are considering how much the railroad companies are involved. This thought may be made plainer by putting it in this way. Say that a certain railroad company is about gaged. If the Iowa average ($1,283 to 'I16 farm) holds good for the whole country, the total farm-mortgage debt of the people is $2,138,333,333. It is more than that, probably, because eastern loans are generally larger than western. Exact figures can not be given until complete census re- ports are published. I believe it is safe to put the aggregate farm-mort- gage debt of the country at $2,500,000,000, which is 300 per cent more than my estimate before any census reports on the subject were pub- lished. And if town and city house mortgages equal one half those of the farms in amount, the sum total equals $3,750,000,000 on houses occupied only by persons who claim to own them. l8i THE FARMER'S SIDE. to go out of business. The first thing it does is to pay its indebtedness. Every stockholder as well as every bond- holder has a claim upon that road ; say the bondholders' bond is $i,ooo, say the stockholders' stock is $i,ooo. The road — the property of the company of every sort and de- scription making up what we call the " road " — is indebted to the stockholders $i,ooo in the settlement, just as much, just as honestly as it is indebted to the bondholders $i,ooo. It is for that reason, the reason that the stock- holder has a claim on the road for every share of stock he owns, that in making up the estimate of total indebted- ness stocks and bonds both are included. Taking that as a standard, the indebtedness of the railroads of the United States is at least four times what they would sell for if put upon the market to-day. And more than that, by taking a broader standard of measurement, they are in debt four times as much as their assessed valuation for taxes. In the Western States generally the roads are assessed at an average of $6,000 to $7,000 per mile ; that is presumably what they are worth on the market ; their capitalization amounts to from five to eight times that amount. In Kan- sas the capitalization of the railroads is $456,000,000 in round numbers, while their assessed valuation is put at $57,000,000 ; the books of the companies show the former amount, while the books of the tax gatherer show the lat- ter amount; capitalization $8, value of the road $1. The farmers, while not being reputed as good managers, and while being rated as thriftless, wasteful, and extravagant, yet even at $2,500,000,000 for their aggregate mortgage indebtedness, they can show on the tax rolls of their re- spective counties an amount quite as large as that. In other words, the farmers' debts are not greater than the assessed valuation of their property, while their shrewder and more competent competitors in business — the railroad managers — have in some way fastened upon their roads THE DEBT BURDEN. 1 83 debts in proportion vastly beyond that which rests upon the farmers. And, as shown further by the census report, the inter- est on this indebtedness is exorbitant — three, four, five times, even twenty times the average increase of wealth produced by labor in the ordinary form, which is about 3 per cent. Farmers find that difficulties in the way of payment of their debts are increasing from year to year, that it is growing constantly harder to meet their obliga- tions. If, then, enough money could be obtained by the farmers to pay off their indebtedness, other things being equal, they would be wholly relieved, because they are producing as much wheat and as much corn and as much cotton, and raising as many cattle and horses and swine as they ever did and more ; they are producing as much hay and as many potatoes and as much of everything else which goes to make up the ordinary living of a family. Relieve them of their debt burden and they would be free indeed. But there is a great deal more about it than the mere payment of a debt. To pay with borrowed money would leave them in no better condition than they are now, un- less the money which they borrow can be obtained at a rate of interest that they can afford to pay. And there is where the difficulty appears. If money could be obtained at, say, 2 per cent, which business generally would afford and no more, it would be a comparatively easy matter for the farmers to pay interest on their debts out of the profits in their business, and at the same time have a small margin left every year to apply upon the princi- pal. At a 2-per-cent rate the average farmer would pay out in the course of fifteen or twenty years at most ; he would pay his debt and save his home. But how is he to obtain money at 2 per cent ? How is he to obtain money at anything less than he is paying now ? How is 1 84 THE FARMER'S SIDE. he to renew his loan except at the discretion of the owner of the money which he borrowed, or of the agent who negotiated the loan ? He is at the mercy of his creditor, and that being true he is practically powerless, for the creditor is not a man to be trifled with. That brings us up to the question whether money can be obtained at lower rates of interest, and if so, how ? for it may as well be admitted now as at any other time, the plain, naked truth is, that unless lower rates of interest can be obtained, one half of our farmers will be renters within the next ten years, and one half of the remainder in another ten years, and by the time the nineteenth century is ten years past the occupied lands of the country will be owned almost wholly by a comparatively few wealthy men. Let us, then, take up the subject of cheaper money. CHAPTER X. MONEY A NECESSARY INSTRUMENT OF COMMERCE. Persons who have been out among the farmers and the working people as a class, and have talked with them about financial matters, have discovered that the farmer is an honest man. They learn that first of all he is anxious to know whether the phrase " cheap money " means either dishonesty or any sort of repudiation. He denounces the charge that he is a repudiator, or that he wants to get rid of his obligations in any other way than to meet them just as he promised to do. But he finds himself encumbered beyond present ability to pay out. He finds, further, that the interest rates are so excessively high that by the time he pays his interest and his taxes and other necessary ex- penses, and meets the many little demands that are made upon him by reason of social and religious connections, he has nothing left to pay upon the principal. Every year he is three hundfed and sixty-five days nearer the end of his journey ; his wife is growing old faster than he is ; his children are coming on, and the prospect is that, unless there is some favorable change in financial methods, he will eventually lose not only his home, but lose all of the profits upon years of toil, getting nothing out of them except a bare living. Still, he would rather that his home should go, and that his family should be turned adrift to shift for themselves, than to leave to them a name that could be justly charged with dishonesty. The farmer is an 1 86 THE FARMER'S SIDE. honest man ; so is the wage worker. Ninety-nine out of every hundred men and women who toil for a living are honest people. They want to be as true to their obliga- tions as the untutored child is to the truth. So it is that the first question which the farmer asks when you talk to him about cheap money is : " Is it honest ? Will it be treating our creditors fairly to obtain cheap money ? " Then the question arises, What do we mean by cheap money ? The meaning of it is this : That the interest charged for the use of money shall not be any greater than the profits upon ordinary business. That is what is meant by cheap money. It is not meant necessarily that we shall do away with silver or gold coin as money. It is not meant necessarily that we shall flood the country with what .is commonly called an irredeemable paper currency. It is not intended that there shall be a great mass of money beyond the needs of the people manufactured and given out to every person who calls for it, the same as rations are distributed to people who are unable to provide for themselves ; but it is meant that the people shall have money enough provided for them to transact their neces- sary business ; that they shall not be charged for its use any higher rate than they themselves, speaking generally, can obtain out of the profits in their own business. Is a money lender any better than a farmer ? Is a banker any better than a bricklayer ? Is a millionaire entitled to more privileges or advantages or jyotection under the law than the wage worker in any line or department of work ? Briefly, is there any reason why persons who have money at their command should be permitted to prey upon their fellow-men, and make out of their toil greater profits than the toilers themselves ? To illustrate the thought : Mr. A and Mr. B each has $10,000 in money to invest. A invests his money in a farm ; B invests his money in mort- gages drawing 10 per cent interest. A, in order to make MONEY A NECESSARY INSTRUMENT OF COMMERCE. 187 any profit whatever out of his investment, must put his farm to work ; he must either perform the labor himself, or employ some other person or persons to do it and pay them for their services, or he receives not one dollar's worth from his f 10,000 invested. Not only that ; the neg- lect of his farm will result in its growing up to weeds and trash, the fences will go to decay, the buildings will rot down, and in every conceivable way the farm will de- preciate m value and be absolutely worthless ; while B, without turning his hand, without doing any manner of work, without paying any sort of attention to his invest- ment — leaving that entirely to his agent — receives at the end of the first six months $500, which is 5 per cent on his §10,000 ; at the end of the next six months he re- ceives another $500. At the end of the year he has re- ceived $1,000 without in any manner whatever exerting himself to any extent or in any degree with respect to that investment. Now, let the reader think a moment about the philosophy underlying these two transactions, and search for the reason of the difference between the sources of the incomes of the two men — that one is com- pelled to work in order to realize any income from his in- vestment, while the other, making exactly the same amount of investment, needs do no work whatever, though his profit is 10 per cent. In one case the man himself must work ; in the other, somebody else does the work. It comes from the custom of allowing certain citizens to charge their neighbors interest for the use of money. Money is a necessary instrument of commerce, and ought not to be freighted with any charges beyond the mere cost of its issuance. Interest is wrong in principle. We have been accustomed to it so long that it never oc- curred to us that there is anything about it which is not in itself altogether right. It seemed to us that a person who had money had just as much right to lend it at inter- / 1 88 THE FARMER'S SIDE. est as a person who had a house had a right to let it out for rent. We put money and other property upon an equal- ity so far as its payitig a commission is concerned ; but we have not been in the habit of putting money and other commodities on an equality so far as the profits which are derived from their use by borrowers are concerned. Here, then, lies the trouble and the remedy. The trouble is ex- cessive usury, and the remedy is to get rid of it. The principle involved will be further discussed as the argu- ment proceeds. Returning to the farmer's suggestion about whether this is an honest proposition, let him ask himself the ques- tion whether it is honest for him to be permitted to use the public highway without any charge. Is it honest for him to ask the Government to carry a letter for him a thousand miles for two cents, when it would cost him $50 to have it carried by private hands ? Is it right for him to ask the Government to regulate freight charges on rail- ways and ferries to a rate below that which would be charged if there were no such regulation ? In other words, is it honest for him to ask the Government to interfere in behalf of the people in respect to any of these things in which the common good of the people renders Govern- ment interposition necessary ? Money is one of the neces- sities of civilization. Dollars are as necessary as wagons. They are as necessary as railroad cars and ships and canal boats. In order that a fair estimate may be made as to the necessity for the use of money, let one imagine for a moment what would be the condition of things were money absolutely withdrawn, so that there would be no money for any man or woman or child to use. Then, in connection with that, imagine the stoppage of all trans- portation. Cut off the towns from the country and the country from the towns ; close up all the highways, all the railroads ; anchor all the ships ; close all the banks ; bury MONEY A NECESSARY INSTRUMENT OF COMMERCE. 189 all the money ; in sixty days half the world would be dead and half the remainder starving. At the end of the year not more than 25 per cent of the population of the civil- ized world would be living, and they would be such as happened to have a year's supply ahead of them. The farmer to-day does not carry over supplies like his predecessor did. He relies now very largely upon the merchant and the carrier. Throughout all the Western States a wheat crop is all thrashed at one time, and the grain, except such as is needed for seed, is disposed of as rapidly asNt can be hauled to the nearest market town. So it is as a general rule with all the surplus stock on the farm. It is disposed of in large quantities. In traveling thousands of miles over that magnificent Western region beyond the Mississippi, and even on large tracts east of that river, a smoke house is rarely seen ; on many farms the barn is hardly large enough to accommodate the work horses and the milch cows ; no bins, no granaries, no places to store grain, no sheds to store surplus " rough- ness." There is a constant interdependence growing be- tween the farmer and the manufacturer and the carrier and the merchant. Anything which would destroy this rela- tion would not only revolutionize but impoverish, and m a short time starve, the world. So it is seen that money is an absolute necessity. The farmer doesn't make shoes now ; he doesn't make clothing ; he makes very little of what he uses, except the crops which are produced upon his land and the live stock which he raises ; and the sur- plus of these he disposes of at once, relying upon his neighbors in other lines of work for his daily supplies. That being true, all the people are interested alike — not to the same degree, it is true, but exactly alike — in this matter of money. Every man, every woman, every child that is thrown upon its own resources, must have money. We can not exchange our wheat for shoes, nor our corn for 13 igo THE FARMER'S SIDE. hats, nor our cotton for machinery, but we can exchange any one of these articles, and to any amount, for money, and we can obtain the needed supplies with money. This brings us to where we can understand what the real func- tion of money is — namely, to serve a public use. What the highway and its moving vehicles laden with produce do in the movement of commodities, money in circulation does in the exchange of values ; as it is with the highway, so it is with money — the function of both is to serve a public use. Before discussing further the philosophy of money and illustrating its uses and functions, let it be understood, to begin with, that the underlying proposition involved is that money is a necessary instrument of commerce. This proposition is not a new one. It has been suggested many times by economists, by statesmen, by lawyers in their briefs, and by courts in judicial decisions. Daniel Webster, in some of his most memorable speeches, asserted the doctrine. The Supreme Court of the United States has affirmed it, and it probably will not be disputed by any person claiming to have thought upon the subject. It is well that this be kept in mind. Money is a necessary instrument of commerce — not simply an instrument, but a NECESSARY instrument. Let it be inquired at this point why the people empowered Congress to regulate com- merce among the several States ? What is it to have such a thing as a regulation of commerce ? Why is Congress authorized to levy duties upon imports ? Why is Congress authorized to levy taxes upon the people ? There is but one answer. All of these things are public functions, and besides being public functions they are classed among the prerogatives of sovereignty. The people of the United States constitute a nation. Congress represents our legis- lative power, courts represent our judicial power, the President and his subordinate officers represent our execu- MONEY A NECESSARY INSTRUMENT OF COMMERCE. 191 tive power. All of them combined are called the " Gov- ernment." Acting in harmony they are an agent of the people for the purpose of executing the popular will. The reason why Congress was authorized to take charge of the commerce of the people is that when the people of the several States undertook to regulate commercial affairs among themselves it was found to be utterly impracti- cable. One of the principal reasons for adopting the Con- stitution and organizing a new government under it was that there might be a central authority somewhere to ex- ercise the sovereign power of the people. Commerce means simply trading among the people, selling and buy- ing, buying and selling, carrying property, exchanging values, moving things from place to place. The people are all alike interested in this matter, and for that reason chiefly the Government is empowered to take charge of it and to regulate it — not to please the Government, but in the interest of the people. From that comes the power to open and maintain thoroughfares ; from that comes the power to take away lands belonging to the people; to move their houses and their fixed improvements in order that a highway may be opened there, that a canal may be cut through, or a railway constructed. These things are done in the public interest, for the common good. The land is taken because the public demands it ; the property is used because the public wants it ; it is all done to pro- mote the general welfare. The railroad is as much a need of commerce as the common highway — indeed, it is much more important now, if such a thing could be, than the common highway, because producer and consumer are many miles apart. Wheat and corn grown upon a Kan- sas farm are used in Philadelphia, in New York, in Boston, in Liverpool, in London ; it is carried to all parts of the world. Wool produced among the mountains of Montana is carried to Boston, manufactured there, and scattered all 192 THE FARMER'S SIDE. over the world. The internal trade of the United States, measured either in tons or in dollars, exceeds the aggre- gate foreign commerce of any half-dozen other nations. Its value is almost beyond computation. One of the es- sential parts of this vast system of trade, absolutely neces- sary for transacting it, is money. Without money com- merce would cease ; without money all movement of trade would stop ; without money there would be no business ; all exchange would be barter, and that would take us back to barbarism. CHAPTER XI. CONGRESS MAY REGULATE INSTRUMENTS OF COMMERCE. If, then, Congress is authorized to regulate commerce among the several States, it is also authorized to regulate the instruments of commerce. It may prescribe what kinds of roads and ways shall be opened ; what kinds of vehi- cles shall be run on them ; what shall be the rate of toll ; whether, indeed, any person other than authorized agents of the Government shall be permitted to manage and to control the ways. The same power which authorizes the Government to open and maintain highways, post roads, and the like authorizes it to build roads for the people without the intervention of any corporation whatever ; to build the roads, to own them, to manage them in the in- terest of the people ; and this right to regulate commerce includes necessarily — not only impliedly, but necessarily — every function essential to the work. That makes it plain that it is not only within the province and power of the people through their agent, the Government, to regulate money as an instrument of commerce, but to regulate its quantity, to regulate the manner of its issuance, to dictate the material out of which it shall be made, to prescribe the form, the inscriptions, and devices which shall appear upon it, to prescribe the amount which shall be issued, the channels through which it shall reach the people, and to regulate the charges for its use. If, then, the Govern- ment may not only make the money as it is doing now — 194 THE FARMER'S SIDE. that is to say, performing the mechanical work — and dic- tate the material out of which it shall be made and regu- late its value, but also regulate the manner of its issuance and provide the ways and means by which it shall reach the people, and may also regulate the rate of charges to be exacted for its use among the people, there is no rea- son why the Government should not do for the people directly what it is now doing for them indirectly through banking institutions, and permitting the banks to charge a very high percentage for their services. If the Govern- ment may issue a hundred million dollars in bank notes to banking corporations upon the deposit of Government bonds as security and then permit the banks to lend that money to the people at lo per cent interest, what is to hinder the Government from lending the money directly to the people and taking their property as security, just as the banks do ? Is not the property which the bank take's as security for money obtained from the Government — and which security the Government is ready at any time to en- force in favor of the bank — quite as good security to the Government itself as it is to the bank ? and could not the Government enforce the security in the interest of the peo- ple at large as easily as it can enforce it in favor of the bank ? We all understand very well that as soon as a creditor be- lieves his debt is in danger, or that his debtor is unable to pay, he goes into court, states the amount of the debt, that it is due and unpaid, mentions the particular piece of land which is held as security, asks judgment for the amount of money due and a decree ordering a sale of the land to satisfy the judgment. If the government — State or national — can dispose of real-estate security, and thus collect the debt for a bank or for a private individual, as it is doing every day in the year, there is no reason why, with the same machinery, the same officers, and under the same laws, it could not enforce the collection of debts for REGULATION OF INSTRUMENTS OF COMMERCE, mg itself in the name of the people. Another case : Where a county encumbers itself with debt to aid in the construc- tion of a railway or of a bridge or of a public building and the debt is represented by bonds owned by individual persons and the bonds become due and are not paid, the bondholders go into court — either the State or United States Court, as may be proper under the circumstances — and ask enforcement of the obligation, that the debt be collected. The creditor has nothing further to do. The machinery of the law is at once put in motion, necessary process issued, the debtor is brought into court, the case adjudicated, judgment rendered, and a decree issued that the debt must be paid. Taxes must be levied upon the people ; the levy must be made by the regularly consti- tuted officers, and when the officers neglect or refuse to levy the taxes, as they sometimes do, they are adjudged to be in contempt of court and are imprisoned. In case imprisonment does not bring about the necessary levy of taxes through regularly appointed officers, the court in due time will appoint its own officers to levy the taxes, collect the money, and pay the amount due over to the creditors. This is done under the law by tribunals already established, and these same laws and these same tribunals would be used in the same way and with the same powers — no more, no less — to collect debts due the Government and pay the money into the Government treasury. So, we see, we now have all the necessary machinery ready for the inauguration and management of a system by which the people can control their own financial affairs in their own way. CHAPTER XII. DISCRIMINATION IN FAVOR OF MONEY. The changes in our social condition within the last fifty years have been so many and so important as to work a complete transformation. The effect of competition has been marvelous, and upon the farmer it has been more marked, if possible, than on any other class of citizens. In the beginning of our national career 90 per cent of the people lived on farms, and farmers owned at least 85 per cent of all the property in the country. Now 40 per cent of the people live in towns and cities, and farmers and their helpers do not exceed 45 per cent of the total popu- lation of the country. One third of them do not own the places they occupy, and about one half the rest live in homes that are mortgaged for more than they would now sell for in the open market on thirty days' notice ; they are crippled in all directions, and have lost their rightful influ- ence in politics. The farmer has been shorn of his power to help himself in a thousand and one little ways that once were familiar to him. He is now at the mercy of combi- nations which are in effect conspiracies against the com- mon rights of the people ; his grain is sold in the markets long before he harvests it; the packing houses and the railroads have cut off all competition in the matter of live- stock sales; bulls and bears in the grain pits have relieved him of all personal influence in the matter of the disposi- tion of his crops. His necessities require the use of large DISCRIMINATION IN FAVOR OF MONEY. 197 amounts of money, and the money volume of the country has been contracted so that his debts are increased 100 per cent, while the value of his products has been dimin- ished on the average nearly 50 per cent ; his taxes and other money demands which are made upon him have largely increased, thus multiplying his debt burdens by three. And now we have come to a point where we begin to ask ourselves why it is that money is the only com- modity which the law specially protects. There is noth- ing in our legal codes fixing the prices at which wheat, or corn, or cattle, or cotton, or iron, or wood, or wool, or anything except money shall be sold. If a citizen or any number of citizens were to ask Congress or a State legis- lature for the enactment of laws fixing the price upon articles of ordinary commerce, such persons would be re- garded as not only fanatical, but actually crazy. No such proposition would be listened to by our lawmakers or by any considerable number of the people. It is utterly im- practicable ; it would be wrong in itself. It would be an act of oppression which the people would not and could not very long tolerate. But as to money, nearly every State in the Union has laws concerning the value of that. These laws relate to what is commonly known as interest. In most of the States the rate of interest is fixed by law, ranging from 5 to 12 per cent. In some of the States the lender is permitted to charge all that the borrower's necessities compel him to promise, but an or- dinary contract would be set aside if it were unconscion- able. The legal rate in Louisiana is 5 per cent per annum ; in most of the other Sates it is 6 ; in some of the Western States the rate runs as high as 12 ; in Arizona, California, Colorado, Florida, Maine, Massachusetts, Montana, Ne- vada, Rhode Island, Utah, Washington, and Wyoming any rate may be charged for the use of money ; but for labor and for the use of any other kind of property, the law 198 THE FARMER'S SIDE. prescribes that it must be reasonable. There is no law in any of the States which pretends to regulate or in any way interfere with the charges which one person may make for his services, or the price which he may set upon his prop- erty when he sells it to another person, except that it must not be unreasonable. In case any question arises as to what is a proper charge for personal services or for prop- erty, it is determined by a jury ; and the rule laid down invariably is the market price of the particular article at the particular place and time ; but when it comes to de- termining what shall be charged for the use of money there is always a statute governing the case, and that ends the dispute. If there is no rate fixed in the law, it is provided that whatever is shown to have been the con- tract, the courts will enforce. The question is now sub- mitted to the people for their consideration, by what rule of equity, by what rule of common sense, by what rule of justice between man and man, is money entitled to any greater consideration than any other article bought and sold among men ?- Why should we be required to pay a fixed sum regularly from year to year and from one gen- eration to another for the use of money, when the prices of our products out of which we are to pay the interest are continually fluctuating ? The same rates of interest which now prevail in the country in most cases were in force fifty years ago, yet there is a range in the market value of our products of from 5 to 50 per cent in the course of a single year. Corn may be worth on an aver- age twenty-five cents a bushel on the ist day of Decem- ber, and worth fifty cents a bushel on the ist day of the following July. Wheat changes its market value, and cot- ton and all other products in the same way and frequently to the same extent ; but as to money, if the rate is 6 per cent it is 6 per cent all the time ; if it is 10 per cent it is 10 per cent all the time ; there is no variation ; and what DISCRIMINATION IN FAVOR OF MONEY. igg is still more singular, if possible, is that the rate of inter- est has always been, as it is now, higher than the rate of increase upon property generally. It has been stated in these pages several times already that the regular annual rate of increase in the ordinary productive industries of the country does not exceed 3 per cent, and it has been shown that as to agriculture, taking the whole field of the country to work upon, during the last forty years, the in- crease does not exceed 2 per cent, and that at the time of this writing it does not exceed i per cent net ; yet we are compelled to pay for the use of money not only the rates established by law, which do not go below 6 per cent in any case except one — that of Louisiana — and in many cases, as the Census Reports show, as high as 40 per cent, and even more. We see from this that there has been in law continaally from the beginning to the present a discrimi- nation in favor of money, and against all other classes of property, and against labor. It is on that account that the people are now inquiring why this discrimina- tion. They see as its effect the rapid concentration of the wealth of the country in the hands of a few per- sons. Less than i per cent of the adult male popula- tion own more than 50 per cent of the total taxable wealth of the country. CHAPTER XIII. REGULATION OF COMMERCIAL AGENCIES. And, further, let us consider the functions of money in connection with other commercial agencies, as ferries, roads, bridges, public buildings, street railways, street lighting, water supplies, etc. In every rural community where flouring mills have been established the law pre- scribes a rate of toll which the miller may demand and receive for his services. When a ferry is established it is always done under authority of law, and rates of toll are prescribed, so that the people shall not be charged exorbitant rates, and that there shall be no discrimination against one person and in favor of another. When a rail- way is opened in the country it is done in pursuance of law; the law prescribes a maximum rate of charges, and if there is no statement in the law concerning dis- criminations, it is the intention of the law — and the courts always so decide^ — that any discrimination against one person or place in favor of another person or place is un- lawful. So with street railways ; whenever one is estab- lished it is in pursuance of law, and invariably the rate of charge for service is fixed by the law. Under the law concerning inns and innkeepers, while there was never any attempt to fix prices which might be charged for the entertainment of travelers and boarders, yet it was the common law of England, it is the common law of this country, that there shall be no discrimination in favor or REGULATION OF COMMERCIAL AGENCIES. 20I against any persons or classes of persons in any matter of right which the traveler may claim ; that is to say, a pub- lic innkeeper is required to admit all sane, healthy, or- derly persons who are able to pay the usual charges for entertainment if he has room for them. So in a public mill, the' miller must receive and grind the grain of every person who in an orderly way brings it to him. The ferryman is required to pass all well-behaved persons across the stream, and at the same rate that the law per- mits him to charge other persons. The railway is required to transport property and persons at or below the rates written in the law, and the charges must be the same to all persons for like services. It is so in the street railway ; it is so in all matters where the people through their Gov- ernment have undertaken in the public interest to regulate the business of persons and corporations who serve the public. Let the reader fix in his mind the difference between these classes of business and those which are purely of a private nature. The farmer, for example, is carrying on a business which is strictly private ; he produces corn and cattle, cotton and wool, to sell to his neighbor ; his farm may consist of ten acres or a hundred acres or more — a small portion of the earth where he in his own little world makes a living for himself and his family and sells his surplus. So with the shoemaker, the tailor, the carpen- ter, the brick-maker, the stove-maker, the weaver, the iron- monger, or with any other person who is simply working for himself without respect to the public at large. He is earning his own livelihood in his particular calling, dis- posing of his surplus products to his fellow-men around him, and in that way he earns his living. But there are some things that must be done for the accommodation of the people at large. Crossing a river at a particular point is a great public convenience. It is neither comfortable 202 THE FARMER'S SIDE. nor safe for men, women, children, and animals to wade or swim across a large stream of water ; therefore, it be- comes a matter of public importance that a ferry be estab- lished or a bridge constructed in order that the people may pass over comfortably, safely, and quickly ; so the people, through their agent the Legislature authorize a particular person or number of persons to pass the people forward and backward across the river, demanding for the service a reasonable charge. So it is with the railway. Per- sons living in one part of the country want to transport themselves and property to another portion of the coun- try. The railway becomes necessary. The people author- ize the building of a railroad in order to accommodate this sort of traffic. The matter of communication among citizens in their business transactions becomes one of pub- lic importance. We want to communicate with our fel- lows at distant points by letter ; this brings the transpor- tation of mails into prominence, and the Government takes charge of it, authorizing an individual person to do the work for a certain stipulated remuneration, so that the people may fare alike in the matter. If the reader will consider these things, and note how certain classes of work take on a public character, how they become necessary for the convenience and the com- fort of the people at large, and also how many of them become absolute necessities, he will be able to draw the line between what is a public function and a private mo- nopoly ; and after having made that comparison he will be able to draw the line between the work of public agents and the personal work of individual citizens. Money is just as much a public necessity as railways, bridges, ferries, court-houses, school-houses, water works, street lighting, etc. We can not get along without the use of money and remain in our present social condition. The farther we advance the greater will be the need for REGULATION OF COMMERCIAL AGENCIES. 203 money, because in our advancement we are constantly dividing our forces, multiplying our energies, and diversi- fying our employments. This may be illustrated in the work of the shoemaker, who not many years ago made the whole shoe ; now, in the great factories, where shoes are made by the million, workers each make only one particu- lar part of a shoe, and it appears that in a fine shoe there are upward of fifty different parts, one person working at one part, another person working at another part, and so on. The farmer himself, instead of preparing, curing, and preserving his meat for the next year, as he did once, sells his swine and his cattle and his sheep and his wool and his fruit, and purchases the manufactured product from those persons who prepare it. Look where we will, we find this same sort of change continually at work, so that in- stead of a few leading industries — as we had them once, and within the memory of many men and women now living — to-day we find a diffusion among the people, a division of labor ; this makes transportation and money all the more necessary, and it shows to our minds the reason why the Government ought to treat money as it treats transporta- tion, ferriage, milling, and the like. The public, all the people, every man, woman, and child, are interested in this matter of money. Among the first things that the child learns is the use of money, and among the necessi- ties of the people nothing is so great at this hour as mon- ey. Ask every adult man and woman in the United States to-day what they most need, and in nine cases out of ten the answer would be money. CHAPTER XIV. A CHANGE NECESSARY IN OUR FINANCIAL LEGISLATION. It is coming to be evident that there must be some change in our legislation concerning the use of money, and there need be no difficulty in determining just what the change ought to be. A proposition that will strike the mind of every person as just is this : That people who bor- row money ought not to be charged for its use any more than the profits in their business well-managed will justi- fy; or, in another form, the people ought not to be charged for the use of money any more than they can af- ford to pay. If owners of money can not or will not afford that, then the people must provide another way. Going a step further, we find that this whole subject is embraced within the scope of one fundamental principle, namely : That all agencies in which the people are alike interested are matters over which the people themselves should have exclusive control; that the functions in all such activities are public functions ; that the people, through their regu- larly authorized means, should exercise those functions in the common interest. This includes money. The theory is, in law and in practice, that nothing more shall be charged in the performance of these ^uasi'-puhMc duties than is just and reasonable. The doctrine of the common ' law was and still is quantum meruit — what is the service worth ? or, literally, how much worth ? That is the rule. It is intended that in charges for railway transportation, A CHANGE NEEDED IN FINANCIAL LEGISLATION. 20^ ferriage, and the like, the service is worth a certain stated sum per ton, per pound, per mile, per passenger, etc., and that sum is named in the law, the presumption being that that sum is a reasonable compensation for the service per- formed. It is not intended that the carrier shall become wealthy by reason of charging the people more for his service than it is worth ; nor is it intended that any private citizen, in a matter arising between him and his neighbor concerning the value of his services, shall be permitted to charge for his service more than it was really worth ; and in determining that matter, like services in the same com- munity and under similar conditions are considered. Let us remember, then, that the principle in all these cases is the same — namely, a reasonable compensation, and that the rule is to be determined by an estimate of what, all things considered, the services are really worth. Then, when the people themselves perform their own work by their own agents, as in the postal service, for example, there is no profit expected — just compensation enough to pay for the work. We are now paying two cents on sealed letters which do not weigh more than an ounce, one cent on unsealed matter, postal cards, and the like ; and when the annual report is made it appears that not one dollar has been made by the Government over and above the necessary expenses of performing the work. Let the same principle apply in the matter of money. The people ought to have the use of all money they need at just what it costs to prepare the money for their use, and this deter- mines the whole question. As to whether money should be made of metal or of paper or of any other substance, that is another matter. If the people prefer to use gold and silver for money, let them do so ; if they prefer to use paper or some other ma- terial, let them do so. The coining of money is the exer- cise of a sovereign power ; it is one of the prerogatives of 14 2o6 THE FARMER'S SIDE. the people in their organized capacity.. The only trouble in the way of using only gold and silver for money is that there is not anywhere near enough of those metals obtain- able to supply the needs of the people, and they are too heavy for convenience. Some other material must be used. Other materials have been used for many centuries past. In the United States we have never at any time been without the use of other sorts of money besides gold and silver coin. We have had bank notes and treasury notes, and now we have gold and silver certificates. United States noTes, national-bank notes, and we have the later treasury notes issued in payment for silver bull- ion ; so in our own experience we have found it necessary to use other materials besides gold and silver, and for the reason that there is not enough of gold and silver. to be obtained. This subject was discussed in some of its phases by the writer hereof several years ago in the Kansas Farmer under the title " The Way Out." The articles were after- ward collected and reprinted in pamphlet form under the same title. With a few slight modifications, and with such amendments and additions as changed conditions and new- ly discovered facts make necessary, some of the matter in the pages following is taken from "The Way Out." Substitute for the Money-changer a Disinter- ested Agency. Money which is lent to citizens on interest is the indi- vidual property of its owners, and they charge what they please for its use, subject, of course, to legal limitations. It is owned mostly by wealthy persons or corporations whose income is derived from what they receive for the use of their money. A considerable portion comes from savings banks and insurance companies, but it is these corporations, and not the individual owners of the small A CHANGE NEEDED IN FINANCIAL LEGISLATION. 207 sums separately deposited, which deal with the people and receive the larger share of the profits. The business is done by the agents and not by the principals. The active agency in the work is the person or company that nego- tiates the loans, deals with the borrowers, and collects the interest. Without the interposition of the bank, loan or insurance agency, acting for the poor people whose sav- ings are thus made profitable to them, there would be no savings — at any rate, but little — and that attests the value of such institutions. The point made here, however, is not that, but this : That the pecuniary interest of these useful agencies is to maintain the interest business. In this respect all money-lending or money-investing agencies, whether corporate or individual, are precisely alike — all interested in receiving high prices for the use of the com- modity in which they deal, just as farmers and mechanics are interested in maintaining high prices for the articles which they produce for sale. The man who uses money only in the regular conduct of his business, who uses money only in effecting ex- changes of property in which he deals, does not care any- thing about interest and discount, for he is not engaged in the business of lending money. He does not deal in money at all ; he uses it only as one of the agencies neces- sarily employed in his business, just as he does a dray or a railway car. He pays cash for what he buys and re- ceives cash for what he sells. He does a cash business ; hence he has no concern about the mon^y market further than to note how its fluctuations affect the market prices of articles in which he deals. Only the persons who live off the interest of money are benefited by high rates, and there are so many of them and their interests are so much alike and they own or control so large a proportion of the money used by borrowers, that there does not appear any reasonable or practicable way of changing this state of 2o8 THE FARMER'S SIDE. things so as to equalize profits and burdens among people who lend and those who borrow money, except to relieve the individual money lender of his present responsibility in that behalf and substitute a disinterested agency. The public good is to be preferred before private bene- fits, and for that reason the merits of a projected reform- may be measured by what, if successful, it would probably accomplish in the common interest without injuring the property or endangering the liberty of the citizen, or in- terfering with the reserved rights of the people. What is proposed here is to suggest such a change in our mone- tary and financial system as will make it practicable (i) for the people to have and use money not only on reason- able terms but on eqical terms ; (2) to avoid panics in the money market and prevent " corners " and other schemes to affect the value or volume of money in circulation ; and (3) to reduce annual charges for the use of money on long time to I per cent, and 2 or 3 per cent on short time, with- out injury to present owners of money. The proposed plan rests upon one fundamental prin- ciple, namely. The proper function of money is to serve a public use. In the beginning, money was not needed. It is the child of commerce. It became useful only as the expansion of trade made needful some convenient medium of exchange, and now it is as necessary in the transaction of ordinary business affairs as common highways are in the movement of persons and property. The citizen, when he lies down at night, should not have any more anxiety about a panic in the money market the next day, or a rise in interest rates through speculation of stock gamblers, than he has about the closing of the highway which lies at his door, or its obstruction by some ambitious neighbor who would traffic in travel, compelling his fellows to pay for privileges to which they are entitled of right. Every citizen is entitled to an outlet. He may not be shut out A CHANGE NEEDED IN FINANCIAL LEGISLATION. 209 from the world by his neighbor's lands. On demand, the state will open a way for him. For stronger reasons, when the common convenience or public necessity re- quires a thoroughfare, no private interest is suffered to stand in the way of its opening. Individual ownership of land is set aside with no more ceremony than the lawful appropriation of it requires, and the citizen must be con- tent "witli that. And when more speedy and direct com- munication between distant points is needed in the com- mon interest, private lands are taken and set apart for public use, the way is opened, a railroad is built and kept in repair for the people's convenience. While a corpora- tion is permitted to perform all the service and receive all the compensation, it is done as agent and trustee for the people. The work is determined by the Legislature, the charges are regulated by law, and, in case of failure to discharge its legal obligations, the people, through their regularly organized tribunals, take possession of the road and its equipments, and provide the needed service. These highways are kept open and maintained at the public ex- pense ; the people use them freely and on precisely equal terms. No person may obstruct them, every person may use them. But the traveler must " move on " ; the high- way must be kept open because it is for the people's use. The function of the highway is to accommodate the peo- ple in the matter of travel and transportation ; it is a ne- cessity of civilization, a public necessity, a common need of all the people, and for that reason it becomes the duty of the Government, which is the people's general agent, to see that the need is promptly supplied and permanently maintained. What the highway is to transportation, money is to trade — a public necessity — and the Government is as much bound to supply one as the other, and upon precisely the same terms as to compensation. People use the roads 2IO THE FARMER'S SIDE. without expense beyond the cost of opening and maintain- ing them, and it ought to cost them no more for the use of money they borrow. The people supply themselves with roads at the public expense, so should they supply themselves with money — the common medium of exchange — at the public expense, paying for its use only what it costs to supply it. The proper function of money is incompatible' with its use as a commodity — an article to be bought and sold in the public markets like wheat and corn. It should be made by the people for their use and upon the same principle that they make and use bridges, ferries, mills, and roads. One citizen should not be permitted to specu- late on the necessities of another. CHAPTER XV. CONGRESS HAS AUTHORITY TO PROVIDE MONEY FOR THE PEOPLE. That the Government should supply the people with money is not a new doctrine. Every civilized nation rec- ognizes the exclusive jurisdiction of its ruling power over the matter of providing the money of the country. The Constitution of the United States specially empowers Con- gress " to coin money and regulate the value thereof," and the States are prohibited from exercising any such au- thority; they are not permitted to make anything but gold and silver coin a legal tender in the payment of debts. Our Government, from the beginning, made money for the people — everything that was used as money, except notes of State banks — and it has made all the money used by the people since 1862. Strange to say, however, it has never undertaken to " regulate the value thereof." It makes the money and then turns it over to individuals and corporations to trade in, the same as they do in wheat and pork. By the act of April z, 1792, a mint was established and certain specified coins of gold and silver were provided for — an eagle containing so many grains of gold, to be of the " value of ten dol- lars " ; a half-eagle, to be of the " value of five dollars " ; a quarter-eagle, to be of the " value of two dollars and a half-dollar"; a dollar, to contain 371'/, grains of pure sil- 212 THE FARMER'S SIDE. ver, with some alloy, this dollar to be the money unit, and of the " value of the Spanish milled dollar," with smaller coins down to a "half-disme." It will be noted that while the dollar was made the unit, and the value of a certain number of dollars was given to the gold coins, the value of the unit — the dollar — was to be that of a foreign coin, the Spanish milled dollar, which was then largely in circu- lation in this country, but there was no attempt to fix the value of that dollar. Had war or any other casualty ban- ished the Spanish milled dollar or destroyed it, the stand- ard of value for our own dollar would have been an un- known quantity, except as to the silver it contained. In fact, there have been no Spanish milled dollars in this country in many years past. Still we have the doIKar of 371'/, grains of pure silver given us in the beginning; and there has never been any other " regulation " of its value than that written in the first coinage law. That, however, was no regulation of value beyond determining the quan- tity of silver in a dollar. To say that it should be of value equal with that of some other coin then in circulation, when that other coin had no value except what was under stood to be expressed in the word " dollar," was only to as- sume that the word " dollar " had a recognized meaning in finance, and that, so far as the people of the United States are concerned, 371'/, grains of pure silver, with a small percentage in weight of serviceable alloy, and all made in certain form with certain marks upon it, should constitute a dollar, the " unit " of our money. It was made in that way and given to the people as money, with no other de- scription of its value. It was not provided in the law that a dollar should have a certain, steady, and uniform pur- chasing power, that it should pay for a bushel of potatoes or a yard of cloth or a seat in the theatre ; it was sent out carefully described in feature, and named " one dollar," with the understanding that it was worth as much as a AUTHORITY OF CONGRESS. 213 " Spanish milled dollar." All, then, that Congress ever un- dertook to do by way of regulating the value of this coin was to determine the exact quantity of silver which it should contain. The value of a dollar is " an ideal thing," the Supreme Court say. CHAPTER XVI. MONEY WHEN USED AS A COMMODITY IS A DANGEROUS THING. How is the value of money (when used as a commod- ity) determined ? Go to a merchant or trader who uses only his own money and does altogether a cash business. Ask him, " What is money worth ? " and he will tell you he is not dealing in money. And not dealing in money, he does not know what money is worth. For the purposes of his business, using money only in effecting needed ex- changes, he does not think about the value of his dollars any more than he does about the value of any other ne- cessary agencies or instruments employed in the carrying on of his business. Go into a bank or a loan agency and inquire, " What is money worth ? " You will be answered in percentage and time — 2 per cent for thirty days, 3 per cent for sixty days, 4 per cent for ninety days, 10 per cent for a year, 8 per cent per annum for two to five years, and so on. That is to say, money is worth whatever interest rate the state of the money market will justify. The value of money, then, is estimated by what can be obtained for its use, with the understanding always that the principal, or an equivalent amount, must be returned at the end of the term for which it was borrowed. Money is no exception to the general rule for deter- mining market values. Whatever can be obtained for an MONEY AS A COMMODITY DANGEROUS. 215 article in the market, that is its market value, and the demand depends largely on the amount and distribution of the supply. A short supply and an active demand en- hances prices, not because any moral principle is involved, but simply because the seller can bank on the necessities of the buyer — he can make money out of a short market. The necessity of one is the advantage of another. And, as to 'commodities in general, there is no objection to this rule of trade. It is conceded on all sides that the rule is reasonable and that its operation tends to maintam com- mercial equilibrium. But how would it work as to things which the people have set apart for their common use and benefit ? Some things may be classified — as the in- dustries ; one class of persons work on farms, another class in shops and factories, a third go to mining, a fourth engage in transportation, and thus all the workers are employed. There are some things, however, that are common to all the people, in which they are all alike inter- ested, not in the same degree, but for the same reason. As to such matters it is better that the work be done by the people for themselves in their own way through some agency specially appointed and kept constantly under sur- veillance of public authority. All the people of a city are interested in water and light, and though in different de- grees the nature of the case will not admit of discrimina- tions. One person may need large quantities of water, another not nearly so much, but no account is taken of that in the determination to supply the city with water. It is much cheaper, more convenient, and better in every way that the city should supply the water and because the people are all alike interested. If people were limited in their correspondence to private mail carriers, the expense would be enormous, and the inconvenience intolerable. Carrying the mails rapidly, promptly, and safely is a public need, therefore the people see to it themselves for them- 2i6 THE FARMER'S SIDE. selves ; the Government does the work, and the poor and rich fare alike. One hundred stamps cost the purchaser one hundred times as much as one stamp of the same class costs its purchaser. The Government is now trying to equalize the cost of transportation of property over railroads and canals and on rivers, so that there shall be no unjust or unnecessary discrimination in favor of or against particu- lar persons or places, and there is an almost universal 'de- mand for legislation prohibiting the free carriage of fa- vored passengers. A Senate committee has just been investigating charges against meat packers that they are defrauding the public in a matter in which all the people are interested. Suits have been brought against corpora- tions alleging that they had forfeited their franchises by engaging in enterprises not contemplated in nor compatible with their charters ; and people of all parties denounce trusts and other combinations which unnecessarily and unjustly make living more costly. There is a clearer per- ception now than ever before of the need of the public management, at all events public contrd, of every matter which directly concerns all the people alike. And this comes logically to a free people where from the begin- ning the poor man enjoyed political and civil rights equal with the rich. Latterly the concentration of large inter- ests have increased the number and the power of rich men, and the deft handling of money by its owners, with the dangerous development of stock and grain gambling, have impressed the masses of the people with the need of legislative interference in behalf of the many as against the few in this particular direction. While all the people — this includes every individual person — are interested alike in the use of money, that portion of it which is used for lending on interest belongs to only a few persons, and that few control the money markets of the country, always interested in making MONEY AS A COMMODITY DANGEROUS. 21/ money scarce and dear, so that the demand will be greater and therefore rates of interest higher. To call in one half the money of the country would not only increase interest , rates 50 per cent, but it would force prices of commod- ities down 50 per cent. Owners of money would gain while owners of other kinds of property would lose. This prin- ciple has been demonstrated many times in our history, an'd never more plainly than within a few years last past. The possession of money is a power dangerous when ex- erted in the interest of individuals against that of the community, and it is neither safe nor just to let that power remain in individual hands. The law of self-defense is nature's law, and it is preserved in human codes. The .cit- izen may be always armed in his own defense, but he should be shorn of every power which endangers the public interests. The money power is the most dangerous foe to republican liberty at this hour ; it must be disabled. Fortunately this can be done justly and peaceably, injur- ing none, benefiting all. The remedy is to take money out of the list of commodities which may be bought and sold for gain, and limit its use to its proper function of serving the people in the conduct of their every-day affairs. Let the Government, not bankers and money lenders, control the money of the country. CHAPTER XVII. GOVERNMENT OUGHT TO SUPPLY MONEY TO THE PEOPLE ON JUST AND EQUAL TERMS. The people, through their Government, should not only supply themselves with money, but they should also provide for its use by the citizens on just and equal terms. And it ought not to be subject to taxation. Roads are useful, but they have no market value and are not taxed. School-houses and court-houses are not taxed, nor are post-offices or Government postal railway cars. What the Government supplies to the people and manages through its own officers is not taxed and ought not to be, because it belongs to the people — to all the people — for their com- mon use. So it ought to be with money, except in cases where persons use it unlawfully, hoarding it or lending it on usury. It is the duty of the Government to fix the rate of charges for the use of money quite as much as to sup- ply the money. This would do away with interest laws and relieve the public from anxiety about panics and corners in the money market, because Government and not individual persons would control the money circulation. It is not proposed or expected that needy persons will draw money from a public fountain as they draw water by simply turning a faucet, nor that any Utopian scheme of supplying individual wants will be established. It is not intended or expected that any derangement of business affairs will occur by reason of the changes herein proposed. GOVERNMENT SHOULD SUPPLY MONEY. 219 Nor will there be repudiation of debts. The change will be easy and without friction in business circles. Banks and loan agencies will be as necessary under the new sys- tem as under the old ; but charges for the use of money will be under control of the people themselves in their com- mon interest. These charges will be fixed by law, will be the same in all parts of the country ; every borrower will pay like charges on equal amounts of money for the same length of time. It will be necessary, of course, for the Government to own money enough to operate the proposed plan, for money owned by the people can not be taken from them lawfully by the Government without compensation. If it were needful that more money should be obtained than the Government does now possess in its own right, with what it may readily and lawfully provide, it could be ob- tained by the issuance and sale of bonds to the amount needed. Fortunately there is no need to resort to any extraordinary proceedings in this direction. Ten hundred million dollars is ample to set the scheme in operation and obtain control of all the money in the country, so far as the matter of charge for use of borrowed money is con- cerned. The Government may unquestionably regulate charges for the use of money, just as it may regulate charges for carrying passengers and freight on railways, or for the transportation of mail matter or packages of merchandise. The authority to " regulate the value " of money covers the whole subject. Congress does now regu- late the rate of interest to be charged by national banks. States may, if they desire, establish and maintain banks of issue, but they can not lawfully " make anything but gold and silver coin tender in payment of debts." States have all along had laws of their own on the subject of interest ; so they have had laws regulating charges for transporta- tion on ferries, canals, and railways ; but such laws do not 220 THE FARMER'S SIDE. operate beyond the State lines. The interstate commerce law regulates commerce among the several States ; every railroad, short or long, now operated in any of the States, is less or more subject to the provisions of that law, and it is altogether probable that within a few years the entire railroad business of the country will be regulated by the national law. The necessities of the situation will bring about that result. Just so with money and its use. The Government established a national currency nearly a hun- dred years ago, and added to it some $800,000,000 in the two years 1862 and 1863. Those troublous times brought about many new applications of old principles, and this is one of them — the providing of a national currency for the use of the people. The thought is well expressed by Hon. James N. Huston, Treasurer of the United States, in his report for 1889, at the beginning of page 12. He says : In becoming practically the sole issuer of currency the Gov- ernment has assumed the duty of supplying the needs of the pub- lic for a circulating medium. To propose, then, that the Government shall " supply the needs of the public for a circulating medium " is not a new thing. That responsibility has already been assumed. The only new feature proposed is that the " circulating medium" shall be supplied to the "public" at cost, and not, as now, largely through banks and loan agencies which charge six to ten times as much for the part they perform as the Government can afford to supply it for through its own agencies specially provided. Nor is it proposed to interfere in any manner either directly or indirectly with any existing investment-or con- tract. Obligations of contracts are sacred and must be re- spected. Congress may enact a bankrupt law — a way of escape from contract obligations by men who have failed in trade. Not one farmer in ten thousand ever thought of going through a bankrupt court, except in some cases GOVERNMENT SHOULD SUPPLY MONEY. 221 where large farmers in the Southern States had been broken up by the civil war. A bankrupt law is intended to relieve crippled debtors who make a surrender of all the property they own. It is virtually expunging the debt record. The primary object of the scheme here pro- posed and the motive which induced a study of "The Way Out," is to assist overburdened farmers and other owners of homes to pay debts which they are utterly un- able to pay at existing rates of interest, and to obtain for all borrowers, money at what it actually costs to provide it for them. Every debt is to be paid in full, and if, in the end, a few persons fail, the i per cent per annum charge for the use of money borrowed will make such losses good, so that all will be gainers and nobody loser, except only those who are now too far gone to be saved. Nor is it expected that any honest person will obtain money without labor, or without exchanging some kind of property or security for it. The scheme is altogether \ practicable and reasonable. A great deal of money is used in lending which is not the property of the lenders. Banks, for example, use a large portion of their deposits in discounting notes and bills, and so far as that amount is concerned, it matters not to the banks whose property it is. A change of own- ership of the money would work no hardships on the banks. What they enjoy is the use of the money, and the ownership is of no consequence to them. The owners — depositors — have no part in the lending; they deposit their surplus funds in bank for safe keeping, and by cus- tom permit its use by the banks until it is called for. Re- ceiving no share of the interest, it is not important to them what interest rates are. They use money in their business just as they do books, pens, weights and meas- ures, wagons and carts. They are not dealing in money, and for that reason, so long as they are not compelled to IS 222 THE FARMER'S SIDE. borrow money they are not troubled about the money market. They do not care whether interest rates are high or low. They want money to use in their business, not to lend. It is the same with every other class of citi- zens, except only the lenders of their own money, as be- fore suggested. Farmers, mechanics, laborers, clerks, professional persons — all classes, with the single excep- tion — use money only in its functional application, as a necessary instrument in trade. When a farmer purchases a wagon or a plow, when a mechanic purchases a saw or an axe, when a laborer buys a coat or a hoe, when a clerk secures a table or a pen, when a professional man pays for his book case — in these and in all like cases money is used simply in paying for the particular articles, not ac- cording to the value of the money, but according to the value of the things purchased, and the question of interest does not arise in the transaction at all. But as to the man who uses his money as the livery-stable keeper does his horse — to let it out for hire — to him interest is the great matter. The value of houses would not be affected by a change in interest rates, because houses are not built of money, but of stone and clay and iron and wood and paper and glass. Labor, which imparts value to houses, is the basis of cost, and cost is the basis of rent. A house would be quite as serviceable with money at i per cent as it would be with money at 6 per cent. The same rule holds good applied to all classes of property except money, and only to such amount of money as is used by owners in lending for interest. The exception comes from the particular use of money. When used by owners simply in buying and selling property, it has no interest value whatever. It is only when used as capital invested for returns on its use that it becomes sensitive to changes in the money market. Money in its proper use has no value ; it is the property which we buy or sell GOVERNMENT SHOULD SUPPLY MONEY. 223 that has value ; money is used only to effect the exchange. We say a horse is worth one hundred dollars, not a hun- dred dollars are worth a horse. The value is in the horse, not in the money. The money which owners and only owners lend, that is the money and the only money which will be affected by the changes here suggested. Loan agents and bankers who act as specially authorized agents of owners to nego- tiate loans for them, are agents for that particular pur- pose, and are therefore herein classed with their principals — all acting as or with or for owners in investing the same money. And this money so used is not to be con- founded with the money which bankers use in the regular course of banking business. But by what means shall the needed amount of money be obtained by the Government ? As before suggested, there are two ways in which the Government may obtain control of the use of property ; one is to purchase it outright, the other to supply similar use through its own agencies. It is plainly evident to the sight of many minds even now that the present financial system will not long be per- mitted to continue. Owners of one fourth the money of the country control the money markets in their own inter- est, without respect to the interest of owners of the other three fourths, and the effect is seen in general resistance to the policy. Profits on the use of money are far in excess of profits on other kinds of property. Farmers especially are hopelessly embarrassed, and can not pay out unless interest rates are reduced, and because with the present range of prices for farm products there is no profit in agriculture. Whenever any combination, or any interest, or any custom deprives the people generally of the enjoyment of conceded rights, or in any manner or to any extent in- juriously interferes with the common rights of citizens, it 224 THE FARMER'S SIDE. becomes the duty of the Government to interfere. Con- gress has appointed committees to investigate charges of oppression and wrong preferred against men operating in lard, butter, oil, wheat, sugar, beef, and coal ; like com- mittees have been studying the labor question in its rela- tion to organized capital, and frequently within the last two or three years it became necessary to remove intrud- ers from the public lands. If farmers, who on the face of the papers own three fourths of the occupied land of the country, who pay more than half the taxes, and who num- ber 45 per cent of the population, will suffer irreparable injury if the Government does not interfere in their be- half, is there any good reason why it should not do so ? And if 40 per cent of the population living in cities, towns, and villages, are embarrassed to the same extent as farm- ers are, why should not they, too, be supplied with money to pay their debts, thus saving debtor and creditor alike without forcing one into bankruptcy and subjecting the other to loss ? And if the persons who are responsible for these troubles refuse to enter willingly into the work demanded and needed, is that a sufficient reason why the Government should not exercise its unquestioned powers of sovereignty and supply money for the use of. borrow- ers without consulting the wishes of these selfish and ob- stinate people ? Congress is expressly empowered to " coin money and regulate the value thereof " ; it is the only body which is so authorized, and it would have the au- thority without a grant, because coining money is the ex- ercise of a sovereign power, and the people of the United States constitute a sovereign nation. The Supreme Court of the United States settled this question fifteen years ago. Congress may make money for the people ; it is in duty bound to do so, and it is not limited to any particu- lar article out of which to prepare the money. It may make paper money legal tender, and in any quantity. GOVERNMENT SHOULD SUPPLY MONEY. 225 The masses of the people now demand the assertion of the Government's right and duty in this matter. Profits on agriculture and labor have dwindled to the bare margin of living, and the use of money as a commodity for the profit of a comparatively few persons will not be tolerated much longer. These facts and suggestions may assist money owners to a conclusion that whether the course proposed is better or worse, there is no room to question the Government's authority in the premises. , CHAPTER XVIII. HOW MUCH MONEY IS NEEDED. Let it be understood that farmers and their co-workers do not ask for relief in their own behalf only ; they are not clannish. What we want is such change as will affect all classes advantageously alike. Nor are we repudiators ; we want to pay all our debts according to both the letter and the spirit of the Contract. We are loyal citizens of the republic. This country is good enough for us ; we made it; the star-spangled banner is our flag. Nor would we work needed changes so suddenly as to endanger business affairs or imperil property rights. We would not take from one and give to another. We would deal justly with all. We would not pay our debts in 50-cent dollars, nor in 200-cent dollars, but in loo-cent dollars ; as nearly as possible such as were current when the mortgage era began. We borrowed money when times were good and prices high, but our contracts were changed without our consent, the value of our property was lessened by law, our debts were increased at the instance of the lender, so that we are compelled to pay two dollars of money, two bushels of wheat, or two days' labor where we agreed' to pay only one. It is not proposed to go further along finan- cial lines than we have been in the past. It is not intended to embark in untried experiments or to explore unknown regions. Nor is it desired to risk bringing trouble upon the country by inaugurating new and visionary systems of HOW MUCH MONEY IS NEEDED. 227 finance. The only changes in this direction which we urge are : (i) More money for the use of the people ; (2) that the Government, and not banks and money changers, issue the money ; and (3) that interest rates be reduced to what the people can afford to pay, leaving margin to apply on the principal. We have not in any of our official declarations undertaken to elaborate methods or suggest details ; that is left for further discussion. Edward Kel- logg, nearly fifty years ago, suggested a plan based on the inter-convertible bond theory. The writer of this in 1889 presented a plan somewhat in detail based on a prin- ciple which, so far as he knows, was never before stated, namely, " The proper function of mbney is to serve a public use." The same plan more fully developed is pre- sented here. Adam Smith, more than a hundred years ago, compared the circulation of gold and silver money to a public highway, and later authors have adopted his com- parison ; but none of them gave the basic principle which gives force to the comparison. They contented them- selves with a simple statement of fact. In "The Way Out " the theory and the reason of it are given thus : " What the highway and its moving vehicles laden . with produce do in the movement of commodities, money in circulation does in the exchange of values ; as it is with the highway, so it is with the circulation of money — the function of each is to serve a public use." If the functions of money be public functions, the peo- ple, as a body politic, ought to provide money enough for the use of the people, and regulate its use in such a way as to make it most serviceable and least expensive. It is on this theory and reason that the plan herein set forth is based. It is universally agreed among workers that the amount of circulating money needed by the people is such amount as is sufficient for our business if trans- acted on a cash basis. That necessarily is indefinite. 228 THE FARMER'S SIDE. Whenever definiteness is attempted, the amount is put at $50 per capita. That is the amount named by the Ohio farmers at a State meeting in May, 1891. The same fig- ures have been given frequently by other public bodies. This particular amount is agreed upon, probably, because when our great war ended and when business was prosper- ous, our money circulation was above that. On careful examination, however, it will be found that population alone is not a proper basis for estimating money volume. The amount of money needed in any community depends not on population, but on the amount of business done and the density of population — in other words, on the ne- cessities of the people, not on their number. One com- munity requires more money than another, though the number of its inhabitants may be less. If a rule must be found and applied, why should it not be the same as that adopted in the case of coffee, sugar, shoes, or axes ? Let the people themselves determine the quantity they need. Who better than they know how much of anything they do need ? Manufacturers and merchants do not base the extent of their business and the amount of goods which they handle upon the number of persons to be supplied, but upon the demands made by the people ; and in order to ascertain what the demand is, or may be, they do not apply any standard of law, but they prepare the goods and take them to convenient places for the people to pur- chase ; then thiey advertise in the local newspapers, show- ing what they have to dispose of, and the people go to the stores and the warehouses, examine such goods as they need, select that which suits them, pay for it, and take it home. Is there any good reason why the same plan in theory should not be adopted in the case of money as it is in postage stamps ? Who knows better than the people themselves what is the amount of their indebtedness ? Who knows better than they do how much money would HOW MUCH MONEY IS NEEDED. 229 be required to relieve them from want ? Who knows better than they anything about what they need, and how much of it ? In this case, then, suppose we adopt a rule somewhat like this : Ascertain the amount of pressing in- indebtedness now resting upon the people for which their homes are mortgaged as security, and which debts are due and subject to immediate collection. If it be ascertained that that particular class of indebtedness is $1,000,000,000, then that amount of money is needed at once to relieve the people. Besides paying the debts of this particular class of persons, the money would immediately go into circula- tion, and within thirty days afterward pay as many more debts, and within another thirty days as many more debts, and so on ; so that by the time a year had passed the money would have paid off twelve times as much indebt- edness as it did at first. Upon a plan something of that kind the people may be relieved of their debt burdens in the course of twelve or fifteen years by the practice of a very simple policy, one which has been practiced ever since money was invented. This thought will be further dis- cussed as we proceed. CHAPTER XIX. three ways to raise the money. Number One. — Bank-notes, Silver Coin Withheld, AND Surplus. There is, however, a much simpler way of getting at a reasonable amount of circulating money if we will but run our eyes back over a few years of our history. Leaving, out of view altogether the flush times immediately suc- ceeding the war and the effect upon our business which the contraction policy had, let us begin at 1879, when what we called " resumption of specie payments " had taken place, and start there. The amount of money in circulation at that time, as the Treasury Department gave it, was $825,804,342, or $17 to the head of population. That amount, however, while it is published to the world as having been in circulation, was not all in circulation. A large proportion of it was in banks, and in the hands of citizens who had withdrawn their money and hoarded it because of the hard times. There was probably not more than half that much in actual circulation among the peo- ple, or available for circulation. Please note the action of the national banks and the Government. The banks, from January i, 1879 to January i, 1883, increased their circulation $38,091,117, a yearly average of $9,522,778. Under the operation of the Bland silver bill, approved February 28, 1878, the silver coinage was increased regu- THREE WAYS TO RAISE THE MONEY. 23 1 larly, and from the two sources the annual increase of cir- culating money amounted to about $35,000,000 during the four years. In addition to this, there was a considerable increase — an average of $35,000,000 — in gold coin. And foreign trade was greatly in our favor. Altogether, we had dur- ing the period between January i, 1879, and January I, 1883, an expansion of circulating currency equal to about 75 per cent of what it was at the end of 1878. Dur- ing that time the business of the country rapidly increased, not only in volume but in activity. The people generally ■were growing prosperous and contented, apparently to a large extent forgetting the hard times during the years following the crash of 1873. The national banking law was re-enacted in 1882, giving twenty years' additional life to that particular part of our financial system. The -value of Government bonds rose rapidly in the market, and the banks, seeing that more money could be made out of customers' deposits which cost them nothing than out of their own bills based upon 90 per cent of bonds rapidly advancing to a high premium, began to withdraw their circulation, and have continued it steadily up to the pres- ent hour. The net decrease of bank-note circulation after 1883 down to and including 1890, is shown on page 42 of the report of the Comptroller of the Currency for 1890, as follows : Year ending October 31, 1884 $24, 170,676 1885 15,545,461 " " iSS3 56,593,533 1^87 50,495,589 " " 1888 16,848,739 " " 1889 22,159,043 " i8s° 5,248,549 Total net decrease $191,061,590 Average yearly decrease $27,294,512 232 THE FARMER'S SIDE. Between January i, 1882, and June 30, 1884, the de- crease was $22,922,105. For the period between June 30, 1884, and October 31, 1884, the exact figures are not at hand. It is safe, however, to place the aggregate net de- crease of bank circulation from July i, 1882, to October 31, 1890, at $227,000,000. The population of the country at the time this con- traction began (July, 1882) was about 52,000,000, and the average per capita circulation at that time was put at $22.57. There had been an increase in the per capita cir- culation in four years (1879 to 1882) from $17 to $22.57, about 35 per cent, taking the figures of the Treasury De- partment as our guide. If, instead of contracting circu- lation after 1882, we had expanded it up to 1890 at the same rate that we had been doing from 1878 to 1882, we would now have for circulation at least 50 per cent more than we have. In addition to the bank-note contraction after 1882, the product of gold gradually fell off from year to year, the amount of silver coinage was not increased, the coinage law was repealed in 1890, and we are to-day not receiving as much increase in our silver note circula- tion by $12,000,000 annually as we might have received under the Bland law if the officers of the Treasury De- partment had executed the law to the full extent of their discretion. Instead of the $25,000,000 annually that were coined under the Bland law, the department might have coined twice as much, or $50,000,000. There was no reason why it should not be done, or why it was not done, except the opinion of officers of the Treasury that in some way or other giving to the people more money, and espe- cially silver money, would interfere injuriously with the business interests of the country. While the people were asking for more money, and while their request was being increased in intensity from year to year, the banks were continually withdrawing their notes, and the Treasury THREE WAYS TO RAISE THE MONEY. 233 Department refused to coin a dollar beyond the lowest limit of the law. Taking the two together — the actual contraction of bank currency at the rate of $27,200,000 a year, and the loss of $25,000,000 yearly through refusal of Treasury officers to execute the coinage law to its high- est limit — we have $52,200,000 net yearly loss of circu- lation. We were entitled to the use of that much money ; the law had provided for it. Let this matter be clearly under- stood. Under the provisions of the Bland law, approved February 28, 1878, the Secretary of the Treasury was re- quired to purchase not less than $2,000,000 worth, and not more- than $4,000,000 worth of silver bullion every month and coin it into standard dollars. He did not rise above the lower limit, coining only about $25,000,000 a year un- der the law, when he was authorized to coin twice that amount. In other words, he was authorized to give us every month $25,000,000 in silver coin more than he did give us. The total amount of money paid out of the Treasury for silver bullion under the Bland law, as appears from the Secretary's report for 1890, was $308,199,261. The average price per fine ounce was a fraction over $1.05. The time was 148 months, and the Secretary was required to purchase not less than $2,000,000 worth, nor more than $4,000,000 worth of bullion per month. He had authority, under the law, to purchase $596,000,000 during the 148 months of the law's operation, but he stopped at $308,199,261, just .51% per cent— a trifle over one half of the amount which the law authorized him to purchase and which the people were entitled to and which they actually needed. Adding $25,000,000 (an amount of silver to which the people were entitled, but of which they were deprived) to the amount of bank-note contraction, we have, in the two items a total yearly loss of circulation amounting to $52,- 200,000 — money which the people ought to have had the 234 THE FARMER'S SIDE. use of every year, but of which they were wrongfully de- prived by bankers and Treasury officials. Multiply that sum by the number of years past since 1882, and we have the total amount of loss in those eight years— $417,600,000. But this is not all. It does not include the years 1878 to 1882— four years during which the banks expanded their circulation, but the Treasury gave us only half the amount of silver dollars to which we were entitled. Four years of average loss of $25,000,000 on silver coinage gives us a total of $100,000,000. And this is not all that the people were entitled to under the law but did not get. From 1878 to 1882 the banks increased their circulation at the yearly rate of $9,500,000. If that was a reasonable increase during those years, it would not have been an un- reasonable increase during the years which have passed since that time when our population and business were greater. Instead of a contraction we were entitled to a regular increase during all the years, because our pop- ulation and our business increased. We were entitled to an increase after 1882, as well as before that year, and we were entitled to a greater increase, while we got none. Taking the yearly increase from 1878 to 1882 as reason- able, if it had been continued down to and including 1890, we would now have $76,000,000 in circulation from that source. Collecting these different items, we have — Contraction of bank circulation $227,000,000 Loss of silver coinage 300,000,000 Loss of increase in bank-note circulation 76,000,000 Total loss $603,000,000 That amount — $603,000,000 — represents what national bankers and Government officials have wrongfully taken away or kept away from the people. The banks not only did not increase their note circulation to accommodate the increasing business needs of the country, but actually took away from the channels of trade $227,000,000 in THREE WAYS TO RAISE THE MONEY. 23S eight years, though the number of national banks was in- creased 1,272. And at this hour the bank capital em- ployed would carry a circulation of nearly $600,000,000, while the actual net bank circulation is only $125,000,000. The Comptroller of the Currency, in his report for 1890, at page 40, says : " If an amount of bonds equal to the total capital were deposited to secure circulation, the whole body of banks might have a circulation amounting to $585,402,512, or $494,279,658 more than the present minimum." And the Treasury might have given us $600,000,000 in silver when it gave us only $300,000,000. The law, which had been passed over a presidential veto, provided for twice as many silver dollars as were actually coined, and eight years passed before any sincere effort was made to put either the coins or their certificates into circula- tion. This is a very simple matter, easily understood, and it is to be hoped that the reader will see it clearly and fix it firmly in his mind. Now let us add the amount of money which is lying idle in the Treasury to-day. In the Treas- ury statement issued April 30, 1891, the following items appear among others : United States note redemption reserve $100,000,000 Fractional silver coin 20,568,405 Trade-dollar bullion Si°ii>i37 Deposits in national banks 29,549,449 Net balance in Treasury 12,096,707 $167,225,698 These five items alone give us a total of $167,225,698 — money in the Treasury belonging, without question, to the people, and may be used whenever the Secretary is so disposed. In a recently published interview Mr. Leach, Director of the Mint, stated that the amount of avail- able funds in the Treasury was about $250,000,000. The 236 THE FARMER'S SIDE. Statement was published in the Washington Post about the 26th of April, 1891. The Post reporter called the attention of Secretary Foster to the statement of Mr. Leach, and the Secretary replied : " I guess he is about right in the main." (See Washington Post, April 29, 1891.) Let us take the amount stated by the Secretary to be cor- rect — $250,000,000 — then add what the country lost and was deprived of as above — $603,000,000 — and we have $853,000,000, which is quite sufficient to inaugurate the plan proposed in this book — a plan which will result in lifting the people's indebtedness, relieving their homes from incumbrances, and restoring the lands of this coun- try to the people in their own right. So grand a consum- mation ought to be welcome to every patriot. It is not proposed in this scheme to add one dollar to the currency more than we are entitled to under laws in ex- istence a dozen years ago, not one dollar more than Con- gress believed, at the time the enactments were made, that the business of the people demanded and would demand as the years should come. It probably will occur to the mind of every reader that if the conditions we had in 1882 had been continued to the present the country would be as prosperous to-day as it was then ; that if the banks had continued to increase their circulation as they had been doing in the years from the alleged resumption of specie payments to the middle of the year 1882, and the Treasury officers had performed their whole duty under the law, this political revolution would have been avoided. Assuming that if one fifth of the mortgaged debtors are relieved at once and provision made for reducing in- terest rates to the rest, the whole body will be safely in process of permanent relief, we have the problem solved. The funds already provided herein are enough to start with. Let us recapitulate : THREE WAYS TO RAISE THE MONEY. 337 Money now in Treasury $250,000,000 Replace national-bank circulation withdrawn since 1882 227,000,000 Increase of bank circulation since 1882 at rate of increase between 1878 and 1882 76,000,000 Difference between amount of silver dollars actually coined and the amount author- ized by law since February 28, 1878 300,000,000 Total $853,000,000 Let $600,000,000 in paper money be issued by the Treasury Department to fill the want created by the pro- cesses hereinbefore set forth, and that, with the $250,000,- 000 in the Treasury, will give us $850,000,000 — an ample fund with which to begin the needed work of relief. It may be objected that the $100,000,000 in gold lying in the Treasury is needed there to redeem the greenback currency out — $346,000,000. In answer it may be stated that by the act of February 4, 1868, the reduction of " cur- rency " (meaning greenbacks) was prohibited ; and by the act of May 31, 1878, the retirement of greenbacks was pro- hibited, so that a redemption fund is no longer needed, if it ever was. The two acts mentioned are as follows : An Act to suspend further reduction of the currency. — (February 4, 1868.) Be it enacted by the Senate and House of Representatives of the United States of America in Congress asseinbled. That from and after the passage of this act, the authority of the Secretary of the Treasury to make any reduction of the currency, by retiring or canceling United States notes, shall be, and is hereby, suspended ; but nothing herein contained shall prevent the cancellation and de- struction of mutilated United States notes, and the replacing of the same with notes of the same character and amount. An Act to forbid the further retirement of United States legal-tender notes. — (May 31, 1878.) Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled. That from and after the passage of this act it shall not be lawful for the Secre- 16 238 THE FARMER'S SIDE. tary of the Treasury or other officer under him to cancel or retire any more of the United States legal-tender notes. And when any of said notes may be redeemed or be received into the Treasury under any law from any source whatever and shall belong to the United States, they shall not be retired, canceled, or destroyed, but they shall be reissued and paid out again and kept in circulation ; provided, that nothing herein shall prohibit the cancellation and destruction of mutilated notes and the issue of other notes of like denomination in their stead, as now provided by law. Number Two. — The Bankers' Rule Applied. But we can get along without using the $100,000,000 redemption fund, and still be within safe rules according to established theories of banking. The rule of bankers has been to float about $4 of paper on $1 of specie. The Government has adopted the same theory. Secretary- John Sherman regarded $100,000,000 of gold coin enough to float all our United States notes (greenbacks), amount- ing to $346,000,000 — that is, $1 in specie to float $3.50 in paper. Let us apply the same rule to the matter now under discussion. By reference to pages no and 112 of the Finance Report of the Secretary of the Treasury for 1890, it will be seen that the following amounts of silver coin and bullion were held in the Treasury on the 30th of June, 1890: Standard dollars $313,239,910 Subsidiary silver coin 22,805,225 Silver bullion, including trade dollars 10,649,449 Total $346,714,584 If we apply the $3.50 rule, $346,714,584 in specie will float $1,213,501,014 in paper. Deduct the amount of sil- ver certificates now out ($308,206,177), and we have left $9°5>394,84o — representing the amount which our silver now in the Treasury would carry, more than is now out, and this according to the $3.50 rule now adopted as to the greenbacks. THREE WAYS TO RAISE THE MONEY, 239 Thus we can put out all of the $850,000,000 proposed in this book, base it on the silver coin and bullion now on hand, and have some room to play on, without touching a dollar of the gold reserved for redemption of the green- backs. And further, if we apply the bankers' rule to the $157,- 562,979 gold reserve for gold certificates out, that would give us $393,907,447 additional. But we do not stop here. Farmers demand free and unlimited coinage of silver, and that would give us at least $50,000,000 in specie every year in addition to what we now have, and as fast as we need more paper we can issue $3.50 of it on $1 of the silver. That would give us plenty of money and still not take us beyond the rule. The author hereof is inclined to believe that it would improve our monetary policy to purchase all the gold and silver bullion offered and pay for it in treasury notes, then issue two more paper dollars on every dollar's worth of bullion of both metals, thus giving us $3 in paper for every $1 in bullion — gold and silver alike. That would give us an abundant currency as well as a safe one — safe, if safety consists in a metallic basis. It will thus be seen that we can raise money enough for present pressing needs by adopting either one of two plans, both of which are within laws and customs long in force. First (a) restore to circulation an amount of money equal to what was withdrawn by the banks (issue treasury notes for this — they are quite as safe as bonds, which secured the bank notes) ; (l>) put into circulation an amount equal to what would have been a reasonable in- crease of national-bank circulation — a yearly average equal to what the banks gave us from 1879 to 1882 ; (c) put into circulation treasury notes equal to the amount of silver which was withheld from us by the Treasury Department under the Bland law ; (d) put into circulation the public 240 THE FARMER'S SIDE. •^ money now in the Treasury. Second, apply the bankers' rule to the silver and gold now in the Treasury — not re- ferring to the greenback redemption fund. Number Three. — Legal-Tender Treasury Notes. Another and a simpler way of raising money is to issue full legal-tender paper money (treasury notes) .to what- ever amount is required to transact the people's business on a cash basis — so much of their business as cash is need- ed for. CHAPTER XX. distribution of the money. Short-Time Loans. There are four ways of distributing money to the peo- ple by the Government : First, in payment of services ren- dered ; second, in payment for property taken or purchased ; third, in payment of debts ; fourth, by lending. Our Gov- ernment has practiced all these modes, lending, however, only through banks which charge a commission in the way of interest. When greenbacks were issued they were paid out directly to the people — right into their own hands by Government agents, and without charge; but when national-bank notes were printed they went directly to the banks, and were issued to the people from the bank counters with interest charges. Then there are two classes of borrowers and two classes of security. One person wants money for a few days only or for a few months at most, and he offers personal se- curity ; while another person wants money for a long time — one year to ten years — and he offers real-estate security. To accommodate these two classes of borrowers, with their varying means of security, it has been found most convenient to have two sorts of loan houses — banks for short-time loans, and loan agencies for the long-time loans. In this proposed scheme that long-established usage is respected. The labor and risk of lending money are 242 THE FARMER'S SIDE. greater in short loans on personal security than on long- time loans on real-estate security, and for that reason the charges may properly be correspondingly higher. From and after the taking effect of this plan interest laws shall be of no effect as to new contracts, except as herein provided. Money shall be non-taxable for any pur- pose (except in cases where persons use it unlawfully, by hoarding it or in any other way withdrawing it unneces- sarily from circulation), the object hereof being to keep money for the people's use, not for speculation. Charges for the use of money shall be made only to pay the cost of its distribution. Notes for money shall not be taxed. Let us consider the short-time lending first. Make national banks Government agencies for this purpose, and amend the banking law so as to let lawful money of the country — gold and silver coin, treasury notes, coin and bullion certificates, and gold and silver bullion — take the place of bonds now required as security for circulation, authorizing banks of small capital for small places — cir- culation as low as $20,000. Let the amount of circulation equal the amount of deposits to secure it, and let the notes be Government notes, not bank notes. The i-per-cent tax on circulation to be abolished. Banks may proceed as now, except that in lending money or in discounting notes the cost to the borrower or seller shall not exceed the rate of '/, of i per cent of the sum borrowed for one month or thirty days, ^/^ of i per cent for two months or sixty days, y, of i per cent for three months or ninety days, and no such transaction shall cover a longer period than three months. By using lawful money instead of bonds as deposits to secure bill holders, the power of the banks to affect the volume of money in circulation will be destroyed, because, when they wish to retire notes, their deposit is issued DISTRIBUTION OF THE MONEY. 243 as fast as the notes come in ; thus the same amount is kept out regularly after the bank receives its circulating notes. It is believed that, by relieving all money and all notes for money from taxation, the rates herein will be high enough for the banker and low enough for the bor- rower — equal to a rate of 2 per cent to 3 per cent a year, and very little lost in taxes. While the national banks are not lawfully authorized to manage the financial affairs of the Government, they do, in fact, control the fiscal policy of the United States as fully as the Bank of England does that of Great Britain. It is because of this growing supremacy of the national banking interest, that many of us are in favor of abolish- ing them. The opposition is not because we are opposed to banking — for we are not — but because the banks are per- mitted to exercise a dangerous power. Established to aid the people, they are so conducting their business as to work injury to public interests. They have wrongfully withdrawn $227,000,000 from circulation in eight years, while they have increased the number of banks during the same period at the rate of 159 a year. While more banks are established, presumably to accommodate public interests, the volume of circulating money is diminished, reducing value of other property, increasing the value of money, and adding largely to the burden of every debt. We (the working masses) do not object to banking; but we do object to banks issuing money. We want the people themselves to do that through agencies of their own ap- pointment. The plan herein proposed would retain banks, but as Government agencies, under Government control, managed according to rules prescribed in the law. It is proposed that banks be continued, that their business methods remain about as they are now, with exceptions noted. This plan would work three good results: (i.) Get 244 "^^^ FARMER'S SIDE. money to persons needing it at rates they could afford to pay, and the rates would be equal alike to all for the same amount and time; (2.) Put to good use all the money now idle in banks; (3.) Reduce the number of banks without impairing their usefulness. One bank, well managed, could take the place of ten now doing business, and the people would get the benefit of resulting cheapness of money. One president to pay instead of ten, and so of all other salaried officers. If it be objected that the rates of charge here sug- gested are too low for the work to be done, let the reader study lessons found on pages 14 to 22 of the re- port of the Comptroller of the Currency for the year 1890, where it is shown that the domestic exchange business of American banks of all classes — national and State — for the last preceding fiscal year amounted to about f 18,000,000,- 000, and that the average rate of exchange was 8'/, cents on the $100, or about y^ of i per cent. If men can do business through the mails with substitutes for money for y^ of I per cent on the amount involved, they ought to be able to get along with 3 per cent for handling money and taking care of the papers and books needed. « The Sub-treasury Plan. The "sub-treasury " idea is based upon a perfectly sound and tenable proposition — that useful property is worth something, and that it is good security for the payment of debts. We do now store grain, cotton, and many other articles — natural and manufactured — in private ware- houses, and borrow money on the warehouse receipts. It would be much simpler and safer and cheaper to do the same thing through Government agencies. It is the prin- ciple of insurance applied under another name. Every distillery uses a bonded warehouse, and the Government assists in taking care of the liquors while they are in bond DISTRIBUTION OF THE MONEY. 245 and until the internal-revenue tax is paid — a period limited to three years. A bonded-warehouse receipt for whisky is regarded by bankers as good collateral in the borrow- ing and lending of money on short time. The govern- ment, both State and national, stands ready to enforce any and all contracts among individuals in which warehouse receipts are pledged as security. The courts are always open for this sort of work. A plan which is universally adopted among individual citizens and enforced by Gov- ernment, would surely be no worse or less practical if the 'people should change the plan from private hands to their own and make of it a Government agency for the public good. Cotton and whisky are quite as good secur- ity for short-time loans as land is for long-time loans, and they are quite as good as government bonds, for the same purpose. On the face of a national-bank note these words are printed: "This note is secured by bonds of the United States deposited with the U. S. Treasurer at Wash- ington." What better is that indorsement than this — " This note is secured by wheat deposited in the Government ware- house at Washington ? " A general law enacted by Con- gress would provide all details of procedure and manage- ment. On every silver certificate these words are print- ed : " This certifies that there has been deposited in the Treasury of the United States one silver dollar payable to bearer on demand." In what respect is that better than this — " This certifies that there has been deposited in the public warehouse at Topeka, Kansas, 100 bushels of No. 2 red wheat, payable to bearer any time before the first day of January, 1892 " ? The object of the indorsement is to satisfy the holder of the note, bill, or certificate that it is genuine and that it is secured according to law. Satisfied on that point, he uses the money without question, feel- ing sure that wheat or cotton or cloth in the hands of Government officers is as secure and as valuable as it 246 THE FARMER'S SIDE. would be in his own hands. The sub-treasury plan would afford opportunities to farmers, mechanics, and mer- chants — all property holders alike — to use their own prod- uce as security for the use of money at no greater ex- pense than the mere cost of doing the work. Salaries of unnecessary persons would not be charged up against borrowers; the fortunes of private bankers, money lend- ers, and pawnbrokers would not have to be contributed by persons in need of money and having good security to offer. Briefly, the sub-treasury plan would afford to farm- ers and all other persons who have useful property which' will not deteriorate by a few months' storage opportuni- ties to help themselves by a prudent use of their own property, thus avoiding the wholesale spoliation which seems to be necessary every year under present condi- tions. A Government warehouse for wheat and cotton and corn and tobacco is quite as appropriate, quite as necessary, and quite as lawful as if it be used for the storage of whisky, silver, or bonds. Tobacco was once used in Virginia as a basis for circulating money, and the experiment was altogether satisfactory. Any article which may be safely kept a long time, or which may be readily and cheaply renewed or replaced periodically, may be used as a basis for money. And it is quite as lawful, quite as constitutional, to use cotton or corn as a basis for money as it is to use silver or gold for the same pur- pose. Cotton is useful for clothing, wheat is useful for food; gold and silver are useful for neither. Men and women, by their own labor, can produce both cotton and wheat ; but gold and silver lie in the mountains. A pub- lic place where we could all store imperishable personal property would help us in many trying times and would save to us the vast wastage now drawn from us by an army of middlemen, whose recruiting stations are found in the offices of bankers, loan agents, brokers, and money changers. DISTRIBUTION OF THE MONEY. 247 Or, in cases where depositors do not care to take out money on their deposits, they may take only warehouse receipts. In close times these receipts could be used as collateral to borrow money on, and they would pass by indorsement from hand to hand the same as promissory notes now do. Associations may combine and borrow money to bridge over a period of low prices, or to carry a weak member through a crisis. Counties and townships building public warehouses under State laws may afford their citizens means of borrowing money on certificates of deposit showing kind of property deposited, with grade and value. Grain, cotton, and manufactured articles gen- erally, may thus be used, under proper restrictions, to assist the producing classes in helping themselves. In- deed, there is no good reasomvhy such certificates should not be received in payment of taxes and other local public dues. These warehouses may be built by the General Government, by the State government, by counties, cities, townships, by associations of the people, or by railway companies ; they should be built close to railroad tracks, and they ought to be a part of the railway system, so that it would be the business of the railroad people to watch the markets and ship promptly when conditions are favorable. Transportation is a large part of agriculture and manufacturing, and for that reason farms and rail- ways and factories and shops are parts of one great sys- tem of production. LoNG-TiME Loans. Let there be created in the Treasury Department at _ Washington a Loan Bureau, to be under the supervision and general direction of the Comptroller of the Currency. Let the Loan Bureau consist of a board of three commis- sioners and their assistants, appointed the same as other officers in the department, to be of different political par- 248 THE FARMER'S SIDE. ties, and to be paid a salary each of $4)SQo a year. One of the commissioners ought to be a lawyer of recognized ability, one acquainted with the business of banking and of real-estate investments, the third familiar with agri- cultural pursuits from practical training in farm life. Let one be appointed for two years, one for four years, one for six years ; their successors to hold six years, the regu- lar term. The Loan Bureau shall establish loan agencies in the several States and Territories wherever they shall be needed — one at the State capital to be known as the Central Loan Agency for that State, and local agencies at such convenient places as will best serve the public inter- ests. In the Territories there shall not be any central agency ; the business of the local agencies shall be trans- acted with the office of the Comptroller of the Currency, or with the Central Agency in an adjoining State, in his dis- cretion. The Central Agency shall be in charge of a super- intendent, appointed by the Secretary of the Treasury ; he shall employ such clerical assistance as may be needed, and he shall have charge of such funds as may be intrusted to him by order of the Secretary of the Treasury on re- quest of the Comptroller of the Currency, and he shall pay out the same on orders from superintendents of local agencies. He shall report specially once a month, and generally once a year, to the Board of Loan Commission- ers, upon the business and condition of all the agencies within his State. He shall have general supervision over the local agencies to the extent of having access to all their offices, books, and papers, and advising the local superintendents in all cases of need or of difference. The salary of the superintendent of the Central Agency shall be $4,000 a year, and his term of office six years, subject to removal for cause. He shall enter into bond in the sum of $150,000, conditioned for the faithful performance DISTRIBUTION OF THE MONEY. 249 of his duties and the safe keeping and handling of all pub- lic moneys intrusted to his care. He shall appoint to assist him a deputy superintendent — a practicing lawyer, who shall have charge of all legal business arising out of the administration of this law in the State, and advise officers connected with the agencies touching their duties in all matters where questions of law are raised, subject to revis- ion by the Board of Loan Commissioners. He shall pre- pare rules and regulations, with necessary blank forms, for the safe dispatch of business at the several agencies ; and he shall revise the same whenever changes or additions are needed. His term of office shall be seven years, and his salary $3,000 a year. The local agencies shall be in charge of assistant super- intendents, appointed by the superintendent of the Central Agency ; they shall appoint such assistants as are neces- sary for the transaction of the business of the office, and fix their wages, subject to the approval of the superintend- ent. They shall have no other general or special business. They shall report monthly to the superintendent of the Central Agency, showing the state of their business, and shall make to him an annual report covering all the busi- ness of the year in detail. Their salary shall be $3,500 a year, and their term of office five years, subject to dis- missal at any time for cause. They shall give bond each in the sum of $25,000, conditioned for the faithful per- formance of their duties. Salaries of assistants in all the agencies shal^be determined with reference to wages paid for similar work in private lines of business in the particu- lar State or locality. The business of these agencies shall be to lend money to the people on real-estate security, in manner, as nearly as practicable, like such business is now conducted by re- sponsible real-estate and loan agencies. Applications will be made on blanks prepared by the deputy superintendent, 250 THE FARMER'S SIDE. showing the location, description, lay, and quality of the particular parcel of land offered as a security, with the ap- praisement under oath of three disinterested freeholders of the neighborhood who have personal knowledge of the premises, showing the actual value of the land, with and without improvements, estimated as other lands in that locality are valued, and its assessed value for taxation, together with the report of a local examiner. The appli- cation shall be accompanied by a complete abstract of title, and if it appears satisfactorily to the assistant super- intendent that the security offered is sufficient, under the rules established, for the amount of money asked for, the application shall be granted ; and after due execution of note or notes, as may be desired by the applicant, with first mortgage on the land, an order shall be drawn by the assistant superintendent on the Central Agency for the amount of the loan. The time for which money may be lent as above shall not be less than one year nor longer than eleven years; at least 9 per cent of the principal shall be paid every year until the last year of the loan, when the remainder shall be paid. Charges for the use of money so loaned shall be a sum equal to i per cent per annum on the amount, and these must be paid annually. In case of failure to pay any interest installment when it is due, it shall thereafter bear interest at the rate of i per cent per annum. No other charges of any character shall be made. Nine per cent of the principal, with i per cent charges (interest), equals a yearly payment of 10 per cent on the amount borrowed. The applicant pays all pre- liminary expense. The mortgage shall be forthwith re- corded in the proper office. Notes and recorded mort- gages shall be filed and securely kept by the assistant superintendent. The same rules, as far as applicable, to ap'ply to town or city property offered as security. The number and location of the loan agencies can be DISTRIBUTION OF THE MONEY. 25 I determined only after a careful study of the necessities of the people, the States where most money is required, and the amount and nature of the work to be done. The su- perintendent of a central agency would know, in a general way, what his State needed in this respect ; he would ap- point only such men for assistants as could be relied upon for first-class work — business men, not politicians — and together they would in a very short time decide how best to cover the field. And whether it would be better to have the number of agencies and their location to corre- spond with congressional districts — at present 356, with an average force of 10 persons each, or 3,560 for all, add- ing, say, 440 for the new States and the Territories, giving an aggregate of 4,000 for the entire country — or whether it would be better to distribute the number so as to have one agency to two or three counties, thus getting nearer to the people, would be a matter of detail for the Loan Bureau. In either case the aggregate number of persons to be employed ought not to exceed 4,000. Allowing an average salary of $1,000, the total yearly expense on that account would be $4,000,000. Office rent, fuel, stationery, and other incidentals, including special work of examiners and experts, would not exceed $500,000, making the total expense of the bureau one year $4,500,000, which is i per cent on $450,000,000, and such a force could easily handle $850,000,000 in one year. The estimate is based on what is actually being done by private loan agencies now. It appears from a state- ment recently published by the Kansas Loan and Trust Company, of Topeka, one of the most reliable institutions of the kind in the West, managed by able, clear-headed business men, that the average yearly business done by the company during the last six years amounted to $2,- 000,000 in round numbers. It appears from directories and cards published by the company that its office force, 252 THE FARMER'S SIDE. including tiie active officers, averages about eighteen per- sons. What wages are paid employes and what the officers, the writer does not pretend to know ; but the Government pays an average of $i,ooo a year to persons engaged in somewhat similar work at Washington. Beginning with $5,000 to the Comptroller of the Currency, and descending down through salaries of $2,800, $2,200, $1,800, $1,600, $1,400, $1,200, $1,000, $900, $840, $720 to $660, the report of that officer for the year 1887 shows that the average yearly salary paid to 92 persons, including himself, em- ployed in the work of his office, was $1,061. Besides, a private loan agency has to do a great deal of work that the Government would not have to do, soliciting business, advertising, etc., and this must be paid for. One per cent per annum (payable annually) of the money handled in a large business will pay all expenses and losses of the busi- ness when the loans are made on real-estate security and on long time. But it will not require the services of so large a force more than one year to carry out the details of this scheme ; for most of the very needy cases would be disposed of the first year, and after that one fifth of the number of persons could easily handle the business. The Census Bureau reports 9,000,000 real-estate mort- gages recorded in the United States during the ten years from 1880 to 1890; and, judging by the reports thus far published, we may estimate that about one third of them were in force unsatisfied on the first day of January, 1890. It appears that about two thirds of the mortgages are on farms, the other one third on town and city lots. The aver- age life of the mortgage is jJbout five years. The debts are not all due now ; the mortgaged homes are not all in immediate danger ; some — one half or more, perhaps — can stand the strain a year or two longer ; and whenever the Government begins the work of assistance creditors will be patient, feeling certain that in due time they will be DISTRIBUTION OF THE MONEY. 253 paid. In order, then, that proceedings be orderly, the people justly dealt with, and the intent of the plan fairly carried into effect, during the first two years after the work is begun no application for the use of money shall be entertained at any of the loan agencies except such as are intended to relieve the applicants from pressure of ex- isting indebtedness, for the payment of which homesteads, or lands occupied as homes, are mortgaged ; and in every case it must appear that the debt is due and proceedings in foreclosure are imminent, the intent hereof being to as- sist only those who are in need, and first those whose needs are most pressing. After the expiration of two years from the date of the first loan applications will be considered at every agency as they are filed ; but in no case will the Government lend money on real-estate secu- tity except to relieve the homestead from debt or to pro- cure a homestead ; no loan will be made on a tract larger than 1 60 acres, nor to any person for another's use, nor for an amount exceeding $2,500 in one transaction. According to the plan above outlined — repayment of 10 per cent annually, 9 per cent to apply on principal and I per cent as charges or interest — beginning with $850,- 000,000, that much indebtedness is relieved at once, and at the end of the first year we will have a return of 10 per cent, or $85,000,000, of which $8,500,000 is interest and $76,500,000 is principal, to be reloaned as fast as applied for, and 10 per cent of it ($7,650,000) will be returned at the end of the year, $765,000 as interest, $6,885,000 as principal to be reloaned, and so on. The amount to be reloaned every year after the first year will be larger than that of the last preceding year until the whole amount of the original principal ($850,000,000) is returned ; because, as fast as payments are made, the amount, less interest, will be immediately reloaned. As applied to a particular case, the plan may be ex- 17 254 THE FARMER'S SIDE. plained thus : Say Mr. A is indebted $i,ooo at lo per cent annual interest, and his home is mortgaged to secure pay- ment. As things now are he can pay no more than the interest as it falls due — that is, $ioo a year. At the end of eleven years (supposing present conditions to continue) he would have paid eleven times $ioo, or $i,ioo, a sum equal to the amount of his debt and f loo more, but the debt would not be paid — not a dollar of it ; he would still owe the original $i,ooo. No w, follow the plan proposed in " The Way Out": Mr. A borrows $i,ooo from the Government at x per cent annual charge, promising to pay 9 per cent of the principal every year for ten years, and the balance at the end of the eleventh year. That would be just $100 a year ($10 interest, $90 principal). This amount ($100) is all interest under the old lo-per-cent system ; but 90 per cent of it is principal under the system proposed. At the end of ten years under the new rule $941.60 of the principal would be paid, leaving only $58.40, with the in- terest, to be paid at the end of the eleventh year, when the debt would be all paid, and the aggregate amount of all the eleven yearly payments, principal and interest, would be less than the interest only by the old rule. In practice, the details would work out this way : First year Second year Third year Fourth year Fifth year Sixth year Seventh year Ei_ghth year Ninth year Tenth year Eleventh year Total amount paid . Total amount still due Present System. Debt $x,oao ; interest lo per cent. $100 100 100 100 TOO 100 ZOO 1,100 $100 100 100 100 100 100 100 TOO 100 ZOO ZOO X.IOO §■5 91,000 1,000 1,000 1,000 1,000 z,ooo 1,000 TjOOO z,ooo 1,000 1,000 r,ooo Proposed System. Debt $x,ooo ; interest i per cent. 1' .5 .1 li ®ioo 00 810 00 890 00 S910 CO 100 00 9 10 90 go 91 81 • 819 xo 100 00 8 19 727 29 100 00 7 27 92 73 634 56 JOG 00 6 35 93 65 54091 ZOO OC 5 4" 94 59 446 32 100 00 446 95 54 35078 joo 00 3 51 96 49 254 29 100 00 2 54 97 46 157 83 100 00 ' ^ 98.43 S8 40 58 98 58 S8 40 1,058 98 5898 1,000 00 00 DISTRIBUTION OF THE MONEY. 255 Showing that the same amount of money which, under the old system, was used to pay interest only, will, under the plan here proposed, pay the entire debt — principal and in- terest — in eleven years. Borrowing on long-time and on real -estate security may be subdivided into (i) persons residing in towns and cities, offering town or city lots as security, and (2) farm- ers and other persons whose interests lie in the country and who borrow money, not to pay pressing debts, but for other purposes, as improving or stocking farms, pay- ing balance of purchase money, or entering Government land, etc. These last-named classes — city and country bor- rowers — have not yet been provided for, and it is proposed to make provisions for them in this way : The money paid out by the Government to borrowers for lifting their notes and mortgages will go at once into the hands of their creditors, and it would seem hardly fair to pay off a 10- per-cent debt with i-per-cent money without at the same time, in some way, providing at least a temporary invest- ment for the money — affording a way out of the old into the new. It is changing from one system to another, and some time and concessions are needed in adjustment of methods made necessary by the change. During three years next after the inauguration of this scheme, money may be lent on long-time and on real-estate security by private persons and companies and corpora- tions, except national banks, just as is being done now, except that the rate of charge for the use of money shall not exceed 3 per cent per annum, and no contract for the payment of a money debt shall be enforced if the promise to pay is in gold or silver coin, or bullion of coin fineness. A money debt shall be paid in money — any kind of lawful money — and the debtor shall be at liberty to choose for himself the particular variety he will pay. By relieving money and notes from taxation (which 256 THE FARMER'S SIDE. amounts to 3 per cent on a general average), investors will find 3-per-cent loans then to pay about as well as S -per- cent loans do now. Eliminate the middle-man, and his fees will be saved to the investor. This will amount to 2 per cent a year. When we consider how fast money can be made to pay debts which are scattered among a large number of per- sons, it is easy to understand how we may pay all the farm and house indebtedness with $850,000,000 to begin with. Say A, B, and C are in debt equal amounts. A borrows money from X and he pays Y, who lends the money to B to pay Z, and Z lends it to C, who pays his creditor, and so on. Here these debts are all paid with the same money which paid one of them. A thousand farmers are indebted to ten persons ; they borrow money at low rates from the Government, and pay their creditors, who immediately relend it to other needy debtors, who pay their creditors, and so on. If we put the aggregate mortgage indebtedness at $3,600,000,- 000 and pay $850,000,000 of the amount at once, author- izing money owners to relend at 3 per cent, they will avail themselves of the privilege — many of them will, be- cause it is the best investment offering — and in this way, logically, in the course of the first year's operation of the new law, more than one fifth of the debt will be put on a r-per-cent basis, and all the rest will be lowered to 3. After the expiration of three years the Government loan agencies would be able to take care of all the long-time loan business of the country. PART IV. OBJECTIONS ANSWERED. CHAPTER I. THE OBJECTIONS STATED. Five general objections will be interposed against this scheme : 1. That it is the wodc of a crank. 2. That it is impracticable. 3. That it would derange values and interfere with business. 4. That Government ought not go into the business of banking. 5. That it is bad policy to relieve money and notes from taxation. There will be many other minor objections, but they may be considered under these general heads. Let us take them up in the order here given. Not the Story of a Crank. The first objection is superficial ; it will not be raised by any person who is disposed to consider the subject seriously. This does not read like the story of a crank. The matter treated is of the gravest character ; it ought to have careful attention, not sneers. The time has come 258 THE F/RMER'S SIDE. for stndy ; civilization is opening new fields for explora- tion. New phases of old things appear. There is a growing demand for larger liberty and greater equality of privileges. Half the wealth of the country is owned by a few thousand persons. Seventy men are rated at an average of $37,500,000 each, making an aggregate of $2,- 700,000,000; thirty other persons are put down at an average of $15,000,000 each, making a grand total of $3,- 000,000,000 as the ascertained wealth of one hundred citi- zens of the United States. And these are only conspicu- ous examples. It is estimated by a careful student, Thomas J. Shearman, that " the United States are practi- cally owned by less than 250,000 persons." The distribu- tion is expressed in these figures : Class. Families. Wealth, in millions of dollars. Average per family. Rich 182,090 1,200,000 11,620,000 43,367 7,500 ".21S $238,135 6,250 Middle Total 13,002,090 62,082 $4,775 Poverty is increasing absolutely and relatively, farm values in all parts of the country are decreasing, rents and debts are increasing, agriculture is profitless, and wages are barely supporting. Money alone is returning large gains. Government bonds command 25 to 26 per cent premium, and money dealers are reaping rich har- vests, while farmers, with large crops, can pay little if any more than their taxes and the interest due on their debts. A change is inevitable. The object of this writing is to show a just and honorable way out by helping the poor and doing no wrong to the rich. The Constitution of the United States empowers Congress to " pass uniform laws on the subject of bankruptcies," and thrice has that power been exercised — in 1800, 1841, and 1867. The object of THE OBJECTIONS STATED. 259 bankrupt laws is to relieve debtors from the obligation to pay their debts. "The Way Out" proposes to help debt- ors not to get rid of their debts, but to pay them, and in good money. If these things be but the visions of a dreamer, then indeed are half the people mad. The truth is, the love of money is the most dangerous influence now active in American affairs. The money power is conservative, but it impoverishes the people. It controls the business of the country, the markets and the values, and its managers grow continually richer and more arrogant, while the men who perform the manual labor and produce the commodi- ties grow weaker socially and politically, and poorer and more dependent financially. This condition of things can not long endure and the people remain free. The Plan is Practicable. The second objection is that the plan presented is not practicable. But why not ? It is only changing the appli- cation of existing methods. Everything here advised is now in actual operation, and quite successfully. The only reason why it appears impracticable is that it is new in arrangement. The power vested in Congress and Con- gress alone to supply the people with money, carries with it the duty to direct the application of the power in prac- tice, just as the authority to create courts carries with it the power to assist the courts in. the performance of their duties. Judges are not usually farmers, merchants, manu- facturers, or railroad-managers, yet it frequently happens that they must direct the management of farms, of mer- cantile establishments, manufacturing processes, and rail- roads. Death, failures in business, default in payment of dues, and neglect or refusal to meet engagements make it necessary for courts to appoint administrators, executors, referees, and receivers, with necessary assistants, to settle 26o THE FARMER'S SIDE. business which can not be settled in any other way. Vast interests are managed in this way by the Government through its officers, the judges and their appointees, and without any friction or failure. All this is quite practi- cable. Look at the Post-office Department, managed by the Government through one man. The Postmaster-General, in a recent report, describes the postal service of the United States as " the largest business concern in the world, consisting of a central establishment with almost 60,000 branches, and employing 150,000 people." And there is nothing impracticable in the working of this vast machine by the Government. He recommends the divis- ion of the country into twenty-six postal districts accord- ing to population and territory, with an executive officer at the head to look after the work personally. And there is nothing impracticable about that. The Secretary of War, through agents, purchases supplies for the army, in- cluding farm products, grain, flour, hay, horses, meat, cat- tle, manufactured goods, clothing, shoes, and camp and garrison equipage. . . . The Secretary of the Navy goes into the market for a great variety of articles which he procures through agents. . . . The Secretary of the Inte- rior superintends schools and instructs Indians in the art of farming, and he has under his direction an army of agents and clerks, all operating under a system which works perfectly. . . . The Secretary of Agriculture has charge of experiment stations in every State ; he superin- tends the making of sugar, the raising of new varieties of grain and trees, and he has men out continually looking after farm and stock interests. . . . The Secretary of the Treasury conducts a business amounting to thousands of millions of dollars annually. And all these things are prac- ticable for the Government to do. . . . Taking the census requires an army of people — between 40,000 and 50,000 — THE OBJECTIONS STATED. 26 1 and every house in the country is visited by Government agents. Perfectly practicable. . . . The Comptroller of the Currency, October 30, 1889, had charge of 3,262 national banks, with a circulation of $131,000,000, and doing a business amounting to a hundred times that much in the course of a year. The Comptroller's report for 1888 says : " The monetary transactions of the Government have been conducted through the offices of the Treasurer of the United States, nine assistant treasurers, and 297 na- tional bank depositories." The Treasurer's report for 1889 shows that of the 3,262 national banks, doing business, the Government had designated 270 of them as depositories through which the Treasury acts in distributing money direct from the Treasury, and they held public moneys amounting to $47,259,714. A year before the amount was $58,712,511. The plan proposed herein would not require many more agencies than the Treasury now has, and it would not re- quire the local deposit of much more public money than is now deposited in banks. Nor would it require the service of many more people than are now employed in these depository banks. The business of the whole coun- try could be done through about 300 agencies with a force of 3,000 to 4,000 persons. The Comptroller of the Currency, with a force of 92 assistants and a corps of bank examiners, superintends the business of over 3,500 national banks. These banks employ an average force of ten persons at least, making a total of 35,000 persons en- gaged in national banking, all looked after by one man at Washington on a salary of $5,000 a year. And this is practicable ; it has been going on a long time. Government lending Money. But let us go a little more into detail, and note particu- lar points under the head of the third objection. . . . The 262 THE FARMER'S SIDE. Government lending money to the people is not a new thing. It is at least twenty-seven years old. The national- bank act was passed for the very purpose of lending money to the people. Government bonds are deposited as secur- ity to bill holders, the Secretary of the Treasury issues notes to the banks, and they lend them to the people. The Secretary of the Treasury, in his 1866 report, stated the object of establishing the national banking system was to provide a permanent currency for the people. The Gov- ment prepares the notes and gives them to banks for the purpose of lending them to the people. Upward of $358,- 000,000 of that kind of money was out among the peo- ple at one time, and there is now $120,000,000 out. The banks were made the agencies through which the money was to be distributed, and care was taken to apportion the number of banks to be established so that the different parts of the country should be fairly supplied. And at this hour $23,000,000 of public money is held by 270 of these banks, placed there by the Secretary of the Treasury, with- out charge to the banks, simply to have it where the people can get it if they want it at bank rates of interest. . . . The Treasurer of the United States, in his report for 1889, calls attention to the money-lending feature of the Government's work. " In becoming practically the sole issuer of currency," he says, " the Government has assumed the duty of supplying the needs of the public for a circulating medium." He devotes all of page 12 to this subject, suggesting points of interest, all having ref- erence to the present method of getting money to the people through banks. Why not dispense with this costly method, and, instead of giving money to the people charged with 6 to 10 or 12 per cent interest — the profit of the banks — give it to them directly through Government agents, charging for the service only what the work is really worth ? That is the only change proposed in this THE OBJECTIONS STATED. 263 scheme. If the money is for the people, why not give it to them directly, without the intervention of persons who make a profit on the transaction ? Do away with banks for this purpose altogether, and furnish money to the people at cost of distribution, just as other things which the Government furnishes are supplied. If the banks will act as Government agents, well ; if not, employ private persons to do the work. Get the money to the people at cost. That is the great work to be done. . . . No conflict between State and Federal authority on the matter of tax- ing money will take place, because it has been determined many times that Government bonds and notes can not be taxed by local authority ; and if Congress can relieve bonds from taxation it surely can do the same for the money it issues to the people, whether metallic or paper. Treasury notes, greenbacks, national-bank notes, coin cer- tificates, are not taxed ; none of the paper money now in use among us is taxable. And if Congress can regulate interest it can regulate the taxation of money. . . . The plea that the Government ought not to go into a banking business, as this will be styled, will hardly be sustained in face of the fact that the Government is now doing that very thing. It went into the banking business in 1863, when a certain act of Congress took effect— the act en- titled "An act to provide a national currency," etc. Under the provisions of that act there were 3,262 Gov- ernment banks in the country on the 30th of October, 1889. Every right and privilege which these banks enjoy were given them by Congress. It is too late now to say the Government can not engage in banking. And it is perfectly practicable. Besides banking, the Government, through its post-offices, is doing a money -order and postal- note business amounting to many million dollars yearly. More than $1,000,000,000 passed through the mails in 1889, as the report for that year shows. Custom houses 264 THE FARMER'S SIDE. are collecting agencies, where upward of $200,000,000 are collected annually and turned over to the Govern- ment. There are over 3,000 items in the tariff schedules. Nearly if not quite 100,000 persons, besides those at work in the post-offices, are employed in the public service — 95 per cent of them looking after details. The Proposed Change is Reasonable. The change will repel some people ; too great a change, they will say. But think a moment, dear conservative. How old are you ? What changes have been brought about since the message " What hath God wrought ? " was sent through wire ? Look about you. Everything is changing. Why, infant damnation is about to be discarded by Presby- terians, and Catholic laymen hold a public convention in presence of and with the consent and approval of the highest officers of the Church ; our Congregational brethren are beginning to wonder whether, after all, there is no hope after death; Baptists have about determined to leave the Almighty free to dispose of the unbaptized ; Episcopalians are discussing whether it is still sacrilege to exchange pulpits with clergymen of other denominations; " Camp- bellites " are no longer despised because they want to be Christians ; and a citizen may advocate the brotherhood of man without danger of being battered and dragged about the 'Streets as a public enemy. ... It will be said the Government will not be secured agairist loss. The post-office at Topeka, Kansas, does a business amounting to nearly $450,000 a year — stamp sales, $90,000 ; money- order transactions, $350,000. The work of the office is done by about twenty-five persons, and the postmaster's bond is $60,000 — good for double that amount. There are at least 1,000 post-offices in Kansas- doing an average an- nual business of $50,000, all secured by bonds of the post- masters. It is the same in all the States. Every Govern- THE OBJECTIONS STATED. 265 ment civil officer who handles public money gives bond for the faithful discharge of his duties, and the record shows that, while some losses occur in the collection of money, the loss in handling it after it is collected is so small as to be hardly worth mentioning — only a small fraction of i per cent. The United States Treasurer han- dled thousands of millions of dollars during our great war and since, and not a dollar of it was lost. Of the 4,455 national banks organized since the original act was passed in 1863, only 129, less than 3 per cent, failed, and not a cent was lost to the Government or to bill holders. Losses in the money-order business are virtually nothing. Not one dollar in a thousand is lost through dishonesty of Gov- ernment officers. This proves that it is practicable to se- cure the Government against loss by bonds which citizens can give. But let us make a practical test of the matter by what is actually being done in the very matter now under consideration. What can be done by private persons could be done by the same persons if they were acting for the Government quite as well and as safely as they do it for themselves or as agents for other people. In a circu- lar letter, under date January i, 1889, addressed to its pat- rons and friends, the Kansas Loan and Trust Company, before referred to, reports that in an aggregate business of 17,083 loans negotiated, involving $17,308,376, nothing had been lost to the investors. The same men could make as good a record if they were acting for the Government in- stead of for private citizens and corporations. And it is just that class of men who would be employed to do the work provided for in this scheme. ... In case of fore- closure of mortgages by the Government, proceedings would be precisely the same as now. The lands would be sold to whomsoever would purchase. In case there were no bidders, and the Government was compelled to bid it in, then in due time it would be advertised and offered 266 THE FARMER'S SIDE. again. It would not be public land, open to homestead, but would be sold the same as any other property of the Government taken for debt. It would not derange Values. The third objection — that this plan would derange values — has no force except in one direction. It would tend to raise prices of commodities, more particularly of farm produce, and it would lessen the value of money in a corresponding degree. But this would not be spas- modic; it would come regularly, just as the downward change came. There would be no more derangement during the time of the upward movement of prices than there has been in the downward movement ; and if farmers and mechanics and day laborers could get along while prices were falling, other classes can manage to get along while prices are rising. The fifth objection — that money ought not to be re- lieved from taxation — will come chiefly from persons who return for taxation cents when they could honestly return dollars. On examination it will be found that a very small fraction of the money in the country is taxed; much the greater portion of it escapes taxation altogether. The Treasury and the banks of the country hold about one half, and two thirds of the rest is so manipulated as to escape the attention of assessors. This is so well under- stood by the people that it is not necessary to present tables. But if every dollar in circulation were returned for taxation, the amount is so small in proportion to the value of all the property in the dountry — about one to sixty — that if it were dropped out of the assessment its loss would hardly be noticed. Money can be hidden, but farms are easily found. Many a man escapes taxation on his money, but no farmer is missed. And as to relieving notes given for the payment of money, that follows logi- THE OBJECTIONS STATED. 267 cally. If money is non-taxable because of its function in trade, it ought not be hampered in any way. If it be hoarded or withdrawn from circulation wrongfully, that should be punishable. There would be no money lend- ing, however, under the operation of this plan, except by the Government, after three years, unless at the estab- lished rate, and that would not bear taxation. If a man lend money at i per cent for a year or five years, and if he be taxed 3 per cent on the notes, he would have to borrow 2 per cent of the amount from another fund to pay his taxes on the notes. Paper Money. It will be said that paper money is a dangerous thing. But what is to be done when we have not enough gold and silver to supply the demand for money ? What little coin we have is mostly owned by persons who lend it only on usury. Do we not all know that when danger threatens gold vanishes and the people are driven to the use of paper ? Have we forgotten our own history during and since the great war of 1861 ? Banks suspended specie pay- ment four months after the first great battle was fought. Capitalists loaned us money at 12 per cent interest; they purchased our bonds with notes that they themselves had forced to depreciation, then made us promise to pay the bonds in gold. And now it is the money changer and his pupil that oppose paper money. They make gold scarce and dear, then they measure paper with it and call the paper " cheap money, a cheat, and a fraud upon the poor." It is time to let the people look after this matter. We ought to learn something from the experience of other nations as well as our own. Many times in European affairs great wars were fought out with paper money only. In Russia paper money was issued frequently in cases of emergency — notably in 1770, during a war with Turkey, 268 THE FARMER'S SIDE. and later in war against Napoleon of France. Great Britain used only paper money from 1797 to 1823. Rus- sia, Prussia, and England issued paper money jointly in 1 813, for use during their alliance against the French. France in 1848, and again in i87o-'7i, issued paper mon- ey. In all these cases the paper served all the purposes of money and the people lost nothing by its use. Prus- sian states long ago used paper money, based on real es- tate, with success, and now many of the small German states have treasury notes which circulate as money. Re- ferring to our colonial history, as collected by Prof. Sum- ner in his History of American Currency, Pennsylvania in 1723 issued notes on real-estate security. "The issue was for ^^15,000 (about $75,000), put in the hands of commissioners in each county, acccording to the taxable assessment. The commissioners loaned the bills at 5 per cent on mortgage of land. The loan was for sixteen years, payable one tenth annually, and the interest was to defray the expenses of Government. Installments repaid during the first ten years of the period were to be loaned out again only for the remainder of the period." Every one of the colonies, at one time or other during the first one hundred years of their existence, used paper money, to the general good of the people. Early in the eighteenth century Virginia adopted to- bacco as a currency. It was deposited in warehouses, and the receipts for it passed as currency. Prof. Sumner says: " It was a true money." John Law and the Argentine Republic. It is urged that we propose an experiment which was once tried by John Law, and recently in the Argentine Republic. This is a mistake, to say the least. We pro- pose nothing like either of those schemes. John Law's THE OBJECTIONS STATED. 269 plan was for people in France to bank on wild lands in Louisiana. It was a private money-making enterprise, and proved disastrous, just as many of our mining schemes now do. . . . The mortgage bank of Argentine was established, not to assist the people in the conduct of their business affairs, but to aid speculators to " mo- bilize their land." The Argentine Government does not issue money to the people on real-estate security. It au- thorizes the mortgage bank to issue certificates [ce'dulas, they are called) to persons who mortgage their lands, and the cMulas are sold for money, just as we sell shares of railroad stock and raise money on them. The ordinary mortgage of real estate, as security for borrowed money, is common in Argentine, as it is in other countries, but it is done under the general law, and not in the mortgage bank. The ce'dulas bear interest and the Government assumes to see that the interest is paid. But, while the plan proposed in this book is in no respect like that in force in Argentine, and while nobody in this country advocates such a plan, still, if the goldmongers had kept their hands off and let the people alone, few persons would have been any the worse for the monetary conditions in that country. It is because money changers have always managed to get into the affairs of nations, and compel metallic monetary stand- ards, and then spend the rest of their lives in making the standard scarce and hard to get, that so much trouble is experienced among those who have to pay the debts. In every nation that uses an exclusively gold standard, money panics occur once in about every ten years. At such times gold vanishes and the people are robbed. . . . Con- cerning the Argentine mortgage bank. Consul Baker, m his report to the State Department, as appears in Consular Reports, November and December, 1889, at page 653, wrote as follows : " I refer to the fact that, in addition to the usual legal facilities for borrowing money on mortgage, 18 270 THE FARMER'S SIDE. the Argentine Congress has by law established a great national mortgage bank, whose special functions are to make loans on the hypothecation of real estate. The law creating this bank was passed on the 14th of Septem- ber, 1886. The President, in his last message to Congress, speaks of it as ' an institution which will greatly multiply the elements of credit in the Republic ' ; and the Minister of Finance, in a speech he made in the House of Deputies a few days ago, declared that ' the bank is a great boon to the people for the reason that land is the great patrimony, the immense capital of the country, and every facility should be given to mobilize that capital and increase its value.' By its franchises this bank can operate in all the provinces and territories of the republic. Its functions are not to loan money on mortgage, but to issue transferable mortgage bonds {cidulas) on the execution of mortgages in its favor, which cddulas are put upon the market and sold for what they will fetch by the holders, and the nation guarantees to the holders the service of the interest and amortization. They are made payable to bearer, and they bear an annual fixed interest (not to exceeds per cent) and an annual accumulative sinking fund for their ultimate payment, the maximum of which shall not exceed 2 per cent. The bank is managed in the capital of the Republic by a board of control, consisting of a chairman and eight directors, appointed by the President, and in the different provinces and territories by means of administrative coun- cils. The board can make no loan of less than $1,000 or of more than $250,000 to any one person, nor can any provincial council grant loans of more than $S,ooo, unless specially authorized by the board. The face of the cidulas can not be less than $25 nor greater than $1,000." The plan we propose is that the Government prepare money — good money — and lend it to the people on just THE OBJECTIONS STATED. 27 1 such security as individual money lenders now take, and which the Government enforces. We want money direct from the Government, offering the same security that the Government offers for its debts — the property of the people. And we want money, not certificates to sell to speculators for money. PART V. BENEFITS EXPECTED TO FOLLOW. Among the benefits which it is expected would logi- cally follow the adoption of the plan here proposed, the following may be written as the most important : 1. Destruction of the influence of the money power, which is the aggregate commercial influence of men who deal in money as a commodity, virtually Operating as a money combine. 2. A higher standard in practical politics. 3. The saving to their owners of many million homes. 4. The establishment of methods to assist farmers, mechanics, and manufacturers — producers generally — to secure the use of money for a short time on pledges of personal property in private or public warehouses. 5. Assistance to persons of limited means in purchas- ing homes, and aid to settlers on public lands in paying for them and iniproving them. 6. Assistance to individual persons through organiza- tion — as granges, alliances, unions, building associations, etc. ; and to individual persons on their own account, as merchants, small tradesmen — every person that can offer any sufficient security. 7. The equalization of profits on labor. 8. Establishment of Government savings banks. 9. The establishment of a correct monetary system, limiting the use of money to its proper functions, a wide BENEFITS EXPECTED TO FOLLOW. 273 distribution of money, getting it to the people as they need it, and without charge beyond its actual cost. 10. Public control of transportation and all other agencies which exercise public functions. If there is any proposition in political economy which may be regarded as established so as to be universally conceded, it is this : That prices of commodities in general are affected by the volume of the circulating medium-.- money. A large volume of circulating money, long con- tinued, prices rise ; small volume, long continued, prices fall. It follows, logically and practically, that whoever controls the volume of money in circulation controls prices. If, then, the people control the money volume, as is proposed in this plan, the people will control prices. That will be the destruction of the money power, and the emancipation of labor. With the destruction of the money power, the death knell of gambling in grain and other commodities will be sounded ; for the business of the worst men on earth will have been broken up, and the mainstay of the gamblers re- moved. It will be an easy matter, after the greater spoils- men have been shorn of their power, to clip the wings of the little ones. Once get rid of the men who hold the country by the throat, the parasites can be easily removed. Unless relief is afforded to most of the farmers and other producing people whose homes are mortgaged, they will be homeless in a very few years ; and it is evident to all who have carefully studied the situation that relief, if it come at all, must come through a reduction of interest , rates to a figure which can be paid, leaving something to pay on the principal. As things are now, persons of small means — they who most need assistance — are dealt with the most mercilessly, and it is not because they do not offer security, but be- cause they are too needy to quarrel with a robber. If a 274 THE FARMER'S SIDE. bureau and a table will secure an interest rate of 150 per cent, surely the same articles will secure a rate of 3 per cent. Farmers can erect their own warehouses, store grain and cotton and tobacco in them, and borrow money on the deposit checks. Fifty farmers, with an ag- gregate cash capital of $25,000 or more, may start a bank of their own, if they prefer, depositing that amount of lawful money in the Treasury at Washington, and receiv- ing bank notes to use in their business. Mechanics and manufacturers may join with the farmers, or build their own warehouses, storing goods in them, borrowing money, if needed, on the receipts. And the same as to working peo- ple generally. Under a well-regulated system of appraise- ment, a general warehouse for producers of all classes would furnish a means of storing the best securities in the world — food, clothing, and other needful articles, which lose nothing in value by being housed a few months. Cities, counties, and townships might be authorized by law of Congress to erect the necessary buildings and se- lect the agents to conduct the business. If not done by the public in general, then let associations of individuals, as granges, alliances, building associations, investment companies and the like take charge of the work. Many persons could purchase and pay for homes in. city and country if they could procure the use of money on long time at i per cent interest ; for then they could pay something every year on the principal, and eventually get out. This plan would supply that need. And a set- tler on the public lands — an old Indian reservation, for example, which is being sold at $1.25 an acre — after hav- ing complied with the necessary conditions of settlement, thus showing his good intentions, could borrow money from the Government and repay it without trouble — pay- ing no more each year than men are now paying as in- terest only on equal amounts. Money at 10 per cent BENEFITS EXPECTED TO FOLLOW. 275 doubles itself in ten years ; money at 8 per cent doubles itself in twelve years and six months ; money at 6 per cent doubles in sixteen years and eight months ; and money at I per cent doubles in a hundred years. Government savings institutions would necessarily fol- low, because this plan would eventually do away with private money-lending as a regular business. THE END. A D. APPLETON & CO.'S PUBLICATIONS, HISTORY OF ENGLAND IN THE EIGHT- EENTH CENTURY. By William E. H. Lecky, author of *' History of the Rise and Influence of the Spirit of Rational- ism in Europe," etc. Complete in eight volumes. Crown 8vo, Cloth, per vol., $2.25 ; half calf, $36.00 per set. " On every ground which should render a history of eighteenth-century England precious to thinking men, Mr. Lecky's work may be commended. 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