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 Congress "I 
 Session / 
 
 SENATE 
 
 ■ Document 
 No. 14 
 
 URRENCY AND FINANCE 
 
 MEMORIAL -fc^ 
 
 TO 
 
 7 ^V '^^' 
 
 SENATORS OF THE UNITED STATES G 
 
 BY 
 
 WHARTON BARKER 
 
 RELATIVE TO LEGISLATION ON 
 CURRENCY AND FINANCE 
 
 PHILADELPHIA, APRIL 6, 1911 
 
 PRESENTED BY MR, LA FOLLETTE 
 
 April 28, 1911.— Ordered to be printed 
 
 WASHINGTON 
 1911 
 
MEMORIAL TO SENATORS OF THE UNITED STATES. 
 
 By Wharton Barker. 
 
 Philadelphia, Pa., April 6, 1911. 
 Senators of the United States: 
 
 I venture to address Senators at this time upon the question of 
 money and credit, far the most important question the American 
 people confront now because a grave crisis is near, one the moneyed 
 oligarchy will foster, perhaps create. 
 
 You may call my statement a letter or a memorial, as you prefer. 
 I ask you to make it a public document so that the people can con- 
 sider the great question from a point of view very different from that 
 occupied by Senator Aldrich when he wrote the report he presented 
 to the last Congress. 
 
 I have concluded to use a letter I had the honor to address to 
 President Roosevelt, November 9, 1908, and so make my statement 
 of more than two years since my statement of to-day. During the 
 last two years and more I have continued to study this vital question, 
 and I can find no reasons to change my views or to alter my proposals. 
 
 AN OPEN LETTER. 
 
 Philadelphia, November 9, 1908. 
 Hon. Theodore Roosevelt, 
 
 President of the United States. 
 
 Dear Sir : Because you have said in messages to Congress that you 
 have only limited knowledge of financial questions, and also because 
 of my long careful study of these questions of paramount importance, 
 I venture to address to you an open letter I hope you will read with 
 the attention these great questions surely demand. 
 
 If you are convinced by my statement that national money is the 
 only safe and honest money, and that a bank of the United States 
 owned by the people, a public bank not for profit but to develop the 
 resources of the country, for interchange of natural and manufactured 
 products at charges only so high as to pay cost of the several trans- 
 actions undertaken and to accumulate an adequate reserve fund to 
 cover losses, you will send this letter on to Congress with a recommen- 
 dation for prompt enactment of laws to carry out the proposals made 
 in it. 
 
 I am sure my countrymen occupied with the internal activities of 
 the Nation and foreign trade will read this letter in these days of 
 industrial, commercial, and financial distress, ponder upon the sug- 
 gestions made in it in the same careful way they consider their private 
 operations, and I believe they will, in words easy to be understood, 
 in calls general and loud, demand the immediate establishment of a 
 
4 MEMORIAL TO SEWATOKS OF THE UNITED STATES. 
 
 national money and a national bank and a prompt overflow of bank 
 money and private banks, the moneyed oligarchy intend to fasten 
 upon our country through its control of the Government of the United 
 States. 
 
 Money and credit are the most important instruments of associa- 
 tion, and therefore money should have the same purchasing power 
 at all times, and credit should be granted and used only in a way to 
 facilitate development of emterpnses and interchange of products; 
 never in a way to make booms and panics. Money lenders and credit 
 mongers make booms to encourage a hopeful and courageous people 
 to undertake large and small operations far beyond immediate needs 
 so that when they create a financial panic, they can take at wreck 
 prices all the accumulated wealth of these sanguine and industrious 
 people. The wage-earning and salaried class work on year by year, 
 m normal and boom times alike, for pay only sufficient to maintain 
 life, industrial slaves all, never for pay sufficient to give them living 
 with comfort and hope, and when work stops by decree of the mon- 
 eyed lords they starve. These people often without decent living 
 and hope, a large majority are indifferent to public duties and so 
 vote for pay, direct or indirect, to maintain a government plutocrats 
 set up and thus destroy rule of man and make prime rule of money 
 in our country. Improper division of product of operation between 
 workers and capitalists surely produces this situation. Economists, 
 editors, and politicians in pay of plutocrats declare booms and 
 panics come in semiregular cycles by natural laws and not by decree, 
 and the p'eople accept this statement as true without demur. 
 
 When money lords in control of all lines of production, finance, 
 transportation, and distribution will to make a boom they extend 
 credit, make abnormal activity, and advance wages; when they want 
 to make a panic they lock up money and withdraw credits, and prices 
 of property, commodities, and securities fall, and wages are put down 
 or cut off. All who are able to think will easily understand this seesaw 
 and so surely demand restoration of national money and use of public 
 credit by the people. 
 
 The moneyed oligarchy, the credit mongers, gamblers who rob the 
 people of stock and produce exchange, must be driven out. Pro- 
 ducers of wealth must have a monetary system that will maintain 
 stable prices; speculators, one that will cause general fluctuation of 
 prices, high and low by turn. The people must have a currency that 
 will expand with their needs, one that will grow neither cheap nor 
 dear, but maintain a stable value, thereby securing the equities of 
 debtors and creditors. The currency that will maintain a stable 
 value it is the duty of Congress to give. The volume of money must 
 be regulated to accomplish this. All economists now accept the 
 declaration of John Stuart Mill that "the value of money depends on 
 its quantity together with the rapidity of circulation." The amount 
 of money needed, the time when more money must be issued to pre- 
 serve the stability, the time when smaller issues are required, can be 
 readily ascertained. We have in the general level of prices our 
 guide. When prices are stable the purchasing power of money is 
 unchanged; when they fall, money is dearer, the debtor despoiled for 
 the creditor's benefit; when they rise, money is cheaper, has departed 
 from the level of honesty, with the result of benefiting debtor at 
 expense of creditor. So when prices fall the vplume of money must 
 
MEMOEIAXi TO SENATOES OF THE UNITED STATES. 5 
 
 be increased; when they rise, be diminished. In this way only can 
 we have a proper monetary system that will give us money of unvari- 
 able purchasing value and hence honest money; a money the volume 
 of which will not be subject to accidents of production, as is our gold 
 money to-day; a money not subject to the whim of bankers, such as 
 bank currency, or of legislators who would fix the volume by statute 
 law, but a money established on rigid lines of honesty. This is the 
 basic principle of sound and honest money. 
 
 Let it be borne in mind that there is but one proper way for a 
 people to gain wealth, and that is to produce it by honest toil. They 
 may, of course, gain wealth by despoiling one another or else by de- 
 spoiling other peoples. Those things which conduce to honest toil 
 are honest means by which products of toil are distributed, and 
 honest money is the most important instrument of distribution. 
 
 No one commodity is of unchangeable value or purchasing power 
 and gold is no exception to the rule. In 1893 the per capita volume 
 of money in the United States was $26.21; in 1907 it was $36.30; 
 and October 1, 1908, $35.04. During this period there has been a 
 constant, if not regular, advance in prices of commodities, natural 
 and naanufactured. The outpourings of new gold during the last 
 decade made this increase in the volume of money and advance in 
 commodity prices, and so established the fact that the value of money 
 depends upon its quantity and not its quality. 
 
 The Comptroller of the Currency reported, August 22, 1907, the total 
 stock of money in our country to be: $3,115,600,000 in the_ National 
 Treasury — 11 per cent; in banks, 35.51 per cent; in circulation, 53.49 
 per cent; the per capita not in the Treasury or banks, $19.36, or $1.03 
 less than in 1906. In the same report we find deposits in national 
 banks to exceed $6,037,000,000, divided as follows: 
 
 Individual deposits $4, 319, 035, 402 
 
 Bank deposits 1, 557, 353, 458 
 
 United States depositories 161, 038, 163 
 
 Total '- 6, 037, 427, 018 
 
 We also find in this report deposits in State banks, loan and trust 
 companies, savings banks, and private banks to exceed $8,776,000,000, 
 divided — 
 
 State banks $3, 063, 649, 860 
 
 Loan and trust companies 2, 066, 623, 035 
 
 Savings banks 3, 495, 410, 087 
 
 Private banks 151,072,225 
 
 Total 8, 776, 755, 207 
 
 Our banking institutions, national and State, have aggregate 
 deposits of about $15,000,000,000 ($14,813,000,000) and cash in 
 vaults for reserve only $1,127,000,000, divided- 
 National banks $735,178,189 
 
 State institutions 391,847,497 
 
 Total 1,127,025,686 
 
 These financial institutions, with demand-deposit habihties of 
 $14,813,000,000, should have a cash reserve in respective vaults of at 
 least 12i per cent — a sum in the aggregate of $1,850,000,000 — a sum 
 almost equal to two-thirds of the total cash — gold, silver, paper, and 
 
6 MEMORIAL TO SENATORS OF THE UNITED STATES. 
 
 minor coins — in our country. This exhibit can not fail to make clear 
 the fact that our supply of basic money is very inadequate to meet the 
 needs of our people at this time when the productive population is at 
 work. 
 
 The Treasury Department, October 1, 1908, states the sum)ly of 
 gold coin and bullion in the country to be $1,643,681,386. This is 
 probably an excess estimate. 
 
 How is money now issued in our country? It is issued to the 
 possessors of gold and to national banks that are the possessors 
 of Government bonds and (under the noxious Aldrich law) to the 
 possessors of sundry bonds and notes the Secretary of the Treasury 
 elects to accept as security. Thus was established and is main- 
 tained the moneyed oligarchy that rules in our country. Thus a 
 small number of citizens who know no country, rule here. How 
 should money be issued ? To those who work for gold for themselves, 
 to those who own bonds and securities, often fictitious, the Secretary 
 of the Treasury will accept as security for national-bank notes? 
 No. To those who work or would work for the Government (the 
 people) for the creation of public works of value. This money to be 
 irredeemable in gold, certainly, but not irredeemable. It should be 
 redeemable, receivable for taxes, as were demand notes of the 
 Lincoln days, the Pennsylvania money of Franklin, the Fabian 
 Roman certificates, the Athenian certificates of Pericles. It should 
 also be redeemable in the net earnings of the public works in the 
 operation of which it was issued. This issue and redemption would 
 make a perpetual cycle, create works of public utility, such as public 
 buildings, railways, canals, telegraph and telephone lines, irrigation 
 and other public-service operations, paid for out of the earnings 
 that now go to pay interest on capital. 
 
 Edward Kellogg, 1843, proposed a bond redemption of United 
 States notes when redundant, as did Judge Kelley later. This bond 
 redemption fixes rate of interest as measure of whether currency is 
 redundant or not. This rule I do not accept. 
 
 There is far better foundation for the issue of such a currency as 
 I propose than there is for the issue of a gold currency or for the 
 issue of the Aldrich bank currency authorized by the last noxious 
 law, driven through Congress under bank and other corporation 
 pressure and by political pressure. I am sure that this issue of 
 money by the Government to those who would work for the Gov- 
 ernment, give their labor to the Government, would be more in 
 accord with the rule of ethics than is the issue of money by the 
 Government to those who work for gold and for themselves. I 
 can not see how anyone can honestly dispute this. Money should 
 not be a thing of value. The dollar, whether stamped on coin or 
 paper, is, in efl^ect, a check which certifies that the possessor has 
 given some service of value and is entitled to equal value from the 
 community in return. So it is that money by its nature is not a 
 thing of value, but a representative of value; that coins and bills 
 are mere counters of no value in themselves, but of value because 
 they can be exchanged for things of value. 
 
 Now as a dollar is a record of value given and taken, it is of vital 
 importance that it should be an honest record. For, if such record 
 change, loss will be inflicted on some one. If such dollar changes in 
 value while a man has it in possession, he can not command as great 
 
MEMORIAL TO SENATORS OF THE UNITED STATES. 7 
 
 value when he parts with it as he gave for it, or, he may be able to 
 command a greater value, and in either case there will be of neces- 
 sity, a disarrangement of equities that will cause unsettlement of 
 business and work injury. To cheapen prices hj a scarcity of money 
 is to cheapen the labor of all producers and give their earnings to 
 capitalists without an equitable equivalent. An appreciation of the 
 dollar will cause a shrinkage of general values such as must paralyze 
 trade and industry, for such shrinkage must sap the profits of all 
 producers, tend to reduce debtors to insolvency, for in shrinkage in 
 values there is no shrinkage of debts, and on the other hand a cheap- 
 ening of the dollar such as will cause an inflation of general value, 
 inevitably distracts men's attention from their legitimate pursuits 
 by dazzling them with a show of the speculator's gains, and leads on 
 to an era of wild speculation, inflation that must end in collapse, such 
 as must give a paralytic shock to the whole industrial and commercial 
 fabric. 
 
 It seems only right that the Government should issue its money to 
 those who give it value in return. To single out the producers of 
 gold above all others, issue to them money for such of their products 
 as they deposit at the mints, and deny a like privilege to the pro- 
 ducers of all other products, thus awarding to the holders of gold an 
 exclusive privilege, is wrong; and not only is it wrong in principle 
 but it is grievous in result. For our money issued in this way is not 
 under the regulation of the Government. Its issue is wholly subject 
 to the production of gold. Much gold produced and much money 
 will be issued, httle gold and little money, and while this is so we 
 can not have an honest measure of value, for the production of gold 
 varies much. No one commodity is of unchangeable value or pur- 
 chasing power, and gold is no exception to the rule. The sum of 
 money being dependent upon the production of gold, and that pro- 
 duction shrinking, as it often has, the issue of money must shnnk, 
 and if we cut down the supply of anything, its value will, the demand 
 being the same, go up, and as for the demand for money, it never does 
 remain the same. 
 
 In a state of industrial growth, and we ought to so arrange that 
 such state would be a constant one, it must steadily increase. If we 
 do not meet such increasing demand with a constant increase in the 
 supply of money, we must have a rise in the value of money and a 
 shrmkage in the value of things generally, and such shrinkage will 
 
 Eromptfy put a brake upon industrial growth. The country had a 
 itter experience from contraction in currency froin 1865 to 1873, 
 the period when the Secretary of the Treasury, working at the com- 
 mand of the moneyed ohgarchy, inaugurated and carried out a 
 poUcy of violent contraction. As a result, money doubled in value 
 and prices fell by one-half; of necessity the burden of all debts, pub- 
 lic and private, was doubled, and with the fall in prices it took double 
 the quantity of produce to pay them as before. Industry was para- 
 lyzed, the commercial death rate jumped up alarmingly, the country 
 was bled for the profit of holders of its debts, and of other fund 
 holders, when debtors were strong enough to stand up under the 
 increased strain. 
 
 In response to public outcry and demand Congress halted the 
 contraction. But it was not long before a second step, the demoneti- 
 zation of silver, was taken, resultmg in a further halving of prices and 
 
8 MEMOKIAL TO SENATORS OF THE UNITED STATES. 
 
 step by step money grew dearer until 1900 and prices of products 
 of labor cheaper. The outpourings of new gold during the last 10 
 years made an increase in the volume of money and so the fact is 
 estabhshed that the value of money depends upon its quantity, not 
 its quahty. 
 
 If we continue to base our business operations upon gold currency 
 we must put a brake upon our industrial growth intermittingly. The 
 sponsors for and advocates of a gold currency admit that such a cur- 
 rency is, and must always be in times of industrial activity, inadequate 
 and unrehable, for they are the advocates of national-bank currency, 
 of emergency notes of all kinds and of the use of bank due bills as 
 money in times of stress. 
 
 The issue of money to those national banks which deposit United 
 States bonds and corporation bonds and notes the Aldrich bill per- 
 mits use of, as a pledge for the redemption of such notes, can not 
 change the status so long as redemption of all such money is required 
 in gold; and if such redemption were not required, or such require- 
 ment disobserved by the banks, we would have the regulations of the 
 issue of money further than ever beyond the reach of the Government. 
 We would have the banks now interested to cause a fall in volume of 
 money and now a rise in control of the issue, and in such case we 
 would have a dollar of much changeable value. 
 
 Bank officers will continue to act under the dictation of the specu- 
 lative cUques, for it is hardly probable they will be superior to such 
 influences, and they will contmue to manage the banks solely with 
 an eye to profit to the gamblers they make loans to and of the stock- 
 holders, and therefore they would increase the note issue as interest 
 rose, decrease the issue as interest rates fell. This, bank financiers 
 tell us, would result in automatic regulations of the issue of currency 
 in response to the demand for trade. But we have seen interest 
 rates run their lowest when the country was suffering from a money 
 famine and prices shrinking disastrously. At such times we have 
 the banks offering loans at about normal rates of interest to the 
 restricted class of borrowers they were willing to loan to at all. Again 
 we have seen interest rates rise just as the money famine has lifted, 
 as the supply of money has increased, and this we can not put down 
 to accident. In this we can see the working of a natural law. For, 
 as prices fall, profits of those engaged in industrial undertakings are 
 sapped and men grow more disposed to question their solvency. 
 Hence bankers grow suspicious of such borrowers and hesitate more 
 and more to respond to their requests for loans. Consequently such 
 borrowers find it almost impossible to effect loans at any rate of 
 interest. But at the same time, and because of such refusal to make 
 loans to those engaged in industrial pursuits, money accumulates in 
 the banks, especially in the financial centers, and we have congestion. 
 Thus, while shunning loans to producers of wealth, the banks seek 
 to put out their funds on stock exchange securities, thus making 
 boom market for stocks. Competition in the placing of such loans 
 results, and interest rates fall down, down, down. After awhile 
 there comes an influx of money from some quarter, a turn upward 
 in the trend of commodity prices, a returning willingness of lenders 
 of money to put their money at the risk of industrial undertakings, 
 a drawing away of money from the financial centers, a rising of inter- 
 est rates. So it is that interest rates make a false guide upon which 
 to regulate the issue of currency. 
 
MEMOEIAli TO SENATORS OF THE UNMED STATES. 9 
 
 The price level of commodities, showing the purchasing power and, 
 therefore, the real value of money offers the one true guide. The 
 
 Suestion then comes to this. How are we to avail of this true guide ? 
 f the Government, taking the issue of currency into its own hands, 
 strives to regulate the issues as interest rates rise and fall, it would fall 
 amiss of the natural law referred to above. It would find in interest 
 rates a false guide, and the Government should not play the part of 
 usurer in the use of money. But how may we so issue it as to regard 
 the true guide that we must follow to establish an honest measure of 
 value? If money be redeemable in service of public works retained 
 out of net earnings, why should it not be issued in payment of such 
 works? In what more natural way can it be issued? Let it be 
 redeemed by use in payment of taxes and out of the net earnings of 
 public works and we have a perpetual automatic redemption that 
 would prevent the money supply from being redundant. So by 
 issue and redemption proposed we should have money that would 
 insure stability of prices, absence of booms and panics, and work for 
 the whole people at all times at fair and adequate wages. 
 
 Under existing economic conditions labor is robbed of a large part 
 of its products for the enrichment of the idle. Labor is the producer 
 of all wealth and is entitled to receive the just product of its toil, and 
 it should be secured in its rights by laws enacted to fix a minimum 
 wage per day for labor at such a sliding scale as would be effective to 
 enable the laborer to participate in the general welfare and prosperity 
 of the country. 
 
 WAGE RATE ALSO A JFALSE GUIDE. 
 
 It has been said by some that we have but to hire on public works 
 at a fixed rate all the men who may care to work. If we did we would 
 have a unit of value based on labor and would have the rate of wages 
 rigidly fixed. For if under such a system there came industrial 
 depression, with the resulting throwing of men out of private work, 
 an increasing number of men would seek work on the public works. 
 As a result the issue of money would be increased. This would make 
 an increased demand for products of all kinds, give an upward 
 impetus to prices, and thus a stimulus to industrial activity. And 
 then would come demand for labor ; a slight advance in wages would 
 serve to draw men away from the public works, decrease the issue 
 of money, prevent a further rise in prices, and cause a retrogression 
 until the general rate of wages had fallen back to that fixed by the 
 Government. 
 
 Thus it is very evident that there would be no great margin within 
 which wages could fall below or rise above the rate offered by the 
 Government to all who might apply. But wages thus fixed, a day's 
 wages made the unit of value, what would inevitably follow with the 
 progress of industrial evolution, the introduction of improved machin- 
 ery, and the consequent increase in the product of the day's labor? 
 
 Evidentljr the laborer could not share in such increased production 
 through an increass in his normal wage proportionate to the increase 
 in his productiveness. From the possibility of such rise he would be 
 cut off^ He could only share in the increasing productiveness of his 
 labor through a fall in prices and an increased purchasing power of 
 his wages, and though there came a fall in prices of equal proportion 
 to the Increase in the productiveness of labor, he would not get hia 
 
10 MEMORIAL TO SENATORS OF THE UNITED STATES. 
 
 full share of such mcreased productiveness. He would be cut off 
 from this. For, with a fall in prices, the share of the product taken 
 by the bond-holding classes, by those owning debts and drawing 
 first sums of interest, must be increased. To a share in the increased 
 productiveness of labor they would not, of right, be entitled, but 
 undsr such a system as described above they would get a share, and, 
 
 fetting a share, the share of the producers would, of necessity, fall 
 elow what it ought to be. 
 
 Therefore, in justice, we must see that an increase in the productive- 
 ness of labor will be followed by an advance in the rate of wages, not 
 by a general fall in prices, for, if there comes such fall, the bur- 
 dens resting on the backs of producers will not be lightened as they 
 iiicrease the productiveness of their labor. So what we have to do 
 is to so increase the issue of money as to keep the general level of 
 prices from falling. 
 
 HOW TO MAINTAIN STABLE PRICES. 
 
 All this can be done, how ? By increasing the rate of wages offered 
 ■on the public works whenever the general level of prices shows a 
 falling tendency. Such increase of wages offered would, of course, 
 tend to draw more men to the public works, as well as to increase the 
 distribution for wages, and so issue of money to those already em- 
 ployed. And such increase of currency would, of course, make 
 broadened demand for many products; serve to keep prices from 
 falling. Thus could a stability of prices be maintained; thus an 
 honest measure of values be given; thus honest industry encouraged, 
 speculation discouraged, and, as the foundation step to the accom- 
 plishment of this end, we have but to learn this simple rule, so stamped 
 with common sense, so evidently true, that we may put it down as 
 an axiom of good government — that money should be issued by the 
 Government, not to those who dig for gold, but to those who dig for 
 the Government. 
 
 The supply of gold — the supply of gold and silver together — is, not- 
 withstanding the great production of the last decade, so limited that 
 the money of commerce must be paper money. The moneyed oli- 
 garchy — speculators, all— want bank currency with which they can 
 strip the people almost in the twinkling of an eye of the profits of a 
 year, of the earnings of a lifetime, throw them from hope into despond- 
 ency, cut off the promise of success, open the way to bankruptcy. 
 
 The people need and must have national currency which will main- 
 tain a stable value. Those who have knowledge of the work of Mr. 
 Hugh McColloch, of the work of bankers who urge the contraction of 
 the money of the United States, practiced by Mr. McColloch, must 
 denounce a monetary system in which the unit of value is a fluctuat- 
 ing one and must stand for a system in which the unit of value must 
 be stable. They must also recognize that the value of money must 
 change with any change in the relation between the supply of and 
 demand for money. They must see that the only money that can be 
 kept of stable value is one the volume of which can be increased by 
 government in accordance with the growing demands of trade; and 
 this necessitates that the money be made of a substance the supply 
 of which is not restricted. 
 
MEMORIAL TO SENATORS OF THE UNITED STATES. 11 
 
 PAPER MONEY REGULATED BY PUBLIC WORKS. 
 
 Further as the value of money is dependent on its quantity, not its 
 quality, it is economy to make our money out of the cheapest possible 
 substance that will serve the purpose. And that substance is paper. 
 The people should demand the withdrawal of national bank cur- 
 rency — the speculative money — and the issue in its place of a national 
 currency. They should stand for paper money, for a currency the 
 volume, and hence the value, of which can be absolutely regulated by 
 the Government ; a currency that would be issued directly to the people 
 in payment for public works, that would be redeemed and retired by 
 payments of taxes and out of the revenues of such public works, and 
 reissue for the creation of new works of earning power, the nation ever 
 growing richer in pubhc works, while the country would be supplied 
 with the best of currencies. 
 
 This currency would be honest money — monej' that will ever pre- 
 serve the equities of contracts; that will do justice between debtor 
 and creditor; a money that will not at times grow dearer, rob debtor, 
 take away the profits of industry, paralyze industrial activities, at 
 other times grow cheaper, rob creditors, and stimulate speculative 
 ventures that in the end must collapse, bringing in the wake panic, 
 stagnation, industrial paralysis, and death. When money is scarce, 
 products of labor and all kinds of accumulated wealth are low. 
 When money is plentiful, prices are high, industry active, the pay- 
 ment of debts comparatively easy, and labor is in demand and held 
 in growing esteem. Bank currency means disaster to the people, 
 power and great wealth for the moneyed oligarchy. National cur- 
 rency such as I urge means prosperity for the people and general 
 and constant industrial activity. 
 
 In 1870 the population of the United States was about 38,500,000, 
 money circulation per capita was $17.50; in 1880, population about 
 50,000,000, circulation per capita 119.41; in 1890, population about 
 62,600,000, circulation per capita $22.82; in 1900, population about 
 76,300,000, circulation per capita $26.94; in 1903, population about 
 80,400,000, circulation per capita -129.42; in 1906, July, population 
 about 84,650,000, circulation per capita $32.42; in 1908, October, 
 population about 87,652,000, circulation per capita $53.64. 
 
 The years 1903-1906, inclusive, were j-ears of great aggregate 
 production of wealth, enormous riches for the moneyed oligarchy, 
 the successful gamblers and the favored tools of this oligarchy, fair 
 earnings for farmers who owned their own farms free from mortgage 
 debt, but only poor li\-ing for farmers on moitgaged or rented farms ; 
 poor wages and salaries for the wage-earning and salaried class — men 
 and women in mines, in factory, in mill, in furnaces, in offices, and 
 on farms; a situation bad because of bad economic conditions. 
 
 The delusion that we have — that any country has — a gold currency 
 no longer prevails among informed financiers and economists. The 
 great production of gold during the past decade has not been equal 
 to the new and great demand for money, and all acknowledge that a 
 gold currency can not be adequate and that a paper currency of one 
 kind or another must be used. The question is, therefore, national 
 currency or bank currency — money of the people or of a property 
 oligarchy. 
 
12 MEMORIAL TO SENATORS OF THE UNITED STATES. 
 
 The assumption that any nation has in the past or would or could 
 maintain in the future gold payments, at home or abroad, at times 
 of financial stress and panics, at times when private and corporate 
 bank credit do not meet the demands of the depositors, the owners 
 of the property upon which the credits have been issued, no longer 
 stands ; when private and bank credit break down, banks and nations 
 must and do suspend gold payments and use public credit in one 
 form or another until the public wills to again use the poorer kind of 
 credit. Use of public credit always restores confidence, because the 
 collective note of a people is always adequate. Bankers, dealers in 
 money, credit mongers, of course want to maintain the system of 
 money, the system of banking they can manipulate, and, standing 
 together, make booms and panics, refuse to owners of deposits with 
 them the use of their own funds and drive to bankruptcy the public, 
 themselves bankrupt, and profit by the wrecks they have caused. 
 These individuals constitute themselves an oligarchy, and by intimi- 
 dation and purchase of government dictate laws and administration 
 of laws. They rob the people who produce wealth of almost all but 
 a slave's living, thus taking to themselves the accumulations of 
 mankind. 
 
 So we have a conflict between people and plutocrats. At this time 
 plutocrats are in control everywhere and people outcasts. In our 
 country 3,000,000 men and women, normal wages not less than $7 
 per week average, are no doubt idle now, and 5,000,000 more higher 
 class people are working only half or three-quarters time. So 
 $40,000,000 per week production of wealth stopped, to the end that 
 these plutocrats may starve the people into acceptance of industrial 
 slavery and acceptance of these hardships. I say again, we must 
 have public, not private money, and a public bank, not private banks. 
 There is no need to say more now on the money question, and so I 
 take up the bank question. 
 
 PLAN FOE BANK OF THE UNITED STATES. 
 
 National banks. State banks, trust companies, savings banks, 
 private banks, corporations run for profit with service to the public 
 an incident, are all more or less tools of the moneyed oligarchy that 
 fattens upon the people by booms and panics. Because of this 
 situation, a grave menace to all industrial and commercial operations, 
 there must be a public bank with branches and agencies in aU cities 
 and towns of agricultural, industrial, and commercial activity. The 
 need of such a national money and credit corporation is not a new 
 idea with me, for I proposed the creation of a bank of the United 
 States in an open letter sent to the Finance Committee of the Senate 
 of the United States Congress December 18, 1902, and I now reopen 
 the question only because the grave crisis tnat exists demands that 
 I do so. 
 
 The name of the public bank now needed should be, for obvious 
 reasons, the Bank of the United States. This bank must be estab- 
 Ushed by authority of Congress, total capital provided by Congress, 
 and operated vmder a charter revocable only by a majority of the 
 
 Eeople at a general election, notice of such vote to be given one year 
 efore date of taking it. 
 
MEMORIAL TO SENATORS OF THE UNITED STATES. 13 
 
 GENERAL PLAN OF THE BANK. 
 
 (1) The bank must be a bank of deposit, discount, and exchange, 
 but not a bank of issue. 
 
 (2) The capital of the bank, furnished wholly by the United States 
 by act of Congress, must be national money, legal tender for all 
 debts public and private, and should be the surplus money in the 
 Treasury sit the time of creation of the bank and money otherwise 
 provided by Congress to make up the deficiency. 
 
 (3) The capital at the start of business, provided as stated above, 
 must be $500,000,000, and it must be increased from time to time 
 whenever 60 per cent of the citizens voting at any general national 
 election demand an increase. The power to order a vote on an 
 increase of capital of the bank must lodge — 
 
 {a) With the directors of the bank, a majority of the board voting 
 for such action. 
 
 (6) With Congress, a majority of both Senate and House of Kep- 
 resentatives voting for such action. 
 
 (c) With boards of trade or chambers of. commerce, or by both, 
 in cities where both exist, 10 per cent of said boards voting for the 
 demand. 
 
 id) With 5 per cent of citizens voting at any national election 
 for said increase of capital. 
 
 This bank must be operated, not for profit, but for service of the 
 people; interest charges to be at all times 1 per cent over those paid 
 on deposits with United States post offices, should a postal savings 
 bank be in operation, or 1 per cent above rate at which the United 
 States could borrow in the open market, all other charges to be suffi- 
 cient to cover cost of the several transactions ; so much of the profit 
 or surplus as may be decreed necessary by the directors as an msur- 
 ance fund to be held by the bank and the balance to be used at each 
 and every quarterly settlement for purchase of bonds of the United 
 States outstanding at the time and when the Nation is out of debt, 
 said profit to be used for the creation of public works ordered by 
 Congress. As a large majority of operations of industry and trade 
 are and can always be carried on by use of credit on books of banks, 
 no actual money being required, we should and must separate credit 
 and money accounts in the future and so relieve many financial sit- 
 uations from hardships and danger. 
 
 This proposed bank of the people should inaugurate this most ben- 
 eficial practice and establish two classes of accounts, one payable in 
 actual money when money has been deposited and one payable by 
 credit on the bank books when a credit has been deposited or a note 
 discounted, the bank making a charge for actual money when a 
 transfer from a credit to a money account is demanded when money 
 for any reason may have been withdrawn from bank centers. This 
 
 Erocedure is so sound and easily understood by all those engaged in 
 usiness and out of business that no objection can be or will be offered 
 to it. The use of a credit to pay a debt of banks to banks through 
 the clearing-house system must be at once extended to individuals, 
 firms, and corporations, and banks making loans of credit must be 
 relieved from the obligation to pay a credit so created in actual money. 
 This use of money of account, credit money, has been in operation 
 
14 MBMOEIAI, TO SENATORS OF THE -UNITED STATES. 
 
 in China for many generations and no hardships have ever been 
 experienced. 
 
 The United States bank to loan its credit at all times to farmers, 
 miners, manufacturers, merchants, transportation companies, and 
 other corporations and individuals at rates heretofore stated when 
 loans are declared good by local boards, so that no curb could be put 
 upon legitimate operations of the people. Loans supported by col- 
 lateral securities be accepted even though borrowers had no property 
 beyond security offered, such loans to stand upon value of securities, 
 not upon personal credit. 
 
 When collateral loans are sought, -bonds and stocks offered as 
 security must have paid annual interest or dividends for three years 
 prior to date of loan. Bonds at 2| per cent and above, and stock 3 
 per cent and above, no advance to be for more than 60 per cent of 
 the average market price at which such bonds and stock have sold 
 during a period of four months prior to date of loan. The bank to 
 have specified power to loan upon real estate, upon bond and mort- 
 gage the United States court in the several districts would permit 
 executors, administrators, and trustees to purchase. This rule for 
 collateral loans and loans upon real estate would put real and per- 
 sonal property as security for loans on the same basis, no preference 
 to either class as now. Exchange business between different parts of 
 the country to be done at lowest rates to cover cost. Bank to be 
 place of deposit of all money of the United States, and so all evils of 
 the "Independent Treasury" would be done away with — no locking 
 up of money, no loan of public funds to favored bankers be possible. 
 
 The capital of the bank to be distributed over the country in pro- 
 portion to population or to volume of business as directors of bank 
 may direct from time to time. Bank to have power to purchase any 
 property, real or personal, when sold to cover loans in default. 
 
 GOVERNMENT OF BANK. 
 
 Of course, such a niighty power as the United States would be, 
 must be, in control of the people, for otherwise politicians, sharpers, 
 "captains of industry" would use it as an engine for wrong and their 
 own aggrandizement. Absolute management of bank to lodge with 
 board of directors elected by boards of trade, chambers of commerce, 
 and other commercial and industrial associations. The board of 
 directors to consist of one director from each and every section of 
 the country with a population of 2,000,000, so on the basis of 
 90,000,000' population the bank would be managed by 45 directors, 
 one of whom should, by election of associates, act as president and 
 serve as such one year by authority of one election, but be eligible for 
 reelection. The several conimercial and industrial associations 
 specified each December to elect the director from the section to 
 serve the following year. A board of directors so constituted would 
 be, of course, nonpartisan, and made up whoUy of men skilled in 
 financial, industrial, and commercial operations. This board would 
 hold regular meetings on the first Monday of each month in the city 
 of Washington, at the office of the bank, two-thirds to constitute a 
 quorum. An executive committee of the board to be in Washington 
 in attendance at the bank each and every day save Sundays and 
 public holidays, and to be vested with all power of the fuU board. 
 
MEMORIAL TO SENATOES OB THE UNITED STATES. 15 
 
 President and all directors to be paid adequate salaries; all directors 
 to serve some part of the year at tne Washington office of the bank. 
 
 Each section of the country entitled to a director to have located at 
 the chief city of the section a branch bank. These branch banks to 
 be governed by local boards of directors of 20 members, 1 for each 
 100,000 population, and be elected as the members of the national 
 board are elected, so that each branch bank would have a governing 
 board of 21, for the national director from the district must be also a 
 director of the branch bank and act as president or vice president of 
 the local bank as the directors of the branch bank might decide to 
 be for the best interest of the branch bank. All local directors to be 
 paid adequate salaries, and seven, one-third of these directors, to be 
 at the office of the branch bank at all times during business hours, so 
 that the president would be at all times only an adviser and executive 
 officer. 
 
 As chief office and branches would at all times be in telegraph and 
 telephone communication, the whole business of the country would 
 be known at all times to those in charge of the chief office and branches 
 of the bank, and so needs of the country could be met without friction 
 or waste of time or money in conduct of the business of the bank. 
 
 The capital of the bank being distributed among the 45 or more 
 branches according to population or by measure of deposits and 
 loans, as the directors of the bank might direct, there would be no 
 congestion of money at one place or section of the country and 
 scarcity at other places or sections. Safe, wise, and honest banking 
 would of necessity prevail because no commanding bank center could 
 exist, no gambling center be created. The bank would use the money 
 and credit deposited at each branch bank as far as possible in making 
 loans to those doing business in the several sections of the country 
 and so give support to regular and legitimate enterprises ; no sending 
 of money of agricultural, mining, and industrial sections to a central 
 city where speculators and gamblers gather. 
 
 As deposits isi the United States bank would be secure, no loss to 
 depositors be possible, all deposits of individuals, firms and corpora- 
 tions of the nonspeculative class would be deposited with it. So all 
 loans to the nonspeculative class would be made by the United 
 States bank. So there would be almost upon the opening of the 
 bank a separation of regular and speculative business — the specu- 
 lative business left to private or semiprivate bankers. The effect 
 of course would be that gamblers could no longer rob the people as 
 they do now through use of funds on deposit with national banks. 
 State banks, trust companies, and other kindred banking associa- 
 tions, and the days of booms and panics would be over. 
 
 The saving on the transmission of money from one bank to other 
 banks, from one section of the country to other sections, would be 
 enormous and great work saved. The advantage of use of credit and 
 money of accounts is so great that no open-minded person can ques- 
 tion it. The division into money and credit accounts would prevent 
 the withdrawal of bank support when currency and wage settlement 
 demand more than the usual supply of actual money, and the substi- 
 tution of public credit for private credit, at all times, but especially 
 when men distrust each other, would stop all panics that come 
 from loss of faith of man in man or by machinations of the moneyed 
 oligarchy. 
 
16 
 
 MEMORIAL TO SENATOKS OF THE UNITED STATES. 
 
 ni> 
 
 All persons interested in existing banks as stockholders u 
 persons who use bank funds on improper collateral securif 
 oppose the establishment of the bank I propose, but only that i 
 class will oppose it. The bank and trust company oligarclu 
 grown up to great power, and with the transportation olij ii| 
 both in control of a few able, aggressive, unpatriotic men, 
 now government in our countiy as in all other countries. 
 
 The first step toward liberation of the people from this mone; 
 garchy is to establish national money m place of bank mon< \ 
 second, the establishment of the United States bank I have pre ] 
 the third, the making public monopolies of all those operatioi 
 by nature or by public franchise must be monopohes. I 
 monopolies may be — often would be — advantageous ; private mon] 
 lies can never be advantageous. 
 
 Citizens will, yes, must, remember that all financial, industl 
 and commercial crises have been at last met by some use of pi 
 credit, some use of the consolidated wealth of the people. Citii 
 on reflection must declare in favor of regulation, control, and gerj 
 use of public credit for the operations of the whole people and ags 
 use of public credit only at times when private and bank credit 1 
 broken down either because the moneyed lords have so orderec] 
 because individuals no longer accept private and bank credi 
 their operations. The people can no longer tolerate a syste: 
 money and banking established long since, but never so pow( 
 and arrogant as now, that uses public credit to support a mom 
 oUgarchy that would put in perpetual industrial slavery all produj 
 of wealth. So I declare the confhct now on between people and 
 tocrats must be fought out in one long campaign, the people nei 
 asking quarter of nor giving quarter to the plutocrats. 
 
 The American people will then be masters of the wealth 
 develop and accumulate by their labor, and the idle rich will ci 
 to be overlords. Remember, all competent to consider the su" 
 know that gold money and silver money, one or both,' are of the 
 and that the world must use in some form paper money. The q 
 tion is. Shall this money be bank money or national money ? M^ 
 of account, credit money, the money of civilization should be 
 must be that given by a public bank, not by private banks. 
 
 With national money and a public bank such as I have urged i. 
 could be neither booms nor panics, no enslavement of the industri 
 and intelligent people, no place for the idle rich. The conflict is' 
 rule by the people or by plutocrats, for liberty, justice, and equij 
 of opportunity, or slavery and degradation. 
 
 I have the honor, Mr. President, to be, etc. 
 
 
 
 
 I have the honor, gentlemen. Senators' of the United Stat( i. 
 submit this memorial for your consideration. 
 
 Whaeton Barm i 
 
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