HE GREAT CONSPIRACY 
 
 The House of Morgan 
 
 EXPOSED 
 
 AND 
 
 HOW TO DEFEAT IT 
 
 H. L. LOUCKS 
 
^m fork 
 
 Hate Qlollegc of Agriculture 
 
 At QfotneU UninerBita 
 Stljara, SJ. % 
 
 Sithrarg 
 
Cornell University 
 Library 
 
 The original of tiiis 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/cu31924013900570 
 
The Great Conspiracy 
 
 -OF- 
 
 The House of Morgan 
 Exposed 
 
 How to Defeat it 
 
 H. L. LOUCKS 
 
 SECOND EDITION 
 
 Copyrighted 1916 
 
 BY 
 
 H. L. LoucKs 
 
U7 
 
 Equal QpportUDlty For All. That's All. 
 
 Dedicated to the men and women who have 
 tried to make this good old world the better for 
 having lived in it. 
 
 Object of the study: — To free labor from all 
 unnecessary tax for the exchange of labor and 
 labor's products. 
 
 By H. L. LOUCKS, 
 Watertown, South Dakota 
 
 AUTHOR OF 
 The New Monetary System, 1893. 
 
 Government Ownership of Railroads and Telegraphs, 1894 
 Farm Problems and State Development, 1914. 
 Common Sense Rurul Credits, 1915. 
 
 "^T5T7¥" 
 
A FOREWORD. 
 
 I was requested by The Equity Co-Operative Ex- 
 change of St. Paul, Minn., in December, 1915, to de- 
 liver an address before the largest gathering of prac- 
 tical co-operative farmers ever assembled, to celebrate 
 a substantial victory by The Equity Co-Operative Ex- 
 change, over the Minneapolis Chamber of Commerce, 
 in the marketing of the farmers' grain, by the farmers 
 themselves. 
 
 I was unable to be present, but prepared the ad- 
 dress, and it was read in part by Grant S. Youmans, 
 of Minot, and in part by Cliairman Lee, of Valley 
 City, N. D. 
 
 The very flattering reception of the address by that 
 immense audience, estimated at between 8,000 and 
 10,000, caused me to believe that there would be a 
 demand, as I knew there was a need, for the informa- 
 tion I could give along the lines of that address, and 
 which could be only briefly touched on at such a meet- 
 ing. 
 
 I have taken that address as the text for this book, 
 and have developed several phases of it in such a. plain 
 manner, and with the official proof for the charges 
 made, that I hope it will proA'e to be a ready refer- 
 ence for our speakers, more especially on the para- 
 mount issue now up for solution by the American peo- 
 ple, viz. : Our Medium of Exchange for the future. 
 Shall it be legal tender, lawful money, issued by the 
 government, and administered without private profit, 
 as a public utility; or shall it be, as at present in- 
 tended, and administered, bank ledger credits, wholly 
 controlled by the bankers as to amount of credit, and 
 rate of interest to be charged, and the more dangerous 
 proposition of the banker loaning a book credit, and 
 insisting on the obligation being made payable in a 
 money that has disappeared from circulation in 
 Europe, Asia and Africa, and practically so in the 
 
4 FOEEWOED 
 
 Americas. What little there is I claim will be hoarded 
 in the vaults of the creditors, to be secured on payment 
 of a premium only. 
 
 The meeting was a farmers' meeting, and the ad- 
 dress was primarily prepared for their information, 
 and I developed it as such, not with a view of ask- 
 ing for any special privilege, or favor; just that agri- 
 culture may be placed tipon an equal footing with other 
 industries. 
 
 Briefly as possible, to make the issues plain, I try to 
 show the discriminations against agriculture, in leg- 
 islation, transportation, and finance, and its effect upon 
 all legitimate business. 
 
 An expose of the insincere, buncombe interest in 
 Eural Credits by the practical politicians in distress 
 — ^before election — and the gross betrayal of the farm- 
 ers after election. 
 
 A practical plan for state development by the is- 
 sue of money based on what is universally conceded 
 to be the best security in the world — ^productive land — 
 administered without private profit, with the maxi- 
 mum of security, and at the minimum of expense, by 
 the use of our present political units. 
 
 A general treatise of money and its functions. 
 
 An expose of the greatest conspiracy ever conceived 
 by the brain of men to control all the commerce and 
 industry of a great nation, through a private monopoly 
 of money, the life blood of commerce, by a group of 
 avaricious, conscienceless financiers, whom for brevity 
 I shall name The House of Morgan. 
 
 I trace that conspiracy from 1862 up, but more 
 especially during its rapid development the past ten 
 years, or from the date of the Bankers' Panic of 1907, 
 when J. P. Morgan, Sr., was crowned Sovereign by 
 the President of the United States, and The House 
 of Morgan has been supreme in legislation ever since, 
 until now they have full legal control of the issue of 
 money, and the complete control of the two dominant 
 political parties. 
 
 It has never been my custom to criticise, or try to 
 tear down, unless I think that I can build better. In 
 
FOREWORD 5 
 
 accord with that principle I point out how we may 
 free labor from the power of money to oppress. 
 
 The subject is such a vitally important one that it 
 would require several volumes to cover it thoroughly. 
 
 I offer this as a first instalment, as it were; the 
 result of 30 years' careful study and investigation, 
 with an open mind; seeking the TRUTH for TRUTH'S 
 sake. 
 
 Because of the very great and vital importance of 
 the problem, I realize fully that there is very much 
 left for future development and explanation. 
 
 To this I propose to devote my entire time and 
 ability, as opportunity offers, from the platform, or 
 by means of the press, UNTIL "WE "WIN. 
 
 I am sure that my foundation is builded on the 
 solid rock of justice, equity and righteousness. So 
 believing, I am willing to meet all comers in the 
 defense of my position. 
 
 The Author. 
 
AGRICULTURE OUR GREATEST INDUSTRY. 
 
 (Equity Co-Operative Exchange address at St. 
 Paul, Minn., December, 1915, Developed and Extend- 
 ed.) 
 
 Every intelligent citizen recognizes the fact that 
 agriculture is our greatest industry, and that on it 
 depends the prosperity of every other legitimate in- 
 dustry, business or profession. 
 
 Then why is it that in this year of abnormal con- 
 ditions in the world's markets favorable to us, and the 
 greatest crop in our history, that there should be this 
 unusual activity manifested by political farmers for 
 the betterment" of agricultural conditions, as evidenced 
 by the large number of conventions and conferences 
 being held "to aid the farmer"? 
 
 Is it in response to any signal of distress from 
 the farmers? 
 
 Perhaps a knowledge that the farmers are slowly 
 waking up to the fact that they have been made "the 
 goat" long enough, may have something to do with it, 
 and that this year of great agricultural prosperity 
 will be a good time to sidetrack us on minor issues. 
 Can it be done again? 
 
 To succeed in any business, calling or profession, 
 you must have a pride in that calling, an ambition to 
 excel, and to make the home and environments such 
 that your family will want to make their homes near 
 the old homestead. This cannot be done unless you 
 understand the best methods of production, distribu- 
 tion and marketing, the latter being by far the most 
 important. 
 
 Better Marketing Very Important. 
 
 No matter how close you may adapt your crops to 
 your soil; how efficient you may have been in your 
 work of production ; nor how fortunate you may have 
 been in climatic conditions to produce a good crop. 
 
BETTER MARKETING 7 
 
 or a bumper crop, there is one thing you must ever 
 bear in mind: that it is not the amount you produce 
 that builds up the farm, the home and the state, but the 
 net profits of that production. 
 
 Then it follows that the marketing of your crop 
 should be your primary consideration. Profitable 
 farming is more important to you than better farm- 
 ing, and the more closely you unite the two, the more 
 successful you wiU be. 
 
 Tou are to be congratulated on this second step 
 forward that you have taken in marketing the product 
 of your own labor, and the success of which you are 
 here t o celebrate was accomplished on your own 
 initiative, without the help of any of the political 
 farmers who are now so freely and actively meeting, 
 conferring and discussing the best methods for you to 
 follow to increase production, many of whom have 
 been very active in trying to prevent you from es- 
 tablishing an independent grain exchange of your 
 own. 
 
 Of course we should appreciate their kindly inter- 
 est and advice, but in view of our past experience we 
 should remember the fable of the stork and the farmer ; 
 it is not safe to depend on others; we must do it our- 
 selves; and why not? 
 
 Agriculture is the only industry that permits an- 
 other class or group of men, who neither produce nor 
 aid in production, to monopolize the marketing, and 
 in doing so to insist that to insure prices we must have 
 rapid and constant changes ; and to insure the changes, 
 they must sell from one hundred to two hundred times 
 as many bushels as are actually sold. 
 
 This stigma on agriculture has been tolerated quite 
 too long. You have demonstrated that it is not nec- 
 essary. You are removing the stain, and your effort 
 should be appreciated by every self-respecting farmer. 
 
 Every other business, industry and profession in 
 the nation, including those so active in conferences 
 and conventions of late, would resent the farmers 
 calling conventions and conferences to advise them 
 how to manage their business, more especially the 
 
8 AGKICLUTUEE— GREATEST INDUSTRY 
 
 selling end. They would neither attend the confer- 
 ences nor heed our suggestions. Is it not about time 
 that the farmers declared their majority, and declined 
 to be treated as wards of other business interests? 
 
 I have watched those conferences and conventions 
 very closely, and have seen absolutely nothing new 
 of real value to our industry. 
 
 They carefully avoided all of our present day vital 
 issues. 
 
 Evidently they had never . heard of your great 
 struggle to secure a free and open market for your 
 own grain. 
 
 Rural Credits was discussed by such bankers as 
 Myron T. Herrick, one of the chief promoters of fake 
 rural credits, to relieve the distress of a group of 
 practical politicians, who guessed wrong on reciproc- 
 ity, and is now one of our most active opponents. His 
 remedy would seem to be the "Repeal of the Sher- 
 man anti-trust law. ' ' 
 
 The transportation problem was djiscussed by a 
 railroad official, who failed to mention the extra 30 
 cents per bushel transportation tax levied on the 1915 
 crop of wheat, or the effect it had on the farmer. 
 
 The money problem, proper, the most important by 
 far, was not discussed at all. 
 
 Co-operation, principally by professionals, and a 
 lot of experimental recommendations wholly impracti- 
 cable because of present discriminations against agri- 
 culture, and not one word against the real discrimina- 
 tions. 
 
 There were a few representatives of organized ag- 
 riculture present, very few. They must have felt lone- 
 some, but mark you that it will be the superficial, im- 
 aginative, experimental and impracticable resolutions 
 of the great Chicago convention that will be referred 
 to in congress as the needs of agriculture, and not 
 the real practical things demanded by the represen- 
 tative farmers there and here and at the other annual 
 meetings of organized farmers. 
 
 The object is plain. It is to tide over another 
 presidential campaign on sham, pretence, and bun- 
 
GEORGE LOFTUS THE LEADER 9 
 
 combe. It is wonderful the interest taken in tlie 
 farmers for a year before a presidential election. Will 
 the farmers be caught again? Oh, yes, millions of 
 them, unless we can wake them up. 
 
 Equal Opportunity for Agriculture Demanded. 
 
 The farmers and our true friends at this and everj' 
 other convention should demand and insist on the one 
 fundamental principle, that in so far as legislation is 
 concerned, agriculture must be placed upon an equal 
 footing with any other business or industry in our 
 own nation, and be provided with as good facilities 
 for production, transportation, distribution and mar- 
 keting as are provided for our competitors in our own 
 and foreign markets, and firmly resolve that we will 
 continue the fight until all discriminations have been 
 removed and equal opportunity achieved. 
 
 'This convention is different from any of the others 
 in that it marks a new era in the farmers' movement, 
 not only in the interest of the producers, but the con- 
 sumers also. It is a great gathering to celebate the 
 first substantial victory of the organized co-operative 
 farmers in their efforts to reach the consumer with- 
 out paying an unnecessary tribute to a private monop- 
 oly, that has assumed that we were not capable of 
 marketing the products of our own labor, and have 
 appropriated and enjoyed it so long as to consider it 
 a vested right. 
 
 George Loftus, the Leader. 
 
 The fight has been a long and a hard one, for with 
 private monopoly "an injury to one is the concern of 
 all," and by means of interlocking directorates and 
 mutual interests they have had the direct and indirect 
 aid of money monopoly, transportation monopoly, and, 
 if you please, of the legislative, or political, monopoly 
 as controlled by both the dominant political parties. 
 Under their directions it has been an unequal con- 
 test, and you have succeeded only because of the indom- 
 itable courage, ability and zeal of a Loftus. 
 
10 AGRICULTUEB— GEEATEST INDUSTRY 
 
 He asked no quarter and gave none. That is tlie 
 only standard for success in fighting private monop- 
 oly, and I rejoice with you that it has been made so 
 plain in this contest. I hops the standard will never 
 be lowered. I know in part what it means, for co- 
 operating with the farmers of North Dakota and Min- 
 nesota, as president of the Dakota Farmers' Alliance, 
 I began this' contest in 1886, and the seed that was 
 then sown is now being harvested in part. It will 
 be an inspiration to the younger men now entering 
 into the greater contest for the total elimination of 
 private profit from the administration of the medium 
 and means of exchange and all public utilities. 
 
 The business men of St. Paul should be congrat- 
 ulated for their good business sagacity and foresight 
 in co-operating with you. 
 
 But do not forget that "eternal vigilance is the 
 price of liberty." 
 
 This is only your second step on the way to the 
 consumer; first, the interior co-operative elevator, and 
 now the first terminal elevator and grain eschange. 
 
 "While you have been trying to make these two 
 steps, private monopoly has gained a mile and secured 
 a perfect monopoly of money, the medium of ex- 
 change, and of the railroad and ocean transportation, 
 whereby a little later they will take all they think you 
 will stand and continue production. They will not 
 "kill the goose that lays the golden egg." 
 
 The average farmer is a patient GOOSE. He not 
 only gives tip the "golden egg," but yields the feath- 
 ers also for the plucking. 
 
 He surely is a silly GOOSE. 
 
 By co-operation, you saved, perhaps, five cents per 
 bushel at your local elevator, while the public service 
 corporations, by rail and water have increased the 
 ocean transportation tax alone 30 cents per bushel. 
 (Note. This has since been increased to 50 cents 
 and are gradually but steadily increasing the trans- 
 portation tax by rail on all farm products. This is 
 the way they have gained a mile while you have taken 
 these two steps.) 
 
EQUAL OPPORTUNIY FOR ALL 11 
 
 But you have won and are consolidating the first 
 trench, and have captured a part of the second trench; 
 "we must go on and complete the ■work so well begun. 
 
 The farmers of the northwest are looking to you 
 more than to any of the other many gatherings, con- 
 ventions and annual gatherings that are being held, 
 for a practical advanced program for the future. 
 
 "Equal opportunity for all" is the rock on which 
 you should build. 
 
 Free Trade for One — Free Trade for All. 
 
 As an illustration of what I mean, if we are to 
 have free trade for farm products we should have free 
 trade for all products. 
 
 Free Money for One — Free Money for All. 
 
 If any business in our own country secures the 
 use of money or credit from our federal unit free of 
 interest, so should agriculture. 
 
 If our competitors in the world's markets and now 
 in our own, have government-owned transportation by 
 land or water for farm products to market without 
 private profit, so should we, or we are handicapped in 
 the competition. 
 
 If our competitors have publicly owned and oper- 
 ated terminal elevators, without private profit, so 
 should we. 
 
 These things we are entitled to, and should demand 
 and insist on. 
 
 I have no use, and neither should you have, for 
 those practical politicians who will advise you, as I 
 beard the president of one state organization of farm- 
 ers say publicly that all we should ask for is what 
 they (private monopoly) will concede. They have 
 never asked us what we were willing to concede, but 
 have taken what they wanted. If you are willing to 
 accept that advice, I can tell you in advance just what 
 you will get; in the words of good old Jerry Simpson, 
 "you will get just what is left in the hen's nest when 
 the egg is taken out. ' ' 
 
 We did not succeed in building up our interior farm- 
 ers' co-operative elevator companies by permission of 
 the old line elevator companies, nor have you built up 
 
12 AGRICULTURE— GREATEST INDUSTRY 
 
 The Equity Co-Operative Exchange by permission of 
 concessions granted by the Minneapolis Chamber of 
 Commerce. No, you must continue to stand firm as 
 independent American citizens, insisting upon being 
 "placed upon an equal footing with other business 
 men and masters of industry as they should "(Wil- 
 son). 
 
DISCEiraNATIONS AGAINST AGRICULTURE. 
 
 The discriminations against agriculture, and fail- 
 ure to protect our interests in the past, should admon- 
 ish our farmers that it is utterly useless to longer 
 depend on the representatives of other industries, pro- 
 fessions, or political parties to promote and safeguard 
 t>ur interests. Unorganized agriculture has always 
 borne the burdens of all communities, states and na- 
 tions. 
 
 Agriculture is the only great industry (except 
 mining) that by natviral or climatic conditions is forced 
 to take chances. When the farmer plants his seed, 
 he has no guarantee that he will have a full crop, a 
 partial crop, or any crop at all. He must continue the 
 expense of cultivation; --for destruction by hail, 
 drouth, rust or frost may come on the eve of harvest, 
 or during harvest. In my own personal experience, 
 in one of our best agricultural counties (Deuel) on 
 the eastern border of the state, this has has happened 
 to me more than one-third of the time. 
 
 This is what we might call a natural discrimina- 
 tion, for which the farmer is supposed to be compen- 
 sated by an occasional bumper crop, but seldom con- 
 sidered by the professional farmer. But the loss and 
 inconvenience are not limited to the farmer. If the 
 average farmer loses his crop in whole or in part, he 
 is unable to pay all of his bills. This embarrasses 
 his creditors, and they in turn their creditors, until 
 it reaches the manufacturer. In addition he must 
 limit his purchases, and this in turn cuts down the 
 trade of the local merchant, the wholesaler, the job- 
 ber and the manufacturer. It is an endless chain of 
 inconvenience to general business. 
 
 National Insurance for Farmers. 
 
 It would seem reasonable to suggest that some 
 system of national insurance might be provided to 
 compensate the farmer for labor performed, up to a 
 
14 DISCEIMINATIONS 
 
 maximum of five dollars per acre. This would prove 
 as great a boon to the business industries as to the 
 farmer; and in view of the fact that the farmer pays 
 his share of the increased cost of the products of all 
 the protected industries without the slightest compen- 
 sation, direct or indirect in return, it would seem to 
 be a fair and equitable proposition. 
 
 Agriculture is our only great industry that is not 
 protected from foreign competition in our home mar- 
 ket. Every other industry, even those manufacturing 
 farm products into, food products, has tariff protec- 
 tion to the extent of fair interest on investment, the 
 difference in the cost of labor at home and abroad, 
 with a reasonable profit added, the protected manu- 
 facturers to be the judges of what is "reasonable," 
 and the cost of transportation to our market. 
 
 It is the one and only great industry against which 
 the eiforts of the past and present administrations 
 have been directed in their efforts to reduce the cost 
 of living; the former by a reciprocity agreement with 
 Canada, to admit farm products only free of duty, 
 while protecting food products manufactured from 
 farm products by a high tariff. 
 
 The Republican party tried its best to place farm 
 products on the free list and failed. 
 
 The Democratic party tried, and succeeded. 
 
 The "Finished" Product. 
 
 In all other industries the manufacturer knows 
 what the finished product will cost, and fixes the price 
 so as to realize a profit. In fact, most manufacturers 
 now sell in advance of manufacture. If they cannot 
 sell at a profit, they quit manufacturing. The suc- 
 cess of any industry depends on sale at a profit. 
 
 The farmer not only takes chances on production, 
 but has no assiirance whatever as to the price. It is 
 Oar only industry that is forced to accept of the 
 world's uncontrolled law of supply and demand. 
 
 A large world's yield means a low price for our 
 crop, even though ours has been light. "We must ac- 
 cept of the world's price, less the cost of transporta- 
 
AGRICULTURE UNPROTECTED 15 
 
 tion to the world's market, and this for the whole 
 crop, even though but a small part is exported. It 
 does not seem fair that the cost of transportation and 
 handling to the world's market should be charged 
 or deducted from the price of the four-fifths consumed 
 at home; but it is an economic law that governs any 
 unprotected industry producing a surplus for export. 
 Our manufacturers occasionally may have to pay the 
 freight on a small sacrifice sale abroad, but they do not 
 on what is consumed at home. 
 
 Agriculture is the only great industry that pays 
 freight both on what we produce, and also on what 
 we purchase to consume or use. 
 
 Every other industry in the nation pays as much,, 
 if not more, attention to distribution and marketing: 
 as to production. Not one of them would last a 
 j^ear if th'ey ignored these common-sense business 
 principles as the average farmer does. 
 
 The men who finish the farmers' work, by buying, 
 distributing, transporting, or manufacturing farm 
 products into food products to reach the consumer, 
 each in turn makes a certain profit, whether the farm- 
 er does or not. 
 
 Agriculture is the only great industry conducted 
 without any special privilege, bonus, subsidy or pro- 
 tection. 
 
 It is the one great industry upon which the trusts 
 and public service corporations conducted as private 
 monopolies feed, without sharing the profits in return. 
 
 Farmer's Necessity is Speculartor's Opportunity. 
 
 The average farmer must sell the product of his 
 year's labor as soon as possible after harvest, while 
 the consumer buys for daily needs only. This made 
 an opportunity for a group of non-producers to organ- 
 ize a system of storage elevators and grain exchanges 
 to buy for speculation and hold for the consumptive 
 demand, which enables them to fix the price for both 
 producer and consumer. Their sole object being prof- 
 it, they force the price down as low as possible when 
 they buy, and up when they sell. 
 
16 DISCRIMINATIONS 
 
 The farmer lost on an average ten cents per bushel 
 for the last thirty years by the decline in price between 
 May and September as per the market reports. The 
 farmer loses, but the consumer does not benefit. He 
 pays the monopoly price at all times. No other in- 1 
 dustry would permit such a practice with its products.! 
 
 Co-operation in selling at the interior will never] 
 solve this problem. The farmer must be aided to hold 
 for the consumptive demand, and in time manufacture' 
 farm products into food products, that his produce may 
 be sold to the consumers' clubs, or associations, direct. 
 
 In no other business, industry or profession, do 
 those engaged in it tax themselves to advertise to try 
 to secure more competitors in their line of work, but 
 they all unite with the good-natured farmer in try- 
 ing to secure more farmers, more farming, greater 
 production, and lower prices for the product of the 
 farm. 
 
 Eecent Discriminations By Congress. 
 
 During the late Republican administration, the tar- 
 iff was revised to suit the manufacturers. 
 
 The initial steps taken for a complete change in 
 our financial system to suit the national bankers' asso- 
 ciation. 
 
 The junketing trip to Europe to investigate bank- 
 ing conditions as a shield for the introduction of the 
 Aldrich Central Bank plan. 
 
 The Aldrich- Vreeland currency law to provide for 
 the issue of national bank notes on "other secur- 
 ities" than national bonds. 
 
 The Act of March 2nd, 1911, preparing the way 
 for the demonetization of gold by decoinage; and 
 the strong recommendation of the Aldrich Currency 
 Bill. 
 
 Everything possible was done for the big interests 
 who had full control of legislation, and then to shift 
 the blame for the high cost of living on the farmer, 
 a special effort was made to decrease the price of farm 
 products by a reciprocity agreement and open door 
 for Canada. 
 
TRANSPORTATION 17 
 
 Then followed the present Democratic administra- 
 tion which revised the tariff, in such a way as to amply 
 protect the manufacturers, and sacrifice the farmers 
 by placing farm products on the free list. 
 
 The enactment of the Aldrich Currency Bill, Avith 
 a few foreign frills, and a change of name, covering 
 the same plan, but much bolder. 
 
 The usual promise to the farmer, that it was de- 
 signed primarily for his benefit, to get his support, 
 with the usual result — ^nothing in it for agriculture. 
 
 The amendment of the anti-trust laws, to give a 
 clear way and clear sailing for "big business'" freed 
 from legal annoyance, so satisfactory to the trusts as 
 to be approved by every one of their representatives in 
 both branches of congress. ' 
 
 The change of the Interstate Commerce Commission 
 by appointments to make it a pro-railroad board, in- 
 stead of one to regulate and control in the interest 
 of the. people. 
 
 TRANSPORTATION DISCRIMINATIONS. 
 
 The farmer pays the cost of transportation to the 
 terminal market, v.'herever that market may be, just 
 as certainly as he does from the farm to his home mar- 
 ket town. It is so hard to get the average farmer to 
 understand that simple, but very important, proposi- 
 tion. 
 
 Transportation a Tax. 
 
 Transportation is a tax upon his labor, just as cer- 
 tain as any tax levied by his township, county, state 
 or nation. He complains quickly of a minor direct tax 
 and pays no attention to this major, indirect tax, 
 which amounts to many times more than all of the oth- 
 ers put together. He readily recognizes the advantage 
 of saving a man's wages by having a boy or girl 
 drive a second team with him to market, but does not 
 understand that a raise of one or two cents per hundred 
 in freight rates will offset that saving. 
 
18 DISCRIMINATIONS 
 
 Just in proportion as the cost of transportation 
 and marketing increases, the price received by the 
 farmer decreases, and vice versa. 
 
 Railroads Public Utilities. 
 
 Our railroads are public highways, chartered bj 
 the public, to serve the public. All they are entitled 
 to is a reasonable compensation for services performed, 
 and the employer, not the employe, should be the judge. 
 In no well managed private business does the em- 
 ployer continually complain, or argue, or reason with 
 an inefficient, unfaithful employe, or hire a foreman 
 to try to regulate or control him. He discharges him. 
 It is a poor business to quarrel with your employes. 
 
 This is just as true of a public employe as of a 
 private employe, of a public service corporation, as of 
 an individual. 
 
 Rates Increase With Crop Decrease. 
 
 In 1911 when we in the Northwest had a very short 
 crop of grain, much less than the labor cost of pro- 
 duction, our railroads increased the rate on grain from 
 one to two cents per hundred. The ocean rate was 
 increased 2.8 cents per bushel. A total increase of 
 four cents per bushel. 
 
 Commissioner of Corporations .Porter reported to 
 President Taft that he had the proof that the railroad 
 corporations controlled the ocean traiSc. Then the 
 increased rate for 1911 of four cents per bushel re- 
 sulted in four cents per bushel more for the railroads 
 and four cents per bushel less for the farmer. How 
 much of an extra tax was that on you, Mr. Farmer? 
 
 For the same crop year of 1911 our railroads re- 
 duced the freight rate for our western Canadian com- 
 petitors in Saskatchewan and Alberta, coming into 
 our Minneapolis and Duluth markets, and on east, from 
 12 to 25 cents per hundred. Our "Great Empire Build- 
 er" had reached across the boundary and annexed an- 
 other "zone of plenty" which he was anxious to de- 
 velop and exploit, and did not hesitate to do so at our 
 expense. 
 
INCREASED OCEAN BATES 19 
 
 What difference does it make to our farmers "wheth- 
 er our competitors are favored with a reduction in 
 tariff rates or transportation rates? 
 
 "What effect does it have when they are favored 
 with both? It means that they derive an advantage 
 over us in reaching the world's markets. 
 
 The discrimination in favor of our Canadian com- 
 petitors remained in force for the crop of 1912, and so 
 far as I know is still in force. 
 
 The increase in our local rate remained for the 
 bumper crop of 1912, but the ocean rate was increased 
 by another four cents per bushel. 
 
 Eight cents per bushel more for the railroads, and 
 eight cents per bushel less for the farmers, to which 
 they were entitled by the world's law of supply and 
 demand. 
 
 Mr. Farmer, how much of a tax was that on you? 
 This is based on wheat for brevity, but applies to all 
 farm products of which we produce a surplus for ex- 
 port. 
 
 If the crop is short, they increase the rate to com- 
 pensate them for loss of tonnage. If the crop is large 
 they increase the rate because the farmer, having 
 raised a large crop, can the better afford it. 
 
 Ocean Rates Vastly Increased. 
 
 For the crop of 1914, taking advantage of the Euro- 
 pean war, on the excuse of war risks, they raised the 
 ocean rates another 20 cents per bushel. As the in- 
 surance companies were also trying to coin misery into 
 money, the government organized a temporary war 
 insurance department, insuring grain for one per cent 
 — less than two cents per bushel. ^ But instead of low- 
 ering the rate, they increased it another 12 cents per 
 bushel, making the total increase 32 cents per bushel. 
 The law of supply and demand said that you farmers 
 were entitled to that extra 32 cents per bushel. 
 
 * The law of monopoly said that it belonged to those 
 who had the power to take it, and, trusted as our pub- 
 lic servants, they took it for their own private use. 
 
20 DISCRIMINATIONS 
 
 Secretary of Agriculture Houston thinks that pri- 
 vate monopoly of money and transportation is all 
 right; that the farmers are too "sturdy and independ- 
 ent" to seek or accept legislative redress from the 
 oppression, or greed of money or transportation mo- 
 nopoly. 
 
 On page one, monthly crop report of date January 
 31st, 1916, we find: "Ocean freight rates on canned 
 and cured meats from New York to Liverpool were 
 quoted at $1.25 per hundred pounds in the first week 
 in January, 1916, or about five times the rates quoted 
 prior to 1914." 
 
 In report of date July 15, 1915, page 10, we find 
 that the average rate on ocean transportation for 
 wheat from New York to Liverpool for the five years 
 1906-1910 was 3.3 cents per bushel ; 1911, 4.2, 1912, 7.7 ; 
 1914, 7.5. In June, 1915, the rate had advanced to 
 26 cents. 
 
 In report for December 30th, 1915, we find the rate 
 (p. 80) 37.2 cents. 
 
 In report of date March 16th, 1916 (p. 26), the 
 rate is quoted 48 cents. 
 
 On food products, manufactured from farm prod- 
 ucts, the rate had increased five times. On the raw 
 farm product (wheat) the rate had increased fifteen 
 times. 
 
 The Secretary makes neither comment nor recom- 
 mendation. 
 
 As the special cabinet guardian of agriculture, he 
 does not seem to realize that that 40 odd cents per 
 bushel belonged of right to the farmers who grew 
 that wheat. I shall assume that the Secretary was 
 highly gratified that the farmers were so "independ- 
 ent" that they could yield that very large sum to our 
 railroad corporations. 
 
 Now, Mr. Farmer, do not throw away your pencil 
 in disgust, but just figure up what you might have 
 done with that extra 40 odd cents per bushel to which 
 you were entitled, had we had publicly owned and 
 operated transportation by land and water. When 
 you have done so, show your figures to your friends. 
 
BULK AND PACKAGE FREIGHT 21 
 
 the business and professional men in your town, and 
 ask them what they think of it. Call a meeting of 
 your neighbors in your school house and talk it over 
 with them. It may start them thinking. 
 
 I have noticed only one small cargo of wheat cap- 
 tured, or destroyed, on each the Atlantic and Pacific 
 oceans. The one per cent insurance has proven ample, 
 the premiums paid for the 14 months up to November 
 10th, 1915, being $2,127,976, and the net losses paid 
 $695,984. Surphis premium on hand $1,431,992. A 
 splendid object lesson in government insurance. 
 
 Why not make it permanent? Why not extend to 
 other lines? 
 
 Insurance has now become a public necessity and 
 should be administered as a public utility. 
 
 "Bulk" and "Packag'e" Freight, 
 
 Another very unfair and expensive discrimination 
 a'gainst agriculture in connection with ocean transpor- 
 tation is practiced in the classification of bulk and 
 package freight. Bulk means farm products and 
 package means manufactured products. As shown 
 above, bulk rates were increased three times as much 
 as package rates. 
 
 For a change in package rates ninety days' notice 
 is required. Bulk rates may be changed daily, and 
 have been changed more than once in a day. 
 
 The farmer pays for this uncertainty, as the dealer 
 must protect himself against a sudden change. 
 Public Highways to the North and South, Why Not 
 
 for the Center. 
 
 The federal government is building' a railroad in 
 Alaska to develop our extreme northern country, and 
 paying for same by taxing the whole people. We in 
 this Northwest are paying our share of that expense. 
 
 To the south, the Panama canal was also louilt by 
 taxation of the whole nation. It is a splendid public 
 highway, and will be of inestimable benefit to the 
 West, the South and the East, in reducing transporta- 
 tion rates for them. 
 
22 DISCRIMINATIONS 
 
 Alberta, our Canadian neighbor, claims to be "the 
 future bread-basket of the world." Wide awake to 
 the possibilities of a public highway to the south, they 
 claimed that if they had a modern terminal elevator 
 at Vancouver, to handle wheat in bulk instead of in 
 sacks, they could save 14 cents per bushel in freight 
 rates to Liverpool, and the Dominion government 
 promptly responded. 
 
 We in the Northwest, the real bread-basket of the 
 world, have helped one of our principal competitors to 
 xmdersell us in the world^'s markets, and benefit to the 
 extent of 14 cents per bushel by the use of our public 
 highway, operated by our government, without private 
 profit. 
 
 In view of the foregoing facts, and that we have 
 not been compensated to the extent of a nickel a ton 
 in transportation rates, would it be suggesting too 
 much that we now proceed to help ourselves to a pub- 
 lie highway to the ocean, in fact one to the east, and 
 one to the gulf, to the south, to be owned and operated 
 as real public highways at cost of transportation. 
 
 I might go on almost indefinitely, but theforegonig 
 should be enough to arrest your attention, and increase 
 your desire for "equal opportunity" for agriculture 
 at home and abroad. Without that we cannot expect 
 permanent progress and development. 
 
MONEY DISCRIMINATIONS. 
 
 The worst form of discrimination against agricul- 
 ture is that for the use of money, or credit. Money 
 being a public utility, created by the national unit to 
 facilitate the exchange of labor, and the products of 
 labor, the government should have and keep absolute 
 control of its administration. It should not permit 
 discrimination against any class, business or industry. 
 It should at all times provide a sufficient quantity for 
 the free exchange of lat>or and labor products, and 
 carefully guard against its use and abuse for exploita- 
 tion or private profit. 
 
 But of this I will deal more fully later. 
 
 To offset the effects of the attempted discrimination 
 against agriculture by means of the reciprocity agree- 
 ment with Canada, a movement was inaugurated by 
 the National Bankers' Association, quickly taken up 
 by the national Republican campaign committee, and 
 Ambassador Herriek authorized by President Taft to 
 gather and submit European statistics, etc. The 
 Democrats also became interested, and the zeal and 
 interest displayed by the politicians was wonderful, 
 before election. 
 
 The reports as published and distributed broadcast 
 showed that the farmers of Europe had the use of 
 money for a lower rate of interest than commerce and 
 industry. But the reverse of conditions exists here, 
 and for from one-third to one-half of what our farm- 
 ers were paying. But that estimate was based on 
 eight and a half per cent for farm land loans, which 
 was too low. "We must consider this question from the 
 rate paid by the average farmer, and I have estimated 
 the rate for the Northwest at 13 per cent. 
 
 After hearing from J. Sprunt Hill of North Caro- 
 lina I concluded that my estimate was too low for 
 the West and South. This was followed up by a re- 
 markable address by the Comptroller of the Currency 
 
24 MONEY DISCRIMINATIONS 
 
 before the Kentucky Bankers' Association, and later 
 by his appearance before the Rural Credits Congres- 
 sional Committee, and his official report for 1915, and 
 all past estimates will have to be revised very mater- 
 ially. 
 
 Farmer Pays Highest Interest Rate, 
 
 In re discrimination; in answer to questions of 
 members of the committee, as to where usury was 
 practiced worst (see p. 31 of hearings), Mr. Williams 
 said: "Principally certain portions of the South and 
 the Southwest and the Northwest. In others words, 
 they prevail principally in, the agricultural regions 
 where rates should be normal. Yes. In every 
 part o f the country today business men get money 
 at very low rates, except when it comes to the 
 farmer. Now is the time to help the farmer. Nearly 
 all of these extortionate rates are rates charged to the 
 poor farmer.'" 
 
 The rates of interest given ran all the way from 12 
 per cent to 2,400 per cent. 
 
 Comptroller "Williams is to be commended for the 
 splendid work he has done in trying to force obedience 
 to our laws. In addition he has given some very val- 
 uable information by which the several states can very 
 materially reduce the rate of interest in their re- 
 spective states. 
 
 For instance, Section 5197 of the revised statutes of 
 the United States, being part of the national bank act, 
 provides that .a national bank "may take, receive, re- 
 serve, and charge on any loan or discount made, or 
 upon any note, bill of exchange, or other evidence of 
 debt, interest at the rate allowed by the laws of the 
 state or territory, or district where the bank is located 
 and no more." 
 
 How to Reduce the Rate of Interest. 
 
 All that the state has to do, then, to reduce the 
 rate of interest to six per cent is to enact a law making 
 the legal rate of interest six per cent oer annum, and 
 
A EEMEDY FOR USURY 25 
 
 no national bank in that state can legally charge any- 
 more. Needless to say that the state banks would 
 have to come down to the same rate of interest. 
 
 It may be said that the banks would not obey the 
 law. Comptroller Williams report confirms the fact 
 that about one-sixth of the national banks have been 
 violating the law, and then points out to these law- 
 breakers Section 5147 of the same act which provides 
 that: "Each director when appointed or elected, 
 shall take an oath that he will, so far as the duty de- 
 volves on him, diligently and honestly administer the 
 affairs of such association, and will not knowingly vio- 
 late, or willingly permit to be violated, any of the 
 provisions of this title." 
 
 The Conptroller has taken pains to see that every 
 director of a national bank shall understand just what 
 he has sworn to do, and cannot in the future plead ig- 
 norance of the law. 
 
 Remedy for Usurious Interest Rates. 
 
 The Comptroller says (p. 31, report of 1915) : 
 "As the action against the offending bank must be 
 brought by the customer wlio has paid the usurious 
 interest, suits are brought rarely. The customer who 
 borrows at these unlawful rates is afraid to bring suit 
 for the recovery of the money improperly taken from 
 him, realizing that he may be blacklisted by the banks, 
 and however great his need may be at some future 
 time he would be unable to secure further loans." 
 
 To provide for this he recommends: "If there 
 should be an amendment to the national bank act 
 authorizing and directing the Department of Justice 
 to bring suit against usurers upon information fur- 
 nished either through the Comptroller of the Currency 
 or through other sources, the practice of usury in all 
 the national banks throughout the country can be 
 stopped. I therefore earnestly recommend to the 
 present Congress the passage of such a law." 
 
26 MONET DISCRIMINATIONS 
 
 One little amendment to a national law, and one 
 little act passed by each state legislature, and a John 
 Skelton Williams Comptroller of the Currency, and 
 usury would be stopped. Can you grasp what that 
 means? A conservative estimate would be that it 
 would cut the gross total amount of interest paid by 
 the toilers of the nation in two. 
 
 It would do more for the producers of the nation 
 than all of the laws passed by Congress and the sev- 
 eral states during the past quarter of a century. 
 
 One little amendment. One little act. One faith- 
 ful public official. So small, and yet so great ! 
 
 "What an opportunity for free and independent citi- 
 zens! 
 
 It might be said that the national banks could not 
 do business loaning at 6 per cent. Times have changed. 
 The national bank can now rediscount their paper at 
 the federal reserve bank for 3 per cent, and they would 
 receive 6 per cent. The margin is ample for both, 
 even for commercial purposes. In fact, it might be 
 reduced one-third and still leave a handsome margin 
 conducted as at present for private profit. 
 
MONEY AND ITS FUNCTIONS. 
 
 Money is a public utility, created, or authorized, 
 by the national legislative unit of each independent, 
 sovereign nation, as a medium of exchange, and to pay 
 lawful obligations. 
 
 To be a lawful money, it must be a full legal tender 
 for all debts, public and private. 
 
 Its primary function is ^o facilitate exchange of 
 labor and labor's products, a medium of exchange. 
 Direct barter is now very limited. 
 
 Under our present system we must have the em- 
 ployer, merchant or middleman to whom to take our 
 labor, or the product of our labor, and exchange it 
 for a national order, or medium, that will be readily 
 accepted by the person who may have the thing we 
 need. 
 
 Like all other public utilities, it should be adminis- 
 tered without private profit, as is our postofSce system. 
 
 Any charge for its use, in excess of the cost of ad- 
 ministration, is a tax on labor and labor products that 
 must be paid by the producer or consumer, and is the 
 main cause of the present high cost of living. 
 
 The higher the rate of interest the greater the tax 
 and cost of living. 
 
 We complain of any increase in taxation, school, 
 municipal, state or national, but all combined is a 
 mere fraction of the unnecessary, or super, tax im- 
 posed and collected by the two public service utilities 
 of money and transportation, and appropriated by them 
 as private profit. 
 
 Congress haAang reserved to itself the sole power 
 to coin (issue) money, and having prohibited under 
 heavy penalties any individual, combination of indi- 
 viduals, corporations, or states to make or issue 
 money, is in duty bound to issue a sufficient volume to 
 transact the business of the nation on a cash basis. 
 
28 MONET AND ITS FUNCTIONS 
 
 It becomes the life blood of production, industry 
 and commerce, and to delegate to, or confer, a monop- 
 oly of its administration on any one class or business 
 Avill enable that specially favored class, or business, to 
 control and exploit every other business, or industry; 
 yes, even the state and federal governments. 
 
 Money may be stamped on a metal, or an alloy of 
 several metals, such as iron, brass, copper, nickel, sil- 
 ver, or gold, or on paper. 
 
 The value of the thing stamped is immaterial. It 
 is the fiat of the government making it a full legal 
 tender for all debts, public and private, that gives it 
 the value as a medium of exchange. It then possesses 
 a community, or legal value, regardless of its com- 
 modity value. 
 
 Our gold coin is a perfect money, or would be if 
 there was enough of it, not because of its commodity 
 value, but because our law makes it a full legal tender 
 for all debts, public and private. 
 
 The gold certificate, based on the promise to pay in 
 gold coin, even though the coined gold is stored in 
 government vaults for that specific purpose, is not law- 
 ful money. 
 
 In fact none of the many different kinds of money 
 that we have in the United States, except coined gold, 
 is full lawful money. 
 
 The people have been grossly deceived in this 
 respect. 
 
 Every dollar issued, or authorized, by the govern- 
 ment, should be lawful money in every sense of the 
 term. 
 
 To be issued by, and made an obligation of the 
 govemtaent, and then made lawful money for one 
 specially favored business, and not for all the rest 
 of the people, is rank special privilege, and gross 
 discrimination that cannot be defended in equity, or 
 justice. 
 
 Strange as it may appear, that fact is true of nearly 
 all of the money we have in circulation, and the lawful 
 money, gold, is not performing its functions of money, 
 because it is practically out of sight. 
 
A PRIVATE MONOPOLY 29 
 
 "There's a reason for it," whieh will be developed 
 later. 
 
 All our banks, state and national, are chartered 
 as public service corporations — to serve the public. 
 
 In practice they have used the public machinery, 
 and special privileges, to serve themselves, for their 
 own private gain. 
 
 In the pursuance of private gain, they control legis- 
 lation, both in state and nation, in and for their own 
 special interests. 
 
 In the Federal Reserve Law, they have wrested 
 from the people and secured for themselves the con- 
 stitutional power to issue money and regulate the 
 value thereof. 
 
 Supreme in the political and legislative arena, they 
 secure the enactment of such laws as they want, and 
 ignore, or violate with impunity, any laws that stand 
 in their way. 
 
 There are a few very important things that must 
 be kept constantly in mind in the discussion of the 
 money problem, in connection with the great conspir- 
 acy, now so rapidly developing. They are all parts 
 of one great complete and most efficient scheme for 
 the control of all business, and acquisition of wealth 
 and property. 
 
 Any one of them would in time accomplish their 
 object. 
 
 All being worked in unison at the same time will 
 accomplish it much sooner. 
 
 Checked at any point, it will delay consummation, 
 and give us the opportunity to wake the people up. 
 
 First: By the contraction of our money, or cur- 
 rency in circulation, now in process, as I will show 
 later, both by decreased amount, and increased de- 
 mand, they will increase the purchasing power of the 
 money which they control. 
 
 Second: The dollar loaned today will have in- 
 creased in value a few years hence, when due ; that is, 
 it will require more of the products of labor to buy 
 
30 MONET AND ITS FUNCTIONS 
 
 the dollar, to pay the obligation. It will also enable 
 the owner of the money to charge a higher rate of in- 
 terest for the dollar. 
 
 Third: Most obligations are being made _ payable 
 in "gold coin of the present standard of weight and 
 fineness." 
 
 Gold coin is out of eirenlation tKe world over, and 
 practically so in the United States. Every effort is 
 being made to demonetize onr gold coin, by decoinage, 
 and to retire, or destroy, our lawful money. 
 
 Ponrth : "What we have left of gold coin and lawful 
 money is being rapidly hoarded in the bankers' vaults. 
 
 Fifth: The Federal Eeserve Law provides for a 
 complete change in our monetary system from gov- 
 ernment money to that of bank ledger credits. That 
 is : They will loan you a credit on their books, based 
 on your good security, and take your obligation, pay- 
 able in gold coin, something you did not borrow, and 
 which they can demand in payment, when the obliga- 
 tion is due. Where can you get the "gold coin'"? 
 
 Sixth: Whenever they think that they can make 
 more by taking your property than they can by taking 
 your labor, which they do in the collection of inter- 
 est, they will simply demand payment according to 
 the contract, and you will be at their mercy. 
 
 Impossible, you say, in a free country, where all 
 men and some women are independent, sovereign citi- 
 zens, that we could be robbed like that. 
 
 They will not call it robbery. It can be done in 
 the futtire, as it has been done in the past, legally, 
 by and Avith your support at the ballot box; and as 
 it was done illegally, in open, defiant violation of our 
 laws, by this same group of men during the bankers' 
 panic of 1907. 
 
 '-In every movement for development and better- 
 ment, whether in production, transportation, distribu- 
 tion, marketing, as individuals, or co-operating with 
 your neighbors, or if a tenant farmer, or a farm owner 
 in debt, or if you wish to develop and improve your 
 farm, hold your products for the consumptive demand, 
 
OEGANI- ATION A REMEDY 31 
 
 or to manufacture your farm products into food 
 products, that you may sell to the consumers' clubs 
 direct. 
 
 Pear of a short crop, or crop failure, when you 
 cannot make your payments, or meet your interest, and 
 the danger of mortgage foreclosure is before you as a 
 dreadful nightmare; in each and every ease, you are 
 at the mercy of the one business on which you have 
 conferred this invaluable monopoly, as public servants, 
 and thus permit them to become your autocratic mas- 
 ters. 
 
 What is true of agriculture is true of every other 
 industry. 
 
 You cannot believe it, can you? "Well, follow me 
 through, and I will give you my evidence. 
 
 The House of Morgan is now in supreme control 
 of our industrial, commercial and political affairs, by 
 and with your consent. 
 
 All attempts to regulate or control under present 
 laws, or through present political parties, is time 
 wasted, while they continue perfecting their plans. 
 
 They are in complete control of the political ma- 
 chinery of the Democratic, Republican and Progres- 
 sive parties. 
 
 It is useless to try to wrest any one of these par- 
 ties from their control. 
 
 Their present, extraordinary propaganda for "pre- 
 paredness" is planned far more for home coercion 
 than for defense against foreign aggression. 
 
 This organized usurpation must be met by an inde- 
 pendent organization of the people at the earliest 
 possible date. 
 
WHAT SHOULD THE VOLUME OF MONEY BE? 
 
 Direct barter, customary during the lifetime of 
 many of us, is gone forever. Civilization and progress 
 demand a better system, that we may keep pace with 
 inventive genius in production, by aid of labor-saving 
 machinery whereby the man with the machine, plus 
 electric power, can produce fifty times as much as the 
 individual man could fifty years ago. 
 
 In addition, the woman can in many cases handle 
 the machine as well as the man, and because unfran- 
 chised can be and is employed for less wages; and 
 with still greater perfection of the machine, the child, 
 who should be at school, is employed at still smaller 
 wages to operate the machine. The productive power 
 of the family has been increased very many times. 
 
 Take agriculture as an illustration, and as a boy 
 I used the tools and methods mentioned. 
 
 Then we plowed with a small walking plow; now 
 we have the big gang and farm tractor. 
 
 Then we dragged with a home-made crotch drag; 
 now we attach the big drag behind the gang plow. 
 
 Then we seeded by hand ; now we seed with a large 
 drill. 
 
 Then we harvested with a hand sickle ; and twenty- 
 five shocks of twelve sheaves each was considered a 
 good day's work; now we have the self-binder, the 
 push binder and the header. 
 
 Then we threshed vrith a hand flail; now with a 
 large separator. 
 
 Suppose that we had not . increased the storage 
 capacity and the means of transportation and distri- 
 bution to correspond with increased production, what 
 would we do now? 
 
 The question itself shows the absurdity of the prop- 
 osition. 
 
DEMAND FOR USB 33 
 
 Other conditions remaining the same, it would 
 liave been foolish to produce so much more, because it 
 could not have been marketed for want of the increased 
 medium and means of exchange and distribution. 
 
 There would have been no incentive to progress. 
 
 It may not be out of place to inject another thought 
 right here. 
 
 This greatly increased power of production, should 
 haA'e had two beneficial results, if governed by the 
 natural law of supply and demand, viz: shorter hours 
 of labor for the producer, and cheaper products for 
 the consumer. But owing to the neglect of the duties 
 of citizenship on the part of the producer and con- 
 sumer, private monopoly was permitted to step in and 
 reap all the benefits, by securing control of the two 
 public utilities, money and transportation, and in addi- 
 tion the means of distribution, and, by taxing to the 
 limit, all the trade would stand in each, has actually 
 greatly increased the price to the consumer, while 
 the producer, on an average, is no better off, either as 
 to hours of labor or net returns for labor. 
 
 But, as Kipling would say, — that is another story. 
 
 Now as to exchange. I write of conditions in a 
 well settled section of Eastern Ontario, near Ottawa, 
 the capital of the Dominion of Canada, and I assume 
 that to a great extent the same was true of all the 
 Northeastern and New England states. Home produc- 
 tion and barter was the rule, and the medium of money 
 the exception. 
 
 Farm tenants were very few. I do not now recall 
 one in the two large townships with which I was famil- 
 iar. I do remember well, though, that the farmer 
 who had a mortgage on his farm had lost caste in the 
 community, and the one man in the community who 
 held most of the mortgages Avas called a usurer, and 
 somewhat of an ogre. He had few friends. 
 
 Now for vaj own family experience. "We raised our 
 own wheat, and took it to the custom mill my grand- 
 father had built and for each bushel of wheat dumped 
 in the hopper my cousin took out one gallon ; the rest 
 we took home as flour, bran and shorts. 
 
34 WHAT THE VOLUME SHOULD BE 
 
 We had our own maple sugar bush, as most of our 
 neighbors had, made our own syrup and sugar, and 
 some to spare. Of course we raised our own vege- 
 tables. Wild berries of several varieties were abund- 
 ant, and w.ith a large family (I am one of twelve) we 
 always had an abundance of fruit. 
 
 Instead of canning, we dried for winter use. Cor- 
 ing apples and stringing them up to dry, and ringing 
 pumpkins for same purpose, was an evening pastime in 
 season, 
 
 We raised our own meat, and feasted on venison 
 in season; fish close by and abundant. When we did 
 not have tame bees, we could find bee trees, and had 
 plenty of honey. For the table all we lacked was a 
 few groceries, for which we exchanged farm products. 
 
 For clothing, there was comparatively little bought 
 at the store, and such as was, was paid for with some 
 farm product. We had our flock of sheep, and father 
 and we boys had a suit annually, of all-wool cloth. 
 
 The tailor would come to the house and fit out the 
 men folk, taking some farm product home for his own 
 family use. 
 
 Mother and the girls had their good warm flannel 
 clothes, one-half wool and half cotton, no shoddy. 
 
 For footwear, we usually had one or more hides, 
 which we took to the village tannery, and in due time 
 received one-half of the tanned leather, ready for the 
 shoemaker, who in season brought his bench to the 
 house and remained until the family were all shod, 
 and he was paid for his labor in large part, if not 
 wholly, in barter. 
 
 We raised our own flax, and had our home-made 
 linen for table, bed and clothing. For summer wear 
 we men folk had nice home-made straw hats for week 
 days, and fine hay hats for Sunday. 
 
 I do not claim that every family was so fortunate, 
 for mother was an exception as a mother and house- 
 keeper, but the system of barter was the same for all. 
 
 Taxes were light. The school teacher boarded 
 around among the scholars, and we had not then 
 developed the science of graft in public affairs. 
 
FIXED PER CAPITA ABSURDITY 35 
 
 For the three counties adjoining Ottawa, and with 
 which I was very familiar, there were many small 
 towns, five to seven miles apart, and up to thirty-five 
 years ago there was not one bank in those three large 
 counties, neither was there a "poor farm" or charitable 
 society. 
 
 There was no tax on the exchange of labor, or labor 
 products, except the legitimate tax of the local mer- 
 chant, and competition kept that reasonable. 
 
 I am not advocating going back to that system of 
 barter; but to show that as our improved methods in- 
 crease production, we should have an improved system 
 of exchange, and that the medium should keep pace 
 with the increased products to be exchanged, and ad- 
 ministered without private profit. Not only is "the 
 laborer worthy of his hire," but is entitled to all the 
 product of his labor. 
 
 The moral of this illustration is to make plain and 
 emphasize the absurdity of a fixed per capita for a 
 medium of exchange. We must also expect still 
 greater improvements in methods of production during 
 the next fifty years than have occurred during the 
 past fifty. 
 
 Had we rigidly fixed the volume of money in the 
 United States, as it was in 1860, at $13.85, or even 
 as it was in 1879, as the Secretary continues to use 
 in making comparisons, $16.93, without developing a 
 credit system, how could we have handled our immense 
 increased production. 
 
 The amount to be provided should be governed 
 wholly by the demand for use, and should respond 
 automatically to that demand. 
 
 Who should be the best judge of that need; the 
 man who produced the goods and wants to make the 
 exchange, or hold for the consumptive demand, or the 
 man or business that has a monopoly of this public 
 utility and uses it to satisfy their greed for gain? 
 
 Money is soarce and dear, because limited in quan- 
 tity and monopolized by one private business. Our 
 need is more money, and we must take another step in 
 the evolution of our medium of exchange and base the 
 
36 "WHAT THE VOLUME SHOULD BE 
 
 increased supply on "the best security in the world — 
 productive land," and in addition as needed on the 
 non-perishable, stored products of labor. We can no 
 more have too much of the representatives of wealth 
 than we can have too much wealth. 
 
 I believe that demand for use will automatically 
 regulate the volume, if the federal government will 
 charge a sufficient tax, or interest, for its use to pre- 
 vent people borrowing unless they can make a profit- 
 able use of it. And so long as it can be profitably used 
 it means greater prosperity for the whole people. 
 "When it ceases to be profitable it will be paid in to 
 stop interest or tax. But under the new system sug- 
 gested by me I can see no more harm to the com- 
 munity, or the government, by some money lying idle, 
 except to the borrower, than occurs now with postage 
 stamps lying idle in your desk. 
 
 Our greatest need is a better understanding of the 
 true functions of money. 
 
EFFECT OF CONTRACTION BY INCREASED 
 DEMAND. 
 
 If our theory is correct, that we may have a con- 
 traction of our medium of exchange as effectually by 
 increased demand as by decreased supply, then condi- 
 tions during the autumn of 1915 were ideal for a panic, 
 because we had an unusual, or abnormal, increased 
 demand and an unusual decreased supply. This, too, 
 under the Federal Reserve Law, that was to prevent 
 all panics in the future, and had been in "successful 
 operation" for almost one year. Why was it not pre- 
 cipitated? It was in part, but, strange to say, it was 
 not featured in the press, and those who suffered most 
 did not seem to realize their loss, because of the good 
 crop and abnormal demand for same at fair prices. 
 
 The House of Morgan, as financial agents of the 
 Allies of Europe, and directly, and indirectly interest- 
 ed in the manufacture of war munitions and other sup- 
 plies for them, found that new field more profitable. 
 
 Again, the wholly unexpected importation of gold 
 threatened to postpone their carefully laid plans for 
 the future exploitation of our own country as will be 
 shown later. The press reports indicated that it 
 caused a near panic for the men who control. They 
 must have time to check the flood of gold imports, as 
 shov/n by immense loans of credit, but in doing so 
 they enlarged their vision to include a great part of 
 the world in their conspiracy, by making these vast 
 loans of credit payable in American "gold coin of the 
 present standard, weight and fineness." They must 
 also have time to demonetize the foreign coined gold 
 imported, by decoinage, and the assay office in New 
 York has been kept busy twenty-four hours a day 
 melting and converting it into bullion. 
 
 The great manufacturing trusts, and industrial 
 business being so closely identified with, in fact, being 
 a part of and financed by the controlling element, and 
 
38 EFFECT OF CONTRACTION 
 
 protected from foreign competition, could maintain 
 and actnally increase their prices, and of course they 
 did, and their great prosperity is heralded as great 
 prosperity for all the people. 
 
 Did this contraction of the currency have the effect 
 we claim it must have on the price of the unprotected 
 products of labor, free from monopoly control. 
 
 Agriculture is not recognized as a business, or in- 
 dustry, by officialdom, bankers, big business, or poli- 
 ticians: just a lot of •workers to be humored and 
 taffied, but not taken seriously. For confirmation, 
 read the official reports, general news, the political 
 speeches of the practical politicians, the preambles of 
 bills introduced, and the texts of the bills as enacted. 
 But as for the effect of contraction on agriculture, the 
 one great, unaffiliated, unprotected industry governed 
 as to prices by the world's natural law of supply and 
 demand, it was sacrificed, as usual, under such condi- 
 tions, and more ruthlessly and relentlessly because of 
 the greater opportunity. 
 
 "We were assured then, and will be in the future, 
 that there was plenty of money to move the crops. 
 In reply to Secretary McAdoo's letter inquiring of 
 the Minneapolis reserve bank: "Will you please ad- 
 vise me if the federal reserve bank of Minneapolis is 
 in need of government deposits for the purpose of 
 assisting in the moving and marketing of the crops in 
 the ninth federal reserve district," Mr. Rich replied 
 September 13th, in part: "At this time the North- 
 west is amply supplied with funds, and rates for 
 money are very low" — 1915 Report Secretary of 
 Treasury, p. 9. 
 
 So far as agriculture was concerned interest rates 
 had not been lowered, and were verj^ high. 
 
 The national banks of the nation were at that time 
 hoarding in their vaults in excess of legal requirements 
 over $800,000,000 of which the ninth district (Minne- 
 apolis) banks' share was nearly $100,000,000. 
 
 To substantiate his claim Mr. Rich and associates 
 would point to the fact that the crops did move, and 
 were moving then. True, they did. 
 
AGRICULTURE SACRIFICED 39 
 
 They bought the dollar by giving more poimds of 
 "wheat for it. 
 
 The fanners were compelled to sell to meet pressing 
 obligations, but at what a sacrifice. 
 
 The creditors were pressing and pressing hard for 
 collections. 
 
 The Ninth Federal District Bank had no money 
 for the farmers at any rate of interest, and there is 
 no record that they had been urging the member banks 
 to accept help to meet this urgent need of the farm- 
 ers; but there is evidence that when the speculators 
 of the grain exchange of Minneapolis and other mar- 
 kets had forced the price down to suit their views, 
 there was "ample funds at very low rates" for the 
 speculators. 
 
 The farmers were experiencing the full effects of a 
 very severe panic. 
 
 By September 1st wheat had declined in price 60 
 cents per bushel, which meant $600,000,000 less to the 
 farmers for their wheat crop. 
 
 Oats had fallen in price 20 cents per bushel. A 
 loss of $300,000,000. 
 
 Barley had fallen in price 20 cents per bushel. A 
 loss of $47,000,000. 
 
 Flax had fallen in price 32 cents per bushel. A 
 loss of $6,000,000. 
 
 A conservative estimate on corn would be a loss 
 of $100,000,000. 
 
 Live stock, and all other farm products, except 
 perhaps horses, had all fallen in price. The total loss 
 is too large to be realized by the average reader, 
 but let each farmer who reads this figure out for him- 
 self just what that contraction of currency meant to 
 him and his family. 
 
 Each prosperous landlord figure out for himself 
 what he might have done with his share. Of course, 
 he did not need it, but he might have found a use for 
 it. 
 
 And each local ^merchant might estimate how much 
 more goods he might have handled. 
 
40 EFFECT OF CONTEACTION 
 
 Tes; there was money enough to move your crop; 
 provided that you would give enough of your prod- 
 ucts to buy the monopoly-controlled dollar. 
 
 Our public servants, the Federal Reserve Board, 
 well paid to serve the public, proved either incompe- 
 tent or unfaithful in the performance of their duty, 
 and permitted this great sacrifice of agriculture. 
 
 "Who benefited by this sacrifice? A comparatively 
 few men who operate on our grain exchanges, and who 
 by selling in April or May, for September delivery, 
 100 bushels in Minneapolis, or 200 bushels in Chicago, 
 for each bushel that could be actually delivered, for 
 42 cents per bushel less than cash wheat was selling 
 for, and still further bearing the price by September 
 1st, by another 18 cents, making a total decline of 60 
 cents per bushel, the world's demands having grown 
 greater during that time. 
 
 Let me repeat in hopes that you will remember, 
 that under our federal reserve law there was "ample 
 funds at a very low rate' of interest for these specially 
 favored gentlemen and their associates who bought 
 at the decline in September and can already (Febru- 
 ary, 1916) sell at a profit of around 30 cents per 
 bushel. 
 
 A great system, and judging by their votes, the 
 farmers like it. 
 
 On my initiative the principle involved was adopted 
 at the annual meeting of the National Farmers' Alli- 
 ance and Industrial Union, at Indianapolis, in 1889, and 
 again at Ocala, Florida, in 1890. Again, at St. Louis, 
 at that historical meeting of twenty-one farm and 
 labor organizations in 1891 I was a member of the 
 commitee on resolutions. The principle was reaffirmed 
 in the interest of labor quite as much as of agricul- 
 ture. In 1892, as President, I was requested to pre- 
 pare a text book and did so in 1893, "The New Mon- 
 etary System," which was unanimously approved. As 
 
THE SPECULATORS' HARVEST 41 
 
 chapter XII on "A Flexible Currency," deals witli 
 this phase, and includes some others with which I wish 
 to deal, I will quote quite liberally. 
 
 Per Capita Base for Money. 
 
 "No fixed volume of money per capita can or 
 will solve the money problem. Demand for use is 
 the natura;l law. We can contract the volume of 
 currency either by increasing the demand, or de- 
 creasing the supply. 
 
 "If there arc seasons of the year when there 
 is an abnormal demand and no increased supply 
 there will be a contraction of money with its in- 
 evitable result, lower prices. This is a law as un- 
 alterable as the laws of the ]\Iedes and Persians, 
 and affects not only those who produce the cause 
 (increased demand) but also all industries in the 
 nation. 
 
 "The farmer is the disturbing factor, for tho 
 bulk of his year's labor is rushed into the market 
 in three months. This is especially true of wheat 
 and cotton. The average farmer farms on credit. 
 Plis bills are made payable the first of October or 
 November. This necessity of forced sales by the 
 farmer, and the inability of the consumer to buy 
 more than for daily needs, becomes the harvest of 
 the speculator. 
 
 Speculators' Harvest. 
 
 "Taking the crop of 1891 as per the report of the 
 Secretary of Agriculture, we had of cotton, farm 
 value, $366,863,738, and of wheat $513,472,711, or a 
 total of $880,336,449. A conservative estimate 
 would be that 80 per cent of this must pass out of 
 the producers' hands inside of three months, or 
 $708,269,159. One-fourth of the total amount will 
 go into consumption, leaving about $500,000,000 
 worth of wheat and cotton alone to be carried over. 
 Add to this the other products of the farm sold and 
 stored for future use by speculators, and the 
 amount will be largely increased. This makes ai 
 
EFFECT OF CONTRACTION 
 
 great strain on the money in active circulation 
 which according to Senator Plumb was $500,000,000. 
 In summer it is all in use in the ordinary channels 
 of trade and needed there. With this sudden in- 
 creased demand for its use, there can be but one 
 result: a violent contraction, with falling prices of 
 the products that must be sold to buy the dollars, 
 and a higher rate of interest for other industries. 
 The speculators understand the ease with which 
 the money market can be manipulated or cornered 
 at this period of abnormal demand for use. Per- 
 vision must be made to meet this annual unsettling 
 of values and interference with trade. The remedy 
 is an elastic and flexible volume of currency that 
 will respond to the demand as needed. Political 
 economists realize this necessity and many plans 
 are offered, but, unfortunately, most of them favor 
 basing the currency on some form of credit. The 
 weak point in our currency now is, that it is en- 
 tirely too much overloaded with credit. The Comp- 
 troller of the Currency, in his annual report for 
 1892, page 32, says: 'Over 90 per cent of all busi- 
 ness transactions are done by means of credit. 
 When the public lose confidence and credit is im- 
 paired and refused, over 90 per cent of all busi- 
 ness transactions are directly affected. It is easy 
 to realize how impossible it is for the remaining 10 
 per cent of money to carry on the business of the 
 country without monetary stringency and distress.' 
 "On the same page we find that of this 10 per 
 cent less than 2 per cent is in gold, 5 per cent in 
 promises to pay in gold, and 2 per cent in silver. 
 
 The Gold Base. 
 
 "Col. S. P. Norton puts the case in a nutshell 
 tlius:_ 'The gold base theory is a good deal like 
 spinning a top; so long as the top is spinning 
 around under the influence of the artificial force 
 that is applied to it, it will stand up, but the mo- 
 ment that it touches a round place or comes in 
 contact with any other substance, there is a panic 
 
BASE MONET ON VALUE 43 
 
 at once, and. it falls to the ground ; or when applied 
 power (confidence) is gone, it stops whirling and 
 tumbles over.' 
 
 "The credit business is overdone; the top is 
 liable to tumble at any time. The flexible, as well 
 as the permanent, volume of currency should be 
 based on wealth instead of credit, and it is imper- 
 ative that it be done soon. Ex-Secretary Windom 
 saw the danger confronting us very clearly and 
 stated it explicitly in his address before the New 
 York Board of Trade January 31st, 1891. He said : 
 'The ideal financial system would, be one that should 
 furnish just enough absolutely sound, currency to 
 meet the legitimate wants of trade, and no more, 
 and that should have enough elasticity of volume 
 to adjust itself to the various necessities of these 
 people. Could such a circulating medium be se- 
 cured the gravest commercial disasters which 
 threaten our future might be avoided. These dis- 
 asters have always come when unusual activity in 
 husiness has caused an abnormal demand for 
 money, as in autumn, for the moving of our im- 
 mense crops. There will always be great danger 
 at such times under any east-iron system of cur- 
 rency, such as we now have. Had it not been for 
 the peculiar condition which enabled the United 
 States to disburse over $75,000,000 in about two and 
 one-half months last autumn, I am firmly convinced 
 that the stringency in August and September would 
 have resulted in wide-bpread financial ruin.' 
 
 "Secretary Windom still clung to a gold basis, 
 but hoped to provide for an elastic currency in ad- 
 flition, that would respond automatically to demand 
 for use, to be based on some form of bonds (more 
 credit money). 
 
 Base Money on Value. 
 
 "Our plan is to base our currency on actual 
 value — productive land — and the non-perishable 
 products of labor to be exchanged. 
 
EFFECT OF CONTRACTION 
 
 "As wheat and cotton are the great disturbing 
 factors, as previously shown, we believe that cur- 
 rency-wheat and cotton certificates-issued on these 
 stored products in sufficient volume to move them, 
 is the best solution of the problem yet offered. It 
 would relieve manufacturers and business men from 
 the strain piit upon them every autumn beca.use of 
 the competition forced upon them to retain the 
 money needed in their business, and that the farm- 
 ers must have to exchange the product of their 
 labor for the things they need. 
 
 "This competition is disastrous, both to the 
 farmer and business interests, in proportion to the 
 value of the crop to be moved. 
 
 "The business men need the money; the farm- 
 ers, must have it. 
 
 "Whichever pays most for it in interest, or 
 products, secures it. 
 
 "At the time referred to by Secretary Windom 
 the competition was very keen. On the 28th of 
 August, interest ran up to 180 per cent in Wall 
 Street and stocks fell in value until a panic was 
 barely averted. Wheat dropped 30 cents per bush- 
 el. The necessity for an elastic currency will al- 
 ways come when we have an extra large crop. Mr. 
 Windom said: 'These disasters have alwas come 
 when unusual activity in business has caused an 
 abnormal demand for money, as in autumn, for the 
 moving of our immense crops. When the nation 
 should be most prosperous, because of the vast in- 
 crease in wealth produced by labor, DISASTER IS 
 THREATENED, because of our present cast-iron 
 system of currency.' It is impossible to frame a 
 stronger indictment against the present system. 
 The larger the volume of wealth prodiiced, the 
 greater the danger of financial disaster. 
 
DANGER OP GREAT PRODUCTION 45 
 
 "THE GREATER THE BLESSING, THE 
 GREATER THE CURSE. 
 
 "Chauncey Depew, in one of his happy after- 
 dinner speeches said: 'We are now going to re- 
 ceive from the soil the enormous products made 
 by the Lord and by labor, and this will make the 
 country uncommonly rich.' 
 
 ,"Mr. Windom answers: 'There will always be 
 greater danger at those times under any cast-iron 
 system of finance such as we now have." 
 
 "We have the natural resources, the brawn and 
 brain to make this the grandest nation of the ages. 
 It cannot be done vdth a cast-iron system of finance 
 that is at war with nature and nature's laws. We 
 cannot illustrate this better than by using two dia- 
 grams prepared by S. M. Scott of Kansas in his. 
 work on *The Sub-Treasury Plan.' 
 
46 
 
 EFFECT OF CONTRACTION 
 DIAGRAM NO. 1. 
 
 $500,ooo.noo 
 
 B 
 
 A <» 
 
 A tn 
 S3 
 
 m A 
 
 ^ I 
 
 l> Channel of Trade 
 
 EXPLANATION. 
 
 A represents the banks, whicli control the volume of cur- 
 rency. 
 
 B represents all lines of trade. 
 
 C represents the channel of trade through -which the cir- 
 culating m,edium flows from the banks to all business. 
 
 D represents the mountain of products before the channel 
 of trade has been tapped, or before they commenc^i to move. 
 
 The arrows represent the course the money flows, with no 
 interruption on the part of products. 
 
 The above cut represents the banks, channel of trade, and 
 business. The arrows show the course of money from the 
 banks through the channel of trade into the business of the 
 country. The center figure represents the products of the 
 country before the channel of trade has been tapped and 
 the crops commence to move. 
 
 You will notice the banks are full of loans and discounts, 
 business has all the money there is in circulation, and no pro- 
 vision made for moving the products which the central figure 
 represents. As soon as the channel of trade is tapped by 
 the movement of these products, then the course of money 
 takes a change, wiicli is represented by Diagram No. 2. 
 
BY INCREASED DEMAND 
 
 DIAGRAM NO. 2. 
 
 47 
 
 
 
 
 D 
 
 
 B 
 
 to 
 A ,§ A 
 
 
 
 iness 
 
 
 O 
 
 
 
 «J V 1 
 
 
 V^ 
 
 
 ^ 1 
 
 
 ^ 
 
 
 1 vpq 
 
 Channel of Trade 
 
 EXPLANATION. 
 
 This cut represents an increase of business by virtue of 
 the movement of crops, without a corresponding increase of 
 money, in consequence of which business and products are 
 depressed, but loans and discounts in banks remain the 
 same. Secretary Windom said in his ,New York speech, 
 January 31, 1891: "There "will always be great danger at 
 those times under any cast-iron system of currency, such as 
 •we now have." 
 
 A represents as before the banks. 
 
 B represents all lines of business. 
 
 C represents channel of trade. 
 
 I) represents as before the products, which have com- 
 menced to move. 
 
 By tapping the channel of trade, we notice a complete 
 change In the course of the circulating medium. Instead of 
 flowing into business it is now flowing into products, robbing 
 business of her just deserts, compelling her to divide one- 
 half of her life-blood to sustain the producer. Thus we see 
 business depleted, and products compelled to be pressed 
 inside of the same volume of currency that was only adequate 
 to transact the ordinary lines cf trade. Business and pro- 
 ducts sink as the volume of money finds its level; therefore, 
 we find the banks remaining the same, from the fact that 
 they control all. 
 
A GREAT CONTRACTION IN TIME OF NEED. 
 
 The law of supply and demand applies to money 
 just the same as to any other commodity. We can 
 contract the medium, either by increasing the demand 
 without increasing the supply, or decreasing the sup- 
 ply, the demand remaining the same. In either case 
 it will have exactly the same effect. The fact that 
 under our present system we must first exehaoge our 
 labor or its products for money or credit is over- 
 looked. 
 
 A contraction of currency (money or credit) means 
 dearer money and cheaper products; that is, it will 
 require more of the products of labor to buy the dollar. 
 Eemember that in exchanging our products for the 
 dollar we buy the dollar. 
 
 To illustrate: If the price of wheat is $1.00 per 
 bushel and advances to $1.50 it would require one- 
 half more money to move the crop. 
 
 Exactly the same effect vfould be produced if the 
 yield should be increased fifty per cent, the price re- 
 maining the same. Now add all of the other farm 
 products of the year and estimate if you can what it 
 means. 
 
 Let us take the year 1915 for illustration. There 
 has been an abnormal expansion in manufacturing, 
 more especially in war munitions. 
 
 Our exports have been enormous; the balance of 
 trade in our favor will be over $1,000,000,000. Here, 
 then, was a great increased demand for manufactur- 
 ing purposes. In addition to this we had our record- 
 breaking crop of small grain, our wheat exceeding the 
 billion bushel mark, and other small grain in propor- 
 tion. 
 
 In the Federal Reserve Bank Law Congress had 
 delegated its sovereign power "to coin (issue) money 
 and regulate the value thereof" to a department of 
 government known as the Federal Reserve Board, and 
 
FAILURE OF PUBLIC SERVANTS 49 
 
 Fed'eral Reserve Banks. They • were given absolute 
 control of this most important public utility, as pub- 
 lie servants and trustees of the people, to administer 
 it "in the interest of agriculture, industry and com- 
 merce,"' in fact in the interest of all the people of the 
 nation. 
 
 It was their duty to see that this great increased 
 demand was served with an adequate increased sup- 
 ply, else there would be a severe contraction of money, 
 with the inevitable result that it would require more 
 of the uncontrolled products of labor to buy the dollar. 
 
 What provision did our public servants make to 
 meet this great increased demand ; and more espe- 
 cially to meet the so-called annual "emergency" to 
 move our abnormal crop of small grain and cotton! 
 
 There are two kinds of currency that our national 
 bankers, specially, absolutely control, viz: national 
 bank notes and Federal Reserve bank notes. They had 
 the unlimited, sovereign power to respond to the de- 
 mand. A solemn promise had been made to the people 
 that they would. Now what is the official record, as 
 gathered from the Department of the Secretary of the 
 Treasury ? 
 
 From December, 1914, to June 1st, 1915, there had 
 been a vast increase of manufacturing to finance and 
 products to exchange. AYhat provision had been made 
 during that period to nieet this increased demand? 
 
 The amount of currency in circulation which they 
 specially controlled, national bank notes and Federal 
 Reserve bank notes, had actually decreased by $177,- 
 715,326. The total volume of all kinds of money and 
 currency, including imports of gold which they did not 
 control, had decreased by $102,830,052. A great eon- 
 traction of currency, both by increased demand and 
 decreased supply. 
 
 Our crop movement begins in July. The national 
 bankers were warned by the Secretary of the Treasury 
 of the "emergency," and who offered them all the ad- 
 ditional money needed, to help the farmers move their 
 crop. 
 
50 A GREAT CONTRACTION 
 
 The response, for the month of June, of the special 
 currency they controlled was a still further decrease 
 of $497,812. 
 
 In July the crops began to move. The Secretary 
 of the Treasury remonstrated ; the Federal Reserve law 
 was on trial. The administration had staked their 
 future welfare on it; but there was another decrease 
 of $2,144,604 by August 1st. 
 
 In August the crop movement was on in increased 
 volume. The Secretary of the Treasury now threat- 
 ened and the volume of currency they specifically con- 
 trolled was increased by the very small sum of 
 $5,233,350. 
 
 . For the three months of preparation, June, July 
 and August, reminded, warned and threatened by the 
 Secretary of the Treasury to do their duty, the in- 
 crease of currency, which they specially controlled, 
 was a paltry $2,590,941. 
 
 But there is still another source for contraction of 
 money for the legitimate purposes of exchange, viz: 
 currency held in the national banks. In all the re- 
 ports of the Secretary of the Treasury, all of the 
 money outside of the federal treasury, is classed as 
 "money in circulation." This includes all money the 
 law compels the banks to hold in their own vaults as 
 "legal reserves." Of course, it cannot be locked up 
 in the vaults and be in circulation at the same time. 
 
 Federal Reserve Law a Failure. 
 
 The Federal Reserve law was supposed to obviate 
 the necessity of holding so much money in reserve in 
 the national banks, by their ability to promptly dis- 
 count their commercial paper, but conceding that it 
 has failed in that as well as in every other feature, 
 in so far as the non-bankers are concerned, and that 
 the national banks must continue to hold the "legal 
 reserves" in their vaults, or out of circulation, we have 
 the right to assume that to hold any more in their 
 banks than the legal reserve is hoarding money and 
 keeping it from performing its functions as a medium 
 of exchange. 
 
HOARDING MONET INDEFENSIBLE 51 
 
 This hoarding of money by the bankers in time of 
 stress is in violation of the spirit of the law, and wholly 
 in violation of their duty as puble servants, adminis- 
 tering a public utility. 
 
 Hoarding Money Indefensible. 
 
 That I am correct in this interpretation of law and 
 duty, I refer to the series of telegrams sent to 
 national bankers by the Secretary of the Treasury, 
 during September, 1914, pages 21-22 of offi'jial report. 
 Just a paragraph or two : 
 
 "The reports of national banks now being re- 
 ceived by the Comptroller of the Currency, in response 
 to his call for a statement of their condition as of 
 September 12, indicate an extraordinary hoarding of 
 money by many national banks in various sections of 
 the country. I am astonished that so many of the 
 national banks are pursuing a course so contrary to 
 the public interest and so indefensible from any point 
 of view. There is neither occasion nor necessity for 
 
 -|4- TP T? ^ 
 
 Reports of National Banks Public Property. 
 
 "I intend to begin issuing daily a list of the banks 
 which are hoarding money hy maintaining excessive 
 reserves," the Secretary continues, "in order that the 
 country may know how they are performing the public 
 duties. 
 
 "The reports of national banks are public property 
 anyway, and while they have been published in their 
 respective communities the significance of their state- 
 ments is not generally understood. The public does 
 not know how to analyze them. My purpose is to focus 
 attention upon the excessive reserves carried by these 
 banks, for the reserves indicate whether or not the 
 banks are using their full resources for the relief and 
 accommodation of business in their respective com- 
 munities. * * * 
 
 "The banks that are hoarding money should dis- 
 continue it. Such action more than any other agency, 
 tends to impair confidence and injure business. * * * 
 
52 A GREAT CONTRACTION 
 
 "Reports now being received by the Comptroller of 
 the Currency from national banks throughout the 
 country indicate that a money scarcity is being occa- 
 sioned, in large measure, because of the hoarding of 
 funds by many national banks, which are carrying 
 reserves in some eases two or three times as great as 
 required by law; and also that credits are being re- 
 stricted and excessive rates of interest being charged 
 to customers." 
 
 The Secretary of the Treasury makes a few points 
 very plain, viz: First, that the national bankers are 
 public servants, chartered to serve the public. 
 
 Second : That many of them are unfaithful public 
 servants. 
 
 Third: That hoarding money in the banks in ex- 
 cess of legal reserve is a contraction of the currency. 
 
 Fourth : That a contraction of the currency ' ' tends 
 to impair confidence and injure business." 
 
 Fifth : That publicity as a remedy is utterly worth- 
 less ; for the report of the Comptroller of the Currency 
 for 1915 as given elsewhere shows conclusively that 
 the violations of law and public duty continued in an 
 exaggerated form. 
 
 Sixth: That the people most affected by the con- 
 traction of the currency and falling prices were farm- 
 ers, laboring men and smaller industries in certain 
 sections of the country, and they either approve of the 
 policy, or do not understand the privileges and duties 
 of citizenship. 
 
 The Scandinavian-American bank of Sioux Falls, 
 S. D., was posted as one of the worst, hoarding three 
 and a half times the legal reserve, and its president 
 was elected United States Senator a few weeks later. 
 Query: "Will he support the recommendation of the 
 Comptroller of the Currency to prosecute lawless and 
 perjured bank officials? 
 
 It is officially asserted then, that money hoarded 
 in the banks is a contraction of the currency, and 
 against public policy. 
 
 By September 1st the national banks had hoarded 
 in excess of legal requirements the very large sum of 
 
GOLD IMPOETS CREATE NEAE PANIC 53 
 
 $876,082,647, making the total direct contraction of 
 currency for which they were responsible between 
 December 1st and September 1st, $1,053,797,973. 
 
 The indirect contraction, by increased demand, was 
 very much greater. 
 
 It may be claimed that there was no need of an 
 increased issue of bank notes, because of the large im- 
 ports of gold from Europe. 
 
 "What are the facts? 
 
 From December 1st to June 1st the amount of gold 
 coin reported in circulation had actually decreased 
 by $45,986,339. But as we are now considering cur- 
 rency only and not lawful money, we must also include 
 the gold certificates now being issued against un- 
 coined gold metal. These had increased during the 
 same period by $98,988,490, leaving a net increase 
 from gold coin and bullion of $53,002,151. By Sep- 
 tember 1st gold coin in circulation had again decreased 
 by $15,854,171. Gold certificates had increased $114,- 
 498,740, making a net increase of $98,644,569. A total 
 increase from gold coin and certificates from Decem- 
 ber 1st to September 1st of $151,646,720, the gold 
 coin, or lawful money part having decreased by $61,- 
 840,510. 
 
 Including all kinds of currency there was an actual 
 decrease from December 1st to September 1st (the 
 very time we needed a very large increase), of $247,- 
 606,655. 
 
 Gold Imports Create a Near Panic. 
 
 Strange to say, the increase of gold by importation 
 created a near panic in the ranks of money monopoly. 
 It was interfering with their well laid plans, and to 
 stop it, they were glad to loan the Allies of Europe 
 $500,000,000 on their own terms. We may expect this 
 to be followed up by $50,000,000 a month to prevent 
 further importations of this "precious metal.'" 
 
 > They are not entitled to any credit for the $213,- 
 487,230 increase of gold certificates, and in addition 
 should be charged up vdth the demonetization of 
 $61,840,510 of coined gold by Secoinage. 
 
BANKING AS A DEPARTMENT OF GOVERNMENT 
 
 In the organization of our government, certain 
 functions that would facilitate, or encourage trade be- 
 tween the several states, known as interstate commerce', 
 was conceded to the federal government. 
 
 These included money, the medium of exchange; 
 the post office for the transmission of intelligence; and 
 the public highway for transportation. On money we 
 find Art. I, Sec. 8, No. 30: "to coin money, regulate 
 the value thereof, and of foreign coin." 
 
 The constitution also prohibits any state unit from 
 making anything lawful money except gold and silver 
 coin, and they are prohibited from coining either. 
 
 Heavy penalties are imposed for counterfeiting 
 money, or even having the means of counterfeiting in 
 possession. 
 
 This should settle the question as to where the 
 power rests, and resting with the federal government, 
 it is their duty to coin or issue all the money needed 
 for the purpose of exchange and distribution of the 
 products of labor, in the most efficient manner and in 
 sufficient volume, without private profit. 
 
 In the past and present, the practice in administra- 
 tion has been exactly the reverse, hence the confusion 
 in the public mind. 
 
 The national bankers have so long, wrongfully 
 enjoyed the profits of the administration of this public 
 utility, that they have grown to regard it as a vested 
 right, and resent any attempt to regulate or control. 
 They will not even concede that "the rule of reason" 
 should apply. 
 
 Can Congress by legislation, delegate a power re- 
 served in the constitution as a public function, to a 
 private business to be operated for private profit? 
 
^ A DECEPTIVE LEGISLATIVE TRICK 55 
 
 President Taft in an address at the Waldorf-As- 
 toria, New York, February 14tli, 1910, in discussing the 
 proposed postal savings bank system, took the posi- 
 tion that unless the law contained a provision for the 
 investment of the deposits in government bonds that 
 it would be unconstitutional, "Because the postal banks 
 would then clearly be an instrument of the national 
 government. ' ' 
 
 Again he said: "A provision that when the money 
 is not needed to invest in government bonds, or to re- 
 deem the same, it may be deposited in the national 
 banks, in the neighborhood of the place of deposit, will 
 avoid the great danger of a panic, and will strengthen 
 a banking system, which is an arm of the federal gov- 
 ernment. ' ' 
 
 A public service corporation. "What a travesty in 
 practice ! 
 
 Mr. Herrick says: "The federal reserve system is 
 charged with the issue of currency — a function of the 
 government." Which is true. 
 
 Secretary Houston, page 36, 1914 Tear Book, says : 
 "The federal reserve act was passed with a view to 
 the improvement of the banking conditions of the 
 country in the interest of all classes. It is not a bank- 
 ers' law, it is a law for all classes — for all the people." 
 
 Senator Owen in introducing the bill, and he should 
 know, said (Congressional Record, p. 6766) : "All of 
 these consideration urge that the federal reserve banks 
 should be a bank for banks; a bankers' bank; and not 
 a public bank competing with the banks for business." 
 
 George T. Shibley, expert to the Senate committee 
 on banking and currency, in his explanation on page 
 17, says: "In brief, the federal reserve system is to 
 be a 'bank of banks.' " 
 
 President Wilson, in his currency message to the 
 Congress, December, 1913, said: "The control of the 
 system of banking and of issue which our new laws 
 are to set up, must be public, not private, must be 
 vested in the government itself, so that the banks may 
 be the instruments, not the masters, of business and of 
 individual enterprise and initiative." 
 
56 A GOVERNMENT DEPARTMENT 
 
 Note. That sounds good; but the law as enacted 
 with the President's approval, makes the federal re- 
 serve banks "absolute masters of business and of in- 
 dividual enterprise and initiative." 
 
 Thos. Jefferson said that "the issuing power should 
 be taken from the banks and restored to the people to 
 whom it properly belongs." 
 
 And Andrew Jackson restored it. 
 
 The Civil War gave the bankers the opportunity to 
 take advantage of the necessities of the nation, and 
 since then they have gradually advanced, step by step, 
 usurping the functions of government, until they now 
 have a complete monopoly of this vital public utility. 
 
 We need and must have another Andrew Jackson. 
 
 All political parties agree that the issue and coin- 
 age of money is a constitutional function of the fed- 
 oral government. 
 
 The national banks are chartered as an "arm of the 
 federal government." 
 
 The federal reserve law' was made not only an 
 ^'arm of the government," but the whole thing, so far 
 as money is concerned, now that we have practically 
 ceased to coin money, by making the federal reserve 
 banks fiscal agents of the government, government 
 depositaries and delegating to them the power to issue 
 money, and "to regulate the value thereof." 
 
 IIow regulate the value thereof? By regulating the 
 quantity issued, or rather in circulation. There is no 
 other waj'. That is, the supply must equal the de- 
 mand for use. 
 
 That proposition has been ridiculed in the past, 
 but we now have the admission of what should be 
 considered the very best authority in the United States, 
 viz: the federal reserve board. In their report issued 
 February, 1916, we find: "The reserve banks have 
 not been greatly encouraged to indulge in such com- 
 mercial banking operations as the law permits, because 
 thereby the danger of inflation might have been in- 
 creased and money rates further depressed." 
 
UNLIMITED POWER DELEGATED 57 
 
 The object of the federal reserve board is to in- 
 crease the value of the dollar, and this includes all 
 outstanding obligations, payable in dollars. Just keep 
 that in mind. We will refer to it later. 
 
 Unlimited Power to Fix Kate of Interest. 
 
 The federal reserve bank law, See. Il-b, confers the 
 power on the federal , reserve board to fix the rate of 
 interest one federal reserve bank may charge another 
 for rediscounting the paper of another federal reserve 
 bank. 
 
 They have the power to fix the rate of interest the 
 federal reserve banks may charge a member bank, and 
 the rate the member bank may charge the customer, 
 so the very important factor of fising the rate of in- 
 terest to be charged for the use of money or currency 
 rests with Congress. 
 
 They have delegated this power to the federal re- 
 serve banks without fixing the maximum rate of in- 
 terest to be charged, or the volume issued. 
 
 The responsibility is fixed. Congress is responsi- 
 ble. 
 
 And you, Mr. Voter, are responsible for Congress. 
 
 This is by far the most important branch of our 
 government, because, whoever, or whatever system 
 controls the money of a country is complete master of 
 the labor, industry and commerce of that country. 
 
 It has been said that our government was com- 
 posed of three branches : the legislative, the executive 
 and the judicial, in the order named. 
 
 I think that five divisions would better represent 
 our present system in actual practice, and in the fol- 
 lowing order of influence and power: The independ- 
 ent ( ?) American voting citizen, the legislative, the 
 executive, the judiciary, and the SOVEREIGN HOUSE 
 OF MORGAN. 
 
 In every other department of our government the 
 employes are paid fixed salaries, or commissions. 
 Even in the other branches of the Treasury Depart- 
 ment, the smallest misappropriation of public funds 
 for private use is relentlessly prosecuted. This is true 
 
58 A GOVERNMENT DEPARTMENT 
 
 of every branch of every department, except this one 
 branch of banking as conducted under the inspiring 
 influence and practice of The Sovereign. 
 
 What would be thought of our permitting a post- 
 master to charge each customer all he thought they 
 could, or would, stand for each stamp sold, the least 
 able to pay the most; the receipts above the cost of 
 the stamp to go into his private till, for his own private 
 use in lieu of a stated salary. 
 
 A grave temptation for the weak, or those inclined 
 to graft. 
 
 The cases are exactly parallel. Bach is an "arm 
 of the federal government'" organized for the purpose 
 of operating a public utility. 
 
 No individual, combination of individuals, or state 
 unit is permitted to make either a postage stamp, or a 
 dollar of money. 
 
 The postage stamp is good for the transmission of 
 a letter or parcel to any part of the United States, 
 the rate being the same for every person using them, 
 and estimated at a price that will cover the actual 
 expense of the service, without any private profit. 
 
 The system is operated as a public utility. 
 
 The dollar is supplied to the federal reserve bank 
 at the bare cost of printing, about one mill. Every 
 state in the union except three has fixed the maximum 
 rate that can be charged legally at from six to twelve 
 per cent. 
 
 Gross Violations of Banking- Laws. 
 
 The national banks are prohibited by law from 
 charging more than the legal rate, Section 5197. 
 The Comptroller of the Currency, on page 29, of date 
 December 6, 1915, says: "The sworn statements of 
 cpnditon of a great many national banks show that sec- 
 tion 5197, United States Revised Codes, against usury 
 has been grossly violated by these banks." 
 
 The report indicates that about one-third of the 
 national banks were violating the law by charging 
 usury, running all the way from legal rate to 2,400 
 per cent. 
 
THE BANKERS DEFIANT 59 
 
 The banks that did not violate the law should at 
 least insist that the list be published, and violators be 
 punished. 
 
 But why not follow the system of every other de- 
 partment, and every other branch of the Treasury 
 Department, and pay a fixed salary for services, no 
 private profit, or graft, and apply the same rigid rules 
 to punish violations of the law. 
 
 There is no other department of government that 
 would permit such gross violation of laws to go un- 
 punished. 
 
 There is no other department of our government, 
 whose only remedy for perjury, peculation and viola- 
 tion of laws governing their department is threatened 
 publicity. Up to the present time we have had only 
 one Comptroller of the Currency, the present incum- 
 ment, who has had the courage to even protest, and 
 that is all he can do. 
 
 The Bankers Defiant. 
 
 But that is not all the sinners can do. They boldly 
 denounce the Comptroller as a "pernicious meddler," 
 and the counsel of the federal reserve board in session 
 have unanimously recommended that the office be 
 abolished, which, if acted upon, would legislate him 
 out of office. 
 
 If they malie the attempt every honest voter, re- 
 gardless of party, should make an earnest protest. 
 
 Special privilege is, as a rule, a temptation to dis- 
 honesty, which the tempted rarely resist. 
 
 In the interest of the bankers themselves we should 
 repeal their special privileges, and administer banking 
 as a real public utility, 
 
GOVERMENT MONEY DIRECT WITHOUT INTER- 
 EST. 
 
 There are a good many earnest, intelligent stu- 
 dents of political economy who know that the govern- 
 ment is the sole source of money, that it cannot be 
 legally issued by any other body, iinless Congress 
 delegates the power, as it has to the Federal Reserve 
 Board and banks, without a constitutional amendment. 
 But who will raise that issue? The law has been ac- 
 cepted, and is in operation, so let it pass. The con- 
 stitution is no barrier to private monopoly, anyway. 
 
 "When it has been advocated that the government 
 should issue money direct without interest, it has been 
 ridiculed as impossible and absurd and by none so 
 earnestly as by "our natural pilots," the national 
 bankers. The question to consider is, is it impossible, 
 or absurd? 
 
 The facts are: that all money and currency in the 
 United States are issued now, and always have been, di- 
 rect by the government, without interest. Now let 
 us go over the list of present money and currency, and 
 see if that statement is not true. 
 
 The law of 1873 provided a charge of one-fifth of 
 one per cent for the conversion of standard gold bul- 
 lion into coin; ninety per cent paid when deposit was 
 weighed, eight per cent after trial assay, and two per 
 cent after final assay. 
 
 Now that the national bankers are anxious to de- 
 coin money in large amounts, and to save them loss 
 of interest, the rules were modified in 1915, see re- 
 port of Director of the Mint, p. 7 : "In order that no 
 injustice might be worked to depositors of foreign coin 
 because of the delay incident to the melting and re- 
 fining of it, the regulations governing the handling 
 of precious metals were so modified, with your ap- 
 proval, as to permit the payment of ninety-nine per cent 
 of the value of said deposits, ascertained upon their 
 
MONET WITHOUT INTEREST 61 
 
 being weighed immediately after receipt, when pre- 
 sented in sums of $1,000,000 and over.'" 
 
 "Wherein the injustice? There was no compulsion. 
 They could have secured gold certificates on foreign 
 coin immediately. But here was an opportunity to 
 demonetize a lot of gold coin, and they did it for an 
 object. 
 
 It will be noted that the producer, who seldom has 
 a million at one time, can get only ninety per cent 
 "immediately after receipt." 
 
 There is no interest charged for the issue (coinage) 
 of gold, nor can I see that there is any charge at all 
 for the coinage. 
 
 The government issues the gold coin and gold cer- 
 tificates direct into circulation, without interest. 
 
 For the silver bullion in the 570,272,610 silver dol- 
 lars coined, the government paid $216,786,014, making 
 a profit to the government of $353,486,596, less the 
 cost of minting. A handsome profit, saved that 
 amount of taxes to the people ; but being issued direct, 
 there was no profit to the bankers, so the real power 
 behind the throne had a law enacted in 1873 to stop 
 the further coinage of the silver dollar. This was 
 partially restored in 1878, and in 1893, aided by a 
 panic, and to "restore confidence," further coinage 
 was stopped finally. There has been no interest 
 charged on the direct issue of the silver dollars, or the 
 silver certificates. There is a handsome profit for 
 the government in the coinage of miaor coins, but no 
 interest charged. 
 
 There was a tax of one-half of one per cent on the 
 issue of national bank notes, which were issued direct 
 to the bankers, but no interest. 
 
 There is neither interest nor tax on the Federal 
 Eeserve Bank notes issued direct to the reserve banks. 
 
 The government paid out the greenbacks, direct, 
 without interest, and everybody, except the banker, 
 received them gladly. I think that covers every dol- 
 lar in circulation, or hoarded in the banks. The great 
 wrong and injustice in the system is that our money 
 is issued direct, without interest, to one special class, 
 
62 GOVERNMENT MONET DIRECT 
 
 to whom is given an nncontroUed monopoly of a pub- 
 lic utility, and as public servants they are appropri- 
 ating too much for their services, and are using their 
 power to control all production, industry, and com- 
 merce. 
 
 The advocates of "issuing money direct without in- 
 terest" reason that the government should issue full 
 legal tender money in payment for public service and 
 public improvements, and redeem same by receipt for 
 dues and taxes assessed by the government. To the 
 extent of money issued this would save the present 
 interest charges now raised by taxation. 
 
 "Impossible?" Certainly not; it is the past and 
 present practice. 
 
 The men who control have enjoyed the privilege 
 so long that they seem to look upon it as a vested 
 right, and claim that the government should issue all 
 money direct to them without interest, and delegate 
 to them the authority to issue all the currency needed, 
 they to be the judges of the need. That tabes the 
 government out of the banting business, restores con- 
 fidence, and insures prosperity to one class. 
 
 To defray expenses, the government can issue in- 
 terest-bearing bonds, and the bankers will take them 
 at three and four per cent, paying for same in money 
 or currency issued to them free of tax or interest, and 
 the people pay the interest in taxes. If the people 
 were not taxed, how else would they know they were 
 governed ? 
 
 Again, there is the danger that the government 
 might issue so much for public improvements, such 
 as state owned railroads for transportation at cost, 
 that it would deprive them of another profitable 
 source of revenue. 
 
 Then, again: there is the danger that the govern- 
 ment might issue direct, without interest, a sufficient 
 volume of money to enable the people to exchange 
 their labor, and the products of their labor, without 
 having to pay tribute to a private corporation, as we 
 can now" do, to a limited extent, by parcels post. 
 
MONEY [WITHOUT INTEREST 63 
 
 After all, it is a very simple question. Can the 
 government issue a medium of exchange direct, vrith- 
 out interest, to the individual units composing the 
 government, and redeem same, at less expense than 
 is being paid under the present system? That is the 
 question to be considered 
 
NEW SYSTEM, BANK DEPOSITS NOT MONEY, 
 JUST CREDIT. 
 
 Paul Warburg's plan, as illustrated by Mr. Rey- 
 nolds in his national speaking tour, explains the Fed- 
 eral Reserve Bank system. I quote from his address 
 at Sioux Falls, South Dakota, June 7th, 1911 : 
 
 "I say that the amount of money we have is a 
 secondary matter to that of vsrhether we can in times 
 of distress, extend credit. The average man will be 
 confused between the two, for the reason that the 
 average person who has not given the subject con- 
 sideration, is very apt to say that the deposits in banks 
 are money. 
 
 "The proprietor of one of the largest newspapers 
 in America sent the associate editor to me with a let- 
 ter of introduction, and he said that he wanted to 
 write a series of articles on the financial condition of 
 America, and wanted me to steer him right. The gen- 
 tleman began by making the statement that 'The peo- 
 ple of this country are being fooled. They think they 
 have been having an era of prosperity, but we have 
 been investigating in our office and we find that the 
 deposits in our banks are very little, if any, greater 
 than two years ago. The people are being fooled, and 
 I propose to write a series of articles and warn them.- 
 He said, 'The banks of the state have twenty-five mil- 
 lion dollars less than two years ago.' I said, 'Tou 
 are wrong.' He said, 'I am not.' And he pulled out 
 of his pocket a financial journal, and he pointed to a 
 column of figures which showed twenty-five million 
 dollars less than two years ago. I said, 'That is not 
 money.' He said, 'Do you mean to say the banks' de- 
 posits are not money?' The associate editor of one 
 of the greatest papers in the country was going to 
 warn you people and was going to put you right in 
 your financial course, because he knew you were 
 wrong. I said, 'That is not money. That is credit.^ 
 
DEPOSITS MERE BANK CREDITS 65 
 
 He said, 'How can you get credit without depositing 
 money?' I said,, 'Can you not get credit without de- 
 positing money ? "We will assume that you have stock 
 worth one hundred and twenty-five thousand dollars. 
 You don't want to sell that stock. You see a building 
 across the street which you need in the operation of 
 yoxir business. You say, " 'I need that building, but 
 I don't want to sell my stock.' " I say, " 'AH right, 
 I will take your note, and place the amount to your 
 credit.' " Did you deposit any money?" He said, 
 'No, I guess I did not.' I said, 'You go across tli3 
 street and buy the building and give a check, you have 
 not deposited any money. That check is washed out 
 tomorrow morning at the clearing, and so is ninety- 
 five per cent of the business of the country.' * * * 
 
 "I submit to you if it was not an afternoon well 
 spent if I prevented a metropolitan daily, one of the 
 largest in the country, from coming out with a series 
 of articles of that kind." 
 
 There are several tefxts in that interview weE 
 worth developing, but the one I wish to apply to the 
 text of this article more especially is that $95,000 
 credit on the books of the bank was drawn against 
 by a check and it paid for the building. The check 
 was presented to the clearing house next day, AND 
 WASHED OUT. 
 
 Now see how easily and nicely that can be dupli- 
 cated under the system proposed in this article. The 
 government issues money, a note, or a due bill if you 
 please, today, in payment for public service ; it re- 
 deems the same tomorrow in payment of taxes, or 
 dues assessed by the government, and the money, note, 
 or due bill is "WASHED OUT." We thank you, Mr. 
 Reynolds. 
 
 Another thought worthy of development is sug- 
 gested. The borrower was the owner of $125,000 
 worth of good stock. He gave his note to the banker 
 for $95,000 with this stock as collateral ; now in reality, 
 whose credit was that loan based on? Not the bank- 
 er's. It was on the borrower's $125,000 stock. The 
 banker drew interest on the borrower's credit. Do 
 
66 DEPOSITS MERE BANK CREDITS 
 
 you wonder now why they are so persistent in elimin- 
 ating all money from circulation, and substituting 
 therefor their bank credit? 
 
 A second thought or text would be, where the ed- 
 itors of great metropolitan dailies go to be set right 
 on the money question, and is it not reasonable that 
 they should? 
 
 Another test might be, the very clear exposition 
 that this vast increase in cash bank deposits, boasted 
 of as evidence of great prosperity, is an evidence of 
 increased indebtedness and based on fickle bank credit. 
 
GOLD: THE MONEY OP THE WORLD? 
 
 I am in favor of eliminating any provision for a 
 gold base, or gold redemption for our national invest- 
 ment system. The federal investment bank notes are 
 not intended specially to be "good in Europe"; but as 
 a medium of exchange for home use. If they will 
 not be good for foreign development, so much the 
 better for home development. 
 
 If it be true that gold in itself is the natural world's 
 money, because of its commodity value, then why not 
 let it prove itself as such on its own merits? What 
 should be necessary more than to stamp the weight 
 on the piece of metal to make it pass current as 
 money the world over? That should be the acid test. 
 Instead, these gold-mania theorists insist that the value 
 of gold must be bolstered up by an unlimited demand 
 at a fixed price per grain of metal, and each nation 
 using it as its standard, limiting this special favor to 
 this one uncertain commodity. 
 
 That is not a fair test. As Herrick would say, it is 
 "giving it a Active value." In addition, they insist 
 on each nation making it compulsory on every citizen 
 of the nation accepting this one favored commodity 
 as a full legal tender for all debt obligations; thus 
 showing their own "lack of confidence" in the com- 
 modity value, and natural money absurdity. 
 
 The only true test would be the free, open, uncon- 
 trolled and unfavored world's market for the metal. 
 There is not now, and never has been, a money of the 
 world, or world's money. 
 
 One of the strong arguments in favor of the Fed- 
 eral Reserve law was, that if enacted it would enable 
 us to extend our world's trade. 
 
 My plan for a federal investment bank does not 
 interfere with the present commercial system. If 
 they must have gold coin, a gold base, or a promise to 
 redeem in srold. to promote fo-reign trade, let them 
 
68 GOLD: THE MONEY OF THE WORLD 
 
 have all the gold; but I do not want American agri- 
 culture, or American labor, sacrificed by them to get 
 it. This should surely satisfy the foreign traders. 
 But the absurdity and insincerity of the claim was 
 clearly demonstrated when the large increased impor- 
 tation of foreign gold during the summer of 1915 
 caused a near panic in the ranks of these same foreign 
 traders. 
 
 If gold is necessary to develop foreign trade, the 
 more gold, the more trade ; and they promptly stopped 
 the importation of this foreign trade necessity, by loan- 
 ing the Allies of Europe a thousand million of dollars 
 on mere government bonds "without any security 
 whatever back of them." 
 
 A WORLD'S MONEY DANGEROUS FOR THE 
 HIGHER CIVILIZATION. 
 
 I look upon the attempt to force a world's money 
 upon us as the most dangerous to our more highly 
 civilized nation. I cannot do better even now than 
 to quote from "The New Monetary System" published 
 by me in 1893, page 62 : 
 
 "This has been presented to us very forcibly in 
 the last few years. First: Local difficulties in the 
 little republic of Argentina embarrass a banking firm 
 in England, that came near causing a panic, not only 
 in England, but the United States as well. 
 
 "Then Austria wants to strengthen her gold re- 
 serve and another panic is barely averted. Now at 
 this writing, a political scandal in France is unearthed 
 causing a run on local banks. The result is a heavy 
 drain on us through England for gold, followed by the 
 inevitable result of lowering of prices as usual. The 
 nation needing gold worst will pay most for it in the 
 products of labor. Labor always pays the bill. 
 
 "The farmers, practically unorganized, are at the 
 mercy of the organized classes, and the inevitable 
 result is that in that struggle and scramble for our 
 share of the money of the world, it is the products 
 of the farm that must be exported to be sold in the 
 
A WORLD'S MONEY DANGEROUS 69 
 
 world's markets in competition with the poorer paid 
 labor of Europe, Asia, Africa and South America, at 
 the world's prices, for our share of that world's 
 money, be it gold, or silver, or both combined; and 
 when a monetary disturbance or change of financial 
 policy, or political upheaval, occurs in any part of the 
 world using the same kind of money, every nation in 
 the circle is bound to suffer from its effects. 
 
 "A so-called money of the world is a VERY DAN- 
 GEROUS THING, and of advantage to the money- 
 changers, speculators and usurers only. 
 
 "It will thus be seen that even on a gold and sil- 
 ver basis, the supply is unequal to the demand, there- 
 fore we must have an additional basis for our money 
 if our civilization is to be preserved and fostered. 
 
 "Not only that, but we must have a distinctive 
 money of our own. 
 
 "That is what we mean by a NATIONAL CUR- 
 RENCY — a currency that will remain with us to 
 transact our own business — the exchange of the prod- 
 ucts of our labor. That will not be competed for by 
 the pauper labor of Europe, Asia, or any other foreign 
 country. It is only because of the great, natural, new 
 resources of our own country that we have thus far 
 been able to keep our labor above the common level. 
 A money of the world will eventually force us down 
 to that common level of prices, misery and degrada- 
 tion. It can and must be averted." 
 
 "In answering one of my critics, in The Farmers' 
 Open Forum last July, I think, I said: 'A world wide 
 money is a very great fallacy. There is no such 
 thing, and I hope there never will be. The attempt 
 to make gold such, is fraught with gravest danger 
 to the more highly civilized and enlightened nations. 
 It would inevitably drag us down to the world's level 
 of labor conditions. Given a world's money, limited 
 to one commodity, depending wholly upon the chance 
 of discovery, at present monopolized by a very few, 
 and the result regardless of the .tariff or any other 
 consideration or restrictions would be a competitioa 
 
70 GOLD : THE MONET OP THE WORLD 
 
 by the world's producers, for tMs essential thing — ■ 
 gold. The country offering most of the products of 
 labor for the dollar, would get it.' " 
 
 In the "Commercial West" of Minneapolis, of date 
 September 4th, 1915, in a market review, I find full 
 confirmation of this view of mine expressed twenty- 
 three years ago: "If the Dardanelles be opened, 
 Russia has a surplus from two crops to export and 
 her financial condition is such she will gladly exchange 
 wheat for gold at a lower price than any other coun- 
 try, no matter how low that price may be." 
 
 Wheat and Cotton Our International Money. 
 
 There is no question about it, our farmers will 
 have to meet their prices, and the pity of it is, that the 
 small amount we might have to export would fix the 
 price for the whole crop. I want a free American 
 dollar for the exchange of the products of American 
 labor, that will respond automatically to the demand 
 for use. To paraphrase the greatest statesman of 
 Europe, Lloyd George, who recently said that "coal 
 was Great Britain's international coin," I would say 
 that wheat and cotton are our international coins. 
 It is with these that we pay our foreign bills. Let 
 me repeat: It will always be the great unorganized 
 and unprotected industry that will be sacrificed in the 
 world's markets for a share of a wholly unnecessary 
 metal on which to base a medium for the exchange of 
 our own home products. 
 
 How much more simple, safe and sane, to base the 
 medium on real wealth, or on the products to be ex- 
 changed. 
 
 It is very absurd, when you come to think of it, that 
 the most advanced and highly civilized nation on 
 earth, and we will all admit that we are IT, and with 
 unsurpassed inventive genius in production, we have 
 never yet been able to devise a system of exchange of 
 labor, and the products of labor, except that one of 
 thousands of years ago, when it was decided by some 
 one, who probably owned a gold or silver mine, that 
 there could be no exchange beyond personal barter, 
 
THE POUND STERLING FAXE 71 
 
 until some one accidentally found a piece of rare 
 yellow or white metal, or a little yellow dust. 
 
 If we could only realize the object lesson so plainly 
 taught us in the gold and silver certificates, had they 
 truly represented the coined metal, that money based 
 on value is just as good as money stamped on value, 
 and much more convenient; but they are merely a 
 promise to pay in the coin; and the further fact that 
 it is immaterial what that value is, so long as it is 
 value, we would solve the problem very quickly. 
 JUST READ THAT ONCE MORE. 
 
 The Pound Sterling and Foreign Exchange. 
 
 The "pound sterling" is a piece of gold weighing 
 123.274 grains eleven-twelfths fine, stamped by the 
 British government, and called a sovereign. I used 
 to wonder why it was called a "sovereign." I do not 
 any longer. "What is the definition? "Sovereign; 
 possessing supreme excellence or greatness; preemi- 
 nent ; paramount ; superior in efficiency ; most potent ; 
 to rule over as a sovereign; to exercise sovereign 
 power." 
 
 A true definition of the power of money monopoly 
 to rule over us. 
 
 During the year 1915 for several months the great 
 disturbing factor in American business was the value 
 of the unchangeable "sovereign," the "pound ster- 
 ling." For ages we had been told, and believed it — 
 that is, most of us did — that gold was the one thing 
 that never changed in value, and because it was the 
 only commodity, unchangeable in value, it must be 
 used as the measure of all other values. 
 
 They forgot to mention that if all the gold stand- 
 ard nations agreed to pay one dollar per bushel for 
 wheat, wheat would never go below that price, so 
 long as the nations continued to pay that price. It 
 might go higher, to a premium, as gold has so often 
 done, but never lower. The same is true of silver, 
 cotton, or any other commodity. 
 
72 G OLD : THE MONEY OF THE WORLD 
 
 Our forefathers had the courage to break away 
 from Great Britain's political sovereign, but they did 
 not realize, and their descendants do not yet, that their 
 gold sovereign has been an infinitely greater tax col- 
 lector than was King George. 
 
 Now that we have long outgrown the mother coun- 
 try, and boast of our superiority, we are still in bond- 
 age to Great Britain's bit of metal, the "pound ster- 
 ling,'*' a sovereign. 
 
 During the summer months, and more especially 
 with the reports of our wonderful increase of farm 
 products, that was so badly needed by the warring 
 nations of Europe the fly in the blessed ointment of 
 prosperity, was the unbelievable, unheard of, daily 
 change in value of this hitherto unchangeable com- 
 modity. 
 
 Who raised this cry of alarm? Was it the pro- 
 ducers of wealth? The farmers and laborers? Pro- 
 fessional men? No, strange to say, it was our bank- 
 ers and money-changers who had always in the past 
 insisted that the gold metal, the British sovereign, 
 the world's money, the pound sterling, never changed 
 and could not change in value. 
 
 The reasons given by our banking journals would 
 be amusing, if it were not for the effect it had on the 
 value of uncontrolled products. 
 
 The trust controlled products increased in price, 
 because protected by a tariff and a community of in- 
 terests, but the uncontrolled, unprotected farm prod- 
 ucts decreased in price. 
 
 This in the United States where we were at peace 
 with all the world, and industry enjoying the greatest 
 boom ever known, exports unprecedented, and yet 
 the daily change in the value of the British sovereign 
 seriously affected our industries. What an invincible 
 argument in favor of an American dollar. 
 
 The value of the sovereign declined from $4.85 to 
 $4.50, declined 11 cents in two days, and, strange to 
 say, this change in value not only of the "pound 
 sterling," but American products, without the coin 
 
GOLD THE "MOLLYCODDLE" 73 
 
 itself being visible to the general public; in fact it 
 had gone out of circulation in Europe and practically 
 so in the United States. 
 
 That is a trick this cowardly sovereign has always 
 played at the first note of real need. It is the great- 
 est coward known to history. I think it must be the 
 "mollycoddle" for which so many of us have been 
 looking. 
 
 August 28th Great Britain ordered the post office 
 to discontinue gold payments. 
 
 September 9th a special from Petrograd said the 
 largest hoard of gold in the world is that held in the 
 vaults of the Russian state bank, amounting to $850,- 
 000,000. Yet a visitor may travel from one end of 
 the Russian empire to the other and not see enough 
 gold to buy a pair of shoes. 
 
 Minister of Finance Ribot of Prance issued a 
 patriotic call for the peasants and all others to bring 
 in their little hoards of gold, and it disappeared not 
 only from circulation, but was also taken out of the 
 secret hiding places and given up for paper currency 
 and francs. 
 
 The same was true of Germany, Austria-Hungary, 
 Italy, and all of the other nations. Will the people 
 never learn a lesson so plainly writ? 
 
 If paper currency, based on the faith and credit 
 of the nation in its hour of greatest weakness and 
 need, will pass current and serve all the functions of 
 a medium of exchange, is it not absurd to claim that 
 it cannot serve the same purpose in the days of peace 
 and greater prosperity! 
 
 From the Grain Growers' Guide, Winnipeg, Can- 
 ada : _ 
 
 "In normal times one pound in London is worth 
 approximately $4.85 in New York. Recently the value 
 of the pound has fallen considerably and the last 
 quotation showed the pound sterling worth only $4.67 
 in New York. This means a loss to the producer of 
 18 cents on $4,85, which works out approximately 
 three and one-half cents per bushel of wheat." 
 
74 GOLD : THE MONET OF THE WORLD 
 
 Then when the pound sterling dropped to $4.50, 
 as it did in September, the loss on wheat was seven 
 cents per bushel. Just because a foreign coin changed 
 in value. The same was true of tlie German mark, the 
 French Napoleon, the Austrian crown, the Jap yen. 
 Spurned, discredited, and dishonored, as they came 
 to the United States, they were all dumped into the 
 assayer's pot and decoined. "How have the mighty- 
 fallen"! 
 
 GOLD. 
 
 The average reader will be surprised to learn that 
 the conspiracy to contract our currency and lawful 
 money by withdrawal and decoinage should have in- 
 cluded the sacred joss — gold — ^but such is the ease. 
 
 I do not know what the pretense was for the enact- 
 ment of the law of July 12th, 1882, authorizing the 
 issue of gold certificates for gold coin, stored in gov- 
 ernment vaults, but I presume that it was in the in- 
 terest of economy, or convenience, or something of 
 that kind. If economy and convenience, it proved 
 so for the bankers, in the saving of gold coin by 
 abrasion, and economy, especially in transportation 
 charges. 
 
 But if that was the real reason — and this is a very 
 important question — why was not the gold certificate 
 endowed with the same quality of lawful money as the 
 gold dollar it was supposed to represent? 
 
 The general public was led to believe that it did, 
 and from inquiries I have made I think I am safe in, 
 saying that nine out of ten bankers believe so today, 
 and store them in their inner vaults as lawful money 
 reserves. 
 
 Well, they are not lawful money. It would not 
 have cost them a nickel a million dollars to make 
 them so. Just added the words "A full legal tender 
 for all debts, public and private." They are simply 
 ar note ; a promise to pay a gold dollar if you present 
 it to the United States Treasurer in Washington, or 
 an Assistant Treasurer. They pass current, as money, 
 under a false pretense. 
 
GOLD CERTIFICATES NOT MONET 75 
 
 They will not pay an obligation, calling for law- 
 ful money, or even "gold coin'" if the holder of the 
 obligation insists on being paid "according to the 
 contract. ' ' 
 
 Now do not jump at the conclusion that it is all 
 right, that you can send them down to Washington 
 and get the genuine gold dollars for them. Just wait 
 until I finish. Eemember the bankers' panic of 1907. 
 ^' There is a reason." 
 
 The great victory of 1907 encouraged The House 
 of Morgan to rush matters all along the line. Twenty 
 odd years ago, I predicted that if the time ever came 
 when there was danger of gold becoming more plenti- 
 ful than silver, the national bankers would not hesi- 
 tate to ask for the change back to silver, and demone- 
 tize gold. 
 
 They hold up their gold joss for you to worship, 
 and they laugh, while you bow in reverence. 
 
 The world's production of gold in 1873 was $96,- 
 200,000, and had been declining for the previous thir- 
 teen years. By 1890 it had increased to $130,650,000. 
 The striking down of silver in 1873 had encouraged 
 the production of gold. Then it began to increase 
 more rapidly and by 1908 had increased to $442,- 
 476,900, almost 500 per cent. This was a real annoy- 
 ance. 
 
 The production of gold was almost twice that of 
 silver. To go back to silver would mean a revival 
 of silver mining. To ask for the demonetization of 
 gold would give their case away. 
 
 "We will give credit to Mr. Warburg for the plan 
 of accomplishing the same result, without the knowl- 
 edge of the people, or even of Congress, and I fear too 
 few know it yet. 
 
 The first notice we have of the move was in the 
 report of the Secretary of the Treasury for 1909, when 
 he recommended that the Secretary be authorized to 
 issue certificates against gold bullion and foreign coin. 
 This was renewed strongly la his 1910 report and en- 
 acted in March, 1911. 
 
76 GOLD : THE MONET OF THE WORLD 
 
 Mr. "Warburg has proven that you can eat your 
 cake and have it. 
 
 They can now destroy gold as money by deeoin- 
 'age, and still have a certificate promising to pay 
 in gold dollars, not in existence, based on the uncoined 
 bullion, to use if they vnsh. Or they can use the gold 
 bullion, or certificates based on it, for their cash law- 
 ful money reserves. 
 
 They can also use the uncoined bullion which is not 
 money, as a base for the issue of two and a half times 
 as much currency in the form of Federal Reserve 
 Bank notes. So for all practical purposes they can 
 demonetize, by melting, and yet use as money, paper 
 bank notes, based on a mere commodity — gold bricks 
 — by the decoining of gold. 
 
 They are accomplishing one of their purposes,' 
 the contraction of the volume of money, but the greater 
 object will appear later. 
 
 Now note how quickly and effectively they make 
 use of the law. 
 
 For the four years prior to the enactment of th& 
 law there was an average coinage of $117,980,714. The 
 year following the enactment; that is, for 1912, there 
 was only $12,749,090 coined. The average since then 
 has been $32,405,785. About one-fourth the previous 
 coinage. The production for the five year period 
 showing a small increase. 
 
 We are using in the arts annually over $40,000,000 
 of which $3,500,000 is coin. We are decoining — de- 
 monetizing — annually $121,480,714. 
 
 In the laviT for the decoinage of gold coin, which 
 is nothing more or less than demonetizing gold, the 
 conspirators overlooked one very important point, 
 which should be a good object lesson to every citizen, 
 viz.: that this government note, a promise to pay a 
 dollar although not lawful money, is performing all 
 the functions of a medium of exchange, except that 
 of lawful money; to the full value of the bullion. 
 
 Or to put it another way, that money based on 
 value is just as good as money stamped on value, and. 
 much more convenient. 
 
LAWFUL MONET IN CIECULATION 77 
 
 Although the gold certificates are not lawful money 
 for the debtor, they are for the banker, who can and 
 does use them as lawful money in his cash reserves. 
 A special privilege, and gross discrimination, in line 
 with the uniform custom, in all our monetary legis- 
 lation, and in strict accord vvdth the plan outlined by 
 "Warburg. 
 
 Then, if that be true, and it is, money based on any 
 other stored commodity and made an obligation of the 
 government, would prove just as good, and just as 
 convenient. 
 
 Keep that in mind. It is the true solution of the 
 money problem. 
 
 Lawful Money in Circulation. 
 
 The Comptroller of the Currency secures the re- 
 ports of all other than national banks but once a year 
 and publishes them as of date June 30th. 
 
 This data is gathered from his report, and the 
 monthly reports of the Treasury Department, and will 
 be as of June 30tli, 1915. 
 General stock of money in the United 
 States July 1st, 1915 (this includes 
 all forms of currency as well as law- 
 ful money) $3,997,368,468 
 
 For the purpose of this chapter we must deduct 
 all currency: 
 Minor coin (legal tender limited to $10) $ 158,934,817 
 
 Gold certificates 1,076,637,759 
 
 Silver certificates 482,713,988 
 
 National bank notes 786,643,647 
 
 Federal reserve bank notes 80,501,710 
 
 Currency to be deducted $2,185,431,921 
 
 Lawful money in United States June 
 
 30th, 1915 $1,811,936,547 
 
 There are two very important factors to be con- 
 sidered in this connection: 
 
 First. Is this lawful money in actual circulation? 
 
 Second. Can it be secured promptly in case of 
 another "bankers' panic" like that of 1907, by the 
 
78 GOLD : THE MONET OF THE WORLD 
 
 debtor who has an obligation to meet, payable "in 
 gold coin of the present standard, weight and fineness ' ' 
 or even in lawful money? 
 
 I maintain that money hoarded, whether in banlc 
 vaults, or in the proverbial tin can, or stocking, is 
 not in circulation, and useless as a medium of ex- 
 change, or for debt paying purposes. 
 
 Lawful Money Located. 
 
 Where was the lawful money on that date. I, of 
 course, cannot locate all, must depend on official re- 
 ports. On page 121 we fijad the report of 27,062 banks 
 of all kinds reporting. This does not include all. 
 
 Gold coin $208,612,342 
 
 Silver coin 62,084,534 
 
 Legal tender notes (greenbacks) ........ 179,076,993 
 
 Cash, unclassified 73,548,011 
 
 Federal reserve banks (p. 136) gold 321,068,000 
 
 Other lawful money 37,212,000 
 
 Held in U. S. Treasury as assets 
 
 monthly report 206,526,508 
 
 Held by Federal Reserve Agents 
 
 against notes 12,445,564 
 
 Standard silver dollars 7,910,351 
 
 United States notes (greenbacks) 14,645,022 
 
 Total located $1,123,129,325 
 
 This would leave unaccounted for $688,807,222. 
 
 Only a little over half of the greenbacks are ac- 
 counted for, the rest are probably lost or destroyed. 
 
 When we deduct from that the greenbacks lost or 
 destroyed, the money hoarded by private individuals, 
 and the money in the 3,003 banks not reporting, and in 
 the tills and pockets of business and traveling men, 
 we have it about all accounted for. 
 
 » True, by December 31st there had been an 
 increase of money in the United States report- 
 ed, principally from gold imports, but that will not 
 help the situation as it was promptly decoined at the 
 
DEMONETIZING GOLD COIN 79 
 
 New York assay office, and within a very few years, 
 that and several hundred millions more will be re- 
 turned to Europe. 
 
 Now look over that list carefully, and you will 
 note that it is practically all tied up in reserves, or 
 held out of circulation. 
 
 Our public and private debts are estimated as be- 
 tween one and two hundred billions of dollars; call 
 it one hundred billion. The greater part of the obli- 
 jations are payable in "gold coin of the present 
 standard, weight and fineness." 
 
 This is especially true of farm mortgages where 
 neitler greenbacks nor silver will apply. The bal- 
 ance is payable in lawful money. And on the smaller 
 estinate there is one dollar of lawful money to pay 
 $10C of debt. But, you say, we can get the money 
 to pay if we have the goods, etc. Yes, at present. 
 But the House of Morgan must control more than 
 half of those obligations; suppose they decide the 
 time is ripe for another "ingathering" like that of 
 1907. then what? Do they want those obligations paid 
 in gold coin? If so, why did they rush all gold im- 
 ports to the assay office to be melted for bullion in- 
 stead of having them coined. 
 
GOLD COIN HAS CEASED TO CIRCULATE AS 
 MONEY. 
 
 The fact is that gold com has ceased to circulate in 
 the rest of the world and has practically ceased tc 
 circulate in the United States. 
 
 AYe have practically ceased the coinage oc 
 gold; one mint has already been permanently closed, 
 and we are now using more in the arts than we are 
 coining, and we have already decoined more than me- 
 fourth of our normal volume of gold. ' 
 
 In addition the Allies of Europe are piling up bil- 
 lions of obligations here, payable in that rapidly ran- 
 ising "American gold dollar." The men who zon- 
 trol the obligations, also control the gold coin, an3 the 
 gold bullion which they will not have coined. The 
 bankers can use it as money, but you cannot. 
 
 Even if j'ou could get the foreign gold coin, it 
 would not pay your obligations here. Neither "svould 
 our own gold dust, gold nuggets, or. refined gold bul- 
 lion. 
 
 The rapidity with which gold is being concentra,ted 
 in the vaults of the Federal Eeserve Banks, which 
 means the House of Morgan, and especially in X^ew 
 York, is astounding. Let me quote from the Treas- 
 ury statement of December 31st, 1915: 
 
 "The total reserves of the banks show an increase 
 of about 102.9 million dollars, while their aggregate 
 gold reserves show an even larger increase of 115.9 
 millions. The gold reserves of the system include be- 
 sides the gold reserves of the banks also the amounts 
 of gold turned over by the banks to the federal re- 
 serve agents to reduce the banks' liabilities upon out- 
 standing reserve notes. 
 
 "The amounts of gold held by the agents increased 
 from 12.3 millions at the end of 1914 to 70.6 about 
 the middle of 1915 and to 197.4 millions at the close 
 of the year. The increase for the year in the total 
 
WHEN SHTLOCK GETS READY? 81 
 
 gold resources of the system was over 301 million dol- 
 lars, the larger portion of which represents the gain 
 in the agents' holdings. Of the total gold reported 
 at the end of the present year, 406.5 millions, or 
 nearly 75 per cent, are held in the banks or in the re- 
 serve agents' vaults, while 135.9 millions are either in 
 the gold settlement or in the gold redemption funds 
 at "Washington. About one-half of the system's gold 
 is helb by the New York banks and reserve agent, 
 less than 7.5 per cent by Chicago, less than 6 per cent 
 each by Cleveland and Richmond, over 5 per cent by 
 Boston, while the remaining 25 per cent is distributed 
 among seven banks and reserve agents." 
 
 Nothing could be plainer than the trend towards 
 New York. 
 
 "When Shylock gets ready to demand "the pqund 
 of flesh according to the contract," there will be less 
 than one dollar in gold coin outside Shylock 's vaults 
 to pay $1,000 of gold coin obligations. Once secured 
 and paid in it will remain in their vaults until brought 
 out by a premium. 
 
 There will be just one thing for the debtors to do : 
 pay the premium for gold coin demanded, or give up 
 their property secured in liquidation. You think they 
 cannot do that. They did during the Civil "War, and 
 ran it up to 278. Oh! that was a long time ago; 
 they could not do it now in a time of peace ! 
 
 How short our memories are. They did it in 1907, 
 in a more exaggerated form, in that they deinanded 
 a premium to pay their own obligations to interior 
 banks. My authority is the present Comptroller of the 
 Currency in his last annual report, page 51: 
 
 "And that the member banks will not again be 
 met by conditions which forced them to pay a pre- 
 mium for currency in order to transact current busi- 
 ness, as was the ease in 1907, when correspondent 
 banks refused to ship currency at all, or, if they did, 
 demanded a large premium on the transaction." 
 
 Even during the year 1914 we find in the first an- 
 nual report of the Federal Reserve Board, page 12, the 
 
82 GOLD CEASES TO CIRCULATE 
 
 following: "Tlie consequence was that rates for 
 drafts and cable transfers rose to prices which were 
 equivalent to a substantial premium on gold." 
 
 Not quite nine years ago, under the presidency of 
 that strong denunciator of the "malefactors of great 
 wealth, " Theodore Roosevelt, who, not only permitted, 
 but approved of that gross violation of law. He had 
 to. . Morgan was a little BOSS then ; but the House 
 of Morgan is SOVEREIGN now. 
 
 Some states like South Dakota think they have 
 met the situation by enacting that such obligations 
 can be paid in "lawful money." But the wonderful 
 efficiency of Warburg seems to have guarded against 
 every possible contingency, except perhaps ; an upris- 
 ing of the people. 
 
 We have three kinds of "lawful money": gold 
 coin, standard silver dollars, except where otherwise 
 stipulated in the contract, and United States notes 
 (greenbacks). The bullion certificates and the silver 
 dollars are being gradually withdrawn. The law of 
 1911 and the Federal Reserve law have provided for 
 the elimination, of gold coin. The gold certificates will 
 serve as lawful money for the money power, but not for 
 the people. 
 
 In dealing with the legal tender greenbacks I 
 quoted what I heard Mr. Reynolds say, and the ad- 
 vice he gave to the bankers of the whole country by 
 having it printed and distributed for their benefit. 
 
 The National Bankers Association have assumed 
 "the moral courage" and have unanimously decreed 
 that the greenback must go. 
 
 The bill will be in the interest of economy, to save 
 another billion dollars of waste, and I expect to see 
 it enacted. This administration, like the two pre- 
 ceeding ones, have conceded everything money monop- 
 oly have asked, and they will concede this. It may 
 or may not be put over until after the general elec- 
 tion, to save embarrassment to candidates. 
 
 It is a small concession compared with the Federal 
 Reserve law, and a very necessary part of the plan for 
 
THE GKEENBACKS MUST GO 83 
 
 the substitution of the bankers' credit for government 
 money. The greenback will go. 
 
 That will leave the standard silver dollars. I see 
 the usual approach in the official reports of the Treas- 
 ury Department to retire them. The expense of re- 
 coining uncurrent worn silver coins. Instead of the 
 holder suffering the loss, the government does. Then 
 there is another report showing the face value and 
 the bullion value, etc. Of course they will demand 
 "an honest dollar" and all that. Then there is a 
 statement of the storage space necessary, to store our 
 silver dollars. If you are interested to know, it re- 
 quires 1,250 cubic feet. The bankers' credit for same 
 amount does not require a single cubic foot. 
 
 Yes, the standard silver dollars will go. It will be 
 all the same whether a Wilson, a Root, a Taft, a 
 Hughes, or a Roosevelt will be elected president. Both 
 old parties are committed to the program. 
 
 "What will the harvest be" if we continue to trust 
 these men with such vast power? 
 
 We read daily of the terrible loss of life and the 
 worse suffering for years of the maimed. The daily 
 slaughter of the innocent non-combatants, the starving 
 millions of the ravaged territory; the worst the world 
 has ever known. But should the conspirators within 
 our own country succeed the suffering in these United 
 States will be greater than that caused by all the rav- 
 ages of war, because more prolonged. 
 
 The head of the House of Morgan becomes the 
 financial agent of the Allies of Europe. He secures 
 for them a loan of billions, on doubtful security, or as 
 Mr. Reynolds, one of the arch conspirators, would say, 
 ^'without any security whatever back of it"; just the 
 promise to pay by the several countries borrowing, 
 and at a rate of interest one-half the rate our aver- 
 age farmer has to pay, "with the best security in 
 the world" back of him. 
 
 In addition he becomes purchasing agent for them 
 on a commission. 
 
 Not content with that; and here I wish I could 
 Teach every business man in the nation, to warn them 
 
84 GOLD CEASES TO CIRCULATE 
 
 of what they may expect, when the House of Morgan 
 completes their conspiracy. 
 
 The war contracts have been enormously profitable. 
 "There's a reason." If a man has "a plant, and wants 
 a contract, there is nothing doing, until an agent of 
 the king comes around, and if he secures a controlling 
 interest in the firm, a fat contract follows. 
 
 Still unsatisfied, they want to prolong the era of 
 profit making, by embroiling us in one or two foreign 
 wars. That is what the greed of man will do and dare 
 for gain, and more gain. 
 
 That is the private business standard of the group ; 
 now we turn to the public service side. 
 
PUBLIC SERVICE A PUBLIC TRUST. 
 
 I maintain that any man, or group of men, who 
 secures a charter from the public to operate, or ad- 
 minister a public utility, thereby becomes a public ser- 
 vant, and as such is subject to public control, and en- 
 titled only to a reasonable compensation for labor and 
 investment, over and above expense of administration. 
 All over that belongs to the public, and if appropri- 
 ated to private use is in violation of a public trust. 
 
 That rule applies to all public service corporations 
 alike. 
 
 I am not going into the thousands of exploitations 
 that have been shown up in the press. I will simply 
 refer to two of the best as types and with which you 
 are familiar. The one deals with the tax on transpor- 
 tation which so vitally affects every industry in the 
 nation ; and the other with the tax, or interest, on our 
 medium of exchange, which controls every industry 
 in the nation, transportation and all. 
 
 ' One of the best of the type was known as the 
 "great empire builder" of the west. He was the 
 manager for many years of a great public highway; 
 a public service corporation. A most successful man- 
 ager. With nothing to invest but his ability, he has 
 divided billions of profits among himself and asso- 
 ciates. 
 
 As a sample, a few years ago the press reported, 
 as one of the many juicy melons cut by him, a dividend 
 present to the stockholders of $400,000,000. That, and 
 many other dividends, in equity and justice belonged 
 to the producers in this great "zone of plenty," and 
 never should have been taken from them in excess 
 freight rates. Plaving taken it, he did not render a 
 just account of his stewardship. 
 
 There must be an accounting some day. 
 
 He was one of the leaders in the small group, the 
 inner circle of the men who control; and who are 
 
86 PUBLIC SERVICE A PUBLIC TRUST 
 
 striving for the terrible power referred to. If those 
 who succeed him in management still cling to the law 
 of charging "all the traffic will bear" there is real 
 danger, and I have seen no signs of a change. 
 
 Another became known through the Pujo investi- 
 gating committee of Congress. Mr. Baker, president 
 of the City National Bank of New York, testified that 
 his bank, during the preceding five years, had made 
 an average profit of 285 per cent per annum. 
 
 "When asked if he did not think that a dangerous 
 power to place in the hands of a few men, he replied 
 that it would be in the hands of bad men. The in- 
 ference was that unlimited power might safely be 
 entrusted to such well known good men as Morgan, 
 Plill, Rockefeller, Baker and associates, who never 
 took more than they could. 
 
 These men have hypnotized themselves into believ- 
 ing that they are public benefactors; that the devel- 
 opment of the nation is safer in their hands than with 
 the general public. "What a pity that their splendid 
 genius, energy and ability had not been directed aright 
 for public service! 
 
 What a shame that you and I have placed this 
 great temptation in their path, which has proved too 
 strong for them to resist. 
 
 These men who profess to revere the constitution, 
 handed down by the fathers, as too sacred to be amend- 
 ed, have not hesitated to appropriate for their own 
 private use and personal gain the most vital section 
 of that sacred document. See Art. I, Sec. 8, No. 30. 
 
 They have the power now ; the only question is, as 
 to what extent they will use it. There is great dan- 
 ger in the propaganda for "preparedness" against a 
 wholly improbable danger from abroad, being made 
 the paramount issue in the ensuing campaign, and side- 
 tracking you from the vital issue, the real danger from 
 within our own borders. 
 
 It is a real and immediate danger, and the pity of 
 it is, that it will be the great unorganized and unpro- 
 tected industry of agriculture that must in the nature 
 
UNFAITHFUL REPRESENTATIVES 87 
 
 of things suffer most. "Will you help me expose and 
 defeat this, the greatest conspiracy of the world's 
 history. 
 
 I do not claim that the government officials who 
 recommended the changes in their reports did so with 
 any ulterior motives. Shrewd, efficient, plausible men 
 like Paul Warburg and Geo. M. Reynolds could point 
 out to them the advantages in saving, or efficiency, in 
 such a convincing manner as to make them think 
 that they were doing a real public service. 
 
 I have heard Mr. Reynolds talk to the bankers, and 
 I KNOW the effect it had on them. Imminent bank- 
 ruptcy must have been their nightmare, until the 
 Aldrich plan was enacted into law ; and what a power- 
 ful influence those bankers exerted in a quiet way in 
 every village, town and city in the nation, for I have 
 reason to believe that Mr. Reynolds' address was sent 
 to every banker in the nation. It was a wonderfully 
 effective campaign. Very soon after the meeting my 
 opinion of the address was published in one of our 
 daily papers, and so far as I know, it was all that was 
 given to the public. 
 
 I do not charge that all of our representatives in 
 Congress understood the import of the several changes 
 required for the substitution of bankers' credit for 
 government money. 
 
 We have not been electing our representatives and 
 United States senators because of their knowledge of 
 political economy, or the needs of legislation to safe- 
 guard the free exchange of labor and labor products. 
 
 With few exceptions, our national legislators are 
 "selected" by the political machines of the two domi- 
 nant political parties, as -a reward for past party ser- 
 vice, and an assurance that they will "play the game'"; 
 and, you the voluntary slave of your party, "elect" 
 them. 
 
 The party machine selects, and you elect. 
 
 Now frankly, to whom do the Representatives and 
 United States Senators owe their allegiance? Not 
 to you ; you had nothing to do with the selection ; you 
 
88 PUBLIC SERVICE A PUBLIC TRUST 
 
 simply ratified it. You would have done the same 
 for the meanest man in your party, had he been 
 selected. 
 
 I have heard men boasting of their party loyalty 
 say that they "would vote for a yellow dog, if nomi- 
 nated by their party"; my usual answer was, if you 
 think a yellow dog can properly represent your prin- 
 ciples, you are doing just right in voting for him. 
 
 To whom does the party machine owe its alle- 
 giance? Not to you; they own you; but to the men 
 or interests who furnish the campaign funds. They 
 had you secure; they must have campaign funds to 
 "influence" the floating voters, and pay party work- 
 ers. The interests desiring legislation are wholly non- 
 partisan, and never contribute a dollar until they have 
 an understanding with the political machine. 
 
 Party loyalty is the bane of American polities. 
 You tell me in advance of an election, what interests 
 are financing the campaign of an individual, or a 
 political party, and I will tell you what their record 
 will be if successful at the polls. 
 
 After all, the responsibility rests with the individ- 
 ual voter. 
 
 I claim that the reasons given for every amend- 
 ment or change in our monetary laws were deceptive, 
 and the reverse of what the people were made to be- 
 lieve was intended. 
 
 The same will be found true of all monopoly de- 
 sired laws. I have already touched on a few of those, 
 so will not repeat, but it is safe to take that as a guide 
 for the future. 
 
 The most eifective weapon has always been a panic, 
 or a near panic. 
 
 There is nothing a political party in power dreads 
 so much as hard times, industrial disturbances, busi- 
 ness depression, idle men, free soup houses, etc. It 
 reflects upon their administraiton. I do not claim that 
 President Roosevelt was responsible for the "bank- 
 ers' panic" of 1907. I do claim, that when the panic 
 was on, he became panic-stricken, and thereby an ac- 
 complice of the House of Morgan in all of their designs 
 
HOUSE OF MORGAN SUPREME 89 
 
 as I have previously shown, and aided them later in 
 securing the legislation they desired. 
 
 Had he had the moral courage to have seen that the 
 national bank law was enforced, there would have 
 been no panic. 
 
 I also claim that the House of Morgan still retains 
 the strangle-hold on him they secured in 1907. This 
 was demonstrated clearly by that midnight visit to 
 Sagamore Hill by Geo. W. Perkins, when he induced 
 Colonel Roosevelt to "throw his hat in the ring" to 
 prevent the nomination and election of Senator La- 
 Follette for president. 
 
 That his campaign was financed by money monop- 
 oly through the medium of Geo. W. Perkins to whom 
 he continues to give allegiance, and that if elected 
 then, or in the future, he would be in honor bound 
 to carry out the policies of the men and interests who 
 financed his campaign. I am not going to accuse him 
 of cowardice. Of physical courage he has plenty. 
 But in my opinion his ambition and love of power 
 predominate. "When Perkins took him up into the 
 mountain, he did not have the moral courage to say 
 "Get thee behind me, Satan." 
 
 His successor. President Taft, was selected to 
 carry out the Roosevelt policies, not the openly 
 avowed policies, which some one sarcastically said 
 President Taft was "carrying out on a stretcher," but 
 the secret ones of money monopoly, which was carried 
 otit to the letter. 
 
 It required no coercion. By nature, environment, 
 and instinct, in my judgment, he was theirs, without 
 a struggle. 
 
 Better things were hoped for from President Wil- 
 son, even if not expected. But the record up to date 
 demonstrates conclusively that his administration will 
 go into history as the most disappointing to the people, 
 and the most satisfactory to private monopoly, of any 
 in the history of our country. 
 
 In the Federal Reserve law it has given them more 
 than was asked of Roosevelt or Taft, and all that was 
 needed to clothe them with full constitutional and 
 
90 PUBLIC SERVICE A PUBLIC TRUST 
 
 legislative power to change our monetary system from 
 government money to a private monopoly of bank 
 credit. 
 
 President Wilson got the title and preamble; the 
 House of Morgan got the substance — the kernel. 
 They are now in supreme control. 
 
 Their plans and methods have been cruelly efficient 
 and efficiently developed by the master minds of War- 
 burg and Reynolds. I am simply giving you the facts 
 as I have gathered them, the object aimed at, as I see 
 it, and the power the House of Morgan now possesses. 
 Too great a power to be conferred on any group of 
 men, even of the best men living today. 
 
 It is not right that we should place such tempta- 
 tion in their way. 
 
 Can you trust them to use that power in the inter- 
 est of the whole people in view of their past record? 
 That is up to you; YOU. 
 
 I do not claim, and will not, that all of the repre- 
 sentatives and senators who voted for these measures 
 understood what they were voting for. I am sure that 
 many of them did not. They accepted the assurance 
 of their party leaders — the machine — ^that they were 
 all right. 
 
 If they were innocent when they voted for those 
 laws, and now do not approve of them, it is their duty 
 to vote to repeal them before it is altogether too late. 
 Unless they do, we should hold them "to strict ac- 
 countability." 
 
THE GREAT CONSPIRACY AS DEVELOPED. 
 
 The conspiracy is not new. It is as old as avarice. 
 
 It fastened its fangs upon our republic at its birth, 
 and had so abused its power that it required a great 
 national campaign under the leadership of Andrew 
 Jackson to deprive them of that control. 
 
 Always alert, regardless of the effect on humanity, 
 they took advantage of the necessities of the govern- 
 ment during our Civil War to once more secure partial 
 control, and have persistently followed it up ever since. 
 
 "Wholly non-partisan politically, they are strongly 
 partisan as a business organization. In Republican 
 states they are Republican; in Democratic states Dem- 
 ocrats; everywhere for the National Bankers' Associa- 
 tion. 
 
 What they cannot secure by open argument, they 
 can and do by impairing confidence, and cultivating 
 the fear of a panic. There is nothing a political party 
 in power dreads so much as a panic. Hard times 
 means defeat, and money monopoly utilizes that nerv- 
 ous condition to accomplish their immediate design, 
 and never hesitates to precipitate the panic, or semi- 
 panic, if necessary to attain their object. 
 
 For many years their aim was to sectire a monop- 
 oly of, or at least a control of, the money of the coun- 
 try. Of course, to do so it would help if they could 
 limit the volume. The smaller the volume, the easier 
 to control. 
 
 We were then on a bi-metallic basis. From 1850 to 
 1870 the world's annual production of gold had been 
 decreasing gradually, and that of silver increasing 
 rapidly, having more than doubled during that period. 
 They feared that the rapid increase in silver produc- 
 tion would make it impossiljle for them to control, and 
 their fear was well founded, because in the next twenty 
 years silver had again more than doubled, while the 
 production of gold was still decreasing. 
 
92 THE GEEAT CONSPIRACY 
 
 This rapid increase of metallic money, the produc- 
 tion of which they could not control, must be met in 
 some other way, and what way more effective than to 
 abolish the double standard, and while, doing so strike 
 out the more plentiful metal, silver, by demonetization. 
 But how could it be accomplished? 
 
 "We were large producers of silver. The double 
 standard was satisfactory. There was no demand for 
 a change, except from the comparatively earnest few 
 government money advocates — greenbackers — who saw 
 very clearly what the inevitable result must 
 be of any financial system based on any commodity, 
 uncertain in quantity, and depending wholly upon the 
 chance of discovery, as a medium of exchange of the 
 certain and rapidly increasing products of labor. 
 
 But as usual, the bankers were equal to the emer- 
 gency and by adopting the most absurd possible theory, 
 "the danger of inflation," succeeded. 
 
 Every effort possible made to inflate production, all 
 of which spelled prosperity, which must be accom- 
 panied with a decreased medium of exchange. They 
 were apt disciples of Barnum, "the people like to be 
 fooled." The first thing was to impair "confidence." 
 When that was accomplished, by fear of a panic, etc., 
 then the remedy was offered. 
 
 _To restore "confidence" and "prevent panics in the 
 future" silver must be demonetized. They did not 
 succeed wholly, but did so practically, through the 
 Hepubliean party, and we no longer coin the silver 
 dollar. Minor silver coins are not a full legal tender. 
 
 It is strange that the people do not catch on to 
 this ever fruitful farce, or thv3 quack doctors' financial 
 prescriptions, which always fail. 
 
 The next important move in their plan was to get 
 Congress to declare for the single gold standard. Con- 
 fidence was being impaired by a doubt, etc. There 
 was the danger of a panic unless this was done, etc. 
 
 The same old farce, but it succeeded under a Demo- 
 cratic administration by means of a panic pressure and 
 "an endless chain." 
 
GOLD MONOPOLY ACCOMPLISHED 93 
 
 Since 1870 the world's annual production of gold 
 has increased rapidly, and is now about five times as 
 much as it was then. 
 
 This increase, with future prospects, has been inter- 
 fering with their plans. To ask for the demonetization 
 of gold, as I predicted twenty-four years ago, would 
 under such circumstances, expose them to ridicule, and 
 thwart their plans in a very important particular. 
 
 Counting on securing a monopoly of gold, and 
 using their power as creditors, a little over twenty 
 years ago, they began demanding, in so far as they 
 could influence, that all obligations should be made 
 payable in gold. This was especially true of farm 
 mortgages and obligations. 
 
 But to be sure that Congress might not later ipter- 
 fere with their plans by authorizing less gold for the 
 dollar, as has been done by many governments in the 
 past, including our own, they made the obligation read 
 "payable in gold coin of the present standard, weight 
 and fineness." The reason for this will be shown later, 
 and for wickedness has never been equaled. 
 
 The next thing was to secure a monopoly of gold 
 and lawful money. 
 
 The more of this gold or lawful money that could 
 be destroyed as money, or withdrawn from circulation, 
 legally, the easier to corner the remainder. 
 
 The substitution of gold and silver certificates 
 which are not a legal tender, for gold coin ^nd silver 
 do'lars would help, and this was accomplished. 
 
 The retirement of the greenbacks was another step. 
 The substitution of bank currency for lawful money 
 another. 
 
 I doubt if even ten years ago they had dreamed of 
 being able to usurp by legislation the sovereign con- 
 stitutional power of issuing money, from Congress for 
 their own private use and profit; or to demonetize as 
 much gold as suited their purpose, by decoinage ; or 
 the still more revolutionary scheme of changing our 
 financial system from one of government money to un- 
 limited bankers' credit: a perfect monopoly of money 
 
94 THE GREAT CONSPIRACY 
 
 and credit, which carries with it the absolute control 
 of all commerce and industry. 
 
 Incredible as it may appear, all this has been ac- 
 complished within the past ten years, except the retire- 
 ment of the greenbacks, by an overwhelming majority 
 of the people's (?) representatives in Congress, and 
 hailed as a crowning achievement by our President. 
 
 It is to this ten year period, covering in part two 
 Republican administrations and one Democratic, that 
 I will in the main limit myself. This is yet current 
 history that will be familiar to the present voting gen- 
 eration. 
 
 It is twenty-eight years now since I first realized 
 the power of interest to accumulate over labor to pro- 
 duce and accumulate. I stated then that it was only 
 a question of time when the men who received the 
 interest would control. 
 
 I pointed it out clearly in my text book for the Na- 
 tional Farmers' Alliance and Industrial Union, pub- 
 lished in 1893, and I have watched the development 
 closely ever since. Now that the conspirators are in 
 power, and making such rapid progress towards the 
 completion of their inhuman plans, I once more give 
 the alarm in hopes that you will aid me in exposing 
 the conspiracy, that we may prevent the dreadful re- 
 sults that must inevitably follow. There is no time to 
 be lost. 
 
 In the Federal Reserve Bank law, and other laws, 
 enacted during the past ten years the House of Mor- 
 gan has secured the laws giving them the power to 
 control. Are you willing to leave that power in their 
 hands ? 
 
THE HOUSE OP MORGAN CEOWNED SOVEEEIGIT 
 
 Are the men in control to be trusted to administer 
 our greatest public utility, our medium of exchange, 
 in the interest of the people? 
 
 Our best guide for the future is the past, and for 
 this purpose it is not necessary to go back very far; 
 just a few years. 
 
 Theodore Roosevelt as Governor of New York had 
 proven to be something of an enigma. At every op- 
 portunity he declaimed against "predatory wealth," 
 "malefactors of great wealth," etc., and at the same 
 time could be depended on to serve "the system'"' on 
 demand. At that time O'Dell was boss, and Harri- 
 man was the financial spoke in the New York state 
 wheel. 
 
 To enable the "system" to raid the savings banks 
 of the state a law was enacted authorizing the savings 
 banks to invest in securities of certain railroads, of 
 which the Chicago & Alton was not one. 
 
 In 1898 Harriman and associates secured control 
 of the C. & A. which up to that time had been con- 
 servatively managed. In seven years they had in- 
 creased the bonded indebtedness from $33,000,000 to 
 $114,000,000, $62,000,000 of which was water. It was 
 a national scandal, the worst perpetrated, so far as ex- 
 posed, up to that time. The bonds could not be floated. 
 
 In the 1906 investigation, when Harriman was 
 asKed if at that time he was not under obligations to 
 O'Dell, he answered that O'Dell was under obligations 
 to him, etc. The exposure prevented Harriman from 
 selling the C. & A. bonds, so in his hour of distress 
 he concluded to cash a political coupon, and turned 
 to Boss O'Dell and the New Torli legislature, and had 
 a bill introduced which was passed February 26th, 
 1900, for the specific purpose of authorizing the New 
 York savings banks to invest in the Chicago & Alton 
 
96 JIORGAN CROWNED SOVEREIGN 
 
 securities, and Mr. Ilarriman Iiad a market for his 
 fraudulent C. & A. bonds in the New York savings 
 banks. 
 
 President Roosevelt and Ilarriman remained unus- 
 ually close friends during his first term, and Harriman, 
 at Roosevelt's request, raised a very large fund for 
 the campaign of 1904. 
 
 For some reason President Roosevelt changed his 
 allegiance to the Morgan group before the 1908 cam- 
 paign. 
 
 It is not necessary at this time to go into that 
 further, unless Mr. Roosevelt should again be a can- 
 didate for President. The correspondence was pub- 
 lished in 1907 and we will close that episode by re- 
 printing a plea of the New York Sun, an ultra-capi- 
 talist and administration organ : 
 
 "We ask Mr. Harriman to refrain from pursuing 
 further the solution of the direct issue of veracity with 
 the President of the United States which the President 
 has raised. We are contemplating only the scandal, 
 the spectacular indecency, the hideous immorality, in 
 the broadest sense of the word, of continuing a con- 
 test, which, even if it could be brought to a triumphant 
 conclusion by Harriman and his partisans, WOULD 
 RESULT IN EXHIBITING THE PRESIDENT OP 
 THE UNITED STATES IN A LIGHT PIT TO BRING 
 SHAME TO THE CH-EEKS AND SORROW TO THE 
 HEART OP EVERY HONEST CITIZEN OP THE 
 REPUBLIC." 
 
 The Bankers' Panic of 1907. 
 
 The panic of 1907 came like a clap of thunder out 
 of a clear sky. 
 
 The people were wholly unprepared. Even the 
 bankers of the nation, outside a small group in New 
 York city, seemed to have had no hint of it. 
 
 There had been two groups of financiers contending 
 for supremacy in the control of our financial and 
 transportation systems; the one under the leadership 
 of the Morgan-Hill group, and the other under the 
 leadership of the Roekefeller-Harriman group. There 
 
THE BANICERS' PANIC 97 
 
 was also a third group coming into prominence, called 
 the Heinze-Morse group. 
 
 It may never be known just what the real object 
 was; wc can only judge by the result. In criminal 
 cases, where there is no direct proof, suspicions rest 
 upon those who might be the beneficiaries. In this 
 case it was the general verdict, and so recorded, that 
 it was a "Bankers' Panic." 
 
 There had been a good deal of complaint of Presi- 
 dent Roosevelt. He had been playing too much for 
 public support to secure a third term. He had a habit 
 of declaiming against "predatory wealth" and against 
 the "malefactors of great wealth,"' etc., which was 
 very annoying to them. He would raise the lid of 
 some oppression or extortion and threaten to prose- 
 cute, but just as soon as he was advised that he was 
 hurting the party, he would smash down the lid, and 
 sit on it, and that was the last of that proposition. 
 He would then promise that he would "no longer run 
 amuck." This was repeated so often that there might 
 also have been a desire to force the President out in 
 the open, and perhaps cause his defeat for renomina- 
 tion. But whatever the aim or object, I look upon it 
 as the most important epoch for evil in our history as 
 a nation. The opening of a campaign for the speedy 
 substitution of bankers' credit for government money; 
 of private control, by the worst element of the nation ; 
 of the commerce and industry of the nation, and even 
 of popular government; and successful beyond belief. 
 
 In a speech in the United States Senate in March, 
 1908, Senator LaFollette, in speaking of the period 
 just preceding the panic, that is, 1905-6, said : 
 
 "The fight waxed hot and reckless, and the coun- 
 try was startled with the revelations. The scandal 
 spread. It involved the Equitable Life, the Mutual 
 Life, the New York Life, the banks of the Morgan 
 group, and banks of the Standard Oil group. Morgan 
 and his associates made furious efforts to suppress in- 
 vestigation, but the public demand forced it upon 
 Governor Higgins, and the Armstrong committee began 
 its work. It disclosed the relations existing between 
 insurance companies and banks and railroads and in- 
 
98 MORGAN CROWNED SOVEREIGN 
 
 dustrial organizations and the use of hundreds of 
 millions of money held in trust upon which the big 
 men of the groups, banker and all, were drawing, in 
 violation of every principle of honesty in the admin- 
 istration of public funds." 
 
 March 4th, 1907, a successful raid was made on 
 the United States treasury by authorizing the federal 
 government to deposit its funds with the national 
 banks free of interest, biit the smash in stocks con- 
 tinued. 
 
 However, it did not ai¥ect the country as a whole; 
 that is, those who kept out of "Wall Street. The year 
 for legitimate business was one of our most prosper- 
 ous. We had good crops and good prices; the farm 
 values for the year had increased nearly $500,000,000 ; 
 bank deposits increased nearly $900,000,000; the net 
 railroad earnings had increased over 1906 by $260,- 
 000,000. According to LaFollette: 
 
 "There were no commercial reasons for the panic. 
 There were speculative, legislative, and political rea- 
 sons why a panic might serve special interests. There 
 were business scores to settle. There was legislation 
 to be blocked and a currency measure suited to the 
 system to be secured." 
 
 The central bank had been broached, but fathered 
 by Aldrich it did not meet with favor, so the old tactics 
 must be resorted to — impair confidence, promote signs 
 of a panic to scare the public, and coerce Congress 
 and the President into compliance with their demands. 
 
 It was an inopportune time for a President seeking 
 re-election, or a party in power to commit itself open- 
 ly, but the time had come for a trial of strength. 
 
 For some reason the President had transferred his 
 allegiance from the Standard Old-Harriman group to 
 the Morgan-Hill group. It was also claimed that the 
 Morgan group hoped to catch the Standard Oil group 
 short, because of a large flotation of short time notes 
 in France, by discrediting same and instigating a 
 demand for payment. Then again, both big groups 
 were after a smaller ambitious group just then be- 
 
LAWLESSNESS UNPARALLELED 99 
 
 coming active in "Wall Street and known as the Morse- 
 Heinze group. 
 
 In October the trap was sprung by the bandits in a 
 cold-blooded manner, for which those' responsible 
 should have been made to pay the severest penalty. 
 
 As a result, the Morgan interests gathered in the 
 Morse shipping interests, which were competing with 
 the New Haven railroad, and the Standard Oil gath- 
 ered in the Heinze interests. 
 
 The Morgan group caught the one great and threat- 
 ening competitor of the Steel Trust, the Tennessee Coal 
 and Iron Co., and the Standard Oil the greatest com- 
 petitor of their General Electric Co. 
 
 Lawlessness Unparalleled. 
 
 Surely that was enough to satisfy the greed of a 
 gourmand, but no, they wanted to demonstrate their 
 power in a way that would insure such legislation as 
 they desired to complete their plans. They wanted to 
 discipline Congress, and bring the President to his 
 knees; he had been talking too much; it annoyed 
 them. He must be made to do more, and talk less. 
 This could be done most effectively through the people 
 of the whole nation by an object lesson. And we had 
 the object lesson! 
 
 In violation of the national bank laws the New 
 York banks refused to honor the drafts of the interior 
 banks, and they in turn were forced to violate the 
 banking laws and refuse to honor checks of their de- 
 positors, and without an hour's warning there was no 
 money in the interior to pay for our grain, and other 
 farm products. The reason given was that the eastern 
 correspondents had wired the local banks that they 
 could not honor drafts, because the New York banks 
 had ceased to honor their drafts. Everything locked 
 up in New York. 
 
 Never was the power of the New York banks to 
 paralyze commerce and industry the nation over so 
 quickly and thoroughly demonstrated as on that fate- 
 ful October morning in 1907. I speak from personal 
 experience as to the effect on the farmers of the nation. 
 
100 MORGAN CROWNED SOVEREIGN 
 
 I had an unusually large crop of barley, and a large 
 surplus to sell. I was selling four large loads a day, 
 receiving from 90 to 95 cents per bushel. Sent in two 
 loads in the morning, and was advised over the phone 
 that they could not buy. Why? No money. Banks 
 closed all over the nation, and local banks advised to 
 pay out no money. Later in the' day I was advised 
 that if I would agree to take a check on the bank with 
 the understanding that I would not draw out the 
 money, just check against it, that they could pay me 
 45 cents per bushel. 
 
 The price was cut more than in two. Most of us 
 had to make the sacrifice to meet our obligations, and 
 avoid foreclosures of mortgages. 
 
 Those who could afford to, held back, but it did 
 no good, because prices did not recover for that year's 
 crop. 
 
 The trust-protected industries suffered temporary 
 embarrassment only. There was no rediiction of 
 prices, because no forced sales. 
 
 What did the government do to help agriculture in 
 this great crisis?, Nothing. The sympathy of the 
 President and the Secretarj^ of the Treasury waa 
 wholly with the pirates of Wall Street who had planned 
 the coup, and were making their millions and billions 
 of dollars out of it. 
 
 Had we had a separate Federal Investment Banking 
 system, such as I am advocating, the farmers would 
 have passed through that panic without a loss. In 
 fact there vfould not have been any panic at all. 
 
 For the closing scenes of that campaign for in- 
 creased personal power on the part of the men to 
 whom had been given almost unlimited special privi- 
 leges as public servants, and their manner of using 
 those favors I cannot do better than quote again from 
 Senator LaFollette's address: 
 
 The Closing Scene. 
 
 "The floor of the stock exchange was chosen for 
 the closing act, October 24th the time. The men who 
 had created the money stringency, who had absorbed 
 
THE CLOSING SCENE 101 
 
 the surplus capital of the country with promotions 
 and reorganizations schemes, who had deliberately 
 forced a panic and frightened many innocent depos- 
 itors to aid them by hoarding, who had held up the 
 country banks by lawlessly refusing to return their 
 deposits, never lost sight of one of the chief objects 
 to be attained. The cause of currency revision was 
 not neglected for one moment. It was printed day by 
 day in their press; it passed from mouth to mouth. 
 The phenomenal interests were impressing the public 
 in a way never to be forgotten. High interest rates 
 must be paid for emergency money through the tele- 
 graphic dispatches of October 24th in every counting 
 house, factory and shop in America. The banks re- 
 fused credit to old customers ; all business to new cus- 
 tomers. Call loans for monej'' were at last denied at 
 any price. This put operators caught short or long 
 on the rack. It spelled ruin. 
 
 "For the first time since the panic began, 11:30 
 A. M. arrived with everybody on the floor of the stock 
 exchange wildly seeking money at any price. Inter- 
 est rates which had for several days ranged from 20 
 to 50 per cent, began to climb higher. Settlement 
 must be made before 3 o'clock. Money must be forth- 
 coming, or the close of the business day would see 
 Wall Street a mass of ruins and banks and trust com- 
 panies on the brink of collapse. 
 
 The Terrible Climax. 
 
 "How perfect the stage setting. How real it all 
 seemed. But back of the scenes Morgan and Stillman 
 were in conference. They had made their representa- 
 tions at Washington. They knew when the next in-/ 
 stallment of aid would reach New York. They knew, 
 just how much it would be. They awaited its arrival 
 and deposit. Thereupon they pooled an equal amount. 
 Btit they held it. They waited. Interest rates soared. 
 Wall Street was briven to a frenzy. Two o'clock 
 came, and interest ran to 150 per cent. The smash- 
 ing of the market became terrific. Still they waited. 
 Union Pacific declined 101/2 points in ten sales. North- 
 
102 MORGAN CROWNED SOVEREIGN 
 
 em Pacific and other stocks went down in like pro- 
 portion. Five minutes passed — ten miutes — past 2 
 o'clock. Men looked into each other's ghastly faces. 
 Then at precisely 2 :15 the curtain went up with Mor- 
 gan and Standard Oil in the center of the stage with 
 money — ^real money, twenty-five millions of money — 
 giving it away at 10 per cent. 
 
 ' ' Oh, uncrowned King ! ' " 
 "None but himself can be his parallel." 
 "Even the dullest person standing by 
 "Who fastened still on him a wondering eye 
 "He seemed the master spirit of the land." 
 "And so ended the panic." 
 
 Senator Nelson said, in part: "In the state of 
 Minnesota, prior to the tie-up in New York, we had 
 been moving all our crops with western money. It 
 was not until the panic started in New York, and 
 until the banks of New York, Chicago, and other re- 
 serve centers tied up over $30,000,000 of the funds of 
 our Minnesota national banks that our local banks 
 were forced to follow suit. The only way the bankers 
 stopped the panic was by breaking the law, suspend- 
 ing payments, holding up the entire country. That 
 is the modern way of stopping a panic, and it is an 
 easy way. People submit to it. If the First National 
 Bank of Alexandria, my own town, had suspended 
 during that panic, and refused to pay, as it did not 
 do, the Comptroller of the Currency would have been 
 swift to have put it in the hands of a receiver and 
 wound it up." 
 
 Why did the Comptroller of the Currency fail to 
 comply with the law and put these big New York 
 banks in the hands of receivers to be wound up, as 
 has always been the custom? There was a reason. 
 
 What was President Roosevelt doing to stop this 
 inhuman, ungodly, riot of mammon? Or what was 
 he doing to help, directly, or indirectly? 
 
 The New York banks had secured from outside 
 banks, and held in their vaults, $410,000,000, subject 
 
FEDERAL TREASURY DRAINED 103 
 
 to call, according to law, and subject to be closed up 
 and wound up if they failed to respond promptly. 
 
 With one accord they violated the law, and defied 
 the officials sworn to see that the laws were enforced. 
 
 They had secured deposits, taxed from the people, 
 free of interest, from the federal treasury of $400,000,- 
 000, none of which was called for by the Treasurer 
 to help the interior banks in distress. 
 
 They called on the administration for more help 
 and Secretary Cortelyou responded with $100,000,000 
 more, which emptied the treasury; still the demand 
 was for more, and $50,000,000 Panama canal bonds 
 were sold and the proceeds went into the Morgan hop- 
 per. These bonds were not offered to the general 
 public, but sold to the Morgan syndicate, 75 per cent 
 of the purchase price remaining on deposit in their 
 vaults, and the remaining 25 per cent quickly returned 
 by deposits. The Panama canal was not in need of 
 the money, and it was not raised for its use ; but what 
 was that as between master and servant ? It looked 
 like a misappropriation. Was it? 
 
 The northwestern bankers were in distress and 
 were clamoring for a share of the public funds but a 
 deaf ear was turned to them. Senator Nelson and oth- 
 er Representatives called on the federal officials and 
 remonstrated, and urged that any further money be 
 sent to the western bankers direct, but without avail ; 
 and Morgan insisted on more money. 
 
 Seventy-five millions in certificates of indebtedness 
 were offered to the public at 3 per cent and $15,436,500 
 sold and went to Morgan & Co. They had drained 
 the federal treasury and the public to the limit. They 
 had confiscated $410,000,000 of their creditors' money, 
 and appropriated $642,000,000 of the people's money, 
 by collusion or coercion, to the utter demoralization 
 of and sacrifice of the nation's business. There was no 
 protest by the Comptroller of the Curi'ency, and no 
 receiivers appointedt, as would have been, the case 
 with an interior bank. 
 
 It is fair to assume that the New York bankers 
 had an understanding with the Comptroller in ad- 
 
104 MORGAN CROWNED SOVEREIGN 
 
 vanee or they never would have taken the risk. It 
 is also fair to assume that the Comptroller had an 
 understanding with the President, or he would have 
 followed the usual custom of winding up the banks. 
 
 Someone in the United States Senate kindly said 
 that: "They held a dagger at the throat of the Presi- 
 dent, compelling him to issue more interest-bearing 
 bonds for their special benefit." 
 
 The President might writhe in pain, or gnash his 
 teeth in agony, in dread of the pending election, but 
 they had made him; he was in their power, and they 
 knew no such thing as mercy. It was then we needed 
 an Andrew Jackson in the executive chair. 
 
 The Sherman Anti-Trust Law Also Violated. 
 
 The violation of one of our vital laws was not 
 enough to satisfy the greed of these "malefactors of 
 great wealth." There was a new competitor of the 
 Morgan steel interest growing up in the south, a very 
 valuable and promising propea-ty, which had be«n 
 valued at over $1,000,000,000. They got the men who 
 controlled the companj'- in their toils, but it would be 
 a violation of the Sherman anti-trust law to take it 
 over, as giving them a monopoly of the steel industry. 
 Messrs. Gary and Friek were sent to see the President 
 to get his consent and promise that they would not 
 be prosecuted if they did absorb it. There was no 
 "dagger'" needed this time. He agreed promptly, but 
 a pirate never takes chances. They insisted that he 
 so instruct the Attorney General, and he did so. 
 
 For years these men had been trying to secure the 
 repeal, or the amendment, of this law, and failed. 
 This grave neglect of duty on the part of the Presi- 
 dent and Attorney General created such a scandal that 
 a Senate committee was appointed to investigate. The 
 committee consisted of Senators Kittredge, Overman, 
 Rayner, Culbertson, Bacon, Nelson and Foraker. The 
 report was unanimous that the President had no au- 
 thority to promise immunity from prosecution (re- 
 port 1110, 60th Congress.) 
 
ANTI-TRUST LAW VIOLATED 105 
 
 The committee also say of the President's letter 
 to the Attorney General of date November 4th: 
 
 "We think it was, in effect, a direction to the At- 
 torney General not to interfere but to permit the 
 proposed purchase and absorption to be consummated. 
 * * * Moreover the letter to the Attorney General 
 shows that the legality of the merger was discussed 
 and that the President gave the representatives of the 
 Steel Corporation who visited him to understand that 
 the action proposed could be taken if desired. It was 
 not until this understanding was telephoned from 
 Washington to New York city by one of the represen- 
 tatives of the Steel Corporation to another representa- 
 tive there that the purchase and absorption was made. 
 In our opinion the President permitted and sanctioned 
 the acquisition and merger." 
 
 In his message to the Senate of date January 6th, 
 1909, President Roosevelt said: "As to the transac- 
 tion in question I was personally cognizant of and 
 responsible for its every detail." 
 
 From the testimony, one George W. Perkins of the 
 Steel Trust seems to have been the active representa- 
 tive of the Steel Trust. 
 
 That may account for his permanent hold on the 
 ex-President. 
 
 The profit on that one transaction to the House 
 of Morgan was estimated at $955,000,000 on the pur- 
 chase alone. What it means indirectly is hard to 
 estimate. I have gone into this rather fully to show 
 the character, or lack of character, of a few of the 
 men to whom we are expected to trust our future 
 destiny as a people and a nation. 
 
 "To cap the climax," when they had secured all 
 they thought they could grab at that time, and when 
 interest had soared up to 150 per cent, the sham bat- 
 tle between the two houses of Morgan and Standard 
 Oil ceased, and Morgan and Stillman had divided the 
 last $25,000,000 received from the government equally 
 between them, the panic was called off, and they 
 were acclaimed patriots for having saved the nation, 
 
106 MORGAN CROWNED SOVEREIGN 
 
 by those who had not been, beggared, or committed 
 suicide. The tragedy of it! 
 
 The panic had accomplished much more than the 
 conspirators had ever dreamed of. The House of 
 Morgan was now in supreme authority in the United 
 States. "The rule of reason" had been written in 
 our court decisions ; our most strenuous fighting Presi- 
 dent had been degraded and Congress seared into ab- 
 ject obedience ; our vital laws ignored with impunity ; 
 and our prosecuting officials paralyzed. Senator Nel- 
 son said truly, "Holding up the entire country in the 
 most lawless method I have ever known." 
 
 We read in ancient history that when the Roman 
 emperors captured a distinguished chief, prince, 
 king, or emperor, they exhibited their captive tied to 
 their chariots in triumphant march through the streets 
 of Rome. 
 
 The House of Morgan has improved on that. They 
 had the captive chief, the President of the United 
 States, ride in the chariot of state, and proclaim that 
 the conspirators, the authors and promoters of the 
 panic of 1907, the worst we had ever had, were benevo- 
 lent, patriotic benefactors, for stopping their own 
 panic. 
 
 It had been said that J. P. Morgan, Sr., was our 
 uncrowned king; not quite so President Roosevelt in 
 that proclamation, crowned him sovereign, with right 
 of succession. 
 
 Private monopoly has neither sympathy nor mercy 
 for a political party or politician in distress, and no 
 gratitude for past favors. 
 
 The public man who puts himself in their power, 
 is never again a free man. He must either "play the 
 game' or retire from public life. 
 
 The distress of a political party or prominent pub- 
 lic man is their opportunity. 
 
MORGAN CABINET CHANGES TACTICS, 
 
 With a new administration whose members had for 
 many years opposed anything bearing the brand of 
 Aldrich, any effort to enact the Aldrich plan, known 
 as the Reserve Association of America, would have 
 been very embarrassing. Many prominent Democrats 
 had exposed and denounced it in strong terms. That 
 they then understood what the House of Morgan aimed, 
 at is evident. In the issue of The Commoner of bate 
 January 14, 1910, The Great Commoner, under the 
 caption, "And Now He Wants The Central Bank," 
 after enumerating the many financial institutions and 
 industries controlled by this one House, said: 
 
 "With a total of more than ten billion dollars in; 
 resources in the above companies, Morgan, it is claimed 
 in financial circles, can do about as he pleases with 
 the finances of the country, no matter what monetary 
 legislation is enacted by Congress and there is a feel- 
 ing of wonderment in Wall Street today as to where 
 the aged financier is going to get off. It is known 
 that his recent activity in assuming control of the 
 big banks, trust and insurance companies is all part 
 of one general plan that was decided on by Morgan 
 and his advisors following the panic of 1907. 
 
 "Closer control of banks and stricter restrictions 
 for their management were the suggestions Morgan 
 made when he was asked at that time what remedy 
 there was for the panic and, judging from recent 
 developments, he has set out to secure the closer con- 
 trol at any rate. 
 
 "And now he wants the American people to give 
 him the central bank. 
 
 "Will they do it?" [Note.— Yes, inside of four 
 years and with Mr. Bryan 's help.] 
 
 Gov. Polk:, of Missouri, another Democratic presi- 
 dential candidate, was present at the Chicago Aldrich 
 meeting and said of the Aldrich plan, in part : 
 
108 MORGAN CIIANGES TACTICS 
 
 ' ' In my opinion the Aldrich plan is radically "wrong 
 in that it would bestow upon private interests through 
 the medium of the proposed National Reserve Asso- 
 ciation, the control of the government of the country. 
 The National Reserve Association suggested is noth- 
 ing more than a central bank with a capital of $300,- 
 000,000 and places in the hands of the interested finan- 
 cial interests the entire management of the money 
 matters of the nation. 
 
 "The memory of the central bank which Andrew 
 Jackson fought, its corruption of members of Congress 
 and attempted control of the government itself, v/ill 
 effectually prevent this experiment being tried again 
 in this country. 
 
 "The people will never consent to the delegation 
 of such authority to private parties; and the result 
 will be that the relief hoped for cannot be obtained. 
 The command of the money supply is a governmental- 
 function and cannot be given to special interests with 
 any reasonable hope of the authority being admin- 
 istered for all the people. The effect of the National 
 Reserve Association would be to build up a money 
 monopoly that could through its power practically sub- 
 ject all industries to its selfish ends." 
 
 These two distinguished, representative Democrats 
 outlined correctly just what the Aldrich plan was in- 
 tended to accomplish, and what the inevitable result 
 would be. So the Democratic party had ample warn- 
 ing, and so had the House of Morgan, and neither 
 gentleman could be nominated by the Democratic 
 party for President. 
 
 Senator Aldrich promptly accepted the challenge of 
 Governor Folk, and in language so plain that it could 
 not be misunderstood, said, in part, as follows: 
 
 "In almost every generation we have had men 
 who wanted to put the currency issue of the country 
 into the hands of the government, but I can't recall 
 anything quite so radical as this plan of putting the 
 entire banking industry of the country into the hands 
 of the government. We have had the Greenback craze 
 
READY FOR THE FIGHT 109 
 
 and we have had other crazes of every kind; they re- 
 cur vpith every generation. 
 
 "So I expect that our present proposal will meet 
 with the opposition of men who want to put into the 
 hands of the government the power to issue notes and 
 control the banking of the country. 
 
 Eeady for the Fight. 
 
 "I am glad the contest is coming on that issue. 
 Our predecessors all through the ages have fought that 
 fight, and, if we must have it, we are ready. If, even 
 though only for political reasons, we are to have that 
 issue, whether the government is to control the note 
 issue and the banking of the country, let it come." 
 
 The issue could not have been more clearly de- 
 fined than it was by Governor Folk: "Money is a 
 government function, to be administered for all the 
 people." 
 
 Senator Aldrieh replies: "In almost every gen- 
 eration we have had men who wanted to put the cur- 
 rency issue of the country in the hands of the govern- 
 ment. " He calls it a periodical craze. Just think 
 of that from the acknowledged leading statesman of 
 the Republican party for many years. An authority 
 on financial legislation. Chairman of the big monetary 
 committee, and author of the greatest financial bill 
 ever prepared, etc. 
 
 "Was he so grossly ignorant, or was he banking 
 on the ignorance of the people? Is it any wonder 
 that the average Congressman is so ignorant on the 
 money question. How could they help it, following 
 such a leader. 
 
 Why did Governor Folk say that "Money is a gov- 
 ernment function?" 
 
 Not that money should be; but is. 
 
 Because the very first article of our Constitution, 
 Section 3, No. 30, says so. There has been no such 
 agitation to put it there. 
 
 The exact reverse has been true, that the schemes 
 have all been to deprive the government of tha;t 
 power, and the Aldrieh bill itself, as was so plainly 
 
110 MORGAN CHANGES TACTICS 
 
 pointed out by Governor Folk, was for that purpose, as 
 is its sucessor, the Federal Reserve Act. 
 
 He says: "I am glad the contest is coming on that 
 issue. We are ready for that fight,'" and then to make 
 it clear he restates it "whether the government is to 
 control the note issue and the banking of the country. ' ' 
 
 I have often wondered why Senator Aldrich aban- 
 doned his educational tour of the West after that first 
 meeting at Chicago. 
 
 I think now that perhaps it was because he stated 
 the object of his bill so frankly. On the issue as out- 
 lined such a revolutionary measure debated on its 
 merits would have been overwhelmingly defeated. 
 It was the first attempt to make a fight in the open. 
 
 Their policy always had been to secure legislation 
 by stealth, or misrepresentation, and Mr. Aldrich was 
 recalled and his plan abandoned temporarily. 
 
 The Morgan Cabinet Had Learned a Lesson. 
 
 When it was known that the National Bankers' 
 Association favored the Alrdich plan, the average 
 voter, and more especially the organized farmers, were 
 against it, and the Aldrich plan was not presented to 
 Congress. In fact, as already shown, the issue was 
 apparently shifted to Rural Credits. 
 
 The Democratic party proved to be just as willing 
 to serve the House of Morgan as were the Republicans ; 
 if it could only be nicely covered up. We will again 
 give Mr. Reynolds credit for the plan, as he seemed 
 to have charge of the Washington lobby, and it was 
 very simple indeed. The Aldrich plan was to be re- 
 written with all the fundamentals retained, a few ad- 
 ditions apparently in favor of the public, added, and 
 the name changed to the Federal Reserve Bank law, 
 and be known as the Owen-Glass bill. The National 
 Bankers' Association was to come out in strong appo- 
 sition to it. They played the part well; even going 
 so far as to threaten to surrender their charters rather 
 than operate under the law. The sham battle was 
 kept up and worked like a charm. 
 
WARBURG'S CHANGE OF SYSTEM 111 
 
 A strong lobby was organized to fight the bill in 
 Congress. 
 
 A "National Citizens' League" was organized, and 
 a weekly official organ, "Monetary Reform," estab- 
 lished to fight the bill. 
 
 That caught the unsophisticated public. "What the 
 national bankers so strongly opposed must surely be in 
 the interest of the people, and the said people, without 
 investigation, walked right into the trap, and support- 
 ed the bill that was to free them from the power of 
 money to oppress. 
 
 Ex-President Taft was discreetly silent, but his 
 smile broadened. 
 
 It certainly was a nice thing for the editors, who 
 for once could please both sides. "Monetary Re- 
 form" had declared repeatedly that the bill would not 
 pass until amended to suit the national bankers, and 
 Mr. Reynolds was so encouraged with the progress he 
 was making and the yielding mood of Congress, that 
 they decided to complete the bill as originally planned, 
 incorporating the several points even Mr. Aldrich had 
 refused to include ; several of those being very import- 
 ant. 
 
 A German Jew by the name of Paul M. "Warburg 
 was a member of the banking firm of Kuehn, Loeb & 
 Co., of New York, a bom banker, if such there be, had 
 been trained and educated with true German efficiency 
 in his business. 
 
 Soon after associating himself with the American 
 House, he began a study of our American system, and 
 in a series of pamphlets outlined our deficiencies, and 
 advocating the better system, which so attracted the 
 attention of J. P. Morgan and associates that he was 
 induced to become an American citizen, that he might 
 be the better able to assist in making the change. 
 
 First in importance, perhaps, is that the Aldrich 
 plan adhered to the use of money, or currency. 
 
 The "Warburg-Reynolds plan was a complete change 
 from money, or currency, to credit; except, as Mr. 
 Reynolds put it, "what little money might be needed 
 
112 MORGAN CHANGES TACTICS 
 
 for counter use." This is permitted under the Federal 
 Eeserve law, and in practice the change is being made 
 very rapidly. 
 
 There is no limit to the amount of credit the na- 
 tional banks may loan and no gold reserve needed to 
 back it up. But while they loan their credit only, the 
 obligation will be made payable in "gold coin of the 
 present standard, weight and fineness."' 
 
 The Aldrieh plan provided for the gradual retire- 
 ment of our national bank notes, but offered no special 
 inducement for the retirement of the two per cent 
 bonds with circulation privilege, and provided that 
 "the reserve association must issue its own notes as 
 fast as the outstanding notes secured by such bonds 
 so held shall be presented for redemption." The Fed- 
 eral Reserve law makes no such provision. The issue 
 of Reserve Bank notes is left optional with the banks, 
 and in practice they are not replacing them in full. 
 
 And in addition, to hasten retirement and direct con- 
 traction of the currency, the Federal Reserve law 
 provides a handsome premium, in the offer to exchange 
 three per cent bonds without the circulation privilege, 
 for the two per cent bonds with the privilege. 
 
 The Aldi:;ieh plan provided for an annual tax on 
 the reserve association notes of 3 per cent for the first 
 $100,000,000, 4 per cent for the second, 5 per cent for 
 the next $300,000,000, and 6 per cent for all over 
 $500,000,000. 
 
 In 1914 we had over $1,000,000,000, and the annual 
 tax under the Aldrieh plan would have been over $52,- 
 000,000. 
 
 Under the Federal Reserve law there is neither tax 
 nor interest. 
 
 Mr. Reynolds claimed (page 29) that: "There is 
 apparently no reason why such a tax should be im- 
 posed at all, as the government is not in need of the 
 income to be derived from the charge." 
 
 Every change that was made was in the interest 
 of the "money trust." 
 
PRESIDENT WILSON DEE-LIGHTED 113 
 
 On page 16 Mr. Reynolds says: 
 
 "And since any tax levied must ultimately be paid 
 by the people, the currency commission of the Amer- 
 ican Bankers' Association recommended to the Nation- 
 al Monetary Commission the right to issue its notes 
 in an amount necessary to take care of the reasonable 
 requirements of business and that said notes be free 
 from taxation." 
 
 The foregoing was very cunningly put. The in- 
 ference intended to be conveyed was that as the peo- 
 ple paid the tax, if the notes were issued to the Fed- 
 eral Reserve banks free, it would benefit the people 
 to that extent. 
 
 Result: the notes are issued free of tax to the 
 banks, and the people pay the tax just the same. 
 
 Just another illustration of a public servant be- 
 traying a trust. 
 
 Mr. Warburg testified in his examination, before 
 confirmation, that he was the author of the Aldrich 
 bill, and practically so of the Federal Reserve law; 
 that the Federal Reserve Board had authority to make 
 any changes necessary to comply with the Aldrich 
 plan. He did not, however, call attention to the many 
 new advantages secured. 
 
 The Aldrich plan was as long a step towards a com- 
 plete monopoly of our financial system as Senator 
 Aldrich thought could be enacted at that time. 
 
 President Wilson was elated over the prospect of 
 being able to assist in the enactment of such a law. 
 
 In his address to Congress recommending the bill 
 as an administration measure he said: "The pend- 
 ing currency bill does the farmers a great service. 
 It puts them on an equal footing with other business 
 men and masters of enterprise as it should, and upon 
 its passage they will find themselves quit of many of 
 the difficulties which now hamper them in the field of 
 credit." 
 
 In an address before our state Grain Dealers' Asso- 
 ciation a few days before the passage of the bill, in 
 commenting on it, I said: "This will be most wel- 
 
114 MORGAN CHANGES TACTICS 
 
 come news if it proves true, but I have seen nothing 
 in the bill, nor in any of the suggested amendments 
 that would indicate 'equal footing with other busi- 
 ness men.' There is one thing absolutely certain: 
 there will be no 'equal footing' for agriculture in any 
 financial system so long as the money, or credit, for 
 our needs must first pass through the channels of our 
 commercial banks, with the privilege to them of col- 
 lecting as toll 'all the traffic will bear' " 
 
 Two years of the administration of the law has 
 demonstrated clearly that I was correct. One of the 
 worst blows ever given to our agricultural interests 
 was inflicted during the autumn of 1915, as I have 
 shown in page 39. 
 
 The Federal Eeserve law was as complete a sur- 
 render to the House of Morgan, or, as President Wil- 
 son called it, "the money trust," as Messrs. Warburg 
 and Reynolds could think of. 
 
 President Wilson was enthusiastic over the enact- 
 ment of the law. 
 
 Just a few brief extracts from his address on sign- 
 ing the law, for the purpose of pointing a moral : 
 
 "Gentlemen, I need not tell you that I feel very 
 deep gratification at being able to sign this bill, and 
 I feel that I ought to express very heartily the ad- 
 miration I have for the men who have made it possi- 
 ble for me to sign this bill."' 
 
 Note. — The three men most entitled to the credit 
 for the plan, the drafting of the bill, and its enact- 
 ment in the order named were Warburg, the plan; 
 Aldrich, for drafting, and Reynolds for the enact- 
 ment. 
 
 "It is a matter of real gratification to me in the 
 case of this bill there should have been so considerable 
 a number of republican votes cast for it." 
 
 Note. — The surprise should have been that there 
 were any republican votes cast against it, except real 
 progressives. It was the Aldrich bill renamed and 
 amended in the interest of the "money trust." That 
 is where the Democrats began the practice of appro- 
 
ANDREW JACKSON RBVEESED 115 
 
 priating Republican policies. President Taft had cam- 
 paigned for it two years, and urged it as paramount 
 in his 1911 message to Congress. 
 
 "For the bill itself, I feel that we can say that it is 
 the first of a series of constructive measures by which 
 the Democratic party will show that it knows how to 
 serve the country." 
 
 Note. — Then Andrew Jackson will have to be 
 dropped as the Patron Saint of the Democratic party. 
 
 "Then there came upon the heels of it [the tariff 
 bill] this bill which furnishes the machinery for free 
 and elastic and uncontrolled credits put at the dis- 
 posal of the merchants and manufacturers of this 
 country for the first time in fifty years." 
 
 Note. — ^Here is where words fail me. "Free cred- 
 its"? Yes, to the bankers; the whole constitutional 
 powers of the government are delegated absolutely to 
 them, free of interest or tax, to administer for private 
 profit. "Uncontrolled"? That surely was intended 
 as a joke; unless the President meant "uncontrolled" 
 by the government. 
 
 "I have been surprised at the sudden acceptance 
 of this measure by public opinion everywhere. I say 
 surprised, because it seems as if it had suddenly be- 
 come obvious to men who had looked at it with too 
 critical an eye that it really was meant in their in- 
 terest. They have opened their eyes to see a thing 
 which they had supposed to be hostile to be friendly 
 and serviceable; exactly what we intended it to be 
 and what we shall intend all our legislation to be." 
 
 Note, — The foregoing, of course, refers to the na- 
 tional bankers, and indicates that Mr. Reynolds had 
 conducted a very efficient campaign. Of course they 
 promptly, yes, suddenly, accepted what they had so 
 carefully planned for, during three administrations. 
 They were jubilant, because they had secured a far 
 more complete monopoly than they had hoped for, 
 quite so soon. The moral is plain: Politicians in 
 
116 MORGAN CHANGES TACTICS 
 
 power become party blind. Representative Henry, of 
 Texas, sums it up neatly thus: 
 
 "When framing the Federal Reserve act for the 
 banking and commercial population, you bundled up 
 the credit of the government, neatly tied a blue ribbon 
 around it, and placed it in pawn for the benefit of 
 the bankers and commercialists. You sat them down 
 at a feast of Federal Reserve notes, prepared for them 
 by the government, in return for their assets and com- 
 mercial paper. You gave them government aid. Let 
 us give the farmer the same aid. He is entitled to the 
 same privilege at the government mint."' 
 
THE HOUSE OF MORGAN SECURES MONOPOLY 
 OF MONEY. 
 
 Elated with their successful campaign of 1907, much 
 more successful than they could have anticipated, 
 there was nothing but time in their way, and having' 
 consolidated their forces, were prepared to push mat- 
 ters. 
 
 But as patriots who had saved the nation financial- 
 ly, there was a lot of financial cripples to be taken 
 care of, not by helping them back to health, but by 
 relieving them of their cares by absorption. 
 
 This proceeded rapidly. When the Thomas F. 
 Ryan and Levi P. Morton interests had been gathered 
 in, in one of the financial write-ups of the day, we 
 find the following paragraph headed, "Morgan is; 
 Cash King": 
 
 "What does it all mean? is the question that is 
 being asked on all sides. The eclipsing of Ryan has 
 come fast on the revelations in connection with the 
 manipulation of the traction companies of New York 
 by Ryan and his associates and Morgan has in nearly 
 every instance taken over the Ryan holdings. The 
 first shares to pass into Morgan's control were the 
 shares controlling the Equitable Life, which E. H. 
 Harriman would have owned had he lived. Other 
 securities passed and finally, by purchasing the Ryan 
 shares in the Morton Trust Co., was able to manipu- 
 late the newly announced deal and today can, if he 
 desires, wear the smile of the cat that swallowed the 
 canary. ' ' 
 
 The article concluded as follows: 
 
 "It is known that his recent activity in assuming 
 control of the big banks, trust companies and insur- 
 ance companies is all part of one general plan that 
 was decided on by Morgan and his associates following 
 the panic of 1907. Closer control of banks and 
 stricter restrictions for their management, were the 
 
118 MORGAN SECURES MONOPOLY 
 
 suggestions Morgan made when he was asked at that 
 time what remedy there was for the panic, and, judging 
 from recent developments, he has set out to secure 
 the closer control." 
 
 Of course the object towards which they have 
 been working ever since the Civil "War has been to 
 secure a monopoly of our medium of exchange, and 
 the means of exchange — transportation — but of the 
 latter, some other time. 
 
 Just keep in mind all through this discussion the 
 difference between money — that is, lawful money — and 
 currency. Our lawful money consists of coined gold, 
 silver dollars, and greenbacks, with an exception 
 clause. 
 
 Our currency consists of anything that will pass 
 current in ordinary business transactions, but is not 
 a legal tender for private debts or any other obliga- 
 tions payable in gold coin or lawful money. 
 
 Our currency consists of minor coins, national bank 
 notes, silver certificates, gold certificates, and now Fed- 
 eral Reserve bank notes. 
 
 As previously pointed out, the medium of exchange 
 may be contracted by an increased demand, the vol- 
 ume remaining the same. But that process was too 
 slow for them; they must also contract the volume 
 by decreasing the supply, to hasten their control. Then 
 the best means of securing control of both money and 
 currency would be to strike all along the line as op- 
 portunity offered — and make the opportunity. 
 
 They had been proceeding cautiously, for the people 
 had waked up a little in the nineties, and given them 
 a bad scare. 
 
 The success of the 1907 panic encouraged them to 
 believe that they could do anything they Avished, but 
 there were some conservatives of the Aldrich school 
 who thought it better to proceed cautiously. 
 
 They were all agreed upon one point: that the 
 government should be taken out of the banking busi- 
 ness. There was always danger that the people might 
 get control of one Congress and spoil their plans. 
 
SENATOR ALDRICH DISCARDED 119 
 
 They were all in favor of some central power hav- 
 ing control, and the House of Morgan was now that 
 power. 
 
 Senator Aldrich apparently was not in favor of a 
 direct contraction of currency, or the more radical 
 scheme of changing our whole financial system from 
 public money to private credit. 
 
 This will account for some of the apparent con- 
 fusion in the ranks, and the withdrawal of Senator 
 Aldrich as the leader. Each of the plans was being 
 pushed, and as a result with the passage of the Fed- 
 eral Reserve law, they have secured authority for all 
 of the plans, even for that of the most radical. 
 
 Both political parties and Congress seem to have 
 thrown all caution to the winds, in their haste to com- 
 ply with every wish of money monopoly as guided by 
 the new sovereign, Morgan and associates. 
 
 Thus in eight years, we have lived a thousand 
 years, as measured by the evolution from money, a 
 public utility, to credit, a private monopoly. We 
 have overthrown and discarded the traditions, be- 
 liefs, and fetishes of thousands of years, or since metal 
 was first used as money. 
 
 The things for which men have fought and died; 
 have risked death by exposure, cold, disease, and 
 starvation; committed crimes without number; for 
 which families, bands, states and nations have fought, 
 and are fighting — gold and silver — we, by the wand of 
 Morgan, have discredited, dishonored, spumed and 
 caused a near panic on the part of the sovereign and 
 associates for fear of a flood of gold from Europe. 
 
 "Danger of inflation." They had no use for it as 
 money, in excess of what they could hoard in their 
 own vaults. More than that would postpone their 
 grand coup of demanding payment of the obligations 
 of the whole people of the nation in a money out of 
 circulation by hoarding in their own vaults. 
 
 I realize fully that this statement will not be be- 
 lieved, by many. It will seem incredible, improbable, 
 impossible, in a country where the people have a 
 
120 MORGAN SECURES MONOPOLY 
 
 chance to pass upon those questions every two years, 
 and yet it is true. I see it just as plainly as though 
 it was all written. out, and to the best of my limited 
 means I have been warning the people for more than 
 a quarter of a century. 
 
 How is it possible in a free country, in a republic 
 where the citizens have a, vote every two years? 
 'Well, it is not only possible, but an actual fact as I 
 will show conclusively, and it has been endorsed by 
 these very same victims every two years, and will 
 be again next November. 
 
 "What is the answer? Very simple: BLIND IDOL- 
 ATRY OP PARTY. Your ancestors organized a po- 
 litical party for a live issue of their day. They cre- 
 ated a machine to manage the campaign. The issue 
 was settled many years ago, but the machine lives on, 
 and demands your support for issues to which you are 
 opposed, and, not being a free citizen, you obey the 
 machine and vote for what you do not want — and get 
 it — and it serves you right. 
 
 I will now proceed to trace the conspiracy along 
 each of the lines mentioned, giving you the proof so 
 clearly that I hope you will realize the impending 
 danger, and emancipate yourselves from the slavery 
 of partizanship and graduate into the freedom of vot- 
 ing for principles. 
 
LEGISLATIVE CONTRACTION OF MONEY AND 
 CURRENCY. 
 
 The "benevolent patriots" responsible for the* 
 "bankers'' panic," as usual wanted to shift the re- 
 sponsibility onto someone, or something else, and it 
 is wonderful what a good publicity bureau can do. 
 
 Tou can always count on private monopoly giving 
 a reason, other than the real one, for any legislation 
 they may want. In this case they placed the responsi- 
 bility on their own best handiwork, the national bank- 
 ing system, which they have acclaimed "the best fi- 
 nancial system the world had ever known," and in 1907 
 it had broken down utterly, in fact, was responsible 
 for the panic. The reason given for the national bank 
 system was "to make a market for government 
 bonds." Always patriotic! The real reason was to 
 secure the use of currency for a tax of one-half of one 
 per cent. 
 
 Just why the government had to issue 4 per cent 
 bonds to get money through the medium of a bank, 
 and in turn issuing the money to the bank for one- 
 half of one per cent, is more than I was ever able to 
 figure out. The base of credit for the bonds was the 
 government — a government obligation paying 4 per 
 cent. The bank added nothing to the security. The 
 national bank note was a government obligation, for 
 which the government received a tax of one-half of 
 one per cent. 
 
 Now, however, this best ever must be retired from 
 circulation. The national bank notes was the second 
 largest item of currency and had been held in such 
 high esteem by the bankers, it would require some 
 nerve for the bankers themselves to discredit it, so 
 who better for the task than the Standard Oil econ- 
 omist of the Chicago University? 
 
 In his book, "Banking Reform," p. 139, he says: 
 "The unsatisfactory character of the national bank 
 
122 CONTRACTION OF BANK NOTES 
 
 currency has been one of the few things about the 
 system that have been universally recognized and 
 agreed to. There is hardly any support for the pres- 
 ent system of issuing the currency. Even those who 
 have looked upon it as having been heretofore a meas- 
 urably successful experiment in note issue recognize 
 that it is not possible to continue a system which would 
 imply the existence of a national debt." 
 
 Section 16 of the Federal Reserve Bank law makes 
 the notes of the Federal Reserve Banks, issued against 
 commercial paper, an obligation of the government "a 
 national debt." How absurd! As usual, the reason 
 given was other than the i^al one. 
 
 The real reason was that the men who control 
 wanted a contraction of the currency as well as of the 
 money. 
 
 Under the old law a national bank could be or- 
 ganized anywhere with a capital of $25,000, and issue 
 currency, l3y complying with the conditions. There 
 was no limit as to the number of banks and amount 
 of issue, and the bank notes issued was over one- 
 fourth of the total volume of money and currency 
 combined. 
 
 This made it very difficult for the House of Morgan 
 to contract and control — the two things they were aim- 
 ing at. Or, as Mr. Reynolds said: "The issue of 
 credit and credit notes was to be left entirely with 
 the Reserve Association, and to be free of any tax." 
 The national bankers fell for that. Apparently 
 there was to be a saving of that one-half of one per 
 cent tax. But they will find out in time, if they have 
 not already done so, that their future circulation privi- 
 lege has been cut off, and if they want currency or 
 credit they will have to go to the Federal Reserve bank 
 for it, and instead of one-half of one per cent tax, they 
 will have to pay just what the Federal Reserve bank 
 thinks they will stand. Of this they may rest as- 
 sured, that the Federal Reserve banks will discourage 
 the issue of reserve notes, as they are doing, on the 
 theory as explained by Mr. Reynolds, that: ""\Ye do 
 
NO NEED FOR ]\IONET 123 
 
 not need money for the transaction of our business; 
 just c**edit and a check book." 
 
 I quote further from Mr. Reynolds' Dallas (Tex.) 
 address on this point as follows, to prove the point: 
 "Therefore, our greatest need at this time [1911] is 
 the establishment of some central institution given 
 power under enactment of laAv to provide the credit 
 necessary to meet the reasonable requirements of busi- 
 ness, but which at the same time will be safeguarded 
 so as to confine credit within the bounds of conserva- 
 tive limit.'" 
 
 They have secured just what they wanted in the 
 Federal Reserve law. 
 
 They will grant the credit they think necessary, or 
 advisable for their own profit, and keep it within what 
 they deem a conservative limit again for their own 
 purposes. Instead of a tax of one-half of one per 
 cent, they started out with an interest charge of 6 
 per cent or more. 
 
 The interior banks will soon find, if they have not 
 already done so, that they have been badly deceived; 
 that they have lost their independence ; that in the 
 near future they will have to deal in credits instead of 
 money and on such terms as the House of Morgan 
 dictates. They have been big toads in the country 
 puddle, but in the Morgan pool they will be mere min- 
 nows ; just nice fish bait. 
 
 The Aldrich Reserve .Association plan (Sec. 18) 
 provided against any contraction of currency by the 
 change. They must substitute reserve notes for the 
 national bank notes as fast as retired. The present 
 law makes no such provision. 
 
 Messrs. "Warburg and Reynolds found the last 
 Congress plastic, and willing to be moulded, and the 
 President more anxious for the title cf the bill than 
 the substance, and while the getting was good, they 
 secured all they wanted. If there is anything missing 
 Mr. "Warburg testified that the Federal Reserve Board 
 had the power to give it. 
 
 Now as to progress being made. "When the Fed- 
 eral Reserve law went into effect in November, 1914, 
 
124 LEGISLATIVE CONTRACTION 
 
 there were national bank notes outstanding to the 
 amount of $1,121,468,'911. December 31st, 1915, there 
 "was outstanding only $713,314,000; a permanent re- 
 tirement of $408,154,000 in thirteen months. Federal 
 Reserve notes had been issued to the amount of $205,- 
 732,000, a net contraction of $204,422,000. 
 
 At this writing, the Federal Reserve notes are also 
 being withdrawn from circulation. During the month 
 of February there was retired from circulation $14,- 
 737,165, and $3,395,755 national bank notes, or a net 
 contraction for the short month of $18,132,920. 
 
 To induce the national bankers to retire their cir- 
 culation as rapidly as possible section 18 of the Federal 
 Reserve law provides for an exchange of 3 per cent 
 bonds for the 2 per cent with circulation privilege. 
 That increase of one per cent interest was a gift by 
 Congress to the bankers to be paid by taxing the 
 people at large. 
 
 Surely that man Warburg has all the financial 
 efficiency of the Jew and the German combined. 
 
 SILVER. 
 
 The real reasons given for the demonetization of 
 silver, and later against the resumption of free coin- 
 age, were just the same as has inspired every one of 
 the other similar moves : First, to contract the vol- 
 ume of money in circulation, to expedite control; and 
 second, to increase the value of debt obligations. 
 
 At that time we did not have any ciirrency, except 
 minor coin; it was gold, silver and greenbacks, each 
 circulating at par with the other and performing the 
 same functions. They could not at that time, with 
 any hope of success, make such a complete change 
 as they have now accomplished, even if they had 
 dreamed of such a thing. But they could make a 
 start. 
 
 The greenbacks were too popular to attack success- 
 fully, so it was a choice between the two metals of 
 gold and silver, and it did not take long for them to 
 decide. 
 
SILVER CJOINAGE DISCONTINUED 125 
 
 The production of gold had been steadily decreas- 
 ing for the previous 20 or 25 years, and silver had 
 been rapidly increasing, in fact had trebled. Senator 
 Stewart claimed that more than half of the gold pro- 
 duced was secured from the silver ore. Discourage 
 the production of silver, and the production of gold 
 would still further decline, but silver was our stand- 
 ard and the popular money metal with the people and 
 could not be demonetized in the open; it must be ac- 
 complished by stealth in the interests of the creditors 
 and bond-holders, and this wns accomplished in part in 
 1873, unknown even to many members of Congress. 
 We ceased the coinage of the legal tender part : the sil- 
 ver dollar. 
 
 "When this fact was understood, the agitation for 
 the return to free coinage began again and was pushed 
 with vigor, reaching its climax in 1896. It failed, 
 because the theory was based on the wrong founda- 
 tion, viz., that money stamped on value was superior 
 to money based on value. 
 
 I was one of those Populists who strongly opposed 
 making the free coinage of silver the "paramount 
 issue," because I considered the exclusive use of any 
 one or two products of labor a special privilege, and 
 ■wholly unscientific for a medium of exchange for all 
 labor and labor products; but I did favor the free 
 coinage of silver to right a great wrong that had been 
 committed. 
 
 At a meeting of the National Bi-Metallic League 
 held in "Washington, D. C, in 1893, I said in part: 
 
 "The question is frequently asked, '"Why should 
 the farmers favor a measure that is in the interest 
 of the silver miners only'? Eepresenting, as I do, the 
 largest organization of farmers that has ever existed, 
 it might be well for me to give a few reasons why we 
 favor the free and unlimited coinage of silver at the 
 legal ratio of 16 to 1. 
 
 "First. For the purpose of increasing the volume 
 of money in circulation. * * * 
 
126 LEGISLATIVE CONTRACTION 
 
 "Second. Because our national bonds and many 
 other obligations are now payable in coin (gold or 
 silver) of the standard weight and fineness, when the 
 bonds were issued. "With silver demonetized, of course 
 gold will be the only coin, hence payable in gold coin 
 only. That is the advantage that bond-holders and 
 other large creditors are now working to retain. They 
 can well afford to pay for a good many very ridiculous 
 editorials to befog the public mind to decry silver. 
 It pays them to do it, but how about the victims who 
 will once more find their debts doubled? These bond- 
 holders and creditors would not dare openly to advo- 
 cate the doubling of the public and private debt, but 
 if silver remains demonetized, that will be the result. 
 
 "It is always thus with the money power. They 
 work to increase the VALLTE of the debt, or dol- 
 lar. * * * 
 
 "Third. To encourage the development of an Am- 
 erican industry. * * * 
 
 "Fourth. To right a great wrong. It was taken 
 from them by stealth, without giving them a chance 
 to be heard, and is kept from them unjustly, against 
 the best interests of the masses of the people, and in 
 the interest of one favored class, ' the creditors. ' * * * 
 
 "If Europe or any nation in Europe wants and 
 must have our gold, we should not by lack of legis- 
 lation permit their desire and want to interfere with 
 our national prosperity. LET THEM HAVE THE 
 GOLD AND LET US SUPPLY ITS PLACE WITH A 
 MONEY THAT THEY DO NOT WANT ; A MONEY 
 THAT WILL REMAIN WITH US WHEN NEEDED." 
 
 Prom the report of the Comptroller of the Currency 
 for 1915 we learn that : The total number of standard 
 silver dollars coined up to June 30th, 1915, was $570,- 
 272,610. 
 
 There was in the United States at that date $568,- 
 271,655. 
 
 And of subsidiary silver coin (currency) $185,430,- 
 250. 
 
EETIREMENT OF GREENBACKS 127 
 
 Of the legal tender silver dollars, there was in the 
 treasury, and represented by silver certificates (not 
 a legal tender) $485,708,663. 
 
 Of the balance, the national banks held $12,427,- 
 405. 
 
 Private banks, savings banks and individuals 
 $52,219,751. 
 
 It is safe to say that there is less than 25 cents per 
 capita in the hands of the people, including silver 
 hoarded or hidden. Silver dollars are practically out 
 of circulation in the east, and inside of five years will 
 be in the rest of the country. 
 
 As an evidence of the wonderful efficiency with 
 which they take advantage for contraction, even in 
 small matters, take that of the mutilated silver dol- 
 lars. Since 1883, there have been 197,673 silver dol- 
 lars melted, and recoined as minor coins, instead of 
 adding the small amount of silver necessary to re- 
 store' the weight. This is a loss, paid for by the peo- 
 ple, of probably 45 cents on every dollar, but a con- 
 traction of the currency in the interest of money mo- 
 nopoly. 
 
 So long as the rest of the world prefers the use 
 of silver and gold for money, or a money base, I 
 would encourage the free coinage of both for the 
 purpose of encouraging one of our great industries, 
 that of mining. I would also encourage their ex- 
 portation to the foreign countries still in the dark as 
 to the true functions of money, and the danger of 
 monopoly control of money. 
 
 For we are on the eve of a scientific solution of the 
 money problem. 
 
 The Greenbacks to Be Retired. 
 
 The $346,683,016 of greenbacks have been a great 
 annoyance to the men who wish to control our medium 
 of exchange for two reasons: 
 
 First. That the government could make a non- 
 interest-bearing promise to pay, a medium of exchange, 
 which the people would gladly accept, and passing 
 
128 LEGISLATIVE CONTRACTION 
 
 from hand to hand, was to them a complete redemp- 
 tion. 
 
 The weak points in the greenbacks were, first, that 
 the government promised to redeem in coin — one spe- 
 cial product of labor. 
 
 Second. The exception clause, "except in payment 
 of duties on imports and interest on the public debt. ' ' 
 
 Otherwise it would have been a perfect money. 
 
 What annoyed the bankers was that it was an issue 
 by the government of a money that was not paying a 
 tax or tribute to the bankers. If they were to be 
 supreme as was their aim, then the ' ' government must 
 be taken out of the banking business." 
 
 That is, the government must cease to coin money ; 
 delegate the sole power to issue money to the bank- 
 ers, and turn over all moneys received for taxes and 
 dues to the bankers as fiscal agents; all this free and 
 without control of amount to be issued, or rate of in- 
 terest to be charged, and, as Mr. Reynolds puts it so 
 plainly, "with proper safeguards against over exten- 
 sion of credit, or over expansion in business."' 
 
 A Federal Reserve Board, selected by the National 
 Bankers' Association to have charge of this and be the 
 people's guardians! An absurdity; a wild, visionary 
 dream ? Oh, no ; not at all. Just such legislation has 
 been secured during the past six years, by an over- 
 whelming majority of both dominant political parties. 
 
 Now for the proof as to the authors of the propa- 
 ganda; and I will quote from the address of George 
 M. Reynolds, president of the Continental and Com- 
 mercial National Bank of Chicago, and vice president 
 of the National Bankers' Association. "We may call it 
 ofiieial. 
 
 His campaign was not made in public, but before 
 the meetings of State Bankers' Associations. 
 
 At Dallas, Texas, May 19th, 1911, he said (page 2) : 
 "In addition to this we have in circulation $346,000,000 
 of what are technically known as United States notes, 
 but which are more generallj'' known to the public as 
 'greenbacks.' These are n,'otes of the government) 
 
RETIREMENT OP GREENBACKS 129 
 
 issued without any security whatever back of them, 
 being purely fiat in their character, and certainly are 
 no more flexible than the other paper circulation. 
 
 "The late Mr. Raymond Patterson, who was the 
 Washington correspondent of the 'Chicago Tribune,' 
 during the fall of 1908, published figures showing that 
 if the greenbacks had been funded into 4 per cent 
 bonds by the government in 1879, the total cost to 
 the government, including the principal, would have 
 been $741,897,000; whereas, he claimed that officials 
 of the treasury department had made computations 
 showing the actual cost to the country of continuing 
 these greenbacks in circulation and maintaining their 
 payment in gold was, on January 1, 1907, $1,081,- 
 881,000 or $339,984,000, more than would have been 
 the cost had they been cancelled and 4 per cent bonds 
 issued in their stead, a loss to the government of that 
 amount ; and since the expenses of government are 
 borne by the taxpayers, this necessarily has fallen 
 upon them. 
 
 "To insure its ability to maintain gold payment 
 against these greenbacks, the government has for many 
 years kept stored in its vaults a gold reserve of $150,- 
 000,000. If it were to use this amount toward the 
 retirement of the outstanding greenbacks, it would 
 require only an additional $200,000,000 to accomplish 
 this, or considerably less than the actual issue of 
 United States bonds under Cleveland's administra- 
 tion, made necessary for maintaining a gold payment 
 against these notes; whereas we still have the original 
 amount in circulation, and they will continue to be 
 an annoyance until some one shall be found who pos- 
 sesses the moral courage to lead a movement in Con- 
 gress looking to the issuing oC government bonds, even 
 though interest bearing, with which to retire them." 
 
 "These are notes of the government without any 
 security whatever back of them"! The faith, credit 
 and taxing power of 100,000,000 people, the leading 
 nation in the whole world, that has never yet de- 
 faulted in meeting its obligation, and whose credit was 
 
130 LEGISLATIVE CONTRACTION 
 
 never questioned, except by leading bankers of the 
 country during the Civil War, when they secured, tJie 
 enactment of the exception clause in our government 
 paper currency, for the express purpose of discrediting 
 it, to promote their own private interests ! 
 
 Here again at this late date, they say officially 
 that the bonds, notes, or other obligations of the 
 United States are no good because they are "without 
 any security back of them." 
 
 These same national bankers used to claim that the 
 national bank notes was the best currency in the 
 world, because backed by government bonds, and what 
 are government bonds backed by more than the green- 
 backs? Nothing; the same old United States! 
 
 "What did he propose to substitute for this "lawful 
 money," the greenback? A Federal Reserve Asso- 
 ciation note, not "lawful moaey," but currency, based 
 on commercial paper backed by a member bank. 
 
 The endorsement of a national bank anywhere in 
 the country, the $25,000 bank, is better security than 
 a promise to pay by the United States government, 
 and this by a vice president of the National Bankers' 
 Association ! 
 
 Can't believe it? Well, it is in his printed ad- 
 dress, mailed to me on my request, page 2. 
 
 But strange to say, they insisted that these new 
 well secured Federal Reserve bank notes should also 
 be made "obligations of the government." Senator 
 Owen in introducing the bill in the Senate, gave twelve 
 minor securities, and 13th "that they were the best se- 
 cured currency in the world because backed by the 
 United States government." Oh, Mr. Reynolds? ? ? 
 
 When the Allies of Europe began to flood this 
 country with their gold to pay for war munitions, 
 these same men, to prevent the further importation 
 of gold, which was tKreatening to postpone their plans, 
 loane(J^ them in one lot $500,000,000 "without any 
 security whatever"; fast the unsecured bonds, obli- 
 gation of the government of Great Britain, or France. 
 This ;has been largely increased, probably four times 
 
EETIREMENT OP GRSENBACKS 131 
 
 as much now. The same has been true of Russia, and 
 even our Canadian neighbors have secured a good 
 many hundred millions on the like unsecured obliga- 
 tion of their government. How absurd, Mr. Reynolds ! 
 
 "No more flexible than the other paper circula- 
 tion.'" Why? 
 
 Because the National Bankers' Association secured 
 a law prohibiting any furtlier issue of greenbacks. 
 How could it be flexible? 
 
 As for the expense of the greenbacks, I was really 
 shocked when I heard Mr. Reynolds repeat that state- 
 ment in his Sioux Falls address. I was not present 
 as a banker, but by the courtesy of a Chicago banker 
 friend. It is not in the nature of a; monopolist, nor is 
 it their custom, to discuss any issue on its merits. He 
 did not say that it was the case. As a business man, 
 he knew better, but he wanted to give that impression 
 in a way that every banker present would state it 
 as a fact. 
 
 As stated, it was an endorsement by him, a shame- 
 ful deception on his part, for the specific purpose of 
 having it circulated by the bankers present, to create 
 sentiment for the retirement of the annoying "pest," 
 greenbacks. 
 
 There was a fine representation of our leading busi- 
 ness men present, for many of our bankers are inter- 
 ested in other lines of 'business, and are exceptionally 
 good business men, and how must such a statement 
 appear to tkem, and it is fair to assume that he made 
 the same statement at all his state bankers' meetings: 
 "The loss to the government borne by the taxpayers 
 was up to January 1st, 1907, $1,081,881,000." 
 
 A very large sum. Note how adroitly it was put: 
 "Borne by the taxpayers." That is, that the people 
 had actually paid that enormous sum in taxes. An 
 absolute, gross misstatement, unworthy any man, much 
 less the official representative of the greatest 6i our 
 public service corporations. It has not cost the gov- 
 ernment one dollar beyond the clerical help and the 
 expense of renewals and reissue of the spoiled notes. 
 
132 LEGISLATIVE CONTRACTION 
 
 But how are ^Ye to meet thesa things, given out at those 
 private meetings? It was by the merest accident that 
 I was privileged to be present, and had no means of 
 counteracting it. 
 
 The government did not borrow that money. They 
 issued it in payment of legitimate public espenses, 
 just as a merchant might issue a due bill, good for any 
 obligation due to, or for goods sold by, him. 
 
 That is all the government should have done, paid 
 out for expenses to be redeemed by acceptance for 
 taxes due to the government. The mistake of making 
 them redeemable in coin instead, was insisted on by the 
 bankers who were then, as ever since, in control of 
 Congress, and had no confidence in the stability or 
 credit of our government. 
 
 If they will not trust us, why should we trust 
 them? The greenbacks have kept their place with 
 gold coin ever since, because they have performed the 
 same 'functions as gold, with the two exceptions in- 
 sisted upon by the bankers. 
 
 Just as well charge up a similar expense for all the 
 gold and silver coined by the government since 1879. 
 
 Or for the national bank notes that have been issued 
 or for the new Federal Reserve bank notes that are now 
 being issued, the estimated cost of which Vi^as one- 
 tenth of one per cent ; not an annual tax, just for the 
 first issue, later issues will be less. 
 
 "To insure its ability to maintain gold payment 
 against these greenbacks, the government has for 
 many years kept stored in its vaults a gold reserve of 
 $150,000,000." 
 
 The general public, the loyal men and women who 
 love our country, and have absolute confidence in its 
 future, never made any such demand. 
 
 That was a scheme of the bankers to discredit the 
 greenback in the esteem of the public. These patriots 
 (?) and superloyal (?) citizens who are so intensely 
 interested in the preservation of the honor of the re- 
 public — betimes — never hesitate to discredit and dis- 
 honor it, if thereby thej'- can promote their own self- 
 ish interests. This is just another case in point. 
 
HAD JACKSON BEEN PRESIDENT 133 
 
 The greenbacks were redaemable in COIN (gold or 
 silver coin). The option was with the government. 
 When the bankers made the effort during Cleveland's 
 adminstration to force the retirement of the "annoy- 
 ing" greenbacks and to repeal the act for the pur- 
 chase of silver bullion, it was by the usually effective 
 panic method, "want of confidence" in the govern- 
 ment's ability to redeem the greenbacks in gold, and 
 the danger of an undue inflation of money, by the 
 coinage of silver. 
 
 "Why redeem the greenbacks in gold? They were 
 redeemable in coin. 
 
 Had Andrew Jackson been president, he would 
 have taken advantage of the option, and tendered the 
 more abundant coin, silver, and that Avould have 
 snapped "the endless chain" instanter. But President 
 Cleveland, being in sympathy with their design, was 
 a willing accomplice, and aided them by the sale of 
 bonds and otherwise until Congress agreed to such 
 legislation as v/ould place the United States on the 
 single gold standard. It was a great gain for the 
 conspirators. 
 
 Every move made by them will show the same 
 traits, when analyzed, of misrepresentation of facts, 
 and selfish disloyalty to the government. 
 
 Another instance : The House of Morgan, who are 
 willing to trust Great Britain, France, Russia, Canada, 
 or any other foreign nation, dominion, or province, 
 for millions, or billions of obligations payable "in gold 
 coin of the present [American] standard, weight and 
 fineness" away beyond their stores of gold, are un- 
 willing to trust our own "Uncle Sam," for the pay- 
 ment of their share of the greenback holdings in gold 
 unless he keeps in his treasury (otit of circulation) 
 almost fifty per cent of the actual gold coin for that 
 specific purpose. Something they do not exact of the 
 most turbulent, discontented, discredited, republics of 
 Central or Soitth America or Asia! 
 
 Just a few years ago, we diplomatically forced 
 China to borrow $50,000,000 from our financiers, just to 
 
134 LEGISLATIVE CONTRACTION 
 
 place us upon an equal footing with the Eiiropean 
 nations and Japan who had forced similar favors ( ?) 
 on China, but they did not insist that China must keep 
 $20,000,000 in American gold coin "stored in its 
 vaults to insure its ability to pay." 
 
 This blessed, prosperous, greatest nation on earth 
 is the only one that these patriots ( ?) cannot trust, 
 iinless we put up 40 per cent gold security back of 
 our bonds. 
 
 If that is their real sentiment, then I can under- 
 stand why the National Bankers' Association want to 
 be appointed our guardians, "that proper safeguards 
 against over-extension of credit, or over-expansion of 
 business should be provided." 
 
 In looking over the reports of the reserves held in 
 the national banks December 31st, 1915, I find that 
 they had in their vaults at that time $118,117,000 of 
 these "purely fiat 'notes' without any security what- 
 ever back of them." Now, what do you think of that? 
 "Why do they keep these discredited, annoying, un- 
 secured obligations in their vaults, as a part of their 
 sacred cash reserves? 
 
 "Why not shove them out on the unsophisticated 
 public ? 
 
 "They will continue to be an annoyance until 
 some one shall be found who possesses the moral cour- 
 age to lead a movement in Congress looking to the 
 issuing of government bonds, even though interest 
 bearing, with which to retire them." 
 
 To whom are those greenbacks an annoyance? 
 
 Have you ever been annoyed by having them forced 
 upon you? 
 
 Have you ever had a merchant, or creditor, show 
 any annoyance when you have offered them in payment 
 for goods purchased, or an obligation due? 
 
 Have you ever had a banker object, or even hesi- 
 tate, to accept them on deposit? 
 
 Then to whom are they an annoyance, and why? 
 
 So long as they are in circulation, they are an 
 
MORAL COURAGE (?) 135 
 
 object lesson that may prove dangerous to their ulti- 
 mate plans of complete supremacy. 
 
 When the people realize that these "purely fiat 
 notes, without any security ■whatever back of them'"; 
 free of any tribute to, or endorsement by the bank- 
 er, or anyone else, perform the same functions as the 
 coined gold or silver dollars, and much more com- 
 plete service than the bank currency, or bank credit, 
 to vsrhich the bankers intend to limit us in the future, 
 they will refuse to permit their retirement to please 
 the bankers. 
 
 "Moral courage"! They cannot get anyone with 
 courage backed with morals to do that job, but in 
 accord with their plans such a bill will be introduced. 
 The National Bankers' legislative committee have so 
 unanimously decreed. Thej^ may never again have 
 so subservient a Congress as the present one, and yet 
 they may postpone action until after the general elec- 
 tion, but the fight is on; that is, if there is any fight 
 left in the people. 
 
OUR FOKEIGN TRADE. 
 
 In our public life, apparently everything is being 
 subordinated to an extension of our foreign trade. 
 
 Note the press reports of the many booster meet- 
 ings to promote foreign commerce ; the many editorials 
 in our great dailies, and trade magazines, in which the 
 exploiters are at all times willing, under many guises, 
 to go to any length, even to the extent of embroiling 
 our nation in a foreign war to promote our foreign 
 trade, or protect the investments of American citizens 
 for the development of foreign countries, for their own 
 personal gain. 
 
 Now Look Upon the Other Side. 
 
 Who is expected to pay the price necessary to se- 
 cure this expansion of foreign trade and commerce? 
 
 That is the important proposition for you to con- 
 sider. 
 
 First. The federal government — the whole people 
 — through our consular service, ship subsidies, subven- 
 tions, reciprocity agreements, ocean transportation in 
 opening up new routes which must be done at a loss ; 
 all to be paid by the public through taxation. 
 
 The exploiters do not want to take any chances. 
 If there be a loss at first, which they expect, let the 
 public pay it. 
 
 If it proves profitable, they are ready to take ad- 
 vantage of it. 
 
 Second. Labor; whether on the farm, or in the 
 shop, must be cut down to the limit of subsistence, 
 to enable the manufacturers to compete with the "pau- 
 per labor of foreign countries" with which the Ameri- 
 can voter has become so familiar. 
 
 Third. The American manufacturer must be pro- 
 tected against the competition from the same foreign 
 countries in our own markets, and the American con- 
 sumer forced to pay private monopoly trust prices, for 
 
MULTIPLE INTEREST 137 
 
 our home products, that the manufacturers may be 
 able to sacrifice their goods abroad to secure the for- 
 eign trade. Thus far, it is all one-sided. 
 
 A Third View — Production. 
 
 The three principal factors in production and dis- 
 tribution are labor, money and transportation. 
 
 How are these three factors treated by our home 
 and foreign exploiters? 
 
 First. They deny to the American laborer a voice 
 in the transaction. It is for them to work, or starve. 
 
 They must welcome and pay the propaganda ex- 
 pense of securing this same "pauper labor" to com- 
 pete with them in the open shop at home. 
 
 The farmer must submit to the world's competi- 
 tion, that industrial labor may live cheaper, and thus 
 be able to work cheaper. 
 
 Second. Next in importance as a factor in pro- 
 duction comes money. 
 
 Ordinarily, we think of it only in connection with 
 the interest paid on the capital invested in a partic- 
 ular business. 
 
 That is a v/holly superficial view, and entirely too 
 narrow. 
 
 We will just consider two lines, the base of our 
 chief exports. 
 
 (a) Less than one-fourth of our farmers own the 
 farms they work free of debt. 
 
 Rent must be reckoned the same as interest. 
 
 As shown by the report of the Comptroller of the 
 Currency, the farmers are the special sufferers from 
 usury "and the half hath not yet been told." It is 
 conceded that we pay from two to three times as much 
 for the use of money as do our foreign competitors, 
 and to that extent we are handicapped in competition 
 with them. 
 
 Now comes the proud, independent farmer out of 
 debt, who thinks that he is not interested in the inter- 
 est problem; or maybe he has a little money out at 
 interest, and thus interested on the other side. 
 
138 OUR FOREIGN TRADE 
 
 As a fact, he pays a great deal of interest just the 
 same as his less fortunate neighbor. 
 
 There is the grain buyer and the stock buyer, each 
 representing companies with large capital invested in 
 plants, and working capital to conduct the business. 
 The interest on all the capital invested is charged to 
 over-head expenses, which the fax'mer has to pay 
 
 Next comes the transportation company, paying in- 
 terest on three or four times the amount of money in- 
 vested; this also the farmer has to pay. 
 
 If you want to follow this to the consumer : there 
 is the interest on the millers' investment; the jobbers; 
 the wholesalers ; the retailers ; and the bakers, in the 
 case of grain, and the packers, in case of stock. 
 
 In the end the consumer pays that interest. He 
 may think that as he is out of delDt he is not interested 
 in this interest question, but he is, in a score or more 
 of ways. 
 
 We are not yet through with the farmer, and this 
 question of multiple interest. He pays the interest 
 that is paid by the manufacturers, jobbers and handlers 
 of everything he buys to use or consume on the farm 
 in his business of production. 
 
 What is true of the farmer is also true of every pro- 
 ducer, or manufacturer. 
 
 (b) Next we will take steel and steel products. 
 
 Mr. Schwab proudly boasts of having converted 
 J. P. Morgan, Sr., to this multiple system of interest 
 and profits. 
 
 The elder Morgan's idea was one great corporation 
 to take the ore directly from the mine and follow it 
 step by step until it reached the consumer. At one 
 of their special dinners, Mr. Schwab pointed out the 
 much greater advantage and profit there would be in 
 organizing separate companies for each step taken 
 from the mine to the finished product, and the con- 
 sumer. 
 
 Follow that briefly and consider what it means to 
 and for the men who control the system, and you will 
 
MULTIPLE INTEREST 139 
 
 hare a much better idea of what multiple interest, and 
 multiple profit, means. No one escapes the tolL 
 
 The system, and that means the House of Morgan, 
 invests in the mine; they must have interest on the 
 investment, and a profit on the ore. 
 
 A corporation is organized to mine the ore, followed 
 by interest and profit. I think that there were twelve 
 separate organizations, not including the several 
 transportation companies which they also controlled. 
 
 Third, Transportation. Here again we have a 
 public utility monopolized for private profit, managed 
 on the well-known theory of "taking all the traffic will 
 bear." 
 
 With few exceptions, our foreign competitors have 
 publicly owned and operated transportation systems, 
 so managed as to encourage production, by transpor- 
 tation at the minimum of expense. 
 
 Money without private profit in interest, and trans- 
 portation at cost, are the two things most needed to 
 enable our manufacturers to compete for foreign 
 trade, but have you ever heard of them advocating 
 such a reasonable solution for the increase of our for- 
 eign trade? 
 
 Given as low rates of interest and transportation 
 as other nations have, and with our great natural 
 resources, and our greater ability and genius in the 
 use of horse-power in production, we could, if freed 
 from monopoly control, and without any special fa- 
 vors, or oppression of labor, easily secure the leading 
 position in the world's markets. 
 
 The nation that will first recognize the fact that 
 special privilege is all wrong; that justice to labor, 
 the foundation, must be the first consideration; and 
 that the medium of exchange, and the means of trans- 
 portation, shall be administered without private profit, 
 will become the mistress of the commercial world. 
 
 How much longer can we afford to sacrifice our 
 best citizenship, that a few avaricious men may accu- 
 mulate vast wealth by the development of foreign 
 countries at our expense? 
 
140 OUR FOREIGN TRADE 
 
 The whole trend of our national thought today 
 would seem to be world development, world expansion 
 and world power to such an extent as to blind us to 
 the development necessities of our own state and na- 
 tion. 
 
 A few years ago we diplomatically forced China 
 to borrow $50,000,000 from our financiers, just to 
 place us upon an equal footing with the European na- 
 tions who had forced similar favors ( 1) upon China. 
 
 The rate of interest was a minor consideration; 
 other nations had secured valuable concessions, and 
 as a growing world power we must assert our right 
 to a share of this foreign exploitation. 
 
 "We, the people? No; we, the exploiters. 
 
 Blinded by Aspirations. 
 
 During the past year our wings have fully devel- 
 oped, and we must now become THE WORLD POWER. 
 How proud we are when we read in the press that 
 J. P. Morgan, or some other representative financier, 
 has returned from Europe having arranged for a loan 
 of hundreds of millions to the Allies. Rate of inter- 
 est? Oh! that is secondary; the main object is the 
 profit that the financiers will make as manufacturers 
 of war munitions, and the still greater profits on the 
 so-called war stocks. As an illustration, take the 
 Bethlehem Steel Co., which had never paid a dividend, 
 and whose stock on July 30th, 1914, was quoted at 32 
 and on August 5th, 1915, was quoted at 301. 
 
 Given a monopoly of money or credit, the bene- 
 ficiaries have their great profits in peace as well as war. 
 
 Developing- Canada. 
 
 One of our greatest competitors in farm products 
 is otir good Canadian neighbors to the north. We note 
 by press reports that Ave have recently loaned them 
 $100,000,000 at around 4 per cent interest. 
 
 James A. Farrell, president of the U. S. Steel cor- 
 poration, and chairman of the National Foreign Trade 
 Council, at New Orleans, January 27th, 1916, said: 
 
DEVELOPING CANADA 141 
 
 "The advantage of foreign investment of United 
 Stales capital -was evident in American trade predom- 
 inance in Canada, vrhere about $700,000,000 of Ameri- 
 can capital has been invested, in branches of American 
 factories, mining, timber, and agricultural enterprises, 
 all tending to develop Canadian resources and expand- 
 ing Canadiai demand for American products." 
 
 If we can loan our money or credit at 4 per cent 
 for the devdopment of Canada, why not to our own 
 states bordering on Canada where we have as yet 
 barely scratched the surface? 
 
 The European financiers are temporarily shut out 
 of Central aid South America by home needs, and 
 there looms up a world to conquer, more surely by ex- 
 ploitation than by war. 
 
 Wall Street Astonished. 
 
 At a noted financial dinner at Washington, D. C, 
 a short time ago, to show our sympathy and consider- 
 ation for our ueighbors to the south, whose national 
 bonds have been difficult to negotiate at 8 and 10 per 
 cent and upwirds, our then Secretary of State sug- 
 gested and recommended that we loan our national 
 credit to them for their development, free of interest 
 and at our expense, by guaranteeing their bonds, so 
 that they mighl be sold on our markets for 3 per cent, 
 they to pay 4 per cent, the 1 per cent to be applied 
 on the principal until paid. 
 
 The proposition electrified his auditors and gave 
 hope to Centra' and South America as nothing else 
 could have done, and astonished Wall Street to such 
 an extent that they forgot his past "vagaries."' The 
 National City Bank pronounced it "not only a daring 
 but a really brilliant conception" and that "it is quite 
 possible that it represents the most astute and enlight- 
 ened statesmanship." 
 
 Wao Would Profit Most? 
 
 Who would profit most by the transaction? The 
 financiers who negotiated the loans. 
 
142 OUR FOREIGN TRADE 
 
 Who would suffer most ? Our farmers, who, un- 
 protected, are forced to compete with their farmers in 
 our own as well as in the world's markets.; 
 
 Compare that with my plan of loaning our own 
 federal credit, for development purposes, to our own 
 solvent states whose bonds are considered I gilt edged, 
 we paying all of the expense and a small aanual inter- 
 est. But it does not appeal to or electriw our finan- 
 ciers who prefer the profits of exploitation, to that of 
 home development. i 
 
 What do you think? How does it arpeal to you? 
 A Great Problem. 
 
 The rapidly increasing exodus from the farm to 
 the city, should warn the laboring men that they are 
 doubly interested. The flow should be tpe other way, 
 and would be if agriculture were placed jipon an equal 
 footing with commerce and industry in Jur own coun- 
 try, and we gave as much consideratiqa to our own 
 needs as we are giving to the needs of foreign coun- 
 tries, i 
 
 Our small business men, and our professional men, 
 should realize that they, too, should beivery much in- 
 terested. 
 
 Our "natural pilots" as Myron Herrick calls them, 
 in their haste to accumulate vast wealt^ have failed to 
 see the rocks just ahead. j 
 
 If it were your private business, -What would you 
 do? ! 
 
 IT IS TOUR PRIVATE BUSINESS. 
 
ORI(S[N MB OBJECT OP SURAL CREDIT MOVE- 
 MENT. 
 
 It will b interesting to study the object and trace 
 the history >f the late Rural Credit campaign which 
 seemed to sping up spontaneously, and to have struck 
 a strangely lew chord of non-partisan harmnoy. 
 
 A great isue in the interest of agriculture alone. 
 In fact a speial privilege that was to be forced upon, 
 an unwilling class if necessary. It was so unusual 
 that a studen of the several farmers' movements of 
 the past, espcially those with a knowledge of the 
 strong opposiion every effort for agricultural better- 
 ment made b; the organized farmers themselves had 
 been met wit, might well have hesitated to enthuse 
 over it. 
 
 For one, te writer was suspicious from the start, 
 and pursued : "policy of watchful waiting." He re- 
 membered theold advice to "beware of Greeks bearing 
 gifts." It ws a well played part in the great con- 
 spiracy to chnge our financial system from money to 
 credit, by the enactment of the Federal Reserve law ; 
 in effect delgating a vital public, or government, 
 function for )rivate exploitation. 
 
 This fake Rural Credit movement was not inaug- 
 urated by an; farmers' organization, and must not be 
 connected in my way with the old Farmers' Alliance 
 movement in :avor of the government loaning money 
 on land secur;y and on the non-perishable products of 
 labor, stored n government warehouses. That was a 
 safe, sane anosound proposition, backed by the twen- 
 ty-one farm aid labor organization of that time. It 
 was not limitd to farmers, but for manufacturers of 
 staple produes and the owners of land, to encourage 
 development nd home building in the town and city 
 as well as in he country. 
 
 It was neiher special privilege nor class legisla- 
 tion. 
 
144 
 
 ORIGIN OF RURAL CREDITS 
 
 To Aid President Taft and the Republican Pariy. 
 
 The origin of the Rural Credit campaign, then, was 
 not with the farmers, or in the interest o| the farm- 
 ers. It was in fact a "bunco game," cmceived by 
 the practical politicians, for the double purpose of 
 tiding over a political emergency of the/Republican 
 party; and covering up a change of plamfor the en- 
 actment of the Aldrich central bank. / 
 
 Overconfident, because of the easy vicfory in 1907, 
 they had openly advocated the Aldriehplan, and it 
 was exposed to such an extent as to insire its defeat. 
 President Taft had been outspoken in is favor, and 
 it was hurting the prospects of his re-elction. Sen- 
 ator Aldrich, instead of- touring the Wet, abandoned 
 the tour with one meeting in Chicago. 
 
 The open advocacy of the Aldrich )ill suddenly 
 ceased, and they proceeded to do, unde cover, Avhat 
 they could not accomplish in the open. 
 
 President Taft was their first choice or President. 
 The first part of his term had been ufortunate in 
 many respects. 
 
 The revision of the tariff had been i disappoint- 
 ment. It had not reduced the cost of ving as had 
 been promised. The advocacy of the Aldich currency 
 bill had proven unpopular. The progresive element 
 in the party was gaining rapidly in stregth. So far 
 as the farmers were concerned, the climx came with 
 the adoption of the reciprocity agreemet with Can- 
 ada, the openly avowed purpose of whin was to re- 
 duce the cost of living by admitting frm products 
 free of duty. The farmers of the Norb and "West 
 had always been the strong arm of the Republican 
 party. They were in an insurgent fram< of mind, an- 
 gry over their betrayal and sacrifice and efeat loomed 
 big. The political managers of the part; were in real 
 distress. What could they do to cause the farmers 
 to forget, and win them back into the fed? The Na- 
 tional Bankers' Association was not e:ictly in dis- 
 tress, although anyone hearing Mr. Rejiolds talking 
 to a meeting of bankers would have case to think 
 
KEEP FAEMERS' EYES ON EUROPE 145 
 
 that they were in almost immediate danger at any 
 time ; but they were annoyed at the delay in maturing 
 their plans. How could they best help their tried and 
 true friends, the Republican party? Re-elect their 
 champion, President Taft, and a Republican Congress. 
 
 Up to that time there had not been a whisper about 
 Rural Credits as developed in Europe. The Monetary 
 Commission had reported, and if they heard of "Rural 
 Credits'" while in Europe, they failed to mention it in 
 their report. How could they have made "an ex- 
 haustive study of the banking question," and missed 
 the biggest financial thing in Europe? 
 
 The one thing above all others, which, by placing 
 agriculture at the front, where of right it belongs, had 
 made for European prosperity for "the whole citizen- 
 ship" and prevented panics. 
 
 Here then was an ideal situation for co-operation. 
 The National Bankers' Association needed help and 
 so did the Republican party. 
 
 The American farmers were paying two, three, or 
 four times as much interest for the use of money, or 
 credit, as was commerce and industry. 
 
 The farm owners were fast losing their homes by 
 foreclosure of mortgages. In Europe the reverse was 
 true. "Why not come out as the champion of the farm- 
 ers' cause, and duplicate the European Rural Credit 
 system for the American farmer, or pretend to. Have 
 President Taft take the initiative. But the Democrats 
 must also be considered, and cared for. The campaign 
 must be conducted as a non-partisan matter. 
 
 Keep the Farmers' Eyes on Europe. 
 
 Keep the farmers' eyes on Europe, and we will 
 take care of Congress, was their ideal situation. And 
 it worked like a charm. I think George M. Reynolds 
 was the ^-enius who outlined the plan. He was the 
 first one I heard of urging the bankers, and instructing 
 them how to educate the farmers. He clairiierl that it 
 was the opposition of the farmers that prevented the 
 enactment of the Aldrich plan, and urged every 
 banker present to each do his part in convincing their 
 
146 ORIGIN OF RUEAL CREDITS 
 
 farmer customers that they did not need money for the 
 transaction of business; just credit and a cheek-book. 
 His illustration of how to do it was quite convincing 
 and instructive. (See page 64.) For some reason 
 that part was omitted from the printed address. Per- 
 haps it was thought best that it should not get to the 
 public press. Now for the campaign. 
 
 At their annual meeting in November, 1911, "the 
 National Bankers' Association created a committee on 
 agricultural and financial development and education, 
 and began a study of land and agricultural credit at 
 home and abroad." Why this new departure? They 
 were and are absolutely opposed to any investment 
 system in connection with the commercial banking 
 system. 
 
 "Banking Reform," the official organ of the Na- 
 tional Citizens' League, organized for the purpose of 
 promoting the Aldrich bill, of date July 1st, 1913, said : 
 "There may be need for certain reforms in our in- 
 vestment banking machinery. That question is not 
 now before us. Nothing but disaster can result from 
 the confusing of commercial with investment banking 
 problems. ' ' The reason for the National Bankers ' 
 committee was plain. It was to get the farmers, not 
 the bankers, interested in "land and agricultural 
 credits at home and abroad"; more especially abroad, 
 for the campaign year of 1912, and they succeeeded 
 to a wonderful extent. 
 
 There was a real political and bankers' emergency, 
 such as has rarely if ever occurred in the United States 
 of America. There was no time to be lost. The Am- 
 erican farmer had for far too long been neglected by 
 the politicians. The National Bankers' Association 
 would now see that, like his cousin in Europe, he was 
 placed at the head of the procession where he of right 
 belonged. This committee meant business. 
 
 On the Republican side President Taft opened the 
 campaign March 18th by directing the Department of 
 State, through its diplomatic and consular officers in 
 Europe, to investigate and report promptly on* the 
 Rural Credit systems of Europe. 
 
PRESIDENT TAFT STARTS CAMPAIGN 147 
 
 On the Democratic eide, this was followed up in 
 April by the Southern Commercial Congress adopting 
 a plan for investigation, and sending a commission to 
 Europe also. The national and state treasuries were 
 to be drawn on freely to defray the expenses, and any 
 man who objected was branded as an enemy of agri- 
 culture. For once the dear neglected farmer was hav- 
 ing his inning. It was great. Such publicity, such 
 attention, such advertising. 
 
 The commissioners were feted in Europe, and con- 
 ducted to the foot of the rainbow, where they found 
 the proverbial pot of gold. 
 What State Aid in Europe Has Done for Agriculture. 
 
 "What has this state-aided Rural Credit system done 
 for the farmers of Europe, where it has been in force 
 for many years, in Germany for 130, and in France 
 nearly as long? 
 
 We cannot do better than quote first from the of- 
 ficial report of Mr. Herrick, endorsed by President 
 Taft, and published at public expense, for general dis- 
 tribution during the campaign of 1912 when both po- 
 litical parties vied with each other in bidding for the 
 farmer's vote with this tempting Rural Credit bait. 
 What it had done for the farmers of Europe, and what 
 it might do for the farmers of America if either the 
 Republican or Democratic, or even the Progressive 
 party were given the mandate. 
 
 "The government initiative, taken by the Depart- 
 ment of State under instructions issued by my direc- 
 tion to the diplomatic officers in Europe on March 
 18th last, have been effectively supplemented by the 
 Aemrican Bankers' Association, the Southern Com- 
 mercial Congress, and many other bodies by whom this 
 question has been agitated, and valuable work has 
 been done, in studying and disseminating knowledge 
 of those great instrumentalities which have been cre- 
 ated in foreign lands to extend to their agriculturists 
 credit facilities equal in benefits to those enjoyed by 
 their industrial and commercial organizations. The 
 handicap- placed upon the American farmer through 
 
148 ORIGIN OF RURAL CREDITS 
 
 the lack of such a system and the loss sustained by the 
 whole citizenship of the nation because of this fail- 
 ure to assist the farmers to the utmost development 
 of our agricultural resources is readily apparent. * * * 
 
 "The interest rate paid by the American farmer is 
 considerably higher than that paid by our industrial 
 corporations, yet I think that the security offered by 
 the farmer in his farm lands is quite as sound as that 
 offered by industrial corporations. 
 
 "More specifically this advantage may be seen in 
 the fact that through this machinery the German farm- 
 er has received money, at times, at rates lower than 
 those current in commercial loans." 
 
 "The most noticeable fact revealed by the investi- 
 gation of the European land credit institution is the 
 all-pervading presence of the state in every nation." 
 
 Page 12: "A very general practice is the distri- 
 bution of subsidies through state-endowed central 
 banks at rates that allow the peasants to obtain money 
 below the ordinary market figures." 
 
 President Taft, p. 5: "What this plan offers is a 
 means to secure to this country greater productivity, 
 at less cost, from the farms that are now under culti- 
 vation, and above all, to give us more farms and more 
 farmers. It will make it profitable for the farmer to 
 return to the cultivation of the abandoned farms of 
 the East and to open up the vast areas of imtilled lands 
 in the west." 
 
 Official report, p. 36: "The cause of the trouble is 
 the lack of capital, and the remedy lies in financing 
 the farmer and landowner. This is the indisputable 
 conclusion logically reached from examination into 
 the actual conditions and from comparisons furnished 
 by recent European history." 
 
 Page 4 (Taft): "Counting commissions and re- 
 newal charges, the interest rate paid by the farmers of 
 this country is averaged at 8% per cent as com- 
 pared to a rate of 31/2 to 41/^ per cent paid by the 
 farmer, for instance, of France or Germany." 
 
STATE AID IN EUROPE 149 
 
 Official report, p. 9: "The rate of interest at 
 which they are able to obtain and lend money falls 
 even below the European commercial rate and is about 
 one-third to one-half less than what prevails in the 
 United States.'" Note. — In view of the late report 
 of the Comptroller of the Currency the estimate of 
 tlie rate paid by the American farmer is away too 
 low. 
 
 Page 14: "In Austria, Germany, Finland, Ireland, 
 France, Russia, the Balkan States, and practically ev- 
 erywhere, the state has in some way or other given aid 
 to these banks." 
 
 Page 10: "The co-operative credit associations 
 have been of incalculable value to agricultural Eu- 
 rope. There is no question on this point and the in- 
 vestigation so far conducted shows quite as conclusive- 
 ly that such societies could be of great benefit to farm- 
 ers in many parts of the United States." 
 
 Page 20: "They are in fact government institu- 
 tions, clothed with summary execiitive and judiciary 
 powers over property, and to some extent, over the 
 actions of their associate members. " 
 
 Page 36: "The Landschaften and other mortgage 
 institutions have evolved the true theories of the mort- 
 gage loan, never tried in America and have made 
 real estate securities so safe, convertible, and cosmo- 
 politan that in Europe they sell as readily as govern- 
 ment bonds." 
 
 Page 23: "The most noticeable fact revealed by 
 the investigation of the European land credit institu- 
 tion is the all-pervading presence of the state in every 
 nation. * * * Subsidised iji some way or other and 
 granted special privileges. * * * There can be no 
 doubt that the working principles of the European 
 land-mortgage banks are the best ever devised, and 
 that they will have to be introduced into the United 
 States if it be hoped to make the farm mortgages a 
 fluid and popular form of investment, and direct a 
 flow of capital in sufficient volume to agriculture to 
 
150 ORIGIN OF RURAL CREDITS 
 
 enable it to keep pace with the progress of the na- 
 tion." 
 
 Page 10: "With their aid poverty and usury have 
 been banished, sterile fields have been made fertile, 
 production has been increased, and agriculture and ag- 
 ricultural science raised to the highest point. 
 
 "Their educational influence is no less marked. 
 They have taught the farmers the uses of credit as 
 well as of cash, given them a commercial instinct and 
 business knowledge, and stimulated them to associ- 
 ated action. They have encouraged thrift and saving, 
 created a feeling of independence and self reliance, 
 and even elevated their moral tone. 
 
 "Failures have rarely occurred. In France and 
 other countries they hold a record of having never 
 lost a cent." 
 
 The report of Mr. Herrick was an inspiration and 
 a hope to a host of debt-burdened American farmers. 
 It was corroborated by the report of the large and 
 representative non-partisan committee that visited 
 Europe for the special purpose of investigating at first 
 hand their Rural Credit systems. This was further 
 confirmed by the splendid work of David Lubin, our 
 representative at the International Institute of Agri- 
 culture, at Rome, Italy, who has given many years to 
 study of all phases of agricultural co-operative efforts, 
 of which Rural Credits was the most prominent fea- 
 ture. His work was careful, non-partisan and inval- 
 uable. The American farmers owe Mr. Lubin a great- 
 er debt than they recognize. There should be no 
 question then of accepting in good faith the reports 
 of the great success of state-aid in Europe for agri- 
 cultural investments and development. 
 
 Is it any wonder that the American farmer was in- 
 tensely interested, and had a right to hope and ex- 
 pect similar conditions for America? 
 
 Could any intelligent citizen read the foregoing 
 and form any other conclusion than that it was a 
 clean cut promise by President Taft for the Repub- 
 lican party, and backed by the organizations men- 
 
THE HOUSE OP MORGAN WON 151 
 
 tioned, and in convention by both Republican and 
 Democratic parties? 
 
 Clearly the intention was to convey that impres- 
 sion; and it did, not only with the farmers, but with 
 the business and professional men, in fact "the whole 
 citizenship." 
 
 Still, I had grave doubts as to the sincerity of the 
 movement. Was it possible that the House of Mor- 
 gan, and its many political and industrial arms, had 
 been really and truly converted to the good, sound, 
 democratic principle, that agriculture should at last 
 be placed without an effort or struggle on our part 
 "upon an equal footing with other business men and 
 masters of enterprise" in America? I remembered 
 the old query, "Can the leopard change his spots, or 
 the Ethiopian change his skin?"' 
 
 I knew that it was wholly contrary to the policy and 
 plans of the National Bankers' Association, and its 
 political arms, the twin parties. 
 
 I knew that they favored the Aldrich plan, and 
 that they were opposed to any investment attach- 
 ment, or any other feature that would jeopardize their 
 complete monopoly, so was not deceived in the least. 
 
 But the promises were there, and the political par- 
 ties should be held responsible for their fulfillment, 
 or punished for their failure. 
 
 President Taft was defeated ; but as with the 
 changes of rulers in Europe, so it was here. "The 
 king is dead; Iqcg live the king." 
 
 The new President was just as safe as the old. 
 The House of Morgan won. 
 
 So much for the Republican twin, now for the 
 Democratic. 
 
 President Wilson, after election, in Federal Reserve 
 bank law message said: "I present to you, in addition, 
 the urgent necessity that special provision be made also 
 for facilitating the credits needed by the farmers of 
 the country. The pending currency bill does the farm- 
 ers a great service. It puts them upon an equal foot- 
 ing with other business men and masters of industry, 
 
152 ORIGIN OF RURAL CREDITS 
 
 as it should ; and upon its passage they will find them- 
 selves quit of many of the difficulties which now ham- 
 per them in the field of credit." 
 
 President "Wilson in a message to Congress places 
 the farmer on the highest pinnacle: "Without these 
 every street would be silent, every office deserted, 
 every factory fallen into disrepair. * * * We must add 
 the means by which the farmer may make his credit 
 constantly and easily available and command when he 
 will the capital by which to support and expand his 
 business." 
 
 The foregoing would indicate that the President 
 was not familiar with the contents of the bill, or of 
 what it was intended to do, as there was nothing but 
 misery in it for the farmer, as the result of the mar- 
 keting of the 1915 crop demonstrated beyond any 
 theory or guess. (See page 39.) 
 
WHY THE SUDDEN CHANGE ON RURAL 
 CREDITS. 
 
 There is no parallel in the history of the United 
 States for such a sudden and complete change on a 
 great national issue as occurred in connection with 
 that of Rural Credits immediately after the close of • 
 the 1912 campaign. 
 
 It had been promoted from an unexpected source 
 and conducted in the most vigorous manner for the 
 two years preceding, each political party vying with 
 the others in support and promises. 
 
 Europe was scoured for favorable campaign ma- 
 terial by diplomatic and consular officials, individuals 
 and commissions, all returning with the one story, that 
 "there was millions in it," not only for the farmers, 
 but "the whole citizenship" of the United States. 
 
 The sleeping giant was aroused, and really thought 
 there was something in it for the farmer. It was 
 strongly backed by the House of Morgan, and its three 
 most important arms, the National Bankers' Associa- 
 tion, the Republican party and the Democratic party ; 
 and encouraged by every trust and special privileged 
 business in the nation. The farmer smiled. For once 
 he was IT. It made no difierenee which party won; 
 he won. 
 
 Immediately after election there was a complete 
 somersault, and active opposition to any legislatioii, 
 looking towards state aid of any kind developed. 
 
 What caused the change? What new light had 
 been seen? 
 
 Had the farmers' organization protested against the 
 duplicating of the European idea, that agriculture, be- 
 ing first in importance, should be made first in oppor- 
 tunity for development and production. 
 
 Who was alarmed? The business men were satis- 
 fied, and the farmers enthusiastic. The official repre- 
 sentatives of the men who control were all sure that 
 
154 WHY THE SUDDEN CHANGE? 
 
 the "sturdy, self-reliant, Independent American farm- 
 er" for whom they had apparently been working, 
 would spurn and reject any attempt to place him 
 'upon an equal footing with other business men and 
 masters of enterprise," such as our kinsmen and com- 
 petitors in Europe had secured for themselves. 
 
 The non-partisan quartet sang the same song in 
 perfect harmony, after election, and this was the bur- 
 den of the song: 
 
 President Taft: ""We have come to look upon the 
 American farmer of today as one of our most pros- 
 perous citizens. 
 
 "The proposal which I make is not to subsidize the 
 American farmer. Fortunately for this country, he 
 does not need it, nor would he accept it." 
 
 Ambassador Herrick: "It is not conceivable that 
 American farmers would accept such assistance from 
 the government and thus become a privileged class 
 supported in part by the rest of the people. And to 
 add to this wrong the new and more dangerous in- 
 justice of setting apart a class of people by itself to 
 be pampered and spoon-fed with special privilege at 
 public expense."' 
 
 President "Wilson: "The farmers, of course, ask, 
 and should be given, no special privilege, such as ex- 
 tending to them the credit of the government itself. 
 
 ""What they need and should obtain is legislation 
 which will make their own abundant and substantial 
 credit resources available as a foundation for joint, 
 concerted, local action in their own behalf in getting 
 the capital they must use. It is to this we should now 
 address ourselves. 
 
 * * * "The farmers, of course, ask, and should be 
 given, no special privilege, such as extending to them 
 the credit of the government itself." 
 
 Secrtary of Agriculture Houston, 1914 Tear Book, 
 p. 35, says: 
 
 "There seems to be no emergency which requires 
 or justifies government assistance to the farmers di- 
 
THE SECRETARY MISTAKEN 155 
 
 reetly through the use of the government's cash, or 
 the government's credit. 
 
 'The American farmer is sturdy, independent, and 
 self-reliant. ' ' 
 
 Note. — That is a significant official declaration of 
 the representative of agriculture in the cabinet. Just 
 think of such a man being chosen over such men as 
 Charles Barrett of Georgia, or Obadiah Gardner oi 
 Maine. 
 
 "With all due deference to the distinguished quartet 
 of official statesmen, and appreciating the exalted 
 opinion they have expressed of the farmers as a class, 
 the only one that prospers without state aid or protec- 
 tion. The only one that would spurn the same aid and 
 privileges as are enjoyed by other classes in our own 
 country, and our competitors in foreign countries. 
 
 Placing the most charitable construction possible 
 on their incomprehensible reasoning and policy, I 
 must say that the gentlemen are mistaken. They are 
 not acquainted with the American farmer in need of a 
 loan, or looking for a bargain. Thousands of them 
 are stockholders in national banks, now members of 
 the Federal Reserve Association, and not one of them 
 has spurned the special privilege of the use of the 
 government's cash and credit free. We are mostly 
 immigrants from, or descendants of immigrants from 
 some European country. The only difference is that 
 poverty compelled the European farmer to wake up 
 and shake off his partisan shackles, and become an 
 active factor in legislation to secure equal treatment 
 by his own government. 
 
 First. In America, our farmers are as yet too 
 prosperous — or think they are. 
 
 Second. Industrious, sturdy and self-reliant they 
 are, but they are not independent. They are slaves 
 of their political party organizations. The average 
 farmer prefers the taffy and fulsome compliments of 
 the smooth tongued politician of his own party, to 
 actual service of one who will not play the game of 
 the machine at the sacrifice of principles. 
 
156 WHY THE SUDDEN CHANGE? 
 
 The pledges have been made by all political parties 
 having representatives in Congress, and by the Presi- 
 dent to "place the farmers upon an equal footing v^ith 
 other business men and masters of enterprise." 
 
 Fail to do this and it is your fault. Do it and if 
 the American farmer spurns the opportunity, it will 
 be his fault. But what's the use? 
 
 The Rural Credit campaign had served its purpose. 
 The object of its promoters was to interest the farm- 
 ers on a side issue ; to keep his eyes glued on Europe, 
 while they attended to the election of a President and 
 a Congress that would enact the Federal Reserve law. 
 This accomplished they had no further use for Rural 
 Credits, and the farmer. 
 
 In the foregoing quotations, I have condensed in 
 as brief a space as possible, what I shall assume to be 
 the present program, and future policy of the men who 
 seek the control of all commerce and industry in the 
 United States, through special privilege and class leg- 
 islation. 
 
 This great triune is now, and has been, in control 
 of federal legislation for the past fifty years, and is 
 making rapid progress in developing the greatest con- 
 spiracy ever conceived by the brain of man. 
 
 It is composed of the autocratic House of Morgan, 
 the legislative arms being the Democratic party and 
 the Republican party, with the Progressive parly 
 thrown in as a decoy, so long as it is financed by Geo. 
 W. Perkins of the House of Morgan and led by Theo- 
 dore Roosevelt. 
 
 The twin political parties, or even the triplets, dif- 
 fering only on personalities, minor issues or non-es- 
 sentials to distract attention from the mo in issue, but 
 always uniting at the signal of the Sovereign. 
 
 If the National Bankers' Association, and the Re- 
 publican party believed the foregoing to be true, why 
 did they make the campaign for Rural Credits for the 
 benefit of the American farmer? 
 
 "What a pity that our national bankers, railroad 
 companies, manufacturers and the many beneficiaries 
 
"NATURAL PILOTS" DESERT US 157 
 
 of special privileges who swarm over "VYashington, D. C. 
 during each session of Congress, lobbying for more and 
 more of the stuff that so sadly saps the independent 
 manhood of the average American citizen. 
 
 The high-minded, independent, prosperous Ameri- 
 can farmer owes it to our country, and to his less for- 
 tunate, unfortunate fellow citizens, that the baneful, de- 
 moralizing influences of special privileges be repealed 
 at the earliest opportunity, that they too may in time 
 ascend the pedestal now occupied by the American 
 farmer alone. 
 
 But Mr. Herriek's interest in the protection of the 
 American farmer from the baneful influences of spe- 
 cial privilege in the way of state aid grows in intensity 
 as his campaign advances. At Kansas City, Mo., in 
 addressing the State Bankers' Association on May 25, 
 1915, he said: "The movement (Rural Credits) bereft 
 of guidance by its natural pilots (the American Bank- 
 ers' Association) and impelled too rapidly by over- 
 hasty enthusiasts, deviated from its true course of pri- 
 vate enterprise and mutual self-help, and slanted off 
 towards state aid and paternalism.'" 
 
 Note. — Our "unnatural pilots" deserted the ship. 
 
 "The issue has been squarely drawn as to whether 
 the cash and credit of the government shall be used 
 in behalf of individuals in farm-mortgaging. Its pur- 
 pose is to manufacture Active values, and to add to 
 this wrong the new and more dangerous injustice of 
 setting apart a class of people by itself to be pampered 
 and spoon-fed with special privilege at public ex- 
 pense." 
 
 Strange that in his long and successful public ca- 
 reer, he never remonstrated against the danger of his 
 friends, the manufacturers, suffering from spoon-feed- 
 ing, but insisted on increasing the size of the spoon 
 to that of a shovel. Thoughtless statesman! 
 
 Nor of the "dangerous injustice" to the friends of 
 his own class, the national bankers, in increasing the 
 size of the vessel from a shovel to a scoop. Unkind 
 friend ! 
 
158 Y.TIY THE SUDDEN CHANGE? 
 
 Once more the twins were as "two minds with but 
 one single thought, two hearts that beat as one" or 
 something to that effect, when the farmers' interests 
 •were to be neglected, or sacrificed. 
 
 Page 20: "A development resting on state aid or 
 charity could not permanently endure. Such artificial 
 stimulation violates fundamental principles, and should 
 not be considered a moment for Americans, no matter 
 how much it is resorted to in Europe." 
 
 Oh, Myron! Myron! Such apostacy from Eepub- 
 liean principles; and you from Ohio, and a candidate 
 for President! How could you? 
 
 But the American Manufacturers' Association do 
 not seem to take your prophesy seriously. Your "in- 
 fant industries," hoary with age, are organizing to 
 secure more of the poison with which you have been 
 feeding them so generously in the past, and your bank- 
 er friends, who thought they had secured all they 
 could use from the last Congress, are again asking for 
 more charity and special favors. 
 
 In discussing the several propositions I shall as- 
 sume, as I think the facts justify, that each proposition 
 is approved by all three members of the triune. But 
 first please go back and read once more, substituting 
 the national bankers for the farmers, and the business 
 of banking for the business of agriculture. Taffy and 
 all, even if it strains a point. Keep in mind Presi- 
 dent Wilson's favorite maxim that "the farmer should 
 be placed upon an equal footing with other business 
 men and masters of enterprise as he should be."^' Also 
 keep in mind that the chief business of Congress for 
 many years has been the granting of special favors, 
 privileges, public lands, cash taxed from the people, 
 and as in the Federal Reserve bank law, the unlimited 
 credit of the government, and several hundreds of mil- 
 lions of cash taxed from the people, in each and every 
 ease to some class, business or industry, organized for 
 private profit, at public expense, and also protected 
 from foreign competition. 
 
SPECIAL PRIVILEGE FOR BANKERS 159 
 
 The wrong, danger, and injustice of the system 
 never dawned upon the distinguished quartet of offi- 
 cial leaders, until a few non-official (politically) rep- 
 resentatives of agriculture began to ask that agricul- 
 ture be recognized both as a business and an industry, 
 and placed upon a real "equal footing" with any 
 other business or industry. 
 
 A number of propositions raised will be more fully 
 discussed elsewhere, but I think it well to touch on a 
 few at this point very briefly. 
 
 "The issue has been squarely raised as to whether 
 the cash and credit of the government shall be used on 
 behalf of individuals." 
 
 I shall add to the above, "or combination of indi- 
 viduals." 
 
 The Federal Reserve Bank law should be sufficient 
 to illustrate the objection raised. All of its capital 
 to begin with was loaned by the federal government; 
 they call it a deposit, with money, real money, coined 
 gold, taxed from the people, and loaned without inter- 
 est, to one business, organized for private profit, and 
 profit only. 
 
 Is banking a business? Certainly. Are the bank- 
 ers a class? Certainly. Are they organized for pri- 
 vate profit? No question about that. Are they "indi- 
 viduals"? Yes, a combination of individuals. 
 
 Have they received any cash from the government 
 to be used in their behalf? Yes, over $200,000,000 in 
 gold, free of interest to start with, and as much more 
 profits, 
 as they may need, or think they need, on same terms. 
 
 Any other special favor on that line? Yes; the 
 government has delegated to them its constitutional 
 power to issue money, and in practice all the new 
 currency of the future will be issued by them. 
 
 Any other privilege or power? A very important 
 one, the power to fix the rate of interest that may be 
 charged for the use of money. 
 
 But, how about the credit of the government 1 All 
 currency issued by the Federal Reserve banks becomes 
 
160 WHY THE SUDDEN CHANGE? 
 
 obligations of the government, without interest. The 
 whole credit of the government is given to them 
 freely, unlimited and uncontrolled. Spoon-fed? No, 
 scoop-fed. 
 
 Anything further? Yes; Federal Eeserve banks, 
 including the capital stock and surplus therein, and 
 the income derived therefrom, shall be exempt from fed- 
 eral, state, and local taxation, except taxes upon real 
 estate. See Section Federal Reserve Act. Page 13, 
 May, 1915, bulletin. 
 
 "A development resting on state aid or charity 
 could not permanently endure." 
 
 I think that is true, Mr. Herrick, of the kind of 
 "state aid or charity" that we have been indulging in 
 so freely in the past in aiding to build up private 
 monopolies at public expense. It has proven very 
 profitable to the beneficiaries, financially, but utterly 
 demoralizing as to moral character, and good citizen- 
 ship. They are never satisfied. 
 
 The infant industries, under protection, never grow 
 up so that they can stand alone. 
 
 They always fight against any reduction, insisting 
 that they could not continue their business without 
 the state aid of protection. 
 
 Our public highways, privately owned and operat- 
 ed, even though they received state aid in cash 
 bonuses, or public lands, or both, to several times the 
 legitimate cost of building and equipping the road, 
 are always begging for more power of taxation, to the 
 extent of "all the traffic will bear." The national 
 bankers, the largest beneficiaries, larger than all others 
 combined, are never satisfied. Every session of Con- 
 gress finds new demands made upon them for more 
 aid, and their demands are enforced, if necessary, by 
 the club of threatened panic. 
 
 The greater the state aid, charity or subsidy, given 
 to aid a private monopoly, the more insistent they are 
 for more. It becomes a mania with them, and +,he 
 corruption of our political units, and gross violation of 
 our laws follow. No ; that kind of state aid or char- 
 
STATE AID OR CHARITY 161 
 
 ity, or subsidy, cannot permanently endure, and the 
 revolt is now on against it. 
 
 State aid ; that is, the use of the community credit 
 to develop and operate public utilities, by the public, 
 for the public benefit, without private profit, is the 
 solid rock upon which to build to endure. 
 
 The same is true for the use of state credit for 
 legitimate industrial development, where proper secur- 
 ity is offered, and the borrowers pay for all of the ex- 
 pense of administration. This is especially true of 
 agriculture, which all agree offers the "best security 
 in the world — productive land," wheat, com and cot- 
 ton. 
 
WHAT WAS PROMISED FOE RURAL CREDITS. 
 
 President Taft, as chief executive, and recognized 
 head of the Republican party, in his enthusiastic cam- 
 paign for Rural Credits in 1912 stated emphatically: 
 "That the American farmer was seriously handicapped 
 by having to pay more than twice as much interest 
 for the use of money as the European farmer, and that 
 this discrimination was a serious loss to our whole 
 citizenship. That the American farmer paid much 
 higher rates of interest than our industrial corpora- 
 tions, although the security offered was quite as 
 sound. ' ' 
 
 President "Wilson is on record since his election 
 as stating that the American farmer should be placed 
 "upon an equal footing with other business men and 
 masters of enterprise" in financial legislation. 
 
 He said in an authorized interview for the metro- 
 politan press, August 18, 1913, ^whieh was prior to the 
 presentation of the Federal Reserve bill: "Special 
 machinery and a DISTINCT SYSTEM OP BANKING 
 must be provided for, if Rural Credits are to be suc- 
 cessfully and adequately supplied. Our farmers must 
 have similar means afforded them of handling their 
 financial needs easily and inexpensively. They shall 
 be furnished these facilities before their enterprises 
 languish, and not afterward. AND THEY WILL BE. 
 This is our next great task and duty. ' ' 
 
 Both the Republican and Democratic parties rec- 
 ognized this gross discrimination against agriculture 
 during the 1912 campaign, and in their platforms 
 promised prompt relief if given the mandate. In fact 
 they apparently made it their paramount issue. 
 
 President Taft and President Wilson each earnest- 
 ly urged non-partisan consideration of this vital, ur- 
 gent legislation. 
 
 But for some reason for which no satisfactory ex- 
 planation has as yet been given, unless you consider 
 
EURAL CREDITS SIDETRACKED 163 
 
 Mr. Herrick's such. It was sidetracked during the 
 first Congress, and a joint non-partisan committee on 
 Rural Credits appointed to prepare and present a bill 
 at the opening of the first session of the present Con- 
 gress. 
 
 Early in January they presented a unanimous re- 
 port, and a bill. 
 
 They state several very important facts in the re- 
 port; briefly stated, they are, p. 5: "The American 
 farmer has the best secu^"ity in the world — ^productive 
 land." 
 
 "In many parts of the country the farmer is 
 charged extortionate and inexcusable rates of interest 
 regardless of usury laws and a decent regard for hu- 
 man necessities." 
 
 On page 6 we find what may be termed the object 
 or text of the bill: 
 
 "He [the American farmer] desires the govern- 
 ment to authorize a system of land banks which shall 
 duplicate for him the facilities now commanded by 
 men engaged in manufacturing, in transportation, 
 and in commerce." 
 
 Note., — ^A correct interpretation of the farmers" 
 rights. 
 
 "But your sub-committee is convinced that loans 
 must be made available to farmers on long term mort- 
 gage security through some medium other than the 
 commercial bank." 
 
 From the foregoing we summarize a few facts that 
 should be conceded without question: 
 
 First. The American farmer is grossly discrim- 
 inated against, both at home, and in competition with 
 foreign farmers, in the rates of interest charged for 
 the use of money or credit. 
 
 Second. That the corporation, or corporations, to 
 whom has been delegated, as public servants, the ad- 
 ministration of this public utility, money, are "in many 
 parts of the country charging the farmers extortionate 
 and inexcusable rates of interest, in violation of usury 
 laws and a decent regard for human necessities." 
 
164 WHAT WAS PROMISED 
 
 Note. — By a strange oversight, the committee omit- 
 ted to make any recommendation for the punishment 
 of these criminals, compensation to the victims, or 
 forfeiture of their charters so as to prevent further 
 ' ' extortion by these lawless, inhuman oppressors of the 
 farmers in many parts of the country." These are 
 not my charges, but the official report of the joint 
 committee, corroborated by the Comptroller of the 
 Currency and the sworn statements of the officers of 
 the national banks guilty of the offenses. What they 
 have done "in many parts of the country" they have 
 the power to do in all parts. They are no respector 
 of classes or individuals. What they are doing to 
 the farmers, they may and will also do to every other 
 class or profession in the nation. 
 
 Third. Because of this lawless extortion, there is 
 an urgent, immediate demand for such legislation as 
 will not only "place the farmer upon an equal foot- 
 ing with other business men and masters of enter- 
 prise," but that will also forever stop this unjust sys- 
 tem of taxation upon the exchange of the products of 
 labor of all classes and industries in the nation. 
 
 Fourth. That a ' ' distinct' system of banking must 
 be provided for" and "similar means afforded," 
 "which shall duplicate for him [the farmer] the fa- 
 cilities commanded by men engaged in manufacturing, 
 in transportation, and in commerce." 
 
 Fifth. This cannot be done under the Federal Re- 
 serve law as controlled at present, nor under any 
 system, dependent in any degree on the men who now 
 control our financial system. 
 
 It is fair to assume that the impression made, and 
 intended to be made, upon the public mind by the use 
 of the terms: "A distinct system of banking,"' "other 
 than the commercial bank," similar means afforded," 
 and "duplicate for him," was that Rural Credits, as 
 promised, was an investment system that would do for 
 agriculture just what the commercial system was do- 
 ing for other lines of business, and that to do so it 
 
COMPLETE CHANGE OP SYSTEM 165 
 
 must be separate and distinct from, and independent 
 of, the commercial sj'stem. 
 
 It cannot possibly serve that purpose and be de- 
 pendent on, and pay tribute to, a commercial system 
 wholly administered for private profit; and more es- 
 pecially when that commercial system says emphatic- 
 ally that "nothing but disaster could result from a 
 confusion of an investment system with the commer- 
 cial." 
 
 In addition, all the foreign Rural Credit systems, 
 so widely advertised, have been built up as separate 
 and distinct systems. They have grown up side by 
 side with the commercial banks to the mutual benefit 
 of both, and, with the postal savings banks, have been 
 the real reasons why the European countries have been 
 so free from panics, something our monetary com- 
 missions omitted to report. 
 
 A Complete Change of System. 
 
 The great difficulty with the true friends of Rural 
 Credits, or an investment system, is, that they do not 
 understand, or realize, that we have, by legislation, 
 during the past eight years, laid the foundation for a 
 complete change in our whole financial system, in ac- 
 cord with the plan of the House of Morgan, and that 
 the change is rapidly developing. 
 
 The change is from money to credit, as I have 
 clearly shown. 
 
 At present the system is that of lawful money, cur- 
 rency and credit. 
 
 The lawful money is being rapidly destroyed, or 
 stored in the vaults of the men who control. The cur- 
 rency is being rapidly contracted, and permanently 
 withdrawn from circulation. Then all that will be 
 left is the credit of the national banks, and a limited 
 amount of Federal Reserve bank notes for counter 
 use. 
 
 All Rural Credit bills depending upon the sale of 
 bonds for lawful money will prove an absolute waste 
 of time and money; and just how they can hope to 
 handle the credit of the national banking system 'in 
 
166 WHAT "VVAS PROMISED 
 
 competition with, or in opposition to, the system is 
 beyond my comprehension. No effort is being made 
 to amend the Federal Reserve law to meet our needs, 
 and none will be allowed by the men who now control 
 both the Democratic and Republican parties. 
 
 The bill presented by the joint committee does not 
 comply with the promises made by the dominant par- 
 ties in any particular, nor was it intended to. 
 
 It does not comply with the report itself in any 
 respect, but the very reverse in every essential, and in 
 addition it sets the most dangerous of traps for the 
 unsuspecting farmer to walk into. It is a sham, a 
 fraud, a trap. 
 
 Senator Hollis has announced it as the Adminis- 
 tration bill, and as it had the approval of the repub- 
 lican members of the committee (I will deal with it 
 more in detail elsewhere), it represented the official 
 views of both political parties. I think that they as- 
 sume that the average farmer is more stupid than he 
 really is. 
 
WILL THE FEDERAL RESERVE LAW SOLVE THE 
 AGRICULTURAL INVESTMENT PROBLEM? 
 
 In urging the Federal Reserve Bill in Ms message 
 to Congress, President Wilson said: "The pending 
 currency bill does the farmers a great service. It 
 puts them on an equal footing -with other business 
 men and masters of enterprise,, as it should, and upon 
 its passage they will find themselves quit of many of 
 the difficulties which now hamper them in the field of 
 credit." 
 
 That is one of the clearest statements President 
 Wilson has yet made officially. 
 
 Was he deceived as to the contents of the bill, or 
 did he deliberately try to deceive the farmers of the 
 nation ? 
 
 I am loth to believe the latter. I would prefer to 
 believe the former. I will state the facts, and let the 
 reader decide for himself. 
 
 In this connection what should be the meaning of 
 "equal footing"? 
 
 The answer of the layman must be: equal oppor- 
 tunity ; equal service ; equal facilities for credit ; equal 
 rates of interest, and terms to suit his special business. 
 
 What are we to understand by the term "other 
 business men and, masters of enterprise"? 
 
 I understand it to mean that agriculture is a busi- 
 ness, and that the farmer should be the master of his 
 own enterprise; that is, just as free to manage it in 
 accord with his own ideas and plans as did the mas- 
 ters of any other business, or enterprise. 
 
 "They will find themselves quit of many of the 
 difficulties which now hamper them in the field of 
 credit." 
 
 Nothing of that kind is as yet apparent. 
 
 I had heard Mr. Reynolds discuss and advocate the 
 Aldrich plan before a state meeting of bankers. There 
 was not one sentence in his address that would indi- 
 
168 OUR INVESTMENT PROBLEM 
 
 cate that any investment system was being considered 
 in connection therewith. 
 
 I read his address before another state bankers 
 meeting, printed and distributed by himself, or the 
 National Bankers" Association. 
 
 I read "The Aldrich Plan Interpreted" by Mr. 
 Reynolds, and distributed "with the compliments of 
 The Continental and Commercial National Bank of 
 Chicago. ' ' 
 
 I read the bill as prepared by the committee and 
 introduced in Congress, and Senator Owen's speech in 
 introducing it. It was a masterful and complete ad- 
 dress. 
 
 In none of these did I see any foundation whatever 
 for the President's statement as quoted. 
 
 The President and his advisers had access to all 
 this information, and it is very unfortunate, at least, 
 that his cabinet officials should have permitted him to 
 make such wholly unwarranted statements, with the 
 apparent intent of deceiving our greatest industrial 
 and business unit. Indeed, Senator Owen made it very 
 clear as to what the Federal Reserve law was to be in 
 the following words : 
 
 "All of these considerations urge that the Federal 
 Reserve banks should be banks for banks, bankers' 
 banks; and not a public bank competing with the 
 banks for business." 
 
 In fact, they were intended to be a perfect monop- 
 oly of the business of the nation, for the private profit 
 of one business. 
 
 What the Fanner Needs. 
 
 It is admitted by every intelligent student of agri- 
 culture that what the farmer needs is an investment 
 system, for long time loans for development and pro- 
 duction, with small annual payments of principal, and 
 at a rate of interest the industry can afford to pay. 
 
 No business can be successfully operated where 
 they have to pay more interest for the use of money 
 than the profits of the business warrant. 
 
WHAT THE PAEMER NEEDS 169 
 
 Agriculture does not pay more than two per cent 
 on investment and labor, if figured as it should be, on 
 the same basis as is other business. 
 
 In this, increase in land value . should not be in- 
 cluded, as profit on production, for it is not ; that is a 
 value created by the community apart from produc- 
 tion; and allowance should also be made for loss of 
 fertility. 
 
 If more than two per cent interest is charged, farm 
 tenantry will continue to increase. I know of what 
 I write. 
 
 The national bankers are on record, times without 
 number, against an investment system being forced on 
 the commercial banking system. 
 
 When an effort was made to incorporate such an 
 amendment in the Federal Reserve act, "Monetary 
 Reform" protested vigorously, and declared emphat- 
 ically that no such amendment would be permitted, 
 saying that, "Nothing but disaster can result from the 
 confusion of commercial with investment problems." 
 
 They have the commercial banking system now, 
 just about as planned by Mr. Warburg, and advocated 
 by Mr. Reynolds. 
 
 Mr. Yfarburg so testified before the investigating 
 committee, adding that whatever was lacking in the 
 law could be provided by the Federal Reserve Board, 
 which means that it will be just as the bankers wish. 
 
 The amendments the Board have suggested are in 
 line with the policy outlined, and without any hint of 
 provision for investments, such as was promised, and 
 as is needed. 
 
 Speaking in a broad sense and from experience, 
 and official data of 1913, 1914 and 1915, which I will 
 later give you, I am thoroughly convinced of the fol- 
 lowing facts: 
 
 For investments we must have a system wholly 
 free in every respect from the men who now control 
 our financial system. 
 
 No matter what they may claim, the Federal Re- 
 serve law never was intended by its original promoters 
 
170 OUR INVESTMENT PROBLEM 
 
 to serve the public. It was intended to do just what 
 it is accomplishing, — giving complete control to a few 
 grasping extortioners, whose only aim is private 
 profit. 
 
 That they cannot be compelled to serve the public 
 under the present system. 
 
 That they will not permit the amendment of the 
 law except as sanctioned by the National Bankers" As- 
 sociation. 
 
 Report of Joint Committee on Rural Credits. 
 
 (The appended criticism of the joint committee bill 
 as reported to Congress was published in a newspaper 
 under date of February 3, 1916. ) 
 
 The object of the bill is stated on page 5: "Mod- 
 ern farming requires capital in large amounts. The 
 American farmer has the best security in the world — 
 productive land. This bill enables the farmer to ob- 
 tain capital for productive purposes, at low rates and 
 for long terms, on the security of his farm." 
 
 What might be termed the text of the bill we find 
 on page 6: "He [the farmer] desires the government 
 to authorize a system of land banks which shall dupli- 
 cate for him the facilities commanded by men en- 
 gaged in manufacturing, in transportation, and in 
 commerce." 
 
 The committee knew what was wanted and laid 
 a splendid foundation. 
 
 In recommending the Federal Reserve law to Con- 
 gress, President Wilson said : ' ' The pending currency 
 bill does the farmers a great service. It puts them on 
 an equal footing with other business men and masters 
 of enterprise as it should." 
 
 But there was a superior power, sovereign in legis- 
 lation which said not so; "Nothing but disaster can 
 result from the confusion of commercial with invest- 
 ment banking problems." And before the bill was 
 enacted into law, everything of that kind was elim- 
 inated. President Wilson then promised that this 
 would be taken up in a separate measure, and I as- 
 
THE SHAM DUPLICATE EXPOSED 171 
 
 snme that the proposed bill is the administration meas- 
 ure providing for that "equal footing," etc. 
 
 Does the bill, in whole or in part, redeem the plat- 
 form promises of the dominant parties, in favor of ru- 
 ral credits, the implied pledge of President Taft, and 
 the direct pledge of President "Wilson? 
 
 The American farmer for whom this bill was in- 
 tended has the capital. 
 
 What he wants is a partial representative of that 
 capital on "the best security in the world — productive 
 land," for the purposes of development and produc- 
 tion; a duplicate of the system by which commerce 
 and other industries can now borrow moUey on com- 
 mercial paper. 
 
 There is an important fact that should have been 
 considered, viz. : An investment system can be ad- 
 ministered for a mere fraction of the expense and risk 
 of the commercial system ; hence the report might well 
 iave said, instead of the very indefinite "low rate," 
 a lower rate of interest than for any other business 
 or industry. The saving in expense of administration 
 should inure to the benefit of the patrons. 
 
 Is It a Duplicate? 
 
 How far and in what does the proposed law dupli- 
 cate the Federal Reserve law? First. For the Fed- 
 eral Reserve Board they duplicate with a Federal Farm 
 Loan Board. A good start. But that is the only 
 duplicate I can find in the whole bill. 
 
 Second. The capital to start with. For the Fed- 
 eral Reserve bank as stated by Senator Owen in in- 
 troducing the bill. Congressional Record, p. 6763: 
 "We are proposing to put approximately $200,000,000 
 of government funds in the Federal Reserve banks." 
 That was gold coin. The banks were to subscribe six 
 per cent of their capital, one-half to be paid in six 
 months, which would amount to $53,000,000. The gov- 
 ernment contributed four-fifths of the capital as a de- 
 posit, or loan, free of interest. How is this duplicated 
 lor the Federal Land Loan Board? Section 6 pro- 
 vides that they may become depositaries of public 
 
172 OUR INVESTMENT PROBLEM 
 
 money, etc., and the Secretary of the Treasury "shall 
 require satisfactory security, by the deposit of United 
 States bonds and otherwise."' 
 
 No security was required for the deposit of the 
 $200,000,000 of gold with the federal reserve banks. 
 Not much of a duplicate. 
 
 Third. No government funds deposited under the 
 provisions of this section shall be invested in mort- 
 gage loans. The security was to guarantee "the safe 
 keeping and prompt payment of the public money 
 deposited with them." What benefit would the de- 
 posit be unless they could use it? Now compare that 
 with the use the Federal Reserve banks could make 
 of the $200,000,000 loan or deposit. They could issue 
 and loan two and a "half times the amount in Federal 
 Reserve bank notes, or $500,000,000. No sign of a 
 duplicate there. 
 
 Fourth. The government has delegated its sov- 
 ereign power to coin (issue) money to the Federal 
 Reserve banks without limit; but the Federal Farm 
 Loan banks will have to depend on voluntary deposits, 
 for which they will have to pay four per cent (later 
 this feature was promptly eliminated after presents^ 
 tion), or on the sale of bonds bearing a rate of 5 per 
 cent to secure "current funds" that have been issued 
 out, loaned out, by the Federal Reserve system at an 
 interest rate of 8 per cent to 10 per cent. Instead of 
 being a "duplicate" or "equal footing" it is gross dis- 
 crimination against agriculture. 
 
 It is not at all in accord with the desire expressed 
 by the committee as quoted. To duplicate would be 
 for the government to delegate exactly the same 
 power and authority through the medium best suited 
 to each system, and no true friend of agriculture can. 
 afford to accept of any less. 
 
 On page 6 the committee concedes that we must 
 have "some medium other than the commercial banks." 
 It should be wholly independent of them as well. 
 
 Indeed, as agriculture is our basic industry, it 
 should have prior consideration. We must first pro- 
 
$100,000 CAMPAIGN CONTRIBUTION 173 
 
 duce something before there is a necessity for a medium 
 of exchange. 
 
 Our farmers are compelled to compete in the 
 world's markets, where the price is fixed by the un- 
 controlled law of supply and demand; with our com- 
 petitors having cheaper land, the use of money or 
 credit for less than half the rate of interest, and pub- 
 lic transportation imtaxed for private profit. 
 
 Unprotected from foreign competition in our own 
 markets, discriminated against by legislation at every 
 turn, and the prey of every protected and special pri- 
 vileged industrial and commercial trust, agriculture 
 cannot pay more than two per cent for the use of 
 money or credit, and stay the present rapid descent 
 from farm ownership to tenantry, and the increased 
 exodus from the farm to the city. 
 
 "A Low Rate of Interest." 
 
 I do not see how money could be loaned for less 
 than six or seven per cent under the proposed law. 
 Of course that is a low rate as compared with current 
 rates as reported by the Comptroller of the currency. 
 
 But why pay any tribute to the commercial sys- 
 tem? Why pay 6 per cent for the use of this public 
 utility, when it can be provided for 2 per cent by an 
 independent system. The committee accepts of the 
 principle of private monopoly by a special privileged 
 class called bankers, and build their structure upon it 
 by providing an entirely new and very expensive sys- 
 tem of administration, with a vast army of unnecessary 
 new officials. 
 
 It looks very much like a $100,000 campaign con- 
 tribution to the Democratic party. 
 
 By adopting the system I have suggested of using 
 our present political units, we reduce the expense to 
 the minimum, and increase the security to the maxi- 
 mum. For the Federal Reserve Board, duplicate, say, 
 an Assistant Secretary of the Treasury, Interior and 
 Agriculture, as an Investment Bank Board. Dupli- 
 cate the state unit for the Federal Reserve Bank, and 
 the county unit for the member bank, and duplicate 
 the power to issue Federal Reserve bank notes on the 
 security of commercial paper by the power to issue 
 
174 OUR INVESTMENT PROBLEM 
 
 Federal Investment bank notes on "the best security 
 Jn the world — ^productive land.*' That is Vi^hat I 
 would call "duplicating." 
 
 Federal Reserve bank notes are now obligations of 
 the government for which the government receives no 
 Compensation. 
 
 The Federal Investment bank notes will be guaran- 
 teed by the several government units, for which they 
 will be amply paid by the borrower. • 
 
 So far as the state units are concerned, we have the 
 system in successful operation in a number of states, 
 in the loaning of our school funds. Why duplicate 
 these? The only additional help needed would be 
 clerical. Not much. 
 
 If Congress cannot do better than 6 or 7 per cent 
 it is a waste of time to bother with it. We can do 
 better by state legislation, as South Dakota is now 
 doing, thanks to the foresight of the good old Farm- 
 ers" Alliance. 
 
 We have now over $5,000,000 loaned on farm mort- 
 gages at 5 per cent, and over $6,000,000 on deferred 
 payments at 6 per cent. As fast as that is paid in it 
 is reinvested at 5 per cent. This has had a very im- 
 portant bearing on interest rates for all farm loan 
 investments, as evidenced by the fact that we now 
 have $27,000,000 of life insurance funds loaned at 5i/2 
 per cent. We could do better, but unfortunately the 
 United States constitution provides that no state shall 
 make anything but gold and silver coin a legal tender 
 for the payment of debt. 
 
 A serious ■ defect in the bill is that the committee 
 assumes that there is now and will be in the future an 
 abundant supply of money for investment in farm 
 mortgages. They overlook the fact that we are rapid- 
 ly developing a complete change in our whole finan- 
 cial system as advocated by the National Bankers' 
 Association, and provided for in the Federal Reserve 
 law and other laws during the past five or six years. 
 The change is based on the theory that we do not need 
 money for the transaction of business; just credit 
 
A DANGEROUS TEAP 175 
 
 and a checkbook. "We have already had a decided 
 contraction of money both by increased demand and 
 decreased supply, by retirement and decoinage. This 
 process will continue until the few men now in control 
 will have completed their monopoly. The lawful 
 money remaining will be hoarded in their vaults, until 
 drawn out by a premium. 
 
 They want to loan their credit instead of money. 
 "The school teacher, clerk, minister, and wage earn- 
 er," etc., will not be paid in money, but by a check, 
 against a credit. 
 
 A Dangerous Trap. 
 
 Section 12 provides that: "Funds transmitted to 
 farm loan associations by Federal Land banks to be 
 loaned to its members, shall be in current funds, or 
 farm loan bonds." 
 
 Section 26 provides: "Whenever any farm loan 
 boads, or coupons, or interest payments of such bonds, 
 are due under their terms, they shall be payable at the 
 land bank by which they were issued, in gold or law- 
 ful money." 
 
 Under our present laws "current funds" of the 
 future will be Federal Reserve bank notes. They are 
 not "lawful money." At present and until retirement 
 is complete, national bank notes are the same, as are 
 also coin certificates. Gold coin has practically disap- 
 peared from circulation the world over ; but in no other 
 nation are they decoining it as we are. Why pro- 
 vide that the loan "shall be in current funds" which 
 may or may not be "lawful money" and payment 
 shall be made in "gold or lawful money." 
 
 There is going to be a great shortage of legal ten- 
 der money in circulation very soon. Most of our farm 
 mortgages are now payable "in gold coin of the pres- 
 ent standard of weight and fineness.'" The same is 
 true of the greater part of present obligations, esti- 
 mated at all the way from $100,000,000,000 up. Sup- 
 pose the creditors demand payment as stipulated in 
 the contract, where will they get the gold coin? 
 
176 OUR INVESTMENT PROBLEM 
 
 It is a dangerous trap to set for the farmer who 
 borrows "current funds" and obligates himself to 
 pay in "gold or lawful money." 
 
 Having a monopoly of credit; and lawful money 
 out of circulation, by hoarding and contraction, the 
 problem of the man behind the counter will be not 
 what can we afford to loan our credit for, but what 
 can the prospective victim stand. 
 
 As an illustration of what men will do when given 
 the power, take the case of that widow (report of the 
 Comptroller of the Currency, p. 194, 1915). The in- 
 human, ungodly monster behind the counter, sworn to 
 obey the laws governing the public service corporation 
 he represented, concluded that she could make that 
 family of hers pay 120 per cent. That was in Octo- 
 ber, 191-4. She paid it, and in November was again 
 in need. He tried 195 per cent and she paid it ; in 
 December 259 per cent; in March 426 per cent, 720 
 per cent, 1450 per cent and in April 2,000 per cent. 
 All of which she paid. Can't believe it; it is a sworn 
 statement. Would not believe the perjurer on oath; 
 in this case it is taken from the record of the national 
 bank. "What a shame to have it called a national bank. 
 Surely that must have been many years ago. No ; 
 during 1914-1915, under what the committee refers to 
 on page 6 as "the Federal Reserve Act, passed by the 
 last Congress, placed the capstone on a superstructure 
 for commercial credit." Has the outlaw been prose- 
 cuted? No. Has the charter of the bank been can- 
 celled? No. 
 
 Instead the council of the Federal Reserve Board 
 has unanimously recommended that the office of the 
 Comptroller of the Currency be abolished. 
 
 We are assured by the expert to the Senate com- 
 mittee on banking and currency, that under the Fed- 
 eral Reserve Board "Thus intelligence and not au- 
 tomatism, will be the directing power." 
 
 Intelligence combined with greed and endowed with 
 unlimited power, is not a safe public service for the 
 people. The proposed bill does not remedy this fatal 
 
CLASS LEGISLATION UNNECESSARY 177 
 
 defect. It confirms the power of issue, contraction 
 and distribution of money and credit in the hands of 
 this one business, organized for profit and profit only. 
 
 Class Legislation. 
 
 Another section provides: "No such loan shall be 
 made to any person who is not at the time, or shortly 
 to become, engaged in the cultivation of the farm 
 mortgaged." 
 
 Limiting the loans to resident operative farmers is 
 a weakness in that it makes it class legislation, and 
 special privilege, and will be used by the opponents 
 of state aid to defeat any measure worth while. 
 
 I believe that it was so intended by the practical 
 politicians who started this superficial campaign for 
 Eural' Credits some five years ago to tide over an em- 
 barrassing political situation. It was a bad case of 
 "attention without intention"; for as. soon as the 
 question was taken up seriously after the campaign 
 it was intended to influence was over, these champions, 
 under the leadership of Myron T. Herrick, made that 
 very point the chief objection, against any form of 
 state aid. 
 
 While I think it might be justified in the case of 
 agriculture, it puts our friends on the defensive, alv/ays 
 a weakness, and it is wholly unnecessary, and funda- 
 mentally wrong. Every citizen desiring a home, and 
 having the security to offer, should have exactly the 
 same right to community credit. Equal opportunity 
 for all. That's all. 
 
 — H. L. Loucks, 
 
 Watertown, S. D. 
 
THE RURAL CREDIT SYSTEM THAT V/AS PROM- 
 
 ISED. 
 
 (Article published in The Farmers' Open Forum, 
 Washington, D. C, of May, 1916.) 
 
 In this article I propose to limit myself to facts 
 stated, and promises made by official representatives 
 of the Eepubliean and Democratic parties during the 
 campaign of 3912 and since. 
 
 It was claimed and proven that the American farm- 
 er paid more than twice as much for the use of money 
 or credit as did his European competitor, because of 
 their state-aided Rural Credit systems; that on an 
 average he paid more than twice as much as did com- 
 merce and industry at home ; that in many parts of 
 our own country he was charged extortionate and in- 
 excusable rates, regardless of human needs and usury 
 laws ; that he had the best security in the world — ^pro- 
 ductive land; that there was urgent and immediate 
 need that these wrongs should be righted and the 
 farmer placed upon an equal footing with any other 
 business, or industry in the nation, in the interest of 
 the whole people ; that it must be separate and distinct 
 from the commercial system, but a duplicate of it, so 
 that the farmer might "command when he will" the 
 use of money for his needs. This, said President "Wil- 
 son, "is our next great task and duty." All of the 
 successful investment systems of the world are wholly 
 independent of their commercial systems, and without 
 exception state aided. 
 
 The farmers were interested and delighted with the 
 prospect that they were at last to come into their own 
 without an effort or a struggle on their part. 
 
 For one, I propose to hold both political parties to 
 "a strict accountability" for the performance of their 
 duty. 
 
 I have seen no attempt in any of the bills intro- 
 duced to comply with the promises made. In this 
 
A WORTHLESS LAW 179 
 
 article I will discuss only a. few fundamental princi- 
 ples that will apply to all Rural Credit bills alike. 
 
 It is to be regretted that the authors of the many 
 bills presented do not recognize the vital fact that 
 with the enactment of the Federal Reserve law, we 
 have completely revolutionized our whole financial 
 system, changing from a money system to a credit 
 system. That Congress has delegated its constitution- 
 al power to coin (issue) money and regulate the value 
 thereof to one special business, the authors of the 
 great change, to operate for their own private benefit 
 and profit. 
 
 Quite naturally in practice they prefer to loan their 
 own credit. 
 
 First. I am opposed to any system based on the 
 sale of bonds to secure money for farm mortgages. 
 It is not in any sense a "duplicate" of the Federal 
 Reserve law for commerce. Any system that has to 
 depend upon the commercial system, cannot be inde- 
 pendent of it, and the farmer cannot "command when 
 he will." He must pay "all the traffic will stand." 
 The men who control command. 
 
 Where can they get the money, or even the cur- 
 rency, in the near future? Our lawful money at pres- 
 ent consists of coined silver dollars, and greenbacks, 
 with exceptions, and gold. We have ceased the coin- 
 age of silver dollars. 
 
 We are rapidly demonetizing gold coin by decoin- 
 age, and the balance is being hoarded. Gold is prac- 
 tically out of circulation in the United States, and 
 wholly so in the rest of the world. Our currency is 
 also being rapidly retired. Since December 1st, 1914, 
 our national bank notes have decreased by $358,472,- 
 598. 
 
 To still further aid in forcing their credit on the 
 people, they hoard an enormous amount in their vaults 
 in excess of legal reserves. Money so hoarded is not 
 in circulation. December 31st, 1915, the national 
 banks alone held $2,046,256,000, or $813,549,000 in ex- 
 cess of legal requirements. To this we must add 
 
180 THE SYSTEM THAT WAS PROMISED 
 
 $600,000,000 held in other than national banks, and 
 $345,260,000 held in the Federal Reserve banks, and 
 $215,242,005 gold in federal treasury. 
 
 Total locked up in reserves, not available for in- 
 vestment in farm mortgage bonds at 4 percent, and the 
 loanable funds in the banks are not available for 
 similar investments, when they can loan for so much 
 better rates. How absurd then to try to build an in- 
 vestment system on such a basis. 
 
 A second ob,iection to the Morgan as well as the 
 Hollis-Moss bill is that the obligation is made payable 
 in 'gold or lawful money," something the borrower 
 will not receive. He will borrow credit or currency. 
 
 Then why obligate him to pay in something for 
 which he is very liable to have to pay a premium? It 
 is a dangerous trap for the farmer. 
 
 But this is far too important a topic for the lim- 
 ited space of our medium, and yet so far reaching, 
 that discussion must be forced in the open. For this 
 purpose I am preparing the manuscript, dealing with 
 this vital question; for Rural Credits by itself, is as 
 a drop in the bucket as compared with the whole prob- 
 lem of which it is a minor part. 
 
 I am just looking for a publisher who is not "afraid 
 of the cars" and expect to have it out in time that 
 there will be several copies in every congressional 
 district before the November elections. 
 
 Second. They all provide for an expensive army 
 of new officials, wholly unnecessary, as we have in our 
 several political units, as I have suggested, the ma- 
 chinery ready to hand, that can perform the service 
 more efficiently for one-tenth of the proposed expense. 
 They all seem to place a limit for expense of admin- 
 istration of one per cent, but a mere glance over the 
 machinery is sufficient to refute that. 
 
 Third. Our need is as specifically promised, a sep- 
 arate, distinct, independent system with a delegated 
 power to issue real money, a full legal tender for all 
 debts, public and private, so that the borrower can 
 pay his obligation in the same kind of money that he 
 
A ■WORTHLESS LAW 181 
 
 borrows, and of which there can be no private monop- 
 oly, either of issue, or by hoarding or otherwise. 
 
 Issued on the best security in the world — product- 
 ive land — and in such amount as may be needed, in 
 the judgment of the user, for development and pro- 
 duction. 
 
 That is the real issue, from which I will not be 
 sidetracked, and upon which I am prepared to meet 
 all comers. 
 
 Any bill lacking any one, or all, of these features 
 will not redeem the promises made, or fulfill the hopes 
 and expectations raised. 
 
 No representative of agriculture can afford to com- 
 promise on anything short of equal opportunity for 
 all. 
 
A PKACTICAL, INDEPENDENT INVESTMENT 
 SYSTEM. 
 
 This chapter is intended to deal with that one 
 phase only of the money problem called "Rural Cred- 
 its," as raised by practical politicians in distress, to 
 tide over a presidential political emergency. 
 
 Any plan submitted, to comply with the promises 
 made, must embrace the following points: 
 
 It must "duplicate" the commercial banking sys- 
 tem, with an investment system. 
 
 It must "place agriculture upon an equal footing 
 with any other business or industry in the nation." 
 
 "If Rural Credits are to be successful, they must 
 be adequately supplied, easily and inexpensively, be- 
 fore their enterprises languish." 
 
 The "men in control must comply with the needs, 
 and obey the laws." 
 
 "Special machinery and a distinct system of bank- 
 ing must be provided for"' wholly separated from, and 
 independent of, our commercial system. 
 
 We cannot hope for, or expect, to amend the Federal 
 Reserve bank law to meet these requirements for rea- 
 sons already given ; and even if we could, it would not 
 be desirable, because an investment system providing 
 for long time loans can be administered for a mere 
 fraction of the commercial system. Then why try to 
 unite our inexpensive system with the more expensive 
 one? 
 
 So far as I have been able to learn, every one of 
 the successful foreign systems has been separate from, 
 and independent of, their commercial banks. 
 
 The Rural Credit propaganda thus far has been 
 conducted by the practical politicians on a wrong 
 principle. To eater to the farmer vote, it asks for a 
 special privilege and class legislation ; and even though 
 it might, and I believe could be justified in the ease of 
 agriculture, it is wholly unnecessary, injudicious, and 
 
SIMPLICITY, EFFICIENCY, SECURITY 183 
 
 a weakness, because a source of antagonism, and 
 should be avoided. 
 
 I am neither a professional agriculturist nor a 
 theorist. My knowledge was gained hy practical ex- 
 perience as an operative farmer and a student of farm, 
 economics, as the chosen representative of organized 
 farmers. After many years of patient investigation, 
 and study, with an open mind, and forming no con- 
 clusions until I had secured official reports from every 
 available source, I have formulated a plan embracing 
 the best of each as adapted to our own conditions. I 
 have submitted no new or revolutionary principle ; just 
 assembled together parts of systems now in sucessful 
 operation in our own states and nation. It is an Amer- 
 ican system, and America should now take the lead 
 in the world's financial affairs and methods. 
 
 It is strictly in line with the needs outlined, the 
 principles enunciated, and the promises made by Presi- 
 dent Taft, President "Wilson, the Republican and Demo- 
 craitc parties, and I think also of the Prohibition and 
 Socialist parties, and the preamble of the unanimous 
 report of the joint committee on Rural Credits sub- 
 mitted to Congress January 4th, 1916. All of which 
 would indicate that it must be a very conservative 
 plan. Now, mind you, I do not say in line with the 
 wishes and practices of the aforementioned ; just prom- 
 ises and reports. It is so much easier to blend the 
 promises of practical politicians to the farmer, rather 
 than their performances, that I prefer to use the for- 
 mer as the basis for my claim. 
 
 For "the special machinery and distinct system 
 of banking needed" I propose as a "duplicate" for the 
 Federal Reserve Board, a Federal Investment Board. 
 I use the term investment in place of Rural Credits, 
 because the loans, being based on land, every citizen 
 having the security to offer should have the same op- 
 portunity to borrow for development and production 
 as the farmer. Money should be issued by the federal 
 unit to every business or industry without private 
 profit. 
 
184 INDEPENDENT INVESTMENT SYSTEM 
 
 For simplicity, efficiency, security and that it may 
 be administered at the minimum of expense, I propose 
 to utilize our present political units and do away with 
 the necessity of any expensive commissions and a whol- 
 ly unnecessary army of new officeholders. That is, I 
 propose to "duplicate" the Federal Reserve Board 
 with a Federal Investment Board, the Federal Re- 
 serve bank with a state unit, and the member bank 
 with a county unit. 
 
 As the Federal Investment Board would at most 
 have only 48 to 50 correspondents — state units — and 
 would not need to pass on the individual securities, 
 as these would have passed the scrutiny of the county, 
 and state, just the securities offered by the state, the 
 clerical duties would be comparatively small; I had 
 thought it might be administered by a branch of the 
 Treasury Department. 
 
 Or, perhaps it might be more satisfactory to have 
 a board composed of three members, say an Assistant 
 Secretary of the departments each of the Treasury, 
 Interior and Agriculture, and a general superintendent 
 selected by those three, with such clerical help as 
 might be needed. 
 
 There would be no need of an army of registrars, 
 examiners, appraisers, attorneys, special appraisers, 
 experts, etc., as provided for by the joint committee. 
 All that will have been taken care of by the county 
 unit in an efficient manner and at the minimum of ex- 
 pense. I have made no provision anywhere for a 
 single "lame duck," or disappointed candidate. 
 
 Federal Investment Board. 
 
 That the Federal Investment Board might be able 
 to "afford similar means" and "facilities for agricul- 
 tural development and production" as the Federal 
 Reserve Board does for "manufacturing, industry 
 and commerce," Congress should delegate to the Fed- 
 eral Investment Board the same power to issue money 
 as it does to the Federal Reserve Board, or banks; 
 provided, of course, that the security is as good. 
 
 We have the right to demand the same terms for 
 development, prodtiction and. distribution for agri- 
 culture as we concede to "manufacturing, transporta- 
 
FREE MONEY FOR ONE, FREE FOR ALL 185 
 
 tion and commerce." Production comes first and 
 causes the need for a medium of exchange and the 
 means of transportation ; then commerce to aid in the 
 exchange. If we are to have free money for any busi- 
 ness, we should have free money for production. 
 That should be the KEYNOTE of this campaign. 
 
 The details of administration need not be many, as 
 the board would be dealing with sovereign states, hold- 
 ing the securities, and guaranteeing the payment. The 
 state being responsible to the Federal Investment 
 Board, should have the full supervision of the details 
 in the respective states. 
 
 For reasons already given, the money issued should 
 be lawful money ; a full legal tender for all debts, pub- 
 lic and private. 
 
 Instead of free money and currency, as is provided 
 for the Federal Reserve banks, I propose that the 
 Federal Investment Board should receive an annual 
 tax, or interest, of one per cent per annum 
 for all money issued. This on the theory that those 
 who use any public utility should pay all the expenses 
 of administration, just as is the case with our postal 
 system. The expense of administration should not be 
 more than one-eighth of one per cent. All in excess 
 of the expense should be placed in a reserve fund for 
 insurance, or protection, against any possible loss, by 
 any defaulting state, to allay the fears of those who 
 have no faith in the future of our country. But under 
 the plan proposed any loss is very improbable, as all 
 the borrowers in the whole United States are piling 
 up a reserve, or insurance fund for protection. 
 
 This reserve fund would not be private profit. It 
 would belong to the public, and after a safe reserve 
 had been accumulated, the balance might be applied 
 to provide for real public transportation on land and 
 water, soon solving that problem, and saving millions 
 and billions of dollars in cost of transportation, which 
 would benefit both producers and consumers alike. 
 
 There could be no reasonable objection to the fed- 
 eral unit charging one per cent per annum, if charged 
 
186 INDEPENDENT INVESTMENT SYSTEM 
 
 for all money issued, which, of course, would include 
 the Federal Eeserve bank currency as well. It would 
 prove to be a very equitable, efficient and economical 
 system of taxation. 
 
 What I have proposed would not by any means be 
 a full "duplicate" of what has been done for com- 
 merce through the Federal Reserve banks. 
 
 There has been entirely too much done for them — ■ 
 far more than should be done for any business, industry 
 or class. 
 
 I do not ask that the federal government shall give 
 to the Federal Investment Board a monopoly of the 
 issue of money and currency as well as of bank credit. 
 Nor do I propose that the federal government shall 
 loan one dollar of money collected from the people, by 
 taxes or otherwise, nor does it propose that the govern- 
 ment shall deposit with the board or states $200,- 
 000,000 of gold or any other sum, or to issue or pur- 
 chase bonds, or make them fiscal agents, or confer 
 any other favor, or special privilege. 
 
 All we ask is the means of co-operatively helping 
 ourselves exchange the products of our labor at the 
 minimum of expense, we pajdng all the expense con- 
 nected therewith. 
 
 Nor do we ask for a division of that precious 
 "money of the world," GOLD, with them. We do 
 not need a gold base with such security as we offer, 
 and conceded to be "the best security in the world — 
 productive land. " As it is one of the functions of the 
 commercial system to provide for foreign trade fa- 
 cilities, for which they claim they must have gold, we 
 are willing that they shall have all of it so far as we 
 are concerned. 
 
 The system we are advocating is for home devel- 
 opment, home production, home use. "SEE AMER- 
 ICA FIRST." Be for America first. 
 
 Rates of Interest Compared. 
 
 The other outstanding fact is as to the rate of in- 
 terest charged for the use of money for development 
 and exchange. 
 
RATES OP INTEREST COMPARED 187 
 
 The comparison of rates of interest as between 
 Europe and America is an interesting and valuable 
 one ; it comes under a different head, viz. : that of 
 competition in trade, which belongs to a different 
 phase of the problem. For the present it is as to the 
 rate between agriculture and other European indus- 
 tries and commerce, in their respective countries. 
 Floating in the open markets the bonds based on farm 
 mortgages sold at as low a rate of interest as did gov- 
 ernment bonds, and at a lower rate of interest than 
 commercial paper. In times of national trouble bonds 
 fell, and investors hastened to invest in farm land 
 mortgage bonds in preference, demonstrating very 
 clearly that in Europe productive land was the very- 
 best security. 
 
 A third feature is that the farmers organized po- 
 litically as a class. In Germany where the movement 
 originated they continue their political party, the Ag- 
 rarian, and hold the balance of power, and thus secure 
 that equal opportunity. It may not be as sweet as our 
 American political taffy, but it is much more nour- 
 ishing. 
 
 In all the reports there is much made of their 
 co-operation, but strangely this very important feature 
 of co-operating at the ballot box is not mentioned. 
 Without that they would be just as helpless in Europe 
 as they are in America. 
 
 Suggestions for State Administration. 
 
 For the several states I would recommend as a 
 basis the system in successful operation in South Da- 
 kota since statehood for the investment of our school 
 land funds. A somewhat similar system is in force in 
 Indiana, Iowa, Idaho, Minnesota, North Dakota, Ore- 
 gon, Oklahoma, Texas and Utah. Each state should 
 be the best judge of the system best adapted for itself. 
 Mr. Thompson, a government official, testified that in 
 all those states it had proven satisfactory. I know 
 that it has been eminently successful in South Dakota, 
 where we now have over $11,000,000 invested. Mr. 
 Thompson reported that the losses had been insig- 
 
188 INDEPENDENT INVBSTSIENT SYSTEM 
 
 nifieant, and that they could all increase their loans 
 very materially if they had the funds. It has been 
 a pronounced success. 
 
 AppUcant and Security. 
 
 First. The individual. As the county would be 
 responsible for the loan the applicant would have to 
 satisfy the county board as to Ms personal character 
 and the value of the property offered as security. 
 The person and the property would usually be known 
 to some member of the board; if not, the cost of in- 
 vestigation would be nominal. 
 
 Tlie Comity Unit. 
 
 Second. The coimty board. The clerical work for 
 long time investments being very small, it could be 
 done by one of the county officials in the court house. 
 
 Applications for loans should be submitted to the 
 board at a regular meeting, and notice of same pub- 
 lished in the official proceedings and investigation or- 
 dered, to be reported on at the next regular meeting. 
 All applications approved by the board to be forward- 
 ed to the state investment bank, or department, once 
 each month, accompanied by a county bond for the 
 amount applied for, the county retaining the mort- 
 gage security. This would be a voluntary co-operation 
 by the whole county and duplicate the Landschaft 
 system, without any special organization. 
 
 The county will be protected against any probable 
 loss by the charge of one-half of one per cent per 
 annum annual interest; all in excess of the cost of 
 administration to be placed in a reserve fund for that 
 purpose. This would in effect be an insurance policy 
 paid for by all of the borrowers in the county. 
 
 I do not see how it is possible to improve on this 
 plan of practical co-operation, and I have given many 
 years of thought to the problem. It is superior to the 
 Landschaft in that co-operation is secured without 
 coercion, and superior to any other plan offered, in 
 simplicity, security, efficiency and economy. 
 
THE STATE INVESTilBNT PLAN 189 
 
 Third. The state investment department. In South 
 Dakota it would be the Commissioner of School and 
 Public Lands that would pass upon the application, 
 and if approved pass on to the state. For this they 
 would receive one-half of one per cent annual inter- 
 est ; all in excess of expense to go into a reserve fund 
 to protect the department against any probable loss 
 from any county in the state ; all of the counties par- 
 ticipating (for that should be left optional) and all 
 of the borrowers in the state uniting — co-operating — 
 to insure the payment of any loss by any individual in 
 -any county in the state. 
 
 The State. 
 
 Fourth. Once each month the state would send to 
 the Federal Investment Board its bond, with applica- 
 tion for a loan for the full amount of applications, 
 and, if approved, the loans would be completed. 
 
 This reserve feature is borrowed from New Zea- 
 land and Australia, where in each of the political units 
 it has been entirely successful for many years; each 
 unit accumulating a large reserve fund. This would 
 make the total rate of interest two per cent. 
 
 Based on the experience of Europe and Australasia 
 the total expense would be less than one per cent. 
 And there, they had to organize specially for the pur- 
 pose. Here we have the units already organized. 
 
 As with the federal unit, the surplus, or reserve 
 fund, would not be private profit; it would belong to 
 the public — the state and county. 
 
 Nothing: New — ^Not Experimental. 
 
 There is nothing new or experimental in the plan, 
 except the coupling up. The system, except the dele- 
 gated power to issue money, first adopted in our Fed- 
 eral Reserve law, has been in successful operation in 
 some form in nearly all of the civilized countries of 
 the world. 
 
 Apparently this will be a case where "the first shall 
 be last." 
 
190 INDEPENDENT INVESTMENT SYSTEM 
 
 For the Federal Reserve Board I substitute a Fed- 
 eral Investment Board ; for the Federal Reserve bank, 
 'a state unit; for the member bank, a county unit. 
 Could anything be more simple, or practical? 
 
 In the ordinary sense and use of the term, this is 
 neither using government credit, cash nor state aid. 
 It is practical self-help by co-operation. 
 
 "When -we pay full value for a service, we do not 
 feel under any obligation to the servant. In this case 
 we start with the borrower ; it is his credit we use ; not 
 the government's. He furnishes what is conceded to 
 be "the best security in the world — productive land." 
 He says to the county, of which he is a resident: if 
 you will endorse this obligation, I will pay you one- 
 half of one per cent per annum, and you hold the 
 security. He is under no obligation, as he is paying 
 amply for the service. The county repeats this with 
 the state, the borrower paying for the service, and 
 this is again repeated with the Federal Investment 
 Board. It is not borrowing money from the govern- 
 ment, taxed from the people; it is a new issue of 
 money, real full legal tender money, based on actual 
 wealth, and much better secured than are the new 
 Federal Reserve bank notes now being issued by the 
 Federal Reserve banks to commerce. 
 
 As this is intended for all who wish to become home- 
 owners and have the security to offer, regardless of 
 occupation, or calling, it is not a special privilege, or 
 class legislation. 
 
 Comparison of Security. 
 
 Under the present commercial bank law, Federal 
 Reserve bank notes, which is not money, just cur- 
 rency, will be issued to the full par value of com- 
 mercial paper when endorsed by a member bank. 
 
 The Federal Investment Board notes will be se- 
 cured, first by the borrower's paper, secured by a mort- 
 gage on property worth twice the loan, backed by the 
 total wealth and taxing power of a county, and re- 
 inforced by the wealth and taxing power of a state. 
 
GOLD BASE NOT NEEDED 191 
 
 Surely, infinitely better secured than are the Federal 
 Eeserve bank notes. 
 
 "When guaranteed by the faith, credit and taxing 
 power of the United States, and made a full legal ten- 
 der for all debts, public and private, it will be the very 
 best money ever issued by any nation. 
 
 In addition, each political unit will be deriving a 
 revenue from the issue and use of these Federal In- 
 vestment notes so long as they are in circulation, as 
 compared with not one cent from the Federal Reserve 
 bank notes. 
 
 I affirm that agriculture, unprotected and discrim- 
 inated against as it is, and the prey of every favored 
 special privileged and protected business or industry, 
 cannot afford to pay more than two per cent per an- 
 num for the use of money or credit. 
 
 There should be no limit to the volume loaned, so 
 long as the security was ample. Demand for use is 
 the true standard, and the man who has the security, 
 and is willing to pay the rate of interest, should be 
 the best judge of the need. . There is no sane man 
 going to pay 2 per cent for the use of money one day 
 longer than he thinks it profitable. The longer he 
 keeps it out the more revenue for the state and nation, 
 and the less taxes for the people to pay. 
 
 Federal Investment notes do not need a gold base, 
 and should be free from that flimsy fiction. This 
 would leave all the gold for our commercial bankers 
 to aid them in their foreign trade, etc. 
 
 It would prove a very good test of merit in use, 
 and of course it should be optional with the citizen 
 ■whether he would prefer to use the Federal Reserve 
 bank notes with the Active or imaginary gold base 
 at an interest rate of from 8, 10, 20, 100, 500 to 2,400 
 per cent per annum, rates actually charged during the 
 year 1915, or the Federal Investment notes at an in- 
 terest rate of from two to four per cent. 
 
 Those using the investment notes would be relieved 
 of all fear of being called on to pay "in gold coin of 
 the present standard, weight and fineness" with the 
 
192 INDEPENDENT INVESTMENT SYSTEM 
 
 gold coin locked up in the vaults of the creditors. It 
 should prove a most happy solution of our great finan- 
 cial problem. Those who believe that our monetary 
 system should be administered by a favored monopoly 
 for private profit, would patronize the present system, 
 and those who believe that our medium of exchange 
 should be a public utility and be administered without 
 private profit, would patronize the new investment 
 system. 
 
 I do not claim that my plan will solve our great- 
 est problem, an adequate medium of exchange. All 
 I claim is that it would be an entering wedge, based on 
 sound economic principles that will stand the test of 
 criticism and demonstration, and open the way for an 
 American system of finance that will free labor from 
 the power of "money to oppress.*' 
 
 It will enable us to use our own credit for devel- 
 opment, improvement and production, as we may deem 
 best, the only way to attain the best results. No man 
 can do his best unless he is free. It is an old, old 
 truism that "the borrower is servant to the lender." 
 
 The security is the best in the world, and adminis- 
 tration the least expensive, the American farmer will 
 have the full advantage of our own great national 
 resources, and will need no outside assistance, or pa- 
 ternalistic care. 
 
 It will give us the use of a medium of exchange 
 at a less rate of interest or tax than that of any of 
 our world-wide competitors, because our money will 
 be free from any tax or tribute to private monopoly. 
 
 It will provide a medium of exchange, the best in_ 
 the world, with the maximum of security, and at the 
 minimum of expense. 
 
 It would be the capturing of the first trench of 
 money monopoly, which, once gained, would never 
 again be surrendered. 
 
 It is the only plan by which agriculture can be 
 placed upon an equal footing with any other business. 
 or industry. 
 
EQUAL OPPORTUNITY FOR ALL 193 
 
 If we are to have free money for commerce, we 
 must have free money for agriculture. 
 
 Let each system provide its own method of admin- 
 istration. 
 
 The true friends of agriculture cannot afford to 
 compromise on that fundamental proposition. 
 
 All the American farmer needs is freedom in pro- 
 duction and exchange. 
 
 Equal opportunity for all. That's all. 
 
THE FARMERS' RURAL CREDIT BETRAYAL. 
 
 The presidential campaign for 1916 is rapidly ap- 
 proaching, and as usual an attempt is being made to 
 fool the farmer. "Well meaning representatives of ag- 
 riculture, more loyal to their party than to their class, 
 are at work preparing resolutions, and planks for in- 
 sertion in the Republican and Democratie national 
 platforms at the coming national conventions. I have 
 been requested to aid in such work, and have refused, 
 for the very good reason that Ave had more than satis- 
 factory pledges in both platforms in 1912; Rural 
 Credits, in fact, having been made apparently the para- 
 mount issue by both parties. 
 
 It was one of the greatest legislative campaigns 
 ever inaugurated, and unique in that everybody was 
 for "Rural Credits" — ^before election. 
 
 We had what was much stronger than a platform 
 promise, we had the active support of President Taft 
 and his whole official staff for more than a year be- 
 fore election. It was "a ground hog case." The 
 Republicans had got in bad with the farmers in their 
 attempt to reduce tte "high cost of living" by the 
 reciprocity agreement with Canada, to sacrifice agri- 
 culture by admitting farm products free of duty. 
 They were in distress, and had to get busy to again 
 hypnotize the rousing giant of agriculture. The De- 
 partment of State, under the able supervision of Am- 
 bassador Herrick, made a special effort to gather data 
 from all sections of Europe, and glowing accounts 
 were published by the government of what "Rural 
 Credits" had done for the European farmers, as I 
 have previously shown, and the same was published 
 and scattered broadcast over the nation. All this and 
 more. President Taft and the Republican party would 
 do for the farmer, if only given the chance. There 
 never can again be a stronger and more effective bid 
 and promise made to place agriculture upon an equal 
 
PERFORMANCES PREFERRED 195 
 
 footing with other business industries, than was made 
 by the Republican party preceding the 1912 election. 
 
 The Democratic party had caught on, and no doubt 
 encouraged by the National Bankers' Association, had 
 pormptly said "me too." I think that was when 
 President "Wilson formed the habit of "cribbing" Re- 
 publican issues, when they looked good. Tfie Democrats 
 if possible, became more enthusiastic than the Repub- 
 licans, perhaps because of the fact as reported by the 
 Comptroller of the Currency, that the Southern farmer 
 was more cruelly oppressed by usury. 
 
 It is not a new, meaningless promise that we want 
 now. It is the fulfillment of past promises, solemnly 
 made before election. "We have a right to hold both 
 the Democratic and Republican parties responsible for 
 promises made, and hopes kindled; and I, for one, 
 refuse to accept any promises for the future, until 
 they make good their past promises. 
 
 What is their record? 
 
 "What lias ex-President Taft, Myron T. Herrick and 
 the Republican party done to make good their prom- 
 ises? As a party, they have done absolutely nothing 
 in Congress. Ex-President Taft has been very active 
 making addresses, all over the country, on every con- 
 ceivable subject, whether posted on them or not, ex- 
 cept this one paramount issue so near to his heart ( ?) 
 in 1912: "Rural Credits for the American farmer."' 
 
 Myron T. Herrick, because of his great zeal for 
 "Rural Credits" during 1912, had created a real in- 
 terest amongst the farmers for Rural Credits. In 
 fact, he had exceeded the speed limit. He had done 
 his work so efficiently that the farmers began to think 
 that it really meant something this time. Indeed, we 
 began to talk of Ambassador Herrick as the modern 
 Moses to lead us into the promised land of prosperity ; 
 so much so that the bee began buzzing in his bonnet 
 quite actively. 
 
 What has he done since the 1912 election for Rural 
 Credits? 
 
196 THE FAEMERS BETRAYED 
 
 Mr. Herrick had a right to suppose that he would 
 be highly rewarded for his splendid efforts trying to 
 save the Republican party; and instead found that 
 the result had been very annoying to the Sovereign 
 House of Morgan, and that he must now reverse him- 
 self and take charge of the campaign against any form 
 of Rural Credits, or any state aid whatever, and like 
 the good practical politician that he is, or thought he 
 was, he has done his best. I will not say at the sac- 
 rifice of his principles, for I have grown to believe 
 that the practical politician has none such. 
 
 So Mr. Herrick Avas compelled to take the stump to 
 undo the mischief he had done, and has taken advan- 
 tage of every opportunity since to serve his master, 
 the House of Morgan. 
 
 In view of this official record of the Republican 
 party since 1912, what a humiliating farce it would be 
 for any representative of a farmer's organization to 
 ask the Republican party to adopt a Rural Credit 
 plank in their 1916 platform. They have made their 
 recoi'd. "Will the farmers again forget, next Novem- 
 ber? 
 The Democratic Twin Arm of the House of Morgan. 
 
 The Democratic party was successful at the polls. 
 How have they redeemed their campaign promises of 
 1912? 
 
 I am willing to concede that President "Wilson be- 
 lieved that the Democratic party was solemnly pledged 
 to give the farmers an adequate system of Rural Cred- 
 its, "that would place the farmers upon an equal foot- 
 ing with other business men and masters of enter- 
 prise," and that he clearly understood just what that 
 meant. Unlike ex-President Taft he came out openly 
 and stated his position, soon after the revision of the 
 tariff, in an authorized interview for the metropolitan 
 newspapers, already quoted. 
 
 In his message to Congress in favor of the Federal 
 Reserve bank law he said: "The pending currency 
 bill does the farmers a great service. It puts them on 
 an equal footing with other business men and masters 
 
PEESIDENT'S ARDOE COOLED 197 
 
 of enterprise as it should, and upon its passage they 
 will find themselves quit of many of the difficulties 
 which now hamper them in the field of credit." 
 
 How the President could have found that in the 
 bill, even as introduced, is beyond my comprehension. 
 He must have taken Mr. Eeynolds' or Mr. Warburg's 
 word for it, or perhaps he was thinking of things 
 hoped for in the future, and this is in accord with 
 another statement of his to the effect that they could 
 not take up Eural Credits in the pending bill but 
 would do so in a separate measure. And also in line 
 with the closing sentence of the same paragraph in 
 which he says: "What they [the farmers] need and 
 should obtain, is legislation which will make their own 
 abundant and substantial credit resources available 
 as a foundation for joint, concerted action in their 
 behalf in getting the capital they must use. It is to 
 this we should now address ourselves." 
 
 How has President Wilson and his party kept that 
 platform and official promise? There was no bill pre- 
 sented by the administration during that session. For 
 some reason the President had received a new light, 
 
 or was it as claimed by Herrick, p , at any rate 
 
 his ardor suddenly cooled. 
 
 In his December (1914) message he barely mentions 
 the topic, giving his next paramount issue less than 
 four lines. 
 
 In his December, 1915, message he discusses thirty- 
 nine topics, and forgets all about Rural Credits. 
 
 In 1916 he tours the country to reverse himself an 
 a new issue, and never mentions Eural Credits. 
 
 That is the official record of President Wilson on 
 Rural Credits. 
 
 They claim that the HoUis-Moss bill, which Senator 
 Hollis called the administration bill, complies with the 
 promise. If so, all the worse for the administration. 
 I exposed it in The Farmers' Open Forum and it has 
 not been answered, or refuted, and cannot be. Not 
 only does it not comply with the promises made, but 
 aggravates the situation, by setting a most dangeroug 
 
198 THE FARMERS BETRAYED 
 
 trap for the farmer borrowing bankers' credit, and 
 obliging him to pay in "gold coin of the present stand- 
 ard, weight and fineness." Why not permit him to 
 pay in the same kind of currency he borrows? 
 
 Well, that is the record of the party. There are 
 some good loyal men in the party, who have made a 
 good fight, but the party lash has brought most of 
 them to time. 
 
 There has been no satisfactory reason given by 
 Democrats for this second gross betrayal of the farm- 
 ers. The first was in singling out agriculture as the 
 only industry to be placed on the free list in the tariff 
 revision; something the Republicans tried to do and 
 failed, and now in the Federal Reserve law gave the 
 bankers everything they asked for, and sacrificed the 
 farmer. 
 
 But there has been an eloquent tribute paid to 
 President Wilson and Secretary Houston by a no less 
 distinguished person than ex-Ambassador Myron T. 
 Herrick in his Kansas City address, as follows: "I 
 am a Republican, but I would be unfair if I did not 
 express my profound respect for the intelligent and 
 patriotic firmness by which iPresident Wilson and Sec- 
 retary Houston have held in check the agricultural 
 enthusiasts on their side in Congress. They had polit- 
 ical reasons for quick action. The President, like Mr. 
 Taft, had officially promised to do something for the 
 farmer, but since none of the many plans devised 
 were satisfactory, he used his influence to postpone the 
 matter so as to afford the country time for reflection. '" 
 
 The foregoing compliment (?) is worthy of more 
 than a passing notice. Myron T. Herrick has been a 
 prominent Republican for a good many years. He has 
 been Governor of the great state of Ohio, Ambassador 
 to France, and a candidate for President. A promi- 
 nent banker, representing the new sovereign, and 
 speaking ,with knowledge and authority, to a state 
 bankers association, and wishing to impress them with 
 his non-paritsanship, he expresses "mv profound re- 
 spect" for our chief executive for violating a solemn 
 
FARMERS PROMISED SOMETHING 199 
 
 party promise made before election, which secured 
 him and his party many votes. In addition, a personal 
 official promise, made by himself after election. What 
 a low moral standard, or perhaps I should say highly 
 immoral standard, for American politics ! That ad- 
 dress was put in leaflet form, and scattered broadcast 
 over the nation. 
 
 Don't you think that it is about time to change 
 the standard? 
 
 It was "intelligent and patriotic firmness" to co- 
 erce the "agricultural enthusiasts on their side" who 
 thought a political promise meant something. Appar- 
 ently, there was no coercion needed on the Republican 
 side. But then it was only an official promise to do 
 SOMETHING for the farmer. Everybody knows that 
 it is a regular campaign joke to "buneoe the hay- 
 seeds," which the farmer always forgives, or forgets. 
 Thoughtless citizen. But the most significant sentence 
 is right there in the middle. 
 
 They Had Political Reasons for Quick Action. 
 
 "They had political reasons for quick action," and 
 doubtless Myron winked the other eye, and the banker 
 audience laughed. 
 
 AVhat has President Wilson to say of the compli- 
 ment (?) and what do the "independent" farmers 
 think of the code of honor, or dishonor? 
 
 What were the political reasons? And who held 
 the big stick? 
 
 The men who voted for President Wilson, of whom 
 I am one, are entitled to know. 
 
 Surely there is a lesson in that episode that every 
 farmer, laborer and independent business man and 
 woman, and professionals should take to heart. 
 
 It did not take a long, hard-fought campaign to 
 unite the two old parties in Congress, to ignore their 
 party platforms, and official promises to the farmers 
 of the nation. Ex-President Taft and Myron T. Her- 
 rick herded them on one side, and President Wilson 
 and Secretary Houston on the other, enthusiastically, 
 
200 THE FARMERS BETRAYED 
 
 and patriotically non-partisan. Great is the political 
 persuasive power of the House of Morgan. 
 
 Officially Promised Something For the Fanner. 
 
 "The President, like Mr. Taft, had promised to do 
 something for the farmer." 
 
 It would be well worth while to read over again 
 just what was promised the farmer. To the average, 
 intelligent, thinking farmer it meant much more than 
 a small reduction in the rate of interest for the few. 
 It meant equal footing for the industry as a whole. 
 It was the beginning of an era of justice too long 
 delayed. And it is tossed aside as : Oh ! any old thing 
 labelled agriculture. 
 
 Throw good "old dog Tray" a bone, it will interest 
 him for a time. It always has, and always will, so 
 long as he recognizes a Master. 
 
 "The American farmer is sturdy, independent and 
 self-reliant. There seems no emergency which re- 
 quires or justifies government assistance, through gov- 
 ernment cash, or credit."' 
 
 The way Europe was searched for information by 
 the leaders of both parties, and the reports they made 
 to their constituents, President Taft's letter to the 
 Governors, which was also widely distributed, and 
 President "Wilson's interview of August 13th, 1913, 
 all indicated a great emergency, and Secretary Hous- 
 ton gives a little cheap, very cheap, taffy. 
 
 If there is nothing "which requires or justifies 
 government assistance, through government cash, or 
 government credit," then why the Department of Ag- 
 riculture? The farmers would be millions and bil- 
 lions of dollars ahead if they could trade off the De- 
 partment of Agriculture for a Federal Investment 
 bank, such as I have suggested, that would do for 
 agriculture just what the Federal Reserve bank was 
 supposed to do for commerce. 
 
 I say "supposed" advisedly, because it was de- 
 signed to do wholly for the House of Morgan. 
 
VOTE FOR WHAT YOU WANT 201 
 
 What nonsense to claim that agriculture is the only 
 business, or industry, in the nation that would be de- 
 moralized by being placed upon an equal footing with 
 any or all others. 
 
 If state aid is good for one, it should be good for 
 all. 
 
 If bad for any, it should be removed from all. 
 
 Level up, or level down, that all may have equal 
 opportunity. 
 
 The farmer who votes for President Wilson's re- 
 election after this sacrifice of agriculture by tariff 
 revision and betrayal on Rural Credits will by his vote 
 endorse both. The same will be true of a vote for the 
 Republican ticket, whether headed by a Hughes or a 
 Eoosevelt. Better vote for what you want next time. 
 
OUR UNIT AND STANDARD OF VALUE— THE 
 GOLD DOLLAR. 
 
 In 1873 the gold dollar was made our standard of 
 iTaule, and has remained so. Under a law enacted in 
 1890 we discontinued its coinage. 
 
 Up to June 30th, 1915, we had coined of the sev- 
 eral denominations $3,378,009,628, of which more than 
 half, or $1,771,694,596, had disappeared entirely; ex- 
 ported or used in the arts ; proving it to be a very tin- 
 reliable standard, for a medium of exchange, for Am- 
 erican products. 
 
 The Treasury Department estimated that there was 
 then in the United States $1,606,405,032. Of this 
 amount 40 per cent had been demonetized by decree 
 of the House of Morgan, through the medium of the 
 New York assay office. 
 
 Since June 30th, 1915, we have been demonetizing 
 gold by decoinage, by same method, over $50,000,000 
 per mnoth. 
 
 We have practically ceased the coinage of gold ; 
 that is, we are now using in the arts about as muck 
 gold coin as we are coining. 
 
 The special interests who insisted a few years ago 
 that we must have a "money of the world, a "money 
 good in Europe"; or our trade and industry would 
 suffer, were the same interests who are now respon- 
 sible for its rapid demonetization, discredit and re- 
 pudiation. 
 
 This "money of the world,'" "good in Europe," has 
 ceased to circulate in Europe, Asia, or Africa, and 
 practically so in North and South America. Gone 
 in hiding, as it always has, when most needed. 
 
 During the year of 1915 the threatened importa- 
 tion of gold from Europe to pay for war munitions 
 created a near panic in the ranks of the great con- 
 spirators, and which they hastily stopped, by extend- 
 ing almost unlimited credit to the Allies of Europe,. 
 
DBCOINING GOLD 203. 
 
 taking what is called "unsecured" promises (govern- 
 ment bonds) to pay in "American gold coin of the 
 present standard, weight and fineness." 
 
 At the same time, instead of having gold bullion 
 coined into American dollars, they were rushing the 
 New York assay office twenty-four hours a day to 
 demonetize gold by melting into bullion. 
 
 It looked like an attempt to squeeze a premium 
 from the Allies of Europe, as well as from the Ameri- 
 can victim debtors. 
 
 But, the Allies of Europe are not asleep, by any 
 means. 
 
 The press reports, though brief, of a recent indus- 
 trial conference in Paris to prepare, for after the 
 war measures, indicates that they have all uannimous- 
 ly decided to change from gold to a paper currency, 
 as soon as peace has been declared, thus repudiating 
 their "mere scraps of paper" promises to pay in 
 American gold coin, and well they may, as they will 
 not have a cent on the dollar in gold to pay their gold 
 debt obligations. 
 
 Can you imagine a greater folly, than for the 
 greatest nation in the world, which we claim to be, 
 and rightly so, composed of more than 100,000,000 of 
 the most intelligent and industrious people on earth, 
 with unlimited rich, natural resources, to continue de- 
 pending for our future development, and the exchange 
 of our labor, and labor products, on such an uncer- 
 tain, unreliable, cowardly commodity as our "unit 
 and standard of value"; our legal tender — lawful 
 money — now monopolized, and hoarded, by a small 
 group of Shylock creditors. 
 
 Oh! what fools and slaves the worship of gold as 
 money makes of men, when manipulated by cunning 
 knaves, who control the political machinery of govern- 
 ment. 
 
 liow much longer will the American people continue 
 to trust such unnatural, incapable, or avaricious 
 "pilots" to control our financial legislation, for their 
 own selfish purposes? 
 
204 THE GOLD DOLLAR UNIT 
 
 "We cannot afford to wait to secure an ideal finan- 
 cial system all at once. 
 
 "We should proceed to organize for political and leg- 
 islative action all along the line, wherever we can make 
 a change for the better. 
 
 With that in view, I sumbit several propositions, 
 upon which we should all be able to unite for legis- 
 lative action at the earliest possible date. 
 
 For Immediate Action. 
 
 In view of the clear intent and purpose of the 
 House of Morgan to control all the commerce and in- 
 dustry in our country, through a monopoly of the 
 issue and administration of our medium of exchange, 
 and the rapidity with which it is being accomplished 
 by the demonetization and retirement of our money 
 and currency, makes it imperative that the whole peo- 
 ple be warned of the impending danger, and every 
 effort made to thwart, postpone and prevent the final 
 consummation of the conspiracy. 
 
 "We should have a bill introduced and pressed in. 
 Congress to amend the Federal Reserve bank law in 
 line with Section 30 of the proposed Aldrich bill, re- 
 quiring that for all national bank notes retired from 
 circulation Federal Reserve bank notes should be is- 
 sued, and made lawful money. This would stop direct- 
 contraction from that source. 
 
 Up to April 1st, 1916, this had amounted to $172,- 
 799,170. 
 
 Make All Money Issued Lawful Money, 
 
 An immediate and pressing need, is to make all 
 money coined or issued by the government, a full 
 legal tender for all obligations, public or private, or, 
 in other words, lawful money. 
 
 From my own experience, I think that it is safe to 
 say that not more than one person in one thousand 
 understands, or fully realizes, the very marked differ- 
 ence between lawful money and the several kinds of 
 currency we now have in circulation. 
 
WITY NOT LAWFUL MONEY 205 
 
 I would guess further that not more than one in 
 one hundred engaged in the business of banking 
 know. 
 
 And I will be charitable enough to say that I be- 
 lieve that not one in ten United States Senators and 
 Representatives now in Congress, or who were in 
 Congress when the several laws and amendments I am 
 going to refer to were enacted, understood what they 
 were voting for. 
 
 "When you have read this chapter yourself, con- 
 fess it. 
 
 Then inquire of your neighbor, your banker, mer- 
 chants and business men. It will be a real benefit to 
 them to know this important fact. 
 
 The information I am going to give on these sev- 
 eral points is taken from an official book of the Treas- 
 ury Department, "Information." 
 
 Lawful Money. 
 
 Official definition of lawful money: "Legal tender 
 is a quality given a circulating medium by Congress 
 and possessing this quality it becomes lawful money." 
 
 Gold Coin. 
 
 Gold coin is a legal tender at its nominal or face 
 value in payment of all debts, public and private. And 
 the standard since 1873. 
 
 The Silver Dollar. 
 
 In 1786 Congress chose as the money unit of the 
 United States the coined silver dollar of 375.64 grains 
 of pure silver. 
 
 This was changed in 1792 to 371,25 grains of pure 
 silver. 
 
 Up to 1853, the minor silver coins had been a full 
 legal tender. 
 
 The legal tender quality was then limited to $5. 
 
 In 1878 the weight of the silver dollar was again 
 changed, and it was deprived of its full legal tender 
 quality by an amendment, "except where otherwise 
 
206 THE GOLD DOLLAR UNIT 
 
 expressly stipulated in the contract.'" That will elim- 
 inate it when Shylock makes his demand. 
 
 The coinage of the standard silver dollar was dis- 
 continued in 1873 and restored to a limited extent in 
 1878. This latter law was repealed in 1893. 
 
 Subsidiary Silver. 
 
 In 1792 the minor silver coins were made a full 
 legal tender. 
 
 In 1853 thgir legal tender quality was limited to $5. 
 
 Since then the legal tender limit has been raised 
 to $10. 
 
 If legal tender for $10, why not for $20, or $100 ? 
 Why not unlimited, as they were for nearly one hun- 
 dred years? This is one place where money monopoly 
 has no reverence for "the fathers." 
 
 A peculiar feature of the law is that "They may 
 be presented in sums, or multiples, of $20 to the treas- 
 urer, or any Assistant Treasurer of the United States 
 for redemption or exchange into lawful money" 
 
 The banker can gather them up in due course 
 of business and have them converted into gold if he so 
 wishes. 
 
 If they can be redeemed in unlimited quantity by 
 sending them in to "Washington, then why not Congress 
 make them lawful money without all that expense and 
 bother. The present method cannot be justified as 
 good business for the people, with small amounts, or 
 with large debts to pay. 
 
 In whose interest was this ridiculous farce enacted? 
 There is only one guess necessary. You have guessed 
 it the first time. 
 
 By so amending this law there would be added to 
 our lawful money the very considerable sum of $187,- 
 466,970, and this should be done. 
 
 There was no demand on the part of the people for 
 this discrediting and demonetizing of silver money. 
 
 Then as the law stands today, neither the standard 
 silver dollar nor the subsidiary silver coins are full 
 legal tender, althoiigh for the purpose of deception 
 they are made partially so. 
 
WHY NOT LAWFUL MONET 207 
 
 Why was that exception clause added to the law 
 leaking the silver dollar a legal tender?. 
 
 And why was that legal tender quality of the sub- 
 sidiary silver coins permitted to be limited? 
 
 I claim that it was a part of the general scheme 
 of the money power to control the volume of lawful 
 money in circulation, and that it was done with such 
 cunning and skill as to escape the attention of the peo- 
 ple, or 'heir representatives in Congress, while the 
 faithful engineered the legislation "in the interest of 
 the people." 
 
 They could not demonetize silver openly, and what 
 they could not do in the open, they have accomplished 
 by stealth. 
 
 This becomes very easy under our present system 
 of PARTY LOYALTY where the voter accepts of the 
 ''rubber stamp" selected by the money controlled 
 party machine as their representative, instead of select- 
 ing and electing an independent representative of 
 their own, a student of political economy. 
 
 The Silver Certificate. 
 
 They could not demonetize the standard silver dol- 
 lar in 1878, for it was still the people "s favorite coin, 
 and too late the people had discovered the trick of 
 1873, by which coinage of the dollar had been discon- 
 tinued. 
 
 However, under cover, they practically accom- 
 plished their object in the 1878 law by providing that 
 the silver dollars in quantities of not less than ten, 
 and in any amount above, might be deposited with 
 the Treasurer of the United States, and receive there- 
 for silver certificates, which are not a legal tender — 
 lawful money. 
 
 Under this law, or amendment, by June 30th, 1915, 
 there had been $481,970,395 of lawful money taken 
 out of circulation, and replaced by a shameful, fraud- 
 ulent pretence of money palmed off upon the people. 
 This left only $64,647,156, supposed to be in circula- 
 tion. 
 
208 THE GOLD DOLLAR UNIT 
 
 But they are not satisfied to leave that much oui, 
 although most of it that has not been lost, or privatei^y 
 hoarded, is now hoarded by the banks for transmis- 
 sion to the United States Treasurer for retirement, and 
 the zeal with which they are retiring it is evident /rom 
 the fact that since June 30th, 1915, to March 24th, 1916, 
 $3,325,433 in addition had been retired, and certifterites 
 substituted, which would increase the amount of sil- 
 ver certificates to $485,295,828. 
 
 Legislation Necessary to Remedy and E^tore. 
 
 If the several states will enact laws providing that 
 debt obligations shall be payable in lawful money, and 
 if Congress will amend the law of 1878, by cutting 
 out the seven words that never should have been added 
 "except where otherwise stipulated in the contract," 
 and the unwarranted limit of the legal tender qual- 
 ity of the subsidiary silver coin repealed, we can re- 
 store to the volume of lawful money in circulation the 
 very large sum of $672,762,798. 
 
 Gold Certificates. 
 
 Another cunningly devised false pretence for lawful 
 money was put over, and upon the people, by a law 
 enacted in March, 1907, which "provides for the 
 receipt of deposits of gold coin in sums of not less than 
 $20 and the issue of gold certificates therefor in de- 
 nominations of not less than $10." 
 
 "Gold certificates are not lawful money. They are 
 receivable for all public dues and when so received 
 may be reissued, and they may be held by Federal Re- 
 serve and national banks as lawful cash reserve." 
 
 They are lawful money for the national bankers, 
 but not for the people; and these are the men who 
 are so very much alarmed over the danger of special 
 privilege and class legislation through rural credits. 
 Consistency? Oh! pshaw! 
 
 Certificates of Uncoined Metal. 
 
 In March, 1911, another law was enacted, in the 
 interest of efficiency, economy and public convenience 
 
PUT CONGRESS ON EECOED 209 
 
 (?), authorizing the issue of gold ce-rtifieates of the 
 same quality as those issued for gold coin, on deposit 
 with the United States Treasurer, against gold bullion, 
 and foreign coin — mere commodities. 
 
 Up to June 30th, 1915, there had been issued of 
 this sham pretence for money $1,072,847,819. 
 
 It may be claimed that they are orders for lawful 
 money. "Well, so is your wheat, your corn, cotton, or 
 other products of labor, surer and safer orders for 
 money. 
 
 The rapidity with which these sham, misleading, 
 deceptive certificates are taking the place of lawful 
 money may be judged by the fact that by March 24th, 
 1916, the volume of gold certificates had been increased 
 by $411,529,120, in a little less than eight months, 
 or over $5,0000,000 a month of gold being demonetized. 
 
 Put Congress on Record. 
 
 What a shame that our government has been led, 
 or forced, into this wicked trap for the exploitation 
 of the people! A deception unparalleled in the his- 
 tory of any civilized nation in the world, and unless 
 speedily repealed, will result in untold misery and 
 suffering. 
 
 "We should demand of the present Congress the 
 amendment of the laws of March 4th, 1907, and March 
 2nd, 1911, by insertion in the proper place, of the 
 following five words: "All debts, public and_ pri- 
 vate, ' ' That is all ; and that would add to the volume 
 of our lawful money at one stroke of the pen, the very 
 large sum of $1,484,376,939, with, in addition, the 
 many millions now being demonetized, for the press 
 reports are that the New York assay office is running 
 twenty-four hours a day demonetizing gold through 
 the medium of the melting pot. 
 
 The present Congress should be put on record, if it 
 requires a special session of Congress to do it. 
 
 United States Notes — Greenbacks. 
 
 There is still supposed to be $346,681,016 of these 
 United States notes in circulation. They were auth- 
 
210 THE GOLD DOLLAR UNIT 
 
 orized before the conspiracy in its present form was 
 conceived, and when Congress could, and did, write in 
 the vital words, "a full legal tender for all debts, pub- 
 lic and private." 
 
 It is well to remember that the $60,000,000 demand 
 notes remained at par with gold from March 17, 1862, 
 when they were made a full legal tender. 
 
 But there was a sufficient sinister influence in con- 
 trol at that time to force the government to stultify 
 itself by permitting the addition to the law authorizing 
 the issue of United States notes, the following ten 
 words: "Except duties on imports, and interest on 
 the public debt." 
 
 "Who was responsible for that amendment? 
 
 The soldiers at the front, the farmers, laboring 
 men, mechanics, merchants and manufacturers were 
 all willing to accept them as a full legal tender, in 
 payment for services or products. 
 
 Tradition says that a group of patriotic ( ?) bank- 
 ers had at that time secured a monopoly of all the 
 free gold in the country, and also owned the govern- 
 ment bonds; that they had also secured laws provid- 
 ing that all customs dues and interest on the public 
 debt, must be paid in gold. Now, see in whose interest 
 that exception clause was enacted. How smooth the 
 game worked. That exception clause at once made a 
 market for the bankers' gold, and enabled them to 
 charge the importers, who must have it to pay cus- 
 toms dues, a premium for it all the way up to 275 per 
 cent. Then, as the government received the gold 
 for import dues the same bankers were waiting for 
 the .government to pay it back to them as interest on 
 the public debt. 
 
 A perfect and profitable endless chain for said 
 patriotic ( ?) group of bankers. 
 
 The responsibility is clear, and we may well fix the 
 date for the inauguration of the conspiracy, with the 
 enactment of that exception clause in 1862; for the 
 policy has been fixed and persistent ever since. 
 
yn.F'E OUT THAT UGLY STAIN 211 
 
 Although the law has not been changed, the green- 
 backs have been freely accepted by the government 
 for customs dues since 1879. 
 
 Then why not remove that ugly stain, by Congress 
 cutting out those ten words "Except duties on imports 
 and interest on the public debt"? 
 
 That would add $346,681,016 to the volume of our 
 lawful money, provided that there is still that amount 
 in existence. 
 
 National Bank Notes. 
 
 The national bank note system, enacted in 1864, 
 "was heralded as a great patriotic scheme to primarily 
 make a market for United States bonds, and on the 
 side — ^not heralded — to provide a basis for the issae 
 of cheap money, for the bankers' use, for private 
 profit. 
 
 It was called the "best financial system in the 
 world,'" because the notes were based on government 
 bonds, and interest and bonds payable in gold. They 
 are not lawful money; in fact, it is hard to tell just 
 TvhLt they are. It was perfectly safe for the national 
 bankers to worship them without fear of transgressing 
 til- first commandment, second paragraph. For proof 
 o' which I will quote the official definition: "Nation- 
 al bank notes are not legal tender but are receivable 
 for all public dues except duties on imports, and may 
 be paid out by the government for all purposes except 
 interest on the public debt and for redemption of 
 national bank notes. They are redeemable in lawful 
 money of the United States by the Treasurer but not 
 by the Assistant Treasurers, and are also redeemable 
 at the bank of issue." 
 
 Although obligations of the government, they will 
 not pay debts due to the government. 
 
 They are not lawful money, but they are redeemable 
 in lawful money at just two places in the United 
 States. 
 
 The government can pay some things due by the 
 government with them but not others. 
 
212 THE GOLD DOLLAE UNIT 
 
 They are not lawful money for the people, but are 
 for the bankers. 
 
 What would be thought of an employer of labor who 
 fwould pay his employes in money that he would not 
 accept in payment of obligations? 
 
 Or of a merchant that would give a due-bill that 
 he would not accept in payment for his own mer- 
 chandise ? 
 
 With 7,560 national bants scattered all over the 
 nation, and all a part of one system, there are just two 
 places where these national bank notes are redeem- 
 able. 
 
 A national system; the best in the world (?). 
 
 Because these notes were obligations of the gov- 
 ernment, they were readily accepted as money by the 
 people, and when the Federal Reserve law went into 
 effect in November, 1914, there were national bank 
 notes in circulation to the amount of $1,121,468,911, 
 or better than one-fourth of the total volume of money 
 in circulation. No ; not money, mere due bills or 
 promises to pay in money, which no creditor could 
 be forced to accept. 
 
 There is, there can be no justification for our 
 government to so deceive the people in our most vital 
 legislation. 
 
 Then, instead of this ridiculous hodge-podge of 
 mixed money, and currency, and impositions which 
 President Taft called "a miserable patchwork that 
 satisfied nobody," we should demand that Congress 
 should promptly amend the law by eliminating the 
 "tis and isn'ts," and make it read plainly that the 
 "National bank notes are a full legal tender for all 
 debts, public and private." That's all. 
 
 This would increase the volume of lawful money 
 by the full amount of the national bank notes in cir- 
 culation. 
 
 Federal Eeserve Bank Notes. 
 
 Official definition: "Federal resers^e bank notes 
 are identical in all their attributes with national bank 
 notes," "the difference being that such notes are taken 
 
THE PARAMOUNT ISSUE 213 
 
 out by Federal Reserve banks instead of by national 
 banks." 
 
 "Federal Reserve notes are issued by the Federal 
 Reserve Board to^ Federal Reserve banks and their at- 
 tributes are the same." 
 
 As I have shown elsewhere the plan of the House 
 of Morgan is to substitute a system of bank credit for 
 money, "the only money to be a small amount for 
 counter use" (Reynolds), and this Federal Reserve 
 bank note nondescript currency is to be that farcical 
 substitute for money. 
 
 Our Future Money. 
 
 Of the ten kinds listed by the Treasury Depart- 
 ment this, by all means the very worst and most 
 ridiculous in its attributes as a substitute, has been 
 legally imposed upon us. The joint committee on 
 Rural Credits calls it "a capstone on a superb struc- 
 ture for commercial credit." 
 
 And President "Wilson accepted this, the most rag- 
 ged patch in the bunch, as the model for our currency 
 of the future — the Federal Reserve notes. 
 
 The last word in financial wisdom by the men whom 
 Mr. Herri ck calls "our natural pilots," and whom I 
 think we might more properly designate the Sovereign 
 House of Morgan. 
 
 The Paramount Issue. 
 
 Here, then, is the pressing paramount issue for 
 immediate consideration and aggressive political 
 action; important enough to rally around its stand- 
 ard every independent, or semi-independent, American 
 citizen, and the organization of a new political party 
 if necessary, with this as its paramount issue. 
 Preamble. 
 
 Regardless of the base, or security, for the several 
 kinds of money or currency now in circulation ; whether 
 stamped on metal, or based on value; or greenbacks 
 based on the faith and credit of the nation ; or cer- 
 tificates based on metal, or other commodities; or na- 
 tional bank notes based on United States bonds, or 
 
214 THE GOLD DOLLAR UNIT 
 
 other security; or Federal Reserve bank notes based 
 on commercial paper; or investment notes based on 
 land; or on th^ stored products of labor; or on state 
 bonds, or bonds of other political units. 
 
 The final base of security, after all, must be the 
 federal government. It alone can issue money, real 
 legal tender, lawful money, the only kind , any sov- 
 ereign state should ever issue. 
 
 When the security has been, approved by the federal 
 government, there should be no necessity for desig- 
 nating the base or security and needlessly; multiplying 
 the kinds of money. 
 
 There should be but one kind of money, and when 
 issued by the federal government it should be a United 
 States note; a full legal tender for all debts, public 
 and private. That's all. 
 
 Platform Resolution. 
 
 To put it in the form of a platform resolution, 
 something like this: 
 
 Whereas : Honey is a public utility, issued by the 
 government as a medium of exchange, and for the 
 payment of all public and private obligations, be it 
 
 Resolved: That we demand that Congress s shall, at 
 the earliest practicable moment, so amend all of our 
 currency laws, that all money,; or currency, of whatever 
 kind that has been coined or issued, or authorized by 
 the government, directly or 'indirectly, shall be made 
 a full legal tender, for all debts, public or private ; and 
 be it further 
 
 Resolved : That for the future, there shall be but one 
 kind of money issued by the government, and regard- 
 less of its base, or security, or the purpose for which it 
 was issued, it ^hall be simply a United States note ; 
 a full legal tender for all debts, public and private; 
 and be it further 
 
 Resolved: that all money, coined or issued, should 
 be issued to all classes ^of business or industries at 
 exactly the same rate of interest, or tax, without 
 private profit, and through the medium best adapted 
 for the purpose. 
 
FIRST LEGISLATIVE STEPS 
 
 One of the first steps should be to demonstrate to 
 the general public whether it is possible to enforce 
 our laws against usury as practiced by so many of our 
 chartered public servants, known as national banks. 
 
 I have already shown how powerless and obedient 
 even our greatest fighting chief executive was when 
 the head of the House of Morgan called him. 
 
 I refer now to the smaller members, the feeders 
 of the system — ^the national banks. The extent of 
 their extortionate usury in violation of law, would 
 have remained, veiled in comparative secrecy, had it 
 not been for the accidental appointment of John Skel- 
 ton Williams as Comptroller of the Currency ; a public 
 official who thought it was his duty to enforce the laws 
 of his department. Space forbids more than a very 
 brief quotation. As to the prevalence of usury, I quote 
 from p. 23 : 
 
 "The banks were required to give information on 
 this subject in their reports submitted in response to 
 the call for statement of condition as of December 
 31st, 1914, and also again at the time of each of the 
 next five ensuing calls for statements. An analysis of 
 the reports thereupon filed by the national ,banks 
 shows that some national banks in nearly every part 
 of the country, and nearly all banks in certain sec- 
 tions, have been charging rates of interest on some 
 of their loans which are not only ^illegal and usurious, 
 but which are intolerable, and if continued inevitably 
 must sap the strength of their customers and injure the 
 communities in which they operate." 
 
 Page 25: "Especially from the South and South- 
 west, the West and Northwest, many bitter complaints 
 have been received of excessive interest charged the 
 farmers and others engaged in agriculture. In many 
 instances the exaction of the money lenders make it 
 impossible for the farm.er to live comfortably and pay 
 
216 FIRST LEGISLATIVE STEPS 
 
 the banks the enormous rates demanded for the use 
 of money needed to produce his crops. 
 
 "The exhorbitant rates charged the farmers are the 
 more inexcusable when it is considered that the losses 
 made by banks on agricultural paper have been light 
 generally. The record shows that the farmers' loans, 
 sooner or later, nearly always are paid, however great 
 may be the sacrifices the farmer must make to meet 
 his obligations. It is estimated by those in a position 
 to judge correctly that the losses on loans to farmers 
 throughout the agricultural regions amount to not 
 more than i a fraction of one per cent on the money 
 loaned them. Tet the farmer has been, and is, obliged 
 to pay, in thousands of cases, not only twice the rate 
 of interest usually charged in the cities to merchants 
 and manufacturers, where the risk is just as great, 
 but he actually has been required to pay, in many 
 instances, ten times the interest rate which he pught 
 to be charged, or which is permissible under the law." 
 
 Note. — There is no ; reason to doubt these state- 
 ments; they were made under oath, by the officers of 
 the banks in question. 
 
 Why ,are the laws not enforced? I quote from 
 p. 31: 
 
 "As the action against the offending bank must 
 be brought by the customer who has paid the usurious 
 interest, suits are brought rarely. The customer who 
 borrows at these unlawful rates is afraid to bring suit 
 for the recovery of the money improperly taken from 
 him, realizing that he may be blacklisted by the banks, 
 and however great his need may be at some future 
 time he would be unable to secure further loans." 
 
 I know the truth of the foregoing from personal 
 experience of myself and neighbors, when the common 
 rate was from two to three per cent a month. It 
 seems incredible that such a condition of usury, as 
 reported by the Comptroller of the Currency for the 
 year 1915, — much, very much, worse than we expe- 
 rienced here in territorial days, — should have been 
 tolerated all these years, arid continued after the en- 
 
USELESS EFFORTS TO STOP USURY 217 
 
 actment of the Federal Reserve law, which was to 
 free us from, all of our financial ills. 
 
 The Comptroller had been using moral suasion and 
 threats for over a year to secure a moderation of the 
 extortionate charges of interest. Then in his annual 
 report he appeals to Congress for the enactment of 
 "AN AMENDMENT TO PROVIDE THAT SUITS 
 AGAINST USURERS BE BROUGHT BY THE DE- 
 PARTMENT OF JUSTICE." 
 
 "If there should be an amendment to the national 
 bank act authorizing and directing the Department 
 of Justice to bring suit against usurers upon informa- 
 tion furnished .either through the Comptroller of the 
 Currency or through other sources, the practice of 
 usury in all the national banks throughout the coun- 
 try can be stopped. I therefore earnestly recommend 
 to the present Congress the passage of such a law." 
 
 The recommendation is well meant, and with or- 
 dinary law-abiding citizens might have the desired 
 effect. He should have learned by this time that he 
 is dealing with a special class, who know that they 
 make the law-makers, and, having made them, have a 
 right to control them, and do control them. 
 
 All anti-usury laws, are, and have been, useless in 
 preventing usury. 
 
 The true remedy is to deprive any man, or body of 
 men of the power to exact usury, by administering 
 this public necessity, as a public utility, without private 
 profit. 
 
 For proof, go back to 1907, when all of the big 
 banks suddenly closed their doors, thus forfeiting 
 their right to do business, and where was the Comp- 
 troller of the Currency? In this case it would be the 
 Attorney General ; well, where was the Attorney Gen- 
 eral then, when the Sherman anti-trust law was be- 
 ing violated? No; there iS;no use trying to regulate, 
 or control, the men and system that are now enthroned 
 by giving them a monopoly of the money of the coun- 
 try. "The men who control the money of a country 
 
218 FIRST LEGISLATIVE STEPS 
 
 are absolute masters of the industry, commerce and 
 legislation of that country." 
 
 What has been the result of the Comptroller's ap- 
 peal up to date? 
 
 Although he was very careful to say that a large 
 majority of the national banks were not violating the 
 usury laws, the National Bankers' Association decreed 
 that the Comptroller must be chastised for "lese 
 majeste," "official meddling," etc., and the national 
 council, of the Federal Reserve Board have unanimous- 
 ly recommended that the office of the Comptroller of 
 the Currency be abolished. 
 
 So far as I know the administration has made no 
 effort to have the amendment enacted, and no mem- 
 ber of Congress seems to have the courage to intro- 
 duce such a bill. 
 
 There will be no more attempts made to regulate 
 or control, by the present administration, than there 
 was by the two preceding ones. 
 
 For the purpose of demonstration, we should de- 
 mand and insist, that the law be amended as recom- 
 mended. 
 
 Where Begin to Reduce the Rate of Interest. 
 
 How ,and where shall we begin to reduce the rate 
 of interest? 
 
 It is evident from the foregoing that we cannot 
 hope for any change for the better under the present 
 system, or through the medium of the political parties 
 that have fastened the system upon us. And it is 
 just as evident that we must begin at once an earnest 
 fight all along the line if we are to regain financial 
 freedom. 
 
 While aiming at the main fort, we must take ad- 
 vantage of every .opportunity to capture a trench. 
 That is modern warfare. 
 
 The first trench to capture is by state legislation 
 by which we can reduce the maximum rate of interest 
 to six per cent, for the use of money or credit. 
 
 Congress fixed the maximum rate of interest na- 
 tional banks might charge at six per cent, with an ex- 
 
EEDUCE INTEREST EATES 219 
 
 ! eption clause as follows, Section 5197, United States 
 Eevised Statutes: "Any association may take, re- 
 ceiye, reserve, and charge on any loan or discount 
 made, or upon any note, bill of exchange, or other 
 evidence of debt, interest at the rate allowed by the 
 laws of the state, territory or district .where the bank 
 is located, and no more, except that where by the 
 laws of any state a different rate is limited for banks 
 of issue organized or existing in any such state under 
 this title." 
 
 It will be noted that by the state fixing the higher 
 maximum the national banks can raise their rates to 
 the state limit. Then it follows, that if the state re- 
 duces the limit to six per cent, the national banks, by 
 the federal law governing them, automatically must 
 reduce their rate to six per cent. , 
 
 For the future we will have ourselves to blame 
 if we pay more than six per cent per annum. 
 
 A simultaneous effort should be made in every 
 state of the union to fix the maximum rate at six per 
 cent. We will thus materially reduce the rate of in- 
 terest and be the better prepared to take the next 
 step. It is useless to wait for others to do it. "We 
 must do it ourselves. 
 
WILL THEY CONSENT TO BE CONTROLLED? 
 
 "Will the national bankers consent to a reasonable 
 control, and uniform rates of interest for their ser- 
 vice as public officials ? No ; not willingly. Private 
 monopoly, or the beneficiaries of special privilege, nev- 
 er consent to yield a point, unless it is temporary, to 
 gain a larger stake. The more they get, the more they 
 want, and the more arrogant and greedy they become. 
 Indeed we must expect them and their subsidiaries to 
 fight to the limit against any and every attempt, large 
 or small, to regulate or control our medium of ex- 
 change. 
 
 This is not conjecture, or guess work; it is based 
 on the general experience of the past few years and 
 the actual experience of an honest public official during 
 the years 1914-1915, the present Comptroller of the 
 Currency, whose duty it is to see that the laws gov- 
 erning his department are enforced. He was not in- 
 terfering with legitimate business; just courteously 
 calling the national bankers' attention to complaints 
 being made of certain violations of our banking laws, 
 in re rates of interest being charged. That was all. 
 
 Much of the 1915 report of the Comptroller of the 
 Currency should be issued in pamphlet form as a 
 public document for free distribution and given the 
 widest possible circulation, for educational purposes. 
 
 I shall quote just enough to whet your appetite 
 • — then send to your Eepresentative in Congress re- 
 questing a copy, and use it to inform your neighbors 
 as to what one branch of your public servants are 
 doing. 
 
 Many national bankers resented the request, more 
 especially the largest ones, as impertinent and over 
 officious meddling on the part of a subordinate* and 
 remembering how they treated and were treated by a 
 President, Attorney General and a Comptroller of the 
 Currency in 1907, it is not at all strange that they 
 
BIG BANKERS OBJECT TO CONTROL 221 
 
 should, nor that tbey promptly marked him for the 
 official axe. 
 
 They not only objected to any reduction in rate 
 of interest, but to any attempt to control. They have 
 controlled so long that they look upon banking as a 
 private business, with which the public have nothing 
 to do, except borrow and pay interest. They have 
 enjoyed the special privilege so long that they look 
 upon it as a vested right. The larger the banks and 
 the more favors they receive, the more relentless and 
 arrogant they become. In the "bankers' panic of 
 1907" they would not let up until the national treasury 
 had been drained to the limit, and then forced the sale 
 of Panama Canal bonds, contrary to the intent of the 
 law providing for their issue, and in addition forced 
 the issue of "certificates of indebtedness." There 
 was no let up in their demands until they were sati- 
 ated. They did not need the money, except for ex- 
 ploitation, for they had locked up in their vaults of 
 their customers and government funds, as shown else- 
 where, more than $800,000,000, which thev were not 
 using. It was to keep their victims from getting help. 
 
 So here again in 1914-15, under the crowning 
 achievement in financial legislation, where money and 
 credit was to be easy, industry to be encouraged and 
 commerce liberated, there was no change of policy on 
 their part. The treasury department had loaned the 
 banks $210,000,000 of "emergency currency" to help 
 move the crops? Strange as it may appear, much of 
 that went to New York City, and instead of the big 
 bankers using the money to help move the crops, they 
 used it to speculate with, and were chargina- usurious 
 rates of interest. It is by such means that their banks 
 can earn an average of 285 per cent annuallv on their 
 invested capital. 
 
 The Comptroller politely called their attention to 
 it, and suggested that they at least get down to legal 
 rates. It was the three big banks that resented the 
 suggestion with greatest assurance. On page 21 the 
 Comptroller says: 
 
222 THEY WILL NOT CONSENT 
 
 "This bank, in replying, registered a formal pro- 
 test against what its officers referred to as an attempt 
 to force upon them a policy which thev might not 
 consider correct. In his letter the complaining bank 
 wrote: 'We judge there is a sentiment by debtors 
 not of prime standing or with prime collateral, and 
 we feel that they should not assume that they are en- 
 titled to the same treatment by banks when they know 
 the way they can easily have their notes reduced to 
 6 per cent or can pay.' In answer to this communica- 
 tion the Comptroller replied in part with unanswerable 
 logic as follows: 'In such times as these through, 
 which we have been passing I consider that the weak- 
 er concerns and those who may not have been in pos- 
 session of a^bundant resources should have been treated 
 with special consideration and forbearance, and to 
 levy against and exact from them excessive or unjust 
 interest rates simply because they were, under un- 
 parallelel conditions, unable to help themselves, is not 
 defensible. In all kindness let me remind von that the 
 usury laws are framed more for the protection of the 
 weak than of the strong, who can take care of them- 
 selves, and I am sure that you will agree with me that 
 it is neither good policy nor good ethics, in times like 
 these, to take advantage of the weakness or misfor- 
 tune of a bank's clients and customers. " 
 
 The bank in question had received $10,000,000 of 
 so-called emergency currency from the government 
 for the ex-press purpose of helping those in need. The 
 Comptroller makes a splendid point in defining the 
 object of usury laws, which might well be developed. 
 
 We may just as well recognize the fact that under 
 the present system any attempt to regulate or con- 
 trol the national banks will be resented, and all laws 
 that might interfere with their plans will be ignored, 
 or violated in the future, under the adminitsration 
 of a Roosevelt, a Hughes, or a Wilson, as they have- 
 been in the past, and are being now. 
 
SHALL THE PEOPLE CONTROL? 223 
 
 The issue must be clear cut, with no fusion or com- 
 promise for a temporary political victorv. 
 
 Is money a public utility ; a . medium to facilitate 
 the exchange of labor and labor's products: or a me- 
 dium for private profit and oppression? 
 
 Shall the people, or private monopoly, control its 
 issue and administration? 
 
 The House of Morgan is now in supreme control; 
 how may we best proceed to dethrone them; that is, 
 Avhich are their weakest "forts"? Arourid what 
 "salient" can we rally our greatest strength? 
 
 For this I have offered a few suggestion for immedi- 
 ate political action, upon which I believe all financial 
 reformers should be able to unite. 
 
 In the meantime each one can be developing his 
 own ideals for a permanent solution, without antagon- 
 izing, or criticising adversely the suggestion, or plans 
 of our co-workers. Let co-operation and co-ordination 
 l)e our working policy. 
 
 Is There a SuiEcient Margin at Six Per Cent? 
 
 Can the national banks afford to loan the people's 
 money deposited with them for safe keeping for sis 
 per cent? 
 
 Under the old system, the margin dependedvon the 
 rate of interest the banker paid on deposits, and the 
 rate he charged his customers. 
 
 As they sometimes paid four per cent, and some- 
 times six per cent on time deposits and loaned for from 
 eight to ten per cent, that is, the law abiding bankers, 
 we may assume that the average margin was four per 
 cent. True, under the' national bank law, they paid 
 only one-half of one per cent for national bank notes, 
 which would have left a margin of five and a half, but 
 this was offset some by the low rate of interest on the 
 bond security, until the enactment of the Aldrich- 
 Treeland law, which permitted the use of "other se- 
 curities." The free deposits were, of course, offset 
 some by the reserves held, but a very conservative es- 
 timate would be a margin of four per cent, and the 
 
224 THEY WILL NOT CONSENT 
 
 business of banking has been the safest and most pro- 
 fitable of any in every village, town, or city in the 
 whole country. But that will soon be ancient history. 
 The old order is rapidly changing. "We must now discuss 
 the new system of the future. 
 
 There will be no government or lawful money to 
 loan. All that is not withdrawn, or decoined, will be 
 hoarded in the vaults of the "men who control," 
 principally the vaults of the House of Morgan. 
 
 The plan of "Warburg, and announced in advance 
 by Mr. Reynolds, will be followed out to the letter as 
 provided for in the Federal Reserve banks and other 
 laws. They do not propose to lend money, just the 
 credit of the banker. 
 
 Then the question for consideration is: can the na- 
 tional bankers loan their credit to you, based on your 
 own property as security, for six per cent per annum? 
 The state banks need not be considered, for there 
 will be no "place in the sun"' for them. Interest on 
 deposits will be a novelty. Why pay interest on de- 
 posits, when it is their credit that they propose loan- 
 ing? 
 
 It is under this new sytem that we must consider 
 the margin, and for this purpose we must figure the 
 Federal Reserve Board, the Federal Reserve banks, and 
 the member banks as one system. 
 
 The Federal Reserve banks pay no interest on Fed- 
 eral ReserA^e notes. 
 
 There is only a nominal charge of about one-tenth 
 of one per cent for printing, etc., no interest. Pro- 
 fessedly, the Federal Reserve banks are not organized 
 for profit; just to serve the people. The cost of ad- 
 ministration, then, should be sufficient for them. Were 
 they organized in fact to serve the people, one per 
 cent interest would be sufficient. 
 
 But we know that they are organized for private 
 profit. So we will call it two per cent; this would 
 leave the member bank four per cent, or as large a 
 margin as they legally had in the past. But, how long 
 will it be before the member banks catch on, that if 
 
BANK DEPOSITS ARE BANK CREDITS 225 
 
 the Reserve banks are loaning their credit, instead of 
 Reserve bank notes, that they too will accommodate 
 only such customers as will be satisfied with credit 
 instead of cash. Then the six per cent would be all 
 velvet, except the expense of administration. 
 
 December 31st, 1915, there had been issued Federal 
 Reserve notes to the amount of $188,817,000, of which 
 they had on hand $21,910,000. There was held by the 
 member banks $11,139,395, which would leave in cir- 
 culation $155,768,605. 
 
 At same date the national banks had out in loans 
 and discounts $7,357,732,000. 
 
 "We have Mr. Reynolds' testimony that in 1911 95 
 per cent of their then loans were credit and not money ; 
 so it would follow that 95 per cent of their bank de- 
 posits was an extension of credit on the bank books; 
 and not a cash deposit. This very important fact wants 
 to be kept in mind, for the greatest confidence game in 
 the history of the world is now being palmed off on 
 our people. 
 
 What rate of interest does the bank pay for the use 
 of that credit? 
 
 Nothing whatever; THEY USE YOUR CREDIT, 
 and charge you for a transfer, or exchange, of their 
 credit for yours, just what they think your necessi- 
 ties will compel you to pay. A very liberal estimate 
 of the actual expense involved would be one per cent. 
 That would include the risk involved, leaving a mar- 
 gin of five per cent, or a larger margin than in the 
 old system of loaning customers' deposits. 
 
 "When the member banks catch on, as they soon 
 will, they will rediscount very little with the Federal 
 Reserve banks, and when they do, they will have to be 
 satisfied with a ledger credit, instead of Reserve bank 
 notes. 
 
 Of course they will claim that the margin is too 
 small, and they will threaten to surrender their char- 
 ters, just as they did in 1913 ; a mere bluff. But if 
 they should, we can cpnsole ourselves Avith the thought 
 
226 THEY WILL NOT CONSENT 
 
 that bankers are not bom bankers, nor is their busi- 
 ness entailed; they just develop from ordinary busi- 
 ness men and farmers. 
 
 Eeeognizing, and inisting, on the fact that money 
 is a public utility, and its administration a public 
 service, we are not plannng for immense private pro- 
 fits, just a fair and reasonable compensation for ser- 
 vices performed. 
 
 In addition to the enactment of the state law, limit- 
 ing the rate of interest to six per cent, we should have 
 a state law similar to that recommended by the Comp- 
 troller of the Currency for the enforcement of our 
 state usury laws. The rate of interest to be charged 
 should be definitely fixed by law, both federal and 
 state. This regulating by commissions is as great a 
 farce as having our tariff laws dictated by the pro- 
 tected manufacturers, or our railroad rates fixed by 
 pro-railroad commissioners, or our banking laws by a 
 board of bankers. 
 
 It is useless to waste time and effort amending the 
 laws, unless they can be enforced. 
 
 If the system is superior to our government, and our 
 laws, let us openly confess it, and stop the farce of 
 popular elections. 
 
THE FEDERAL BESERVE ACT. 
 
 What was the intent of the Federal Reserve Act? 
 
 Senator Aldrich said that it was to prevent 'put- 
 ting the currency issue and the entire banking industry 
 of the country into the hands of the government. ' ' 
 
 Mr. Eeynolds said that it was to change our whole 
 'financial sysliem from government money to banlsj 
 credit, that we did not need money to transact our 
 business, just bank credit and a check book. 
 
 Senator Owen said that it was to be a bank for 
 banks, a bankers' bank. 
 
 The Federal Eeserve Board says that it was intend- 
 ed as a public trust, to be administered for the com- 
 mon welfare — for the good of all. 
 
 Mr. Rich says that it was to enable the commer- 
 cial bankers to better and more efficiently serve the 
 needs of agriculture, commerce and industry. 
 
 Mr. Warburg says that it was to enable the United 
 States to become the great creditor nation of the vf orld ; 
 the WORLD'S BANKER. 
 
 President Wilson said that it was to furnish the 
 machinery for free and elastic and uncontrolled credits 
 put at the disposal of the merchants and manufactur- 
 ers of this country. 
 
 Theodore Wold said that contrary to the general 
 belief the most important feature of the new law is 
 elasticity of credit, NOT ELASTICITY OF CURREN- 
 CY. The demand therefore was for a measure which 
 would in emergencies increase the lending power of 
 the banks. 
 
 Senator Aldrich was the only man who frankly told 
 the truth, and was promptly deposed as the leader, 
 and his great ambition to have his name go down in 
 history as the author of this great financial reform 
 was denied him. If the truth were told I think it 
 would be found that he died of a broken heart; but 
 it was always thus with private monopoly. 
 
228 THE FEDERAL EBSERVE ACT 
 
 The Senator thought the fight could be made in the 
 open (see pages 108-109) ; they preferred to follow the 
 usual course of deception and misrepresentation. 
 
 I say, and I believe that I have given proof that 
 will convince any unprejudiced mind, that in its in- 
 ception it was a conspiracy against the whole people 
 of the United States, planned by a man who was not 
 a citizen, for the purpose of securing control of the 
 labor, business and commerce of the nation, by usurp- 
 ing the constitutional power of our government to 
 issue and control our medium of exchange, and sub- 
 stituting therefor a system of bank ledger credits, 
 wholly uncontrolled by the public, and to be adminis- 
 tered for private profit. 
 
 The only limit being that of endurance, by the pro- 
 ducers of the nation. 
 
 I will quote briefly from the first annual report of 
 the Federal Reserve Board, as to what the system pur- 
 ports to be. 
 
 It had been my intention to give considerable 
 space to the Federal Reserve law in closing, but space 
 in this book will not permit doing justice to the sub- 
 ject, so I will content myself at this time with briefly 
 touching on a few of the more important points, and 
 leave the fuller development for a special study of the 
 system, if I find there is a demand for such a work. 
 
 A Public Trust— For the Good of All. 
 
 First Annual Report, p. 17, we find a very sig- 
 nificant paragraph : 
 
 'It should never be lost to sight that the Reserve 
 banks are invested with much of the quality of a pub- 
 lie trust. They were created because of the existence 
 of certain common needs and interests, and they should 
 be administered for the common welfare — for the good 
 of all. The more complete adaption of the credit mech- 
 anism and facilities of the country to the needs of 
 industry, commerce and agriculture, with all their 
 seasonal fluctuations and contingencies — should be the 
 
A SPLENDID CONCEPTION, BUT— 229 
 
 constant aim of a Reserve bank's management. To 
 provide and maintain a fluid condition of credit, such 
 as will make of the Reserve banks at all times and 
 under all conditions institutions of accommodation in 
 the larger and public sense of the term is the first re- 
 sponsibility of a Reserve bank." 
 
 Page 18: "There will be times when the great 
 weight of their influence and resources should be ex- 
 erted to secure a freer extension of credit and an eas- 
 ing of rates in order that the borrowing community 
 shall be able to obtain accommodation at the lowest 
 rates warranted by existing conditions and be ade- 
 quately protected against exorbitant rates of inter- 
 est." 
 
 The foregoing is a splendid conception of what 
 the functions and duties of a public service board 
 should be and worthy of the pen of Thomas Jefferson. 
 It is signed by the whole Board : "W. G. McAdoo, J. S. 
 Williams, C. S. Hamlin, P. A. Delano, P. 
 M. Warburg, W. P. G. Harding and A. C Miller, 
 
 In the selection of a Board to direct the controlling 
 public utility in the nation as affecting "the needs 
 of industry, commerce and agriculture — with all their 
 seasonal fluctuations and contingencies," that would 
 have inspired confidence in the ranks of "industry, 
 commerce and agriculture," the Board should have 
 been composed of men who were noted for having 
 made a special study of these "certain common needs 
 and interests," and devoted their lives, or a reasonable 
 part of them, to "the common welfare — for the good 
 of all" 
 
 Now read that list of names over carefully once 
 more, and see if there is a single name on that list 
 that you ever heard of in connection with the promo- 
 tion of 'the common welfare — for the good of all," 
 prior to their appointment on that Federal Reserve 
 Board, to organize, administer and control our medium 
 of exchange, the life blood of agriculture, industry and 
 commerce. 
 
230 THE FEDERAL RESERVE ACT 
 
 I have been a close reader of current events during 
 the past thirty years, and especially interested along 
 those lines, and I have no recollection of ever having 
 seen the name of even one of those distinguished men 
 in connection with any movement, remotely related 
 to "the common welfare — for the good of all." 
 
 There are two men on the Board, placed there in 
 direct opposition to the wishes of the men who con- 
 trol the Board, viz. : the Secretary of the Treasury and 
 Comptroller of the Currency, who were placed on the 
 Board by Congress to give a semblance to the idea of 
 government control, by having representatives of the 
 government on the Board. 
 
 It was around this feature the closing fight in 
 Congress was waged, the public overlooking the fact 
 that the money monopoly controlled the government, 
 and that the appointment of members of a cabinet 
 whose chief was under obligations for his election to 
 this same money monopoly. See Mjrron T. Herrick's 
 tribute to the President and ex-President, p 198. 
 
 The Federal Reserve law was not permitted to pass 
 Congress until the representatives of the system were 
 satisfied that they would have absolute control of the 
 Board and the system. 
 
 That this was clearly foreseen and intended by the 
 House of Morgan and understood by the National 
 Bankers' Association, I quote from their Vice Presi- 
 dent and lobby representative in Congress, in his "Aid- 
 rich Currency Plan Interpreted," published in 1911, 
 p. 15, in commenting on Section 12 of the proposed 
 Aldrich plan. Mr. Reynolds said: 
 
 "The concensus of opinion of bankers is that this 
 clause should be modified so as to give the directors 
 power to appoint and to remove for cause the Gov- 
 ernor of the Reserve Association of America and his 
 two deputies. There is good reason why this should 
 be done, since it is fair to assume that the forty-five 
 directors would be in a better position to pick out a 
 competent man for that very important position than 
 
A BANK FOE BANKEES ONLY 231 
 
 would be the President of the United States. Besides 
 this, it must be remembered that the Eeserve Associa- 
 tion of America, although acting as fiscal agent of the 
 tJnited States government, is not a government bank 
 in the sense that the great central banks of Europe 
 are. It is primarily a bank of banks, and for that rea- 
 son the banks rather than the government officers 
 should have it to say who the executive ofQcers should 
 be." 
 
 Senator Owen, chairman of the committee, in in- 
 troducing the bill, said in part (Cong. Eec, p. 6766) : 
 "All of these considerations urge that the Federal 
 Eeserve banks should be banks for banks, bankers' 
 banks; and not a public bank competing with the 
 banks for business." • 
 
 Paul M. "Warburg, the author of the system, said 
 December 25th, 1913: "The enactment of this legisla- 
 tion will inaugurate a new era in the history of bank- 
 ing in the United States. While it is regretted that 
 some important suggestions made by the business com- 
 munity could not have been adopted, the fundamental 
 thought for the victory of which some of us have 
 worked for so many years have won out. From now 
 on, we shall witness the gradual elimination of the 
 bond-secured currency, of scattered reserves, of im- 
 mobilized commercialized paper and of pyramiding of 
 all call loans on the stock exchange."' 
 
 In an address before a meeting of the Governors 
 of the Federal Eeserve banks at Minneapolis, October 
 22nd, 1915, Mr. Warburg said in part, and this may 
 be considered as the official opinion of the Federal Ee- 
 serve Board: "There is no such thing as the interest 
 of a Federal Eeserve bank as against the interest of 
 member banks. As yet I fear this is not sufficiently 
 understood. The Federal Eeserve bank is the mem- 
 bers" bank; it is your bank, your fire engine, con- 
 structed for your greater protection. You have paid 
 for it, and you are operating it. We are to be con- 
 sidered your fire marshals." 
 
232 THE FEDERAL RESERVE ACT 
 
 There is nothing in that to indicate that it is a pub- 
 Kc service institution, but the very reverse. 
 
 Their official organ, 'Monetary Reform," stated 
 emphatically that the Federal Reserve law would not 
 pass Congress, until made satisfactory to the National 
 Bankers' Association, and Paul M. Warburg after it 
 was enacted, said to an investigating committee that 
 it was satisfactory to them, with a few exceptions, 
 which the Federal Reserve Board had the authority 
 to supply. 
 
 The Federal Reserve Board was organized and is 
 controlled absolutely by an organization whose whole 
 aim in business is to exploit the industries of the na- 
 tion for their own private gain. 
 
 The two exceptions on the Board of seven mem- 
 bers are the two "ex-officio" members, the Secretary 
 of the Treasury, and the Comptroller of the Currency. 
 I have given these two men credit, where they deserv- 
 ed it, and especially John Skelton Williams, who has 
 tried so hard to protect the people "against exorbitant 
 rates of interest. ' ' Also noted the fact that for doing 
 so the Federal Reserve banks through their counsel 
 have unanimously started a movement to abolish the 
 office of Comptroller of the Currency, and thus get rid 
 of the one member who has shown any sympathy "for 
 the common welfare — for the good of all," which 
 causes us to consider that it must have been John 
 Skelton Williams who wrote the report under the im- 
 pression that the Federal Reserve Bank system was 
 intended for public service. 
 
 He knows, and the public knows better now. 
 
 President Wilson, in signing the Act, said in part 
 (See January, 1914, Commoner): "Then there came 
 upon the heels of it [the tariff bill] this bill which 
 furnishes the machinery for free and elastic and tm- 
 controlled credits put at the disposal of the merchants 
 and manufacturers of this country for the first time in 
 fifty years." 
 
THE DISCOUNT POLICY 233 
 
 If the President was sincere, and I will concede 
 that lie was, was ever a responsible public official so 
 grossly deceived by his advisers? 
 
 How does the Federal Reserve Board administer 
 this "public trust"? 
 
 Their first thought in every movement as public 
 servants, administering a public trust, should be : will 
 it be for "the common welfare"? "For the good of 
 
 all"? 
 
 How is it with the Federal Reserve Board in prac- 
 tice? 
 
 There can be no better test than that of service. 
 And in service, no better test than the policy gov- 
 erning discounts. 
 
 There should be no distinction as between individ- 
 uals, classes, business, or industries. 
 
 The Discount Policy. 
 
 The security being equally good, the discount rate 
 should be the same for all paper, except perhaps the 
 one consideration of expense of handling ; the expense 
 of handling long time paper being less than that of 
 short time paper. 
 
 Circular No. 13 of the Federal Reserve Board is- 
 sued November 10th, 1914, will be found on page 182 
 of first annual report. It is too lengthy to quote in 
 full, so I will just give the substance, necessary for 
 this topic. "Commercial paper. The Federal Reserve 
 Board, under section 13 of the Federal Reserve Act, 
 has the right to determine or define the character of 
 paper eligible for discount." 
 
 The requirements are so drastic and rigid as to 
 make the security absolute. Indeed they read as 
 though prepared with the view of discouraging dis- 
 counts, which I know through a banker friend who 
 tried to discount paper to have been the case. 
 
 Page 10, first annual report: "The act gives pow- 
 er to each Federal Reserve bank: to establish from 
 time to time, subject to review and determination of 
 
234 THE FEDERAL RESERVE ACT 
 
 the Federal Reserve Board, rates of discount to be 
 charged by the Federal Reserve banks for each class of 
 paper, which shall be fixed with a view of accommo- 
 dating commerce and business." 
 
 The Board asked the views of each of the Federal 
 Reserve banks as to what they thought the rate should 
 be. 
 
 They did not ask the representatives of agriculutre, 
 industry and commerce, as to their view of "accommo- 
 dation," or what the rate should be for "free and 
 elastic and uncontrolled credit." 
 
 Now just keep in mind the following facts . 
 
 The Federal Reserve banks did not have to pay 
 any tax, or interest, for the Federal Reserve notes; 
 just the bare cost of printing and issue. 
 
 "Upon tabulation of these results it was found that 
 they did not vary greatly, the rates ranging from 5 
 to 7 per cent for 90 day paper. A study of the exist- 
 ing state of affairs satisfied the Board that at the start 
 and until the banks could get a firm footing it should 
 act with prudence and conservatism, and it was con- 
 sequently voted to fix the rates of discouat at from 
 five and a half to six and a half per cent." 
 
 If the members banks were as considerate ( 1) in 
 their commission "to accommodate commerce and busi- 
 ness," what would the rate be? 
 
 The Federal Reserve bank took no risk; the mem- 
 ber banks did. 
 
 Let me repeat President Wilson as quoted: "Free 
 and elastic and uncontrolled credits put at the dis- 
 posal of the merchants and manufacturers." Had the 
 Board no thought of, or mercy for, the President? 
 
 They certainly did not have for the merchants and 
 manufacturers. 
 
 Their policy was one of discouragement; not en- 
 couragement. 
 
 "Uncontrolled credits"? Rigid control of credits 
 to force higher interest rates is the controlling policy 
 of the Board. 
 
DISCRIMINATION IN INTEREST RATES 235 
 
 Congress had fixed the rates of interest that might 
 be charged for the use of national bank notes, but 
 there was no such provision in the Federal Reserve 
 Act. That power was conferred on the public ser- 
 vice ( 1) Board. 
 
 Rates According to Maturity. 
 
 To the layman, it would seem that the longer time 
 the paper had to run, the lower the rate of interest. 
 
 The banker will give you as an excuse for a higher 
 rate of interest on a week, or ten day loan, that the 
 clerical work is just as great for a ten day loan as for 
 90 days, and that is reasonable. 
 
 The Federal Reserve banks will give a lower rate 
 for nine ten day loans than for one 90 day loan, or for 
 eighteen ten day loans than for one six months loan, 
 and this policy is approved of by the Federal Reserve 
 Board. For proof of which see Exhibit A. 1915 re- 
 port. 
 
 I quote those for the "West and South: 
 
 Maturing within ten days, 3 per cent. 
 
 Within 30 days, from 4 per cent to 4^/^ per cent. 
 
 30 to 60 days, 4 per cent to 4% per cent. 
 
 60 to 90 days, 4i^ to 5 per cent. 
 
 Agricultural and live stock paper over 90 days, 
 5% to 6 per cent. 
 
 Commodity paper maturing within 30 days, 3% 
 per cent. 
 
 After 30 days but within 60 days, 4 per cent. 
 
 Aftei'- 60 days but before 90 days, 4^/^ per cent. 
 
 After 90 days, 5 per cent. 
 
 Acceptances, 2 to 4 per cent. 
 
 What Are Acceptances? 
 
 Page 3 of report: "The development of the bank- 
 ers' acceptance, by means of which American insti- 
 tutions are beginning to occupy a leading place in the 
 financing cf the world's international trade, has gone 
 steadily forward. The total amount of such accept- 
 
236 THE FEDERAL RESEEVE ACT 
 
 ances outstanding at the close of the year 1915 is esti- 
 mated at fully $100,000,000 — an auspicious beginning 
 in this branch of business and one of significant im- 
 portance,'" etc. Page 5: "At the close of 1915 the 
 lowest rates made by the Federal Reserve banks for 
 any class of paper were those on bankers' acceptances, 
 approved by the Board at from 2 to 4 per cent, but 
 running in actual practice only a little above lower 
 limit thus stated." 
 
 Well Worth Comparing. 
 
 Page 4: "The direct discount of reserve banks 
 for member banks has at no time been much in ex- 
 cess of $30,000,000, notwithstanding that practically 
 every type of commercial paper available for discount 
 at Federal Reserve banks has been defined and de- 
 scribed. ' ' 
 
 Better read those two paragraphs again to catch 
 the full significance of them. 
 
 To encourage foreign trade, the Federal Reserve 
 banks, on approval of the Federal Reserve Board, dis- 
 counts acceptances, at a fraction over 2 per cent, and 
 in less than four months they have thus loaned o^er 
 $100,000,000, almost entirely by the New York banks. 
 
 To encourage home commerce and industry, they 
 charge nearly 5 per cent and at no time during the 
 fourteen months operation have they loaned "much 
 in excess of $30,000,000." 
 
 Then the next paragraph, page 5, begins thus: 
 "DISCOUNT POLICY. The Board has endeavored 
 the past year to develop a consistent discount policy, 
 graduating its rates according to the maturity and 
 character of paper discounted or purchased in the open 
 market. ' ' 
 
 You may think that the policy is not consistent, and 
 you would be right as to the principle, but it is con- 
 sistent with the plan of the House of Morgan, whose 
 vision, now that they have complete control of the 
 United States, expands to the wider world control. 
 
OUR INTERNATIONAL COIN 237 
 
 And as is the case with the protected manufac- 
 turers, reaching out for foreign trade, they will sell 
 cheaper abroad than at home; so the men who con- 
 trol, propose loaning abroad cheaper than at home, 
 and it is their fixed policy to prevent a reduction of 
 interest rates in the United States, as I will prove 
 later. 
 
 Commodity Rates. 
 
 The term "commodity rates" refers to the special 
 rate provided to aid in marketing the cotton crop, 
 and might have been used for other staple, stored ag- 
 ricultural products. On page 7 of report we find: 
 
 Non-Perishable Farm Products Excellent Security. 
 
 'The committee entertained the view that ware- 
 house receipts for cotton, grain and other staple, non- 
 perishable agricultural products of a readily market- 
 able character, form an excellent base for bank loans, 
 particularly as under the terms of the Federal Reserve 
 Act and the regulations of the Board, notes thus se- 
 cured are eligible for discount by Federal Reserve 
 banks." 
 
 Better Than Government Bonds. 
 
 A leading Chicago banker testified before a Con- 
 grtssional committee that they considered wheat in 
 store better security than government bonds. Then 
 why not have the very best discount rate? 
 
 Again, to slightly paraphrase Lloyd George, 
 "Wheat and cotton is our international coin." 
 Security Being Equal, Why Not Uniform Discount 
 
 Rates? 
 
 The security being absolutely good, or they would 
 not discount at all, and the regulations governing eli- 
 gible paper guarantee that, "For the common welfare 
 — for the good of all,'" every business and industry 
 should be treated exactly alike, and the preterenee 
 
238 THE FEDERAL RESERVE ACT 
 
 always given to American citizens. America first, in 
 the use of American money, or credit. 
 
 In practice, we have this public trust administer- 
 ing this public utility, loaning at 2 per cent on accept- 
 ances to encourage foreign trade. 
 
 At three per cent to accommodate the brokers of 
 New York and Boston and the grain speculators hi the 
 North and "West. 
 
 Agricultural paper, on "the best security in the 
 world," at five to six per cent on six months' paper. 
 
 On page 29 we find : Discount rates for agricul- ' 
 tural and live stock paper, over 90 days 5 per cent, as 
 against under 90 day paper 4 per cent, a discrimination 
 of 25 per cent. ' 
 
 Tli9t was not what the people were promised fn 
 the Federal Reserve Act. 
 
 I maintain that, as usual, it was a gross misrepre- 
 sentation of the intent of the promoters. 
 
 The extreme reverse of the altruistic picture paint- 
 ed. 
 
 The "public trust" became a private monopoly of 
 the most pronounced and far-reaching power. 
 
 "Common needs and interests" were sacrificed to 
 the insatiate greed of a few men. 
 
 Instead of being "administered for the common 
 welfare — for the good of all," it is being administered 
 as the Plouse of Morgan directs to control and exploit 
 every industry in the nation, and actually reaching 
 out for world control, at the expense of American in- 
 dustry. 
 
 Now, for the proof. 
 
 The Revolution — A Change Prom Government Money 
 to Bank Credit. 
 
 On page 65 I quoted from Mr. Reynolds' 1911 cam- 
 paign speeches. 
 
 It will not be necessary to quote him further. 
 
 The gold settlement fund was another device .to 
 iaccumulate and to hoard gold. 
 
'X CRUELLY VICIOUS CONCEPTION 239 
 
 Theodore "Wold, President of the Scandinavian Na- 
 tional Bank, Governor of Ninth Federal Eeserve Bank, 
 said: 
 
 "Contrary to the general belief the most import- 
 ant feature of the new law is elasticity of credit, not 
 elasticity of currency. 
 
 "Under modern development of business the use 
 of currency has given place in all but rural districts. 
 to the use of cheeks on bank deposits." 
 
 The object of the conspirators was three fold. 
 
 First : To secure a monopoly of money and credit, 
 that they might charge for its use all that labor- 
 would, or could, stand. 
 
 Second: That the dollar loaned should constantly 
 increase in value during the period of the loan. 
 
 Third: To loan their credit, and take obligations 
 payable in a money out of circulation, hoarded in 
 their own vaults and for which they could exact such 
 a premium as the victim could stand, or forfeit the 
 security. 
 
 It was a cruelly vicious conception. 
 
 The very worst in the world's history. 
 
 If the completion is permitted, it will cause more 
 misery and suffering than the present world's great- 
 est war. 
 
 There were a good many factors to be taken care 
 of, but Mr. Warburg had made a special study of the 
 problem for many years, and with almost cruel, Jew- 
 ish-German efficiency, had worked out the problem to 
 the entire satisfaction of the elder Morgan, and by 
 the aid of the shrewd political manager and lobbyist, 
 Eeynolds, the car has rolled along, with scarce a hitch. 
 
 When the story is written in full, it will be as mar- 
 velous as any dream of fiction. 
 
 First: They must get the government out of the 
 banking business. 
 
240 THE FEDERAL EESERVE ACT 
 
 There are two things with which I have heeome 
 very familiar, since coming to the Territory of Da- 
 kota, viz: 
 
 "Take the government out of the banking busi- 
 ness," and 
 
 ' ' Keep the farmers out of the grain business. " 
 I have shown how they not only got the govern- 
 ment out of the banking business, but how, through 
 a judicial hint from ex-President Taft, the govern- 
 ment could delegate its constitutional powers to is- 
 sue money to the Federal Reserve banks, without / 
 amending the constitution. ; 
 
 i 
 
 They now have complete control of the issue of { 
 
 money. i 
 
 They do not want to loan money, not even though \ 
 it be furnished by the government free of interest. 
 This was proven in 1915. 
 
 A change of government might upset their plans. 
 
 It could not have been by chance; it must have 
 been by design, that of the eleven kinds of money 
 issued by the government, there was only one kind, a 
 full legal tender for all debts, public and private. 
 
 All the rest had one or more exception clauses. 
 
 And they have practically annulled that kind by 
 substituting certificates that are not lawful money. 
 (See page 202.) 
 
 Emergency Currency to Aid the Farmers. 
 
 In 1913 and 1914 the Secretary of the Treasury, in 
 his efforts to induce the national bankers to aid the 
 farmers, offered to deposit large sums of gold free of 
 interest, and did so deposit, urging the bankers to 
 loan to the farmers at a reasonable rate of interest 
 They took the money, but did not lower the rate of 
 interest. This was repeated in 1914 with like results. 
 
 In 1915 he made another effort stating (page 3, an- 
 nual report) : "We have, at last, a system of elastic 
 credits responsive to the demands of legitimate busi- 
 
ILLUSTRATED IN COTTON PRICES 241 
 
 ness, assuring an ample supply of credits at reason- 
 able rates of interest. 
 
 "As the operation of the Federal Reserve Act be- 
 comes more and more extended and felt throughout the 
 country the value of this useful piece of legislation 
 will be more and more realized, and more and more 
 appreciated." 
 
 Warned by the bankers' failure to respond in pre- 
 vious years, he stipulated that to get this free gold 
 deposits, the Federal Reserve banks must loan to the 
 member banks for 3 per cent, provided that the mem- 
 ber banks loaned on the stored, non-perishable agri- 
 cultural products at not more than six per cent. 
 This both the member and Reserve banks at first re- 
 fused to do, but after strong pressure, three of the 
 Southern Federal Reserve banks agreed to rediscount 
 such commodity paper for three per cent, and a few 
 of the member banks loaned on stored cotton at 6 per 
 cent. 
 __Alt]|ough the movement was not general, or the 
 
 amount large, considering the amount of the crop, the 
 effect vas just what we predicted it would be in the 
 advocfcy of our sub-treasury bill twenty-five years 
 ago ; aid, for proof I quote very briefly from the an- 
 nual Kport of the Secretary, page 5: "I am led "Eo 
 belieA^ that the government's action had a happy 
 effecljupon the situation ; that it contributed to the im- 
 mediite restoration of confidence, prevented demorali- 
 zatiot, and was a potential factor in the steady rise in 
 the "Blue of cotton, from between 8 to 9 ceuts a pound 
 at -raiich it was then selling, to between 11 and 12 
 cen| a pound, at which it is now selling." 
 
 /he Federal Reserve Board reports, page 8 : 
 ithin 60 days, prices advanced from 8 cents to 
 12 cents per pound. There was a steady movement 
 of the staple to primary markets, the price of cot- 
 to/ seed advanced to a figure that added from $20 to 
 a bale to the farmers' income, and comparatively 
 litle cotton had to be carried by banks for producers." 
 
242 THE FEDERAL RESERVE ACT 
 
 Estimating the bale at 500 pounds, there was an in- 
 crease in the price of cotton of 4 cents per pound, equal 
 to $20, and an increase in the price of cotton seed of 
 $20 to $25, — $40 to $45, or a little more than doubling 
 the price, within 60 days. 
 
 Secretary McAdoo gives the Federal Reserve law 
 the credit for this real progressive step in the handling 
 of staple farm products, but neither the system nor 
 the banks are entitled to one iota of credit. The 
 whole credit is due to the Secretary of the Treasury. 
 
 The Federal Reserve banks and the member banks 
 were loth to move in the matter. They had refused to 
 move the previous two years. They disliked that pre- 
 cedent of six per cent, no commission money. 
 
 But there was a potent factor behind the Secre- 
 tary, in a goodly number of loyal member of both 
 branches of Congress, backed by a strong organization 
 of farmers. 
 
 This proposition was not limited to the South, as 
 some of our partisan politicians have intinated, in- 
 deed it would seem to be their chief stock in trade. I 
 quote a paragraph from page 7: 'These regulations 
 do not apply to cotton alone, but cover as well all 
 non-perishable, staple commodities in all parts of the 
 country, and like all credit facilities are avalable to 
 producers in all parts of the country." 
 
 It required an active campaign to indice the 
 Southern bankers to permit the government to dictate 
 the rate of interest to be charged. 
 
 "W. P. G. Harding, a member of the Fede-al Re- 
 serve Board, was sent South to urge the banks to ac- 
 cept the proffered help of the government on tht terms 
 offered, viz.: the free use of gold to the systm, if 
 they would consent to handle it on a six pel cent 
 margin. 
 
 At Birmingham, Ala., August 25th, before thi Ala- 
 bama. Merchants' Association, he "urged Souhern 
 bankers to make concessions to finance the crop, ""res- 
 ent conditions fully justify the low rates, and Sutlz- 
 
■WHY NOT CONTEOL, IN FACT 243 
 
 ern bankers sliould be willing to forego temporary 
 profits for the sake of security and solidity in the 
 future. ' ' 
 
 In this connection it should be remembered that 
 the Federal Reserve Act (paragraph (d), section 14) 
 gives the Federal Reserve Board the absolute power 
 to fix the rate of interest the Federal Reserve banks 
 may charge, and also the rate the member baniis may 
 charge. The Board is supposed to represent the govern- 
 ment. It is appointed by the president for that pur- 
 pose. 
 
 The Secretary of the Treasury is the financial arm 
 of the President "s Cabinet, and is supposed to repre- 
 sent the government directly. 
 
 If the government controls, why did it not control ? 
 Why plead? 
 
 The Federal Reserve Board had started out with a 
 discount rate for the AVest and South for ninety day 
 agricultural paper of six and one-half per cent (see 
 Exhibit M). Why did not the President insist on the 
 Federal Reserve Board fixing what he and his Secretary 
 thought a "reasonable rate"? 
 
 Instead Mr. Harding is sent to the South to plead 
 with tlie merchants to use their influence on the bank- 
 ers, and the press reports said that: "President Wil- 
 son, in a letter read by Mr. Harding, expressed con- 
 fidence that banks in the agricultural regions, the 
 South particularly, would content themselves with not 
 exceeding two per cent above the rate they themselves 
 pay on money for meeting the cotton problem, and 
 said the cotton producers should exact what they have 
 a ri^ht to expect from the banks." And "the cotton 
 producers" did so exact. 
 
 The result of the campaign in the South was that 
 tw/) of the Federal Reserve banks lowered their com- 
 ni((dity rate to member banks for rediscounling cotton 
 proer to three per cent, and a few member banks loan- 
 ed on this cotton paper for six per cent, and the price 
 
244 TUB FEDERAL RESERVE ACT 
 
 of the cotton crop was doubled (cotton and cotton- 
 seed). 
 
 If a reduction from normal rates to six per cent 
 had such a beneficial effect not only on the farmers 
 of the South, but on the whole legitimate business of 
 the South, what would it have been if the rate had 
 been lowered to "two per cent above the rate" the 
 bankers paid for the use of that money? Two per cent 
 for member banks and two per cent for the Federal 
 Reserve banks, would make 4 per cent. 
 
 Or even if the bankers had loaned out to the cot- 
 ton growers the full amount deposited by the Secretary 
 for that purpose, which was $15,000,000 in gold. 
 
 On this they could have issued and loaned $37,500,- 
 000 of Federal Reserve bank notes ; instead, up to the 
 first week in November (page 8), the total loans had 
 only reached $3,548,293, or less than one-fourth of the 
 money deposited, or one-tenth of what they might have 
 loaned. 
 
 The foregoing is a complete refutation of the Sec- 
 retary of Agriculture, who said officially, ' ' There seems 
 to be no emergency which requires or justifies govern- 
 ment assistance to the farmers directly through the 
 use of the government's cash or credit." 
 
 The President should introduce his Secretary of Ag- 
 riculture to his Secretary of the Treasury. 
 
 And President "Wilson should be congratulated on 
 his remarkable conversion from "The farmers, of 
 course, ask and should be given no special privilege, 
 such as extending to them the credit of the govern- 
 ment itself." 
 
 Confronted with the uprising of his loyal support- 
 ers in the South, the President is willing to loan the 
 government's good gold money, taxed from the peo- 
 ple, to the bankers free of interest, to aid the farmers 
 to hold, or move, their crop, and publicly pleads with 
 the bankers to be reasonable (?), and be satisfied, at 
 least temporarily, with a joint commission of sis per 
 ment. An extra two per cent. 
 
AN ENCOURAGING LESSON 245 
 
 The Federal Reserve banks, which were not organ- 
 ized for profit ( ?) and governed by a Federal Reserve 
 Board of the President's own choosing, so that the 
 government would control, in the interest of the peo- 
 ple, were obdurate, and insisted on regular rates, but 
 there was a political emergency on, and they finally 
 compromised, the Federal Reserve banks to receive 
 a commission of three per cent, and the member banks 
 three per cent. The government nothing. 
 
 However, the lesson is a most encouraging one. 
 
 When the farmers organize, and insist in earnest on 
 a reasonable proposition, the politicians will come to 
 time. 
 
 The experiment of 1915 for the South, where tried, 
 was a pronounced success. "Why not make it perma- 
 nent? "Why not make it apply to the whole nation? 
 "Why not to every industry having non-perishable prod- 
 ucts of labor in store? 
 
 "Why not make the rate 2 per cent, which President 
 [Wilson said was sufficient? 
 
 Why pay the bankers that unnecessary 4 per cent 
 tax, for their own private profit? 
 
 How Was It in the North and West? 
 
 Ignorant, or unfair, "practical politicians" in the 
 North and West are trying to make political capital 
 out of the success of the Southern cotton and tobacco 
 experiment, as though it was only a sectional move- 
 ment, in the interest of one political party. I have 
 heard the charge made by one Republican Congress- 
 man, that it was purely sectional in the interests of the 
 Southern farmer, and he clinched it by the old worn- 
 out appeal to sectional hatred that we could get noth- 
 ing for the Northern farmers because "the South is in 
 the saddle." This was repeated again this year by 
 another Republican Congressman, whose only excuse 
 for failure to secure satisfactory rural credit legisla- 
 tion was "you know the South is in the saddle." I 
 have already shown why the South succeeded. 
 
246 THE FEDERAL EESERVE ACT 
 
 I "will now show why the North and West failed. 
 
 The Minneapolis Federal Eeserve bank refused to 
 accept the terms until the wheat was out of the farm- 
 ers' hands, and the farmer lost 60 cents per bushel. 
 Republican candidates for Congress sneer, and say, 
 "the South is in the saddle," and we can do nothing. 
 "When the farmers of the North and West protest as 
 earnestly as did those of the South they will be treated 
 the same. 
 
 What better proof do we need that the law of sup- 
 ply and demand applies to money the same as to any 
 other commodities? 
 
 The present Secretary of the Treasury, after ward- 
 ing off a threatened "bankers' panic," doubtless en- 
 gineered as usual to influence financial legislation (the 
 Federal Eeserve Act) in the early summer of 1913, by 
 offering $50,000,000 new national bank note currency 
 (see page 1, 1913 report). The House of Morgan did 
 not want an increase in the volume of currency. 
 
 What they wanted to make sure of was a change 
 from money to bank credit by the enactment of the 
 Federal Eeserve Act, and the panic was to influence 
 Congress. 
 
 The Secretary having blocked them in the Spring 
 panic, they began planning for a Fall panic. For 
 proof of which I quote from the same report, page 2: 
 
 "Toward the latter part of July symptoms of un- 
 easiness began to reappear. There was much talk 
 about the difficulty of moving the fall crops and the 
 annual apprehension on this score began to stalk about 
 the country with more than usual vigor. 
 
 "It is characteristic of our imperfect and unsatis- 
 factory banking system that the very prosperity of 
 the country becomes, at times, a menace, because of 
 the apprehended inability of the banks to meet the 
 seasonal demand for the large amounts of money re- 
 quired to move a bounteous harvest." 
 
 ' ' To relieve this strain the Secretary determined to 
 deposit from $25,000,000 to $50,000,000 of government 
 
A WELL PLAYED GAME 247 
 
 funds in the national banks in those parts of the coun- 
 try where the necessity for funds to move the crops 
 existed. ' ' 
 
 The game was well played. 
 
 "Our unsatisfactory banking system" was well ex- 
 ploited. 
 
 Three sectional groups of national bankers were 
 called to meet in Washington, representing all of the 
 country, except the Eastern portion which was all right 
 for the Federal Reserve bill, and did not need any extra 
 money to move their crops. 
 
 As a result of those conferences (see page 3) allot- 
 ments were made as follows: 
 
 South and Southwest, $22,550,000. 
 
 Middle and Northwest, $19,000,000. 
 
 Pacific Coast and Rocky Mountain, $4,950,000. 
 
 Total, $46,500,000. 
 
 "In the discussions at Washington, the representa- 
 tives of the banks were urged to pass the government 
 funds on to their country correspondents upon reason- 
 able terms." 
 
 That was very considerate on the part of the un- 
 sophisticated Secretary. He forgot to fix the rate of 
 interest, or take a bond for performance, and neither 
 rate of interest nor terms to the farmers were modified. 
 
 The national bankers were the sole financial bene- 
 ficiaries. 
 
 However, the allotment was non-partisan and non- 
 sectional. 
 
 The same was true for the year 1914. 
 
 Again there was a need for more money to move 
 the crops in 1915, as there always will be, until we pro- 
 vide a scientific monetary system, that will automatic- 
 ally respond to demand for use, and again an offer of 
 assistance was made on the same terms to each and 
 every district. 
 
 Only three Reserve banks applied for deposits, 
 viz. : Richmond, Atlanta, and Dallas, and each received 
 $5,000,000. 
 
248 THE FEDERAL RESERVE ACT 
 
 In reply to the Secretary's letter of inquiry of 
 September 9th, the Minneapolis Reserve bank stated, 
 in part, as follows: "At this time the Northwest is 
 amply supplied Avith funds, and rates are very low. 
 This bank has ample resources to meet the current 
 demands upon it and still provide a very considerable 
 reserve against any emergency that may arise before 
 the crop has reached its markets." 
 
 The Kansas City Reserve bank answered as fol- 
 lows: "Our district has been full of money, so to 
 epeak, and, while the demand is increasing now, I do 
 not think it will reach the point where we will be 
 ■Rnable to handle it with our own resources." 
 
 The St. Louis Reserve bank answered, in part: "At 
 the present time this bank has in its possession all of 
 the funds that there seems any possibility of it need- 
 ing adequately to care for district No. 8." 
 
 Very Cheap Politics. 
 
 It is very cheap politics, then, for Republican con- 
 gressmen from the North and West, to excuse them- 
 selves for not even trying to redeem their platform 
 promises to the agricultural interests, by the unstates- 
 manlike, untruthful pretext that "there was no use 
 trying, because the South was in the saddle." 
 
 First : Unstatesmanlike, because their duty was to 
 try, regardless of the obstacles in the way. 
 
 Instead, with unparalleled unanimity, they voted 
 for all the Democratic financial measures, especially 
 for the Federal Reserve bill, and the Rural Credits 
 fake. 
 
 Second : Untruthful ; because the South is no more 
 in the saddle now, than was the Northwest and West 
 in the saddle during the two preceding administra- 
 tions. 
 
 The East is more firmly in the saddle now than 
 ever before, by the united efforts of the Republican 
 and Democratic parties during the past three years. 
 
PROVEN IN 1915 249 
 
 Had our Representatives from the Northwest and 
 "West been as faithful to their constituents as were 
 the majority from the South to their constituents, I 
 firmly believe that our farmers would have benefited 
 as much in the sale of their grain as were the Southern 
 farmers in the sale of their cotton. 
 
 The principles of the sub-treasury bill upon which 
 the organized farmers of the West and South were 
 united twenty-five years ago, was proven thoroughly 
 sound and beneficial in 1915, in so far as they were 
 applied. 
 
 If the farmers of the nation will organize as ear- 
 nestly, and work as sincerely, as have the farmers of 
 the South, we will make the experiment permanent, and 
 complete it, so that it will apply to all of the non- 
 perishable products of labor, as well as of the farm. 
 
THE WORLD'S BANKER. THE WORLD'S ORED- 
 ITOR. WORLD'S CONTROL. 
 
 Like Alexander the Great, they are seeking more 
 worlds to conquer. 
 
 Emboldened by their success in 1907, and their 
 endorsement in the elections of 1908-10-12-14, the 
 House of Morgan, feeling secure in their control of 
 American industry, promptly took advantage of the 
 "war in Europe to extend their tentacles to include all 
 of the world— to become THE WOELD'S BANKER. 
 
 The policy of their special representatives — the 
 Federal Reserve Board — ^is, then, concerned more in 
 preparing for this world extension and control than 
 for home development. 
 
 To accomplish their purpose the two main factors 
 to develop are: 
 
 First: To loan to, or in foreign countries a sufS- 
 cient amount of their credit — not money, just credit — 
 and making the obligations payable in American gold 
 coin of the present standard, weight and fineness. 
 
 Second: To secure a monopoly of American gold 
 coin, and have it stored in their own vaults. 
 
 I have dealt with this quite fully, so will not need 
 to repeat. The principle will apply as fully to for- 
 eign loans as to domestic loans and obligations. 
 
 They are melting and putting into bars all foreign 
 coin coming to this country. 
 
 The amount of obligations payable in American 
 gold coin is incalculable, or incomprehensible to the 
 average mind; and the concentration of gold in their 
 control, rapid beyond belief. 
 
 The Policy of Control. 
 
 The plan was that of Paul M. "Warburg, but Geo. 
 M. Reynolds, "Vice President of the National Bankers' 
 Association, was selected as the advocate to appear 
 
CORNEKING THE GOLD 251 
 
 before the state bankers associations. The addresses 
 were specially for the banking fraternity, and not pub- 
 lic, hence freer from what is generally termed 
 "bunk." 
 
 I quote from his Dallas, Tex., address of May 16, 
 1911, p. 17: 
 
 "However, it is believed by those who are familiar 
 with the plan that in time this association will hold 
 the major portion of the lawful money of the banks 
 of the United States, as under the operation of the 
 plan it will not be necessary for the banks to carry in 
 their vaults an amount greater than their needs for 
 counter use. ' ' 
 
 First annual report Federal Eeserve Board, page 7 : 
 
 "The Board was also, however, firmly of the opin- 
 ion that in undertaking thus early to establish the Fed- 
 eral Reserve banks it would be necessary to enlist 
 the hearty co-operation of all the member banks in two 
 matters which were deemed of fundamental import- 
 ance: (1) Payment by the member banks in gold 
 out of their own vaults of the reserves they were re- 
 quired to contribute to the new banks, thus diffusing 
 the burden of providing the cash resources of the 
 Federal Reserve Banks." 
 
 This is emphasized again on page 9, and also in a 
 circular, No. 10, issued October 28th. This was to 
 try to prevent the transfer of reserves then held in the 
 large reserve banks. They wanted it out of the gold 
 held in the member banks' own vaults. They were 
 sure of the other, and wanted all the gold. 
 
 "We will now quote from the author of the plan, 
 Paul M, "Warburg's address in MinneapoHs at the con- 
 ference of the Governors of the Federal Reserve banks, 
 the inner circle to whom he could talk frankly, October 
 22, 1915: 
 
 "It is to your interest to see the Federal Reserve 
 banks as strong as they possibly can be. It staggers 
 the imagination to think what the future may have in 
 store for the development of American banking. With 
 
252 THE WORLD'S BANKER 
 
 Europe's foremost financial powers limited to their 
 own field, with the United States turned into a creditor 
 nation of all the world, the boundaries of the field 
 that lies open for us are determined only by our power 
 of safe expansion. 
 
 "The scope of our banking facilities will ultimately 
 be limited by the amount of gold that we can muster 
 as the foundation of our banking and credit structure. 
 Gold that is carried in the pockets of the people, gold 
 that accumulates as excess reserves in the member 
 banks' vaults, does not afford the maximum service 
 that the country is entitled to expect. 
 
 "Excess balances and idle gold should accumulate 
 in the Federal Reserve banks. They should not con- 
 trol $300,000,000 of gold, as they do now, or $450,- 
 000,000, as they will another year, but they should 
 control a billion or two of gold. The stronger the 
 Federal Reserve banks become the stronger will be 
 the country and the greater its chance to fulfill with 
 safety and efficiency the functions of a world banker." 
 
 The foregoing is very ably and plausibly put. 
 
 "IT IS TO TOUR INTEREST to see the Federal 
 Reserve banks as stroifg as they possibly can be." 
 "For the good of all'"? NO. That you, the inner 
 circle, may levy tribute on the labor of the world as 
 well as that of the United States. 
 
 "It staggers the imagination to think what tlie 
 future has in store" — for us, for the interests we rep- 
 resent, when we are in position to tax the world's 
 labor. 
 
 "With the United States turned into a creditor 
 nation of all the world." What jingo nonsense! The 
 United States will not be a creditor nation. It will 
 not loan one dollar to any foreign country, and will 
 not collect one cent of tribute for itself. 
 
 We have through the Federal Reserve system and 
 law "taken the government out of the banking busir 
 ness," and delegated all of its power of issue and con- 
 trol to the House of Morgan, as per the plan of this 
 
PRESSURE OP DIRE NECESSITY 253 
 
 eame Mr. "Warburg. They ean issue, or retire; con- 
 tract, or expand; hoard, or loan; increase or lower 
 interest rates at will ; ignore or violate our laws with 
 impunity ; encourage industry in which they are part- 
 ners, and discourage industry where they are not; 
 tax American labor, that they may exploit foreign 
 labor. 
 
 All this they have the power to do now, are doing, 
 and are rapidly extending that power. 
 
 They will not permit t4ie issue of any more lawful 
 money by the government, so long as they continue to 
 control the government. 
 
 They can issue to themselves all the currency they 
 need, and make them obligations of the government, 
 without contributing one cent to the government, in 
 interest or tax. 
 
 James A. Parrell, President of the United States 
 Steel Corporation and Chairman of the National For- 
 eign Trade Council at New Orleans, January 27th, 
 1916, before the National Foreign Trade convention 
 said: 
 
 "Until the United States begins to finance the needs 
 of those growing countries to which it desires to in- 
 crease its exports the title of world banker would not 
 pass to the Western Hemisphere. 
 
 "Foreign investment is a commercial preparedness 
 measure, a source of protection for the whole indus- 
 trial fabric of our country should the world recede to 
 political-commercial policies of trade restrictions. 
 
 "Whatever may be the nature of the competition, 
 our manufacturers will have to meet after the war, 
 it would not be safe to conclude that would be less 
 intejnse or less effective than heretofore. If it be 
 handicapped by the scarcity and dearness of money it 
 will be stimulated by the pressure of dire necessity." 
 
 I wonder if American labor fully realizes the mean- 
 ing of that address, with all it means to American 
 labor ! 
 
254 THE WORLD'S BANKER 
 
 Between the lines it is very easy to see what this 
 great captain of industry sees. If after the war, for- 
 eign nations "recede to policies of trade restrictions,'* 
 protective tariffs, etc., then we, the American manu- 
 facturers must make our investments in those coub- 
 tries, to escape those restrictions. American labor is 
 not taken into consideration. 
 
 "Foreign investment is a commercial preparedness 
 measure." 
 
 The r-ore American money that is invested abroad, 
 the dearer will be money at home and higher rates of 
 interest. 
 
 Then what is the remedy? More money and lower 
 interest rates? No. 
 
 If we are "handicapped by the scarcity and deaT- 
 ness of money it will be STIMULATED BY THE 
 PRESSURE OP DIRE NECESSITY.-" 
 
 "Dire necessity" will compel American labor to 
 work for less compensation. 
 
 That is the natural, logical reasoning of private 
 monopoly. 
 
 Then comes the appeal for all tlie gold in the coun- 
 try to be rushed in to the Federal Reserve vaults, that 
 the House of Morgan can the more completely and 
 promptly control, for their own private gain. 
 
 "Gold in the pockets of the people, or in the mem- 
 ber banks' vaults" cannot be invested in Europe by 
 and for the inner circle, and hence does not do the 
 "maximum of service" for our new Sovereign. 
 
 In the great world's war, the government appealed 
 to the loyalty and patriotism of the people to aid the 
 mother country, or the fatherland, with their savings, 
 to save their country from foreign aggression and 
 they responded, accepting of government legal tender 
 paper money for current use. 
 
 John Law and the Mississippi Bubble Outdone. 
 
 Our new Sovereign makes an urgent appeal to our 
 people to give up their pocket pieces, their little hoards 
 
NO PARALLEL IN HISTORY 255 
 
 of savings, the business men their lawful money; and 
 bankers to promptly give up their gold reserves to the 
 Federal Reserve banks, that they may "become the 
 stronger to fulfill with safety and efficiency the func- 
 tions of a world's banker," for the private profit of a 
 group of selfish, unpatriotic exploiters. 
 
 I know of no parallel in the world's hiotory of even 
 a semi-civilized nation. 
 
 Whose Money is to Be Used? 
 
 "Whose money and credits are to be used for this 
 [foreign development and exploitation? Your indi- 
 vidual savings; your deposits in your local banks, on 
 whom they will bring presure to bear to forward the 
 same to the Federal Reserve banks, controlled by the 
 Federal Reserve Board, and in turn controlled abso- 
 lutely by the House of Morgan. 
 
 The peasants, the mechanics, business men and 
 bankers of Europe receive in exchange for their sav- 
 ings government money; what will you receive? 
 
 Not even Federal Reserve bank notes, obligations 
 of the government, which would make them as good as 
 the government itself, if they had been made a legal 
 tender. All you will get is credit on their bank led- 
 gers. 
 
 Is the foregoing an exaggeration? 
 
 I have quoted from the official report of the Federal 
 Reserve Board, Mr. "Warburg's plea to all the Federal 
 Reserve Banks. I will now quote briefly from the 
 press report of an address of Mr. "Warburg to the New 
 York State Bankers' association June 9, 1916: 
 
 "He recommended that all republics of the conti- 
 nent adopt a uniform monetary standard on the basis 
 of a gold coin equivalent to one-fifth of an American 
 dollar." 
 
 Note. — ^Put all of Central and South America on a; 
 gold standard, something they will not have, but can 
 borrow or buy from Morgan & Co. if they will pay 
 the price. 
 
256 THE WORLD'S BANKER 
 
 "Mr. Warburg warned against the practice of 
 pyramiding reserves and of considering so-called ex- 
 cess reserves the basis for loan expansion." 
 
 Note. — It is against their policy to loan money, 
 just book credit. 
 
 "The process of absorption of our securities re- 
 turning from abroad should be conducted on such a 
 basis and scope as to turn the individual depositor 
 into an investor, so as to free our gold reserves rather 
 than increase loans on an enlarged floating supply of 
 securities." 
 
 Note. — J. P. Morgan has been appointed the agent 
 of Great Britain to negotiate and handle the American 
 securities owned or held by British subjects, and which 
 the British government is forcing into its treasury by 
 a super-income tax. To force investments, will help 
 Morgan to negotiate and leave more free gold for 
 foreign exploitation. 
 
 The news report closes with this paragraph: 
 
 "Wise statesmanship to my mind, therefore, would 
 indicate that everything should be done by the fed- 
 eral reserve system and by all the banks that are in- 
 terested in our strength to watch carefully further 
 expansion at this time, and to accumulate the floating 
 gold supply in the hands of the Federal Reserve banks 
 so as to enable them when the time comes, if necessary, 
 to spare large sums without thereby crippling their 
 lending power." 
 
 Note. — June is the month when the banks of the 
 West and Northwest must begin preparation for the 
 moving of our jjrops. Perhaps I should now say, that 
 was the custom before the enactment of the Federal 
 Reserve Act. Then the policy of contraction, prac- 
 ticed in 1915 (see page 39), may be considered the 
 permanent policy of the Federal Reserve Board. 
 
 A great expansion of products, the crop of 1916, is 
 to be exchanged, is to be met by a great contraction 
 of the medium of exchange; with the inevitable result 
 I — a sacrifice of the things to be exchanged. 
 
PREPARING FOR GRAND COUP 257 
 
 "Well, that is the logical position for men to take, 
 whose only aim is private profit. They have the 
 power, and intend ^o use it. 
 
 "To accumulate the floating gold supply in the 
 hands of the Federal Reserve banks, so as to enable 
 them," etc. The eight thousand member banks are not 
 to be trusted with the investment of this gold, nor 
 is it good management to hold it in their vaults to meet 
 emergencies, as in the past, or to loan for American 
 development, production or distribution; Messrs. Mor- 
 gan & Co. want it stored in their own vaults, secure 
 for a grand coup, whether it be for foreign investment, 
 or a premium for gold, as per the CONSPIRACY. 
 
 Free ( ?) American labor has given them that power 
 to use ; and they intend using it. 
 
 Beserves in National Banks. 
 
 The reserves held in the national banks on dates 
 nearest May and December each year for ten years 
 past; legal requirements, and amounts held. 
 
 For the eight years prior to the enactment of the 
 Federal Reserve law the average reserve held in excess 
 of legal requirements was $250,589,000. Usually larg- 
 er in the spring than in autumn. 
 
 The Federal Reserve law was put in operation 
 November 16, 1914; now mark the change. March 4, 
 1914, the excess reserve was $302,177,000 and on De- 
 cember when there was greatest need for money to 
 move the crop, the excess reserves had increased to 
 $549,914,000. 
 
 By May 15, 1915, in face of an unusual increased 
 demand for manufacturing, they had increased to 
 $727,343,000, and December 31, with an enormous crop 
 at good prices to move, the excess reserves had actual- 
 ly increased to $876,082,647. That is, they had hoarded 
 that vast amount when a very much larger amount was 
 needed on account of the great increased demand. 
 
258 THE WORLD'S BANKER 
 
 Total Reserves — ^Where Were They? 
 
 -The total money in the country was $4,401,988,337 
 
 In other than national 
 
 banks, June 30th ..$599,945,292 
 
 Gold held in the treas- 
 ury 215,242,005 
 
 In Federal Reserve 
 
 banks 345,260,000 
 
 Federal Reserge agents 202,351,71S 
 
 In national banks ....2,046,256,000 
 
 $3,409,055,010 
 
 — ■- ! 
 
 Leaving in circulation less than one- 
 fourth, or $992,833,327 
 
 A remarkable concentration in less than fourteen 
 months after the organization of the Federal Reserve 
 system. 
 
 Concentration of Gold. 
 
 The rapidity vs^ith which gold is being concentrated 
 in the vaults of the Federal Reserve system is shown 
 in the report of the Federal Reserve Board of date 
 December 31, 1915: 
 
 "The amount of gold held by the Reserve agents 
 increased from 12.5 millions at the end of 1914 to 70.6 
 about the middle of 1915 and and 197.4 millions at the 
 close of the year. The increase for the year in the 
 total gold reserves of the system was over 301 million 
 dollars, the larger portion of which represents the 
 gain in the Reserve agents' gold holdings." 
 
 Concentration in New York. 
 
 "Of the total gold reported at the end of the pres- 
 ent year, 406.5 millions or nearly 75 per cent are held 
 in the banks, or in the reserve agents' vaults, while 
 135.9 millions are either in the gold settlement or in 
 the gold redemption funds at Washington." 
 
NO DESIRE TO ISSUE CURRENCY 259 
 
 "About one-half of the system's gold is held by the 
 New York bank and its reserve agent, less than 7.5 
 per cent by Chicago, less than 6 per cent each by Cleve- 
 land and Richmond, over 5 per cent by Boston, -while 
 the remaining 25 per cent is distributed among seven 
 banks and reserve agents." 
 
 Na Desire to Issue Currency. 
 
 For 214.1 millions of circulation, the Federal Re- 
 serve agents hold 197.5 millions of gold and 16.7 mil- 
 lions of paper.*' 
 
 They could issue two and a half times as much 
 currency, or $505,500,000. They had issued $214,125,000. 
 What better evidence do we need, that it is their 
 credit they want to loan, and not money, or even cur- 
 rency. 
 
 Agriculture Recognized (?). 
 
 "Agriculture and live stock paper in the hands of 
 the banks aggregate at present over four million dol- 
 lars, and constitute 7.4 per cent of the entire bill hold- 
 ings." 
 
 It is safe to say that very little if any of that was 
 loaned to a single practical operative farmer. It is 
 called agricultural paper, because loaned on warehouse 
 receipts, of agricultural products stored. What lit- 
 tle was secured in that line was only after a strong 
 effort by the Secretary of the Treasury to aid the cot- 
 ton growers to tide over an unexpected emergency. 
 It might perhaps be called a forced loan, which will 
 not be repeated. The Secretary loaned $15,000,000 in 
 gold to the three Southern Reserve banks, and all they 
 loaned on commodity paper was $3,548,293, which 
 would leave only half a million for stored grain, and 
 you may be sure that that was not to any farmer, but 
 to the grain speculators. 
 
 "About 77 per cent of all acceptances on hand are 
 credited to the three Eastern seaboard banks, and near- 
 ly 9 per cent to Chicago." 
 
260 THE WOELD'S BANIOEE 
 
 These are the two per cent loans to encourage for- 
 eign trade. 
 
 Eighty-six per cent for the four banks, and sixteen 
 per cent for the rest of the country. It is not hard to 
 note the trend. 
 
 Legislative Preparedness. 
 
 You "will now readily see the advantage of legisla- 
 tive preparedness so long in advance, in taking the 
 government out of the coining, issuing, and banking 
 business; the substitution of currency for lawful 
 money; and the demonetization of lawful money by 
 decoinage. 
 
 I will not repeat, just refer you back to "Our Unit 
 and Standard of Value," and you will be able to read 
 that chapter with a new light. It is so much easier 
 for them to secure control of the money of the coun- 
 try, when they can stop the supply, and destroy for 
 the use of the people so vast an amount of the money 
 previously provided, and that without any loss to the 
 system responsible for its destruction. 
 
 A Wonderful Lesson in Efficiency. 
 
 To place the exception clause in the greenbacks. 
 
 To discontinue the coinage of the legal tender sil- 
 ver dollar. 
 
 To substitute the silver certificate for the silver 
 dollar. 
 
 To make the silver certificate money for the banker 
 but not for the people. 
 
 _ To limit the legal tender quality of the minor silver 
 coin. 
 
 Issuing gold certificates for gold coin and. bullion, 
 and making them money for the bankers, but not for 
 the people. 
 
 Converting gold coin into bullion, with provision 
 for use as money for the bankers, but not for the peo- 
 ple. 
 
 The discontinuance of the issue of national bank 
 notes. 
 
TUENING GOLD COIN INTO BULLION 261 
 
 The retirement of national bank notes. 
 
 The payment of a premium for retiring national 
 bank notes. 
 
 The practical discontinuance of coinage of gold. 
 
 Every change made under a false pretense, that 
 it was in the interest of the people, and that all of these 
 many kinds of currency was in fact money. 
 
 The products to be exchanged are increasing by 
 leaps and bounds, and our money medium of exchange 
 decreasing faster than our products are increasing. 
 
 "We are demonetizing by decoinage twelve dollars 
 of gold coin to the one dollar coined. 
 
 We have retired from circulation, permanently, two 
 dollars of national bank notes to one of Federal Re- 
 serve bank notes issued. 
 
 Since January 1, 1916, to June 1, we have -with- 
 drawn from circulation of national bank notes $22,- 
 658,035 and instead of replacing this by Federal Re- 
 serve notes we have withdrawn from circulation $29,- 
 785,950, a contraction of currency from these two 
 sources of $52,443,985 in five months. 
 
 The government has not only ceased to issue paper 
 money, but is rapidly retiring it and has practically 
 discontinued the coinage of money. The House of Slor- 
 gan has a "clear track" for a more profitable control 
 of American labor than if they owned the physical 
 body of labor; all secured legally by the votes of the 
 independent ( ?) American citizenship. 
 
 It is surely time to reverse the legislative engine. 
 What do you think? 
 
WILL INTEREST RATES BE HIGHER. 
 
 What impression was intended to be made on the 
 public mind by the advocates of financial reform? 
 
 What influenced you to support the Federal Re- 
 serve bank system? 
 
 Was it not that the change vsrould give us a financial 
 system freed from private monopoly and controlled 
 wholly by the government, in the interest of the 
 whole people, or to repeat the statement of the Federal 
 Reserve Board, "A public trust, for the common wel- 
 fare — for the good of all." 
 
 To the average mind that meant lower, steadier, 
 more uniform rates of interest, controlled by the gov- 
 ernment, in the interest of the people, the whole peo- 
 ple, to facilitate exchange and prevent extortion. 
 
 A great play was made on government control; 
 take control away from Wall Street, etc. 
 
 What other meaning could be taken from Presi- 
 dent Taft's appeal to the Governors? (See p. 147.) 
 
 Or what did President Wilson mean? (See pp. 
 152-154.) 
 
 After sixteen months of operation, here comes 
 Messrs. Rich and Wold of the Minneapolis Federal 
 Reserve bank, who say: "The view that the Federal 
 Reserve bank is to produce cheap money is erroneous ; 
 such a purpose has uever been seriously considered." 
 
 Messrs. Rich and Wold state now what was the real 
 intention and is the actual practice of all of the Fed- 
 eral Reserve banks, the Federal Reserve Board, and 
 the whole system. 
 
 Now it is evident from the foregoing, that either 
 one of two things must be true ; and either one is very 
 unpleasant to coptemplate. President Taft, President 
 Wilson, and their co-workers were either wholly ig- 
 norant of the intent, or purpose, or contents of the 
 Federal Reserve bank plan and the bill as presented. 
 
WOULD REAP FORTUNES OVER NIGHT 263 
 
 and enacted, or they were guilty of deliberately mis- 
 representing, and trying to deceive the people. 
 
 Of this deception they are plainly accused by 
 Messrs. Rich, "Wold and Warburg, and the whole sys- 
 tem in official statements and actual practice since the 
 system was put in operation. 
 
 What have they done, and what are they doing to 
 make amends, or to punish the betrayers of the people ? 
 
 Report of the New York Federal Reserve bank, 
 page 158, second annual report: 
 
 "In the belief that a period of easy money was at 
 hand, the directors of the Reserve bank adopted the 
 policy of keeping its rediscount rates slightly above 
 the market rates for commercial paper, so that, unless 
 member banks really needed them, its resources, most 
 of which had hitherto been kept in the vaults of the 
 member banks, should not be forced upon a market 
 already over supplied with funds." 
 
 Federal Reserve Board, page 6: "Money rates 
 have been unprecedentedly low, and any attempt of 
 the Federal Reserve banks to attract business by fur- 
 ther reduction of rates might only have produced a 
 further reduction of rates and increased the danger of 
 inflation of credit without, at the same time, bringing 
 additional business to the Federal Reserve Ijanks." 
 
 Where were the rates of interest so very low dur- 
 ing 1914-15? 
 
 Foreign traders, Eastern brokers (gamblers), and 
 Western speculators, in whose business ventures the 
 men who control were personally interested. 
 
 Who will be benefited "when higher rates for 
 money again prevail? 
 
 I will place another witness on the stand : Mr. 11. R. 
 Lyon, president of the Scandinavian National Bank 
 of Minneapolis in a review of the May, 1916, statement 
 of the Minneapolis banks: 
 
 "Our loans went up $600,000, and the demand for 
 ♦money is getting better. 
 
 "There is a staggering amount of money in the 
 country. This naturally tends to lower the rate of 
 
264 WILL INTEREST EATES BE HIGHER 
 
 interest, 4 to 6 per cent being the rule now ■with a vast 
 quantity of 4 per cent paper being handled. 
 
 "The banks are in splendid condition, although 
 they aren't making money as fast as they would if the 
 demand strengthened [interest rates increased]. 
 
 "Bankers are viewing peace rumors with great 
 hope of their proving correct. If the war ended to- 
 morrow, bankers in the United States would reap their 
 fortunes over night, for Europe will want all the cap- 
 ital she can get. American bankers aren't going to 
 show the least hesitancy in giving it to them either and 
 the rate will be high." 
 
 In their exuberance of hope, they will occasionally 
 "let the eat out. of the bag." " There 'te a staggering 
 amount of money in the country," 
 
 While as a matter of fact, the amount of money 
 and currency in the country increased during the year 
 (July 1st, 1916) by $474,000,000, almost all from im- 
 portation of gold, the amount of lawful money in cir- 
 culation increased only $42,000,000. 
 
 That imported gold, with much more in addition, 
 is being decoined, demonetized and stored to ship back 
 tc Europe very quickly after the close of tne war. 
 
 Law of Supply and Demand. 
 
 "Where interest rates are very low it is safe to 
 assume that not only banking resources, but capital 
 as well, are temporarily at least in excess of the local 
 requirements, and where rates are very high the re- 
 verse may fairly be assumed to be true." 
 
 Note. — "Where interest rates are very low", the 
 system can now very promptly raise them to a satis- 
 factory rate. There will be no more competition 
 amongst the bankers. The Federal Reserve Board 
 will attend to that. 
 
 "Where interest rates are very high.'" Pshaw! 
 Whoever heard of the bankers trying to remedy that? 
 (See page 24). 
 
 As to law of supply and demand, see page 48. 
 
HOME PRODUCER TO BE SACRIFICED 265 
 
 Mr. Lyon states a very important, far-reaching 
 fact. 
 
 The American bankers' interest in world peace is 
 that it will open up a new avenue for investment of 
 American money in Europe, at higher rates of interest 
 and the American banker will not "show the least 
 hesitancy in giving it to them." "Whose money? 
 "Why, your deposits. 
 
 That means that the American borrower will have 
 to pay higher rates of interest. In other words the 
 American producer will be sacrificed and will have to 
 compete with the impoverished European producer, 
 for the use of our American money, issued to our Fed- 
 eral Reserve banks free of interest or tax. 
 
 "The discount rate of the Minneapolis Reserve 
 l)ank runs from one-half to one per cent higher than 
 the rates of other Reserve banks." * * * "The fact that 
 the Minneapolis rate is higher is indicative of a health- 
 ier financial status in the Northwest." 
 
 Note. — For whom does it indicate a healthier status? 
 
 The man who pays the higher rate, or the bank 
 that receives it? 
 
 The perjured, law violating bankers to whom the 
 Comptroller of the Currency referred (see page 24-5-6) 
 must have been extremely healthy; but how about the 
 poor widow who paid those extortionate rates? 
 
 Health for the banker means misery for the bor- 
 rower, and always will. It is very absurd to claim 
 that the higher the rate of interest the producer pays, 
 the more certainly is his prosperity assured. 
 
 "The A'iew that the Federal Reserve bank is to 
 produce cheaper money is erroneous, such a purpose 
 has never been seriously contemplated." 
 
 It is a trite but effective answer to such an argu- 
 ment that "money is worth what it is Avorth." 
 
 Note. — So is a postage stamp. Both the postage 
 stamp and money are issued, or used to be, before the 
 passage of the Federal Reserve Act, by the same gov- 
 ernment and for the same purpose of serving the pub- 
 lic needs of exchange. 
 
266 WILL INTEREST RATES BE HIGHER 
 
 Who ever heard of the postage stamp varying in 
 price because of increased, or decreased demand? The 
 sole difference is in the administration. 
 
 The postoffice is "administered as a public trust 
 for the common welfare — for the good of all"; without 
 private profit, and the price is the same to all, in all 
 parts of the United States, all the time. 
 
 The alleged reason for urging the member banks 
 was to mobilize the resources in the Reserve banks, to 
 enable them to supply the credit and currency, to the 
 member banks, as needed by their customers. 
 
 Since the organization of the Federal Reserve 
 banks, they have made every effort possible, by per- 
 suasion and mild coercion, to gather in the gold of the 
 member banks' reserves. The member banks were 
 still holding back too much, and Mr. Warburg was sent 
 out with another persuader. He was not talking to 
 the public. He was talking to the bankers. To the 
 Governors and prominent representatives of the Fed- 
 eral Reserve banks at Minneapolis October 22 1915: 
 
 "I shall not tire you by enumerating the benefits of 
 the system. I believe that those who think already 
 know them; while those who do not think will learn 
 them by actual experience. [Yes, the victims will learn, 
 when too late]. 
 
 "That will be conspiciously the ease when excess 
 reserves are next reduced and when higher rates for 
 money again prevail." 
 
 The constant and persistent efforts by the Federal 
 Reserve Board and Federal Reserve banks to persuade 
 and coerce the member banks to send in their gold re- 
 serves, has been a puzzle to many. The member banks 
 were supposed to own and control the Reserve banks. 
 
 And the public servants tell the employer what to 
 do. Be good now, send in your reserves to us. We 
 need them to lend in Europe; that will force interest 
 rates up here, and you do not need to lend money, in 
 fact there will not be any money to lend. All that 
 we have not loaned in Europe will be in our vaults, 
 
RATES PERMANENTLY ADVANCED 267 
 
 and we •will not lend it, so long as we can loan our 
 credit. 
 
 That is the thing for you to do. Lend your credit 
 and we in turn will lend you ours, if you need it. 
 
 The applicant who wants to borrow money is a 
 crank; let him worry. 
 
 Loan only to those who will accept of a credit on 
 your books, and a check book. Then we will help you 
 put up the rate of interest, and everybody will be 
 prosperous. 
 
 In the St. Paul press dispatches of date June 16th, 
 we find: 
 
 "Bank loans in St. Paul are at the highest point in 
 their history and a continuation of the present pros- 
 perity in business is predicted by the leading bankers. 
 * * * The next call is expected to show the banks have 
 held their own, and that the loans will exceed any- 
 thing ever known. As a result of the increased de- 
 mand for money, the higher rates announced several 
 days ago will likely prevail for a long time." 
 
 I note as this goes to press the following confirma- 
 tion of my claim comes to hand: 
 
 "Reserve Board sets new discount rates. 
 
 "Washington, July 13. — An increase from four to 
 four and a half per cent on thirty to sixty day com- 
 mercial paper for the Chicago district was announced 
 today by the Federal Reserve Board, and new rates 
 were set for the Kansas City district of three and four 
 per cent on commodity paper, three and a half to four 
 per cent on trade acceptances and four to four and a 
 half per cent on ten day paper." 
 
 E. W. Decker. 
 
 E. "W. Decker, President of the Northwestern Na- 
 tional Bank of Minneapolis, June, 1916: "It is ap- 
 parent that large loans to European nations will again 
 be made. Russia is to borrow $50,000,000. There will 
 be no hesitancy on the part of financiers here in sub- 
 scribing to the loans as every fighting nation is regard- 
 ed as being 'good' for vastly larger amounts than 
 
z!b-8 WILL INTEREST EATES BE HIGHER 
 
 they have already borrowed. As a matter of fact, 
 they can have all they want. 
 
 "The East is pleased over the result at Chicago. 
 Hughes has come up to the preparedness mark as 
 strong as could be desired. 
 
 "Money conditions are looking up. Rates are al- 
 ready stiffening and have gone fully half of one per 
 cent higher. They will stand up right along, at least 
 through the autumn." 
 
 "The East," by which he means the House of 
 Morgan, is so well pleased with the nomination of 
 Hughes, that they are promptly boosting the rate of 
 interest. The nomination of President Yrilson is as- 
 sured, and they feel secure for another four years. 
 
 Again he is speaking for the Twin City bankers: 
 "They will not hesitate to loan the Allies of Europe 
 all they want. They are good for vastly larger 
 amounts than they have already borrowed. 
 
 Another $100,000,000 to France is just being floated. 
 
A THRIFT CAMPAIGN 
 
 The National Bankers' Association, having secured 
 all the legislation needed to give them control of the 
 money of the country, and their Federal Reserve Board 
 having carried out the program, and fixed the policy 
 for a concentration of the currency so as to make a^ 
 dearer dollar, and also having fixed the policy for high- 
 er interest rates, and their faithful Congress having 
 permanently shelved any prospect of long time land 
 loan investments, so long as they are in control, realize 
 fully that it will require more labor and labor products 
 to buy the dollar, and greater economy and saving to 
 enable the debtor to pay the increased interest, they 
 must have, or think they must. 
 
 With their usual efficiency, and this is vrorthy of a 
 Warburg, the National Bankers Association, having 
 settled the rural credits matter, have now decided that 
 the agricultural committee shall turn their attention 
 to a nation-wide campaign to teach the farmers thrift. 
 J. H. Rich, of Minneapolis, has opened the campaign 
 in North Dakota and an agent of the National Bank- 
 ers' Association is organizing South Dakota. 
 
 This is well timed for the farmer in debt will have 
 to not only work harder, but also live more economical- 
 ly if that interest is to he paid with cheaper products. 
 
 The South Dakota Bankers' Association at their 
 late annual meeting the latter part of June was very 
 much interested. The Secretary in reporting for the 
 agricultural committee, said: 
 
 "While we still desire and will aid in this essential 
 work [better farming, greater production] we suggest 
 that details be left to those who have made a life study 
 of the subject and that we as bankers consider more 
 especially better banking and thrift. Waste is the 
 crime of today. The greatest service the bankers can 
 perform at this time is to impress upon every individ- 
 ual the virtue of thrift." 
 
270 THRIFT WILL BE NEEDED 
 
 And accordingly the Association passed the follow- 
 ing resolutions: 
 
 "Resolved, Whereas, the need for inculcating the 
 thrift habit to maintain American prosperity is ob- 
 vious, and 
 
 Whereas, the most effective method of teaching and 
 promoting thrift is through a nation-wide effort being 
 made, and 
 
 Wheireas, the American Bankers' Association is 
 conducting a nation-wide thrift campaign furnishing 
 concrete plans of action; therefore, be it 
 
 Resolved, that the South Dakota Bankers" Associa- 
 tion heartily endorses the campaign of the American 
 Bankers' Association and in every way endeavor to 
 support the movement." 
 
 Of course the farmer, whether in or out of debt, 
 should encourage this great educational campaign in 
 favor of thrift. He will need it. 
 
 Example is better than precept; the bankers have 
 given the precept, now for the example. The next 
 time you go to town, better take a rainy day so that 
 you will not have to hurry home, and be sure to take 
 your wife with you; have something as an excuse to 
 call at the bankers' homes, all of them, nothing better 
 perhaps than to get some ideas of thrift and economy, 
 and on your way home decide that in future you will 
 not build a more comfortable home than the banker, 
 nor dress any better than the banker's family, nor 
 drive a finer automobile, trade off your limousine for 
 a Ford ; in fact, that you will pattern after the bankers 
 and be content to live, dress and drive as economically 
 as they do. 
 
 Remember "Waste is the crime of today"; thrift 
 the greatest virtue. You will have to stop the one 
 and practice the other to meet the higher rates of in- 
 terest decreed to insure "better banking." 
 
NATIONAL BANKS--MEMBER BANKS 
 
 The national banks were made to believe that the 
 Federal Reserve bank system was intended to be or- 
 ganized by them for their own special interest, and 
 controlled by them, for themselves. 
 
 Mr. Reynolds in his Sioux FaUs address sa^d: 
 "The association will be nothing more nor less than a 
 voluntary association of bankers, a voluntary associa- 
 tion of bankers of the United States, just as this is a 
 voluntary association of bankers of South Dakota." 
 
 Page 55, it was to be made impossible for "any 
 clique of men to control it." 
 
 The Aldrich plan starts out with the caption "A 
 BANK FOR THE PEOPLE," and then on page 19 Mr. 
 Reynolds says: "Let it be reiterated again that the 
 Reserve Association is primarily a bank of banks." 
 
 Query. Who are the people? 
 
 In introducing the revised bill. Senator Owen said : 
 "All of these considerations urge that the Federal 
 Reserve banks should be banks for banks, bankers' 
 banks."' 
 
 Mr. Warburg, speaking for the Federal Reserve 
 Board, to bankers, said: "The Federal Reserve bank 
 is the member banks* bank; it is your bank, your fire 
 engine." 
 
 After outlining the plan to secure control by the 
 country banks Mr. Reynolds said (page 55) : "You 
 will agree with me that two at least of the great ob- 
 jections to any centralized organization has been re- 
 moved. First, this ingenious means of selecting these 
 members is an assurance against political intrigue. 
 And second, it gives assurance that none of the large 
 interests of the country would find it possible to have 
 control of the institution." 
 
 As usual, and in accord with their invariable cus- 
 tom, when the law was enacted, it was the very oppo- 
 
272 NATIONAL BANKS— MEMBER BANKS 
 
 site of what was promised, and for this Mr. RejTiolds 
 more than any other man was responsible. 
 
 Instead of being a voluntary association it was 
 made compulsory, under penalty of forfeiture of char- 
 ter. 
 
 The national banks were also deprived of their 
 power to issue bank notes on government bonds or oth- 
 er security. Here again gross deception was prac- 
 ticed, in that they were led to believe that one of the 
 chief functions of the Federal Reserve bank was to 
 issue to them Federal Reserve bank notes, on commer- 
 cial paper, endorsed by the member bank ; but the Act 
 does not provide that they "SHALL." It is MAY. 
 
 The.Aldrich plan provided ^(Sec. 30): "Tie Re- 
 serve Association shall issue, on the terms herein pro- 
 vided, its own notes as fast as the outstanding notes 
 secured by such bond so held shall be presented for 
 redemption." 
 
 Mr. Reynolds approved of this provision and said: 
 "There is also considerable force in the suggestion that 
 the notes issued to replace the outstanding bank notes 
 should be free from all taxation." 
 
 There was a choice tidbit for the national bankers, 
 the saving of the tax of one-half of one per cent, but 
 even that saving does not now inure to the national 
 banks as promised, but to the Federal Reserve banks, 
 and instead of the one-half of one per cent tax paid 
 for national bank notes, the member banks have to pay 
 from four to six per cent for Federal Reserve bank 
 notes. 
 
 They are so used to practicing deception to secure 
 legislation that it has become a fixed habit, and they 
 practice it on their allies just as quickly as on any one 
 else. 
 
 It has been said by someone that "there is honor 
 among thieves." 
 
 If that be true, then the inner circle, the men who 
 control the Federal Reserve system, have demonstrated 
 beyond successful contradiction, that they are not 
 thieves. 
 
CONTROL PASSES TO A "CLIQUE" 273 
 
 The first paragraph of Section 16 is full of "shalls," 
 hut the second paragraph begins to hedge with 
 "mays,"' and the control by the country promised by 
 Mr. RejTiolds passes to the very interests that were 
 to be controlled. The national bankers were deprived 
 completely of their independence and cannot withdraw 
 as independent national banks. 
 
 They are rapidly losing their gold and lawful 
 money, and still the Federal Reserve banks are not 
 satisfied ; they want all in, before the close of the war 
 in Europe, that they may "make their fortunes over 
 night." Not the member banks. Oh, no, Mr. War- 
 burg says, "They [the Federal Reserbe banks] should 
 control a billion or two of gold. The stronger the 
 Federal Reserve banks become, the stronger will be 
 the country and the greater its chance to fulfill with 
 safety and efficiency the functions of a world banker." 
 
 As the country has been taken out of the banking 
 business by the enactment of the Federal Reserve 
 laws, how can it become the world's banker? 
 
 Standardization. 
 
 The regulations for eligibility of rediscount paper 
 as contained in circular No. 13 would seem to have 
 been for the special purpose of discouraging redis- 
 counts, and the issue of Federal Reserve notes. 
 
 It is not a question of security at all. Loans for 
 improvements, or investments of any kind are strictly 
 eliminated, no matter how good the security. 
 
 Page 183: "The Federal Reserve Board proposes, 
 however, to prescribe the following basic principles 
 for the guidance of Federal Reserve banks and member 
 banks." The public servant becomes an exacting 
 master. 
 
 Quotation from circular of Federal Reserve Board, 
 page 184, first annual report: "The required state- 
 ment as outlined above should be signed under oath 
 and should contain a short general description of the 
 character of the business, the balance sheet, and the 
 profit and loss account. Assets should be divided into 
 
274 NATIONAL BANKS— MEMBER BANKS 
 
 permanent or fixed investments, slow assets, and quick 
 assets. On the liability side should be shown capital, 
 long term loans, and short term loans. Short term 
 loans should be in proper proportion to quick assets, 
 and the statement should contain satisfactory evi- 
 dence that short term paper is not being sold against 
 permanent or slow investments. The statement should 
 furthermore show the maximum aggregate amount up 
 to which the concern supplying this paper expects to 
 borrow on short credit or sale of its paper, and the 
 concern giving the statement should obligate itself to 
 obtain the member banks' consent before exceeding the 
 agreed limit. And the member bank indorsing must 
 also affirm in a solemn and binding declaration." 
 
 Now one would naturally think that the foregoing 
 was stringent enough to protect the most exacting 
 creditor. But who is this creditor? 
 
 "Why, your public servants, chartered, and author- 
 ized by you to handle your deposits, which you hand 
 in voluntarily, without any guarantee, or instructions 
 whatever, now when it comes your turn to borrow, 
 presto; a great change. Your wealth, your business 
 ability, your personal character, counts for nothing. 
 Tour statements are worthless; they must be signed 
 imder oath, so that you will be criminally liable for 
 vjxy mistake, no matter how slight, or unintentional. 
 Tour oath is not sufficient, your statements must be 
 backed by the sworn statement of a certified account- 
 ant, and even that is not sufficient; the member bank 
 must also "solemnly affirm," etc. 
 
 Character, industry, honor, property, none of these 
 count. 
 
 The Federal Reserve Board will not trust the Fed- 
 eral Reserve banks. 
 
 The Federal Reserve banks will not trust the mem- 
 ber banks. 
 
 The member banks will not trust their customers. 
 
 Every statement must be verified under oath, and 
 backed by the verified statement of a public account- 
 ant, before you can secure the use of a public utility, 
 
ARE YOU ONE OF THEM? 275 
 
 from your public servants, for the purpose of exchange 
 and not at all for production or development. 
 
 That is the declared official policy of the system 
 and the men to whom you have delegated the full 
 constitutional power "to coin money and regulate the 
 value thereof"; to decoin or demonetize the money 
 already coined; to substitute their bank credit for 
 government money ; and for their own private gain, tax 
 American labor to the limit of endurance for its use 
 in exchanging labor and labor products. 
 
 Is it possible to have independent development, 
 production and distribution under such a system? 
 
 Think it over before you indulge in profanity. 
 
 It has all been done legally, by and with the con- 
 sent of an. overwhelming majority of independent (?) 
 American citizens. ARE YOU ONE OF THEM? 
 
 A Peculiar Custom. 
 
 Under this rigid system of control of credits has 
 grown up what would seem to the unsophisticated lay- 
 man a peculiar custom. 
 
 Preference is given to the borrower who keeps a; 
 good cheeking account in the bank. The borrower is 
 expected to keep at least 25 per cent of what he bor- 
 rows to his credit in the books of the bank. 
 
 He is paying interest on a credit that he does not 
 expect to use, and is not expected to use. This is 
 deemed necessary to keep his credit good at the bank. 
 
 It is good business — for the bank — as it increases 
 their interest 25 per cent, but how about the man who 
 borrows and pays interest on credit that he does not 
 need and will not use? 
 
 Suppose the farmer bought 25 per cent more ma- 
 chinery, seed and twine than he expected to use, or the 
 manufacturer bought 25 per cent more raw material 
 than he expected to use ; what would the paternal 
 banker think of it as a good business proposition? 
 
 It certainly would not pass the standard for redis- 
 count paper with a Federal Reserve Bank as per Cir- 
 cular No. 13, just quoted. 
 
OUE STATE BANKS. 
 
 The state banks have been a very important factor 
 in our banking system. They were able to organize 
 with a smaller capital, in the smaller communities. 
 All that seemed necessary was for some one to hang 
 out the sign BANK, and the people would hand in 
 the deposits with which to do business. 
 
 The number voluntarily reporting to the Comp- 
 troller of the Currency in 1915 was 14,598, a net in- 
 crease during the year of 86. 
 
 The total capital was $503,985,319. 
 
 The total number of national banks at same date 
 was 7,805 with a capital of $1,068,519,000. 
 
 The state banks being chartered by the several 
 states were independent of the national banking sys- 
 tem, and in competition with them. 
 
 This was possible, so long as the federal government 
 exercised its constitutional power to coin and issue 
 money. 
 
 Section 2 of the Aldrich plan provided that "only 
 banks of the classes hereinafter provided for may 
 subscribe to the capital stock of the Eeserve Associa- 
 tion." 
 
 The state banks were a very important body, an'd 
 their political influence was needed to secure the en- 
 actment of the law. 
 
 Mr. Reynolds was put forward to make the bid, 
 and he painted a very attractive picture of the great 
 advantages of the system, and also the imminent dan- 
 ger to the fraternity if it were not enacted. 
 
 The joining the Reserve Association was to be en- 
 tirely voluntary. 
 
 Everything to gain, if it looEed good, and nothing 
 to lose if unsatisfactory, and they all fell for it. 
 
 Mr. Reynolds made the definite statement that 
 "when the law is finally offered it will provide that 
 
STATE BANKS DISCOVER THE TRAP ^77 
 
 stato banks shall participate." How was this promise 
 kept? 
 
 Section 9 of the Federal Reserve Act uses the word 
 "may"' instead of "shall," and leaves it wholly op- 
 tional with the organization committee of the Federal 
 Reserve Board, and provides: "No applying bank 
 shall be admitted to membership in a Federal Reserve 
 bank unless it possesses a paid-up unimpaired capital 
 sufficient to entitle it to become a national banking 
 association in the place where it is situated, under the 
 provisions of the national banking act." 
 
 The Federal Reserve Board provides, Reg. M., June 
 7, 1915, in part : " (2) It must have a minimum paid-up 
 unimpaired capital stock as follows: 
 
 "In cities or towns not exceeding 3,000 inhabitants 
 $25,000. 
 
 "In cities or towns exceeding 3,000 but not exceed- 
 ing 6,000 inhabitants, $50,000. 
 
 "In cities or towns exceeding 6,000 but not ex- 
 ceeding 50,000 inhabitants, $100,000. 
 
 "In cities exceeding 50,000 inhabitants, $200,000." 
 
 The other regulations are very rigid. They must 
 absolutely surrender their independence to the Federal 
 Reserve Board. 
 
 Section 9 at once rules out more than 6,000 state 
 banks, with less than $25,000 capital and a very large 
 majority of the balance because of the rapidly grad- 
 uated increase of capital required. 
 
 First Annual Report, page 20, says: 'Those state 
 institutions which have already been admitted to the 
 system have entered upon the understanding that they 
 are to accept any regulations the Board may make 
 regarding the conduct of the business of member 
 banks. ' ' 
 
 Is it any wonder that up to December 31, 1915, only 
 thirty-two state and savings banks had joined the As- 
 sociation. 
 
 Had it been made voluntary for the national banks 
 as was promised by Mr. Reynolds, I doubt if the pro- 
 portion of national banks joining the Association 
 
278 CONSPIRATOES GROWING IMPATIENT 
 
 would have been mucli greater than that of the state 
 banks, which was at the beginning of 1916 just about 
 one to 455. 
 
 It is not surprising that the independent state 
 banks refuse to surrender their independence. 
 
 Nor is it surprising that the conspirators are grow- 
 ing impatient. 
 
 Private Monopoly Insists on One SystemI 
 
 Private monopoly will not tolerate opposition, com- 
 petition, or independence. They demand strict obedi- 
 ence. 
 
 Their plan provides for one system only, and that 
 a bank ledger credit system, under their supreme, auto- 
 cratic control. 
 
 Federal Reserve Board Circular No. 14: "A uni- 
 fied banking system, embracing in its membership the 
 well managed banks of the country, small and large, 
 state and national, is the aim of the Federal Reserve 
 Act. There can be but one American credit system 
 of nation-wide extent, and it will fall short of satis- 
 fying the business judgment and expectation of the 
 country and fail of attaining its full potentialities if 
 it rests upon an incomplete foundation and leaves out 
 of its stockholders any considerable part of the bank- 
 ing strength of the country." 
 
 W. P. G. Hardinge, a member of the Board, said 
 at the Waco, Texas, meeting May 15, 1916: "I am 
 violating no confidence when I say that the Federal 
 Reserve Board desires earnestly to have the state 
 banks become members of the Federal Reserve system. 
 The Board feels that the membership of the state in- 
 stitutions is essential to the coordinated banking sys- 
 tem that it wishes to establish, and realizes that there 
 can be but one credit system of nation-wide extent." 
 
 And he concludes with a strongly veiled threat of 
 an emergency in which they may need aid, but will 
 not receive it. 
 
 October 15th, in Minneapolis, Mr. Warburg was 
 much plainer in his persuasion and threats. The sys- 
 
:WARBURG THREATENS PANIC 279 
 
 tern that was to prevent panics, and financial troubles 
 is discredited by its sponsors. There is a grave dan- 
 ger unless the state banks that can come in, refuse 
 to do so. As for the 6,000 odd little fellows — ^let them 
 perish. They are not even good fish bait. 
 
 He said in part: "Let me ask those of the state 
 institutions that are proud of their independent stand- 
 ing : Is it quite fair to let your neighbors pay for the 
 expenses of the fire department when, in case of fire, 
 you know you will count on the benefits of the general 
 protection. Let me tell them, at the same time, that 
 insurance companies are generally willing to take risks 
 while applicants are young and conditions serene, but 
 are not very eager to write new insurance when the 
 'quake' is on." Note. — ^There never was to be another 
 "quake." 
 
 "The thought is often expressed that 'at the time 
 of the next crisis the state banks will come in.' I 
 think it may be safe to say that they will find that 
 many will then come in after the next period of anx- 
 iety. This is not meant as a threat, but I am afraid 
 it will be a physical impossibility to take them all in 
 during such a period of stress." 
 
 Then, on the confession of the author of the Federal 
 Reserve Act, speaking for the Federal Reserve Board, 
 to Federal Reserve bank officers, the Federal Reserve 
 bank system is a miserable failure and in no sense a 
 protection against "periods of anxiety," "financial 
 stress, "panics and quakes." 
 
 To accomplish their aims the panics will come as 
 usual. 
 
 Will the State Banks Be Coerced? 
 
 Under the present law and system, it is only a ques- 
 tion of a very short time when the state banks will be 
 forced out of business by starvation. Their only hope 
 is to help us change the system before it is too late. 
 
 The state bank is wholly dependent on the deposits 
 of money by its customers. 
 
280 STATE BANKS TO BE COERCED 
 
 The present system means a complete change from 
 money to credit, and is in very rapid development. 
 See page 64. 
 
 The plan of the system is to retire all currency, ex- 
 cept a small amount of Federal Rserve notes for coun- 
 ter use, and in five months, since February 1st they 
 have contracted the volume by $42,201,550, or about 
 one-fifth. 
 
 To demonetize and retire as much of our lawful 
 money as possible ajid hoard the balance in their own 
 vaults, for the final climax aimed at. See pages 77, 
 92 and 123. 
 
 Now, how long can state banks do a banking busi- 
 ness on a rapidly vanishing volume of money. How 
 can they do banking business on their competitors' 
 ledger credits. 
 
 The system will show no mercy to the state banks 
 who refuse to "walk into their parlor." 
 
 As will be noted by the quotations, the officers of 
 the Federal Reserve system are discrediting the state 
 banks in a very serious manner. 
 
 Casting grave doubts as to their ability to stand the 
 tests that are sure to come, and without help from the 
 system. What effect will such declarations have on 
 the public? What effect was intended? 
 
 As an illustration, take the report of the Minne- 
 apolis Daily News in its review of the Minneapolis 
 banks' statements for March 7th and May 1st as gath- 
 ered from such bankers as H. R. Lyon, President of 
 "the Scandinavian National, and E. W. Decker of the 
 Northwestern National. 
 
 The review reads in part: "A sensational in- 
 crease in savings banks deposits in Minneapolis 
 amounting to nearly $700,000 since March 7th, accord- 
 ing to bankers, was the outstanding feature of a bank 
 report made to the government today. Deposits in 
 state banks fell off nearly $800,000, and barely held 
 their own in the national banks." 
 
 That is the logical effect of such a campaign as is 
 
STATE BANKS DISCREDITED 281 
 
 being made by the chief officers of the Federal Reserve 
 bank system. 
 
 $800,000 withdrawn from the state banks, to de- 
 posit in other banks in one city, in less than two 
 months might not be so very significant if it were not 
 so prominently advertised, but advertised as it was, 
 was sufficient to start a run on the state banks, and 
 shows, in part, what the state banks may expect from 
 the national banks. 
 
 Again there seems to be a very general effort to 
 antagonize and interfere in securing state legislation 
 to cripple the lending power of the independent state 
 banks. There will be persecution in the courts. All 
 of these things will give an opportunity of discredit- 
 ing the stability of the state banks and creating doubt 
 in the miads of their customers. 
 
 Another significant sign of their intent to crowd 
 out the state banks is in the recommendations of the 
 Federal Reserve Board for amendments to the Federal 
 Reserve Act, 1915 report, page 22: "Permission 
 should be granted to national banks to establish branch 
 offices within the city, or within the county, in which 
 they are located." 
 
 It would not have been safe to have included this 
 in the original bill, as it would have alarmed the 
 smaller national banks and all of the state banks, but 
 now it is perfectly safe and the amendment will be 
 adopted. 
 
 This is not only a threat, but an additional means 
 of putting the independent state banks out of busi- 
 ness. I do not see how they can for long compete 
 with the branch of a national bank in any small com- 
 munity. 
 
 First, they must depend upon the customers' money 
 deposits with which to do business, and as shown we 
 have practically ceased to coin or issue money, and 
 what we have is being rapidly retired, or demonetized. 
 So there will be less and less of money in circulation 
 to deposit in state banks. Second, the state bank can- 
 not loan its credit; it must limit its loans to a certain 
 
282 BRANCH BANK COMPETITORS 
 
 percentage of its money deposits, and with a powerful 
 opponent in control of our legislative machinery, they 
 will insist, as they are now doing, that the state banks 
 must keep larger reserves on hand than the national 
 banks need to do. 
 
 Third: The national bank branch can do business 
 without money deposits. It can loan the credit of the 
 parent bank, for which it will have to pay neither tax 
 nor interest. 
 
 These will be the conditons for competition, as be- 
 tween the state banks and 'national banks. Without 
 a change it is easy to see the result. 
 
 Most of the stockholders in state banks are inter- 
 ested more in other business relations than in bank- 
 ing, but even from the banking standpoint they should 
 unite with us in changing the system. 
 
 In fact, so far as personal interest is concerned, 
 it is as one against ten thousand, and the object of this 
 work is to show the ten thousand the danger, and the 
 way out. 
 
SUGGESTIONS FOR COMMERCIAL BANKS. 
 
 As the present Federal Reserve bank system was 
 not intended for, and is not being operated for public 
 service, but solely for private profit, the issue should 
 be a repeal of the whole private monopoly system, 
 and replace it with a government system, a real pub- 
 lie service system "for the common welfare — for the 
 good of all." 
 
 There should be no discrimination as to different 
 sections of the country. The rate of interest should 
 be fixed by a people's Congress, and be uniform in 
 all parts of the nation, as is the case with our postal 
 system. 
 
 "Why should this public utility, money, at times go 
 begging in New York for two per cent ; in Chicago for 
 three ; in Minneapolis for four, and at the same time 
 the farmers of the West and South be begging for it 
 at ten to twenty per cent, and charged up to 2,400 per 
 cent? 
 
 Why should we penalize the pioneers who go out 
 in the wilderness to carve out new homes by develop- 
 ing the country, to the great advantage of the older 
 settled portions of the country" 
 
 It is a very poor way to encourage the develop- 
 ment of our millions and billions of acres of yet un- 
 developed lands. 
 
 In organizing for our commercial banking system, 
 we should to some extent use our present political 
 units, as suggested for an investment system, changed 
 to suit the commercial convenience. 
 
 I do not see any reason for a new department, with 
 delegated constitutional powers, such as the needlessly 
 expensive Federal Reserve Board and Federal Reserve 
 banks ; or the later Land Loan Board for rural credits. 
 
 The high priced financiers are those who have 
 shown the ability to make the greatest profits, regard- 
 less of ihe ethics of the transaction. In this case the 
 
284 COMMERCIAL BANKS. 
 
 private profits would be eliminated. It would be just 
 good, safe, business service, under regular rules estab- 
 lished by Congress and state legislatures. 
 
 The position would be no more responsible, or re- 
 quire greater ability than is required of city or county 
 treasurers, city postmasters, collectors of customs duty 
 or internal revenue, or receivers of railroads. 
 
 For convenience there should be a state bank in 
 each state, in place of the Federal Reserve banks. 
 
 The federal government should charge one per 
 cent per annum interest, or tax. 
 
 As the Treasury Department would have only about 
 fifty correspondents to deal with, the expense would 
 be comparatively small. The revenue derived from 
 the interest in excess of the expense, should for a time 
 be set apart as a reserve fund, until such time as 
 there was sufficient for all reasonable protection, and 
 thereafter to become a part of the general revenue. 
 
 The state bank should also receive one per cent 
 per annum interest. Its business should be similar to 
 that of the Federal Reserve banks, to ,deal with the 
 local banks. All receipts in excess of the expense of 
 administration should be placed in a reserve fund for 
 protection, until a sufficient amount for all reason- 
 able security had been accumulated, after which in 
 compensation for state guarantee, all excess receipts 
 should be turned in to the general state funds. 
 
 The local banks should be banks for deposits jas 
 well as loans. Local co-operative banks should be 
 especially encouraged. 
 
 As service, rather than profits, would be the aim, 
 they could pay two per per cent for deposits and loan 
 at four per cent. 
 
 "When they discounted paper with the state bank 
 they would get the money at two per cent, thus leaving 
 a margin of two per cent. 
 
 These are simply suggestions, to be changed in ac- 
 cordance with experience; but to start with it would 
 give loans for industrial and commercial purposes for 
 four per cent. 
 
AN AMEEICAN BANKING SYSTE:\I 285 
 
 Our independent state banks might be used to be- 
 gin with, and continued as such, so long as satisfac- 
 tory. 
 
 This would give us a truly American banking sys- 
 tem, without private profit, the very best in the world, 
 with a uniform, maximum rate of interest established 
 for commerce, the lowest in the world. 
 
 This should be quite satisfactory to the smaller, 
 independent business men and manufacturers, for it 
 is inevitable that the object of the present system be- 
 ing profits, the national (member) banks will follow 
 the example of the head of the House, and insist on a 
 controlling interest in the business they finance with 
 their credit. 
 
 This should also meet with the earnest support of 
 those who favor building up a foreign trade, in which 
 our two greatest drawbacks are high rates of inter- 
 est for the use of money, and excessive rates for trans- 
 portation as compared with those of our competitors. 
 
A BRIEF SUMMING UP. 
 
 Just how an American citizen can read the story of 
 this great conspiracy and not be stirred to action is 
 ibeyon(\ (comprehension. This is where the "red 
 blood" we read so much of should show itself. 
 
 The system to enslave the whole labor of the na- 
 tion was conceived with satanic cunning at a time 
 when the nation was desperately trying to overthrow 
 the chattel slavery of the colored man. 
 
 On the sound human theory that'" no man was good 
 enough to own the labor of another man"' we freed 
 the colored man, and have now transferred the legal 
 power to a few men to control the labor of all our 
 people, by a control of the money of the country. 
 
 This control has been accomplished, legally, step 
 by step, with cruel efficiency, under cover, or pro- 
 moted under false pretense and misrepresentation. 
 
 It began in 1862 when a small group of bankers, 
 having cornered the gold of the country, forped the 
 government to discredit its own obligations to make 
 a market for this gold. (See page 211). 
 
 In 1886 they substituted a currency, which was 
 money for the bankers, but not for the people. (See 
 page 211.) 
 
 In 1873 they began to discredit silver, our original 
 unit and standard of value. (See pages 125, 206-207.) 
 
 In 1882 they began substituting currency certifi- 
 cates, which was money for the bankers, but not for 
 the people (p. 74) and continued it. See pages 75 
 and 208.) 
 
 In 1911 they began demonetizing gold by decoin- 
 age. (See page 203.) 
 
 They are rapidly contracting and retiring both 
 money and currency from circulation to increase the 
 value of the dollar; increase the rate of interest, and 
 force bank credit borrowing, instead of money. 
 
 See pages 48, 121, 123, 125. 
 
UNPATRIOTIC AMERICAN SACRIFICE 287 
 
 They now have the legislation to give them a com- 
 plete, perfect monopoly of money. See pages 89-90, 
 93, 117-118. 
 
 They are accumulating our gold for foreign in- 
 "vestment, immediately after the close of the war "to 
 make their fortunes over night." 
 
 This is a premeditated sacrifice of Ameri«can indus- 
 iry by these selfish, disloyal citizens for their own 
 private gain. See pages 136 to 142. 
 
 They are now, and have been in the recent past, 
 giving the preference to foreign investments over do- 
 mestic investments. See pages 140-141-142. 
 
 In any real public service they would be promptly 
 fired. 
 
 "Agriculture is being made the special victim of 
 inhuman greed and extortion by national bankers." 
 See pages 24, 176, 163, 215. 
 
 Comptroller of the Currency pleads for legislation 
 to enforce our banking laws, but Congress dares not 
 act. See pages 25-26. 
 
 Both the Republican and Democratic parties were 
 solemnly pledged to place agriculture on an equal 
 footing with our competitors in foreign countries, and 
 any other business in our own country, and shamefully 
 "betrayed the farmer, and in addition set a dangerous 
 "trap for him. 
 
 See pages 194 to 201 and "Dangerous Trap," page 
 175. 
 
 The conspirators are strictly non-partisan and ac- 
 complish their ends under cover by deception, deceit, 
 misrepresentation, corrupt practices, or panics. See 
 pages 91, 120. 
 
 One noted exception of frankness by Senator Aid- 
 rich at Chicago, and that resulted in the retirement of 
 their great leader. Page 109, 119. 
 
 They are no respecters of persons, or official posi- 
 tions. 
 
 "When a political party, or a public official, accepts 
 of their financial assistance, they are in their toils, 
 and must obey, or be destroyed by exposure. Neither 
 
288 DECEIVED 25 TIMES IN SUCCESSION 
 
 Congress, the Judiciary, nor Presidents of the United 
 States are exempt. 
 
 For proof of recent administrations specially treat- 
 ed of in this book: 
 
 For President Roosevelt, see pages 88-89, 95-96, 
 with the climax on page 106, and the finale, the deser- 
 tion of the Progressive party at the command of Per- 
 kins of the House of Morgan. 
 
 Of President Taft, see pages 89 and Herrick's trib- 
 ute, page 198. 
 
 For President Wilson, see pages 114-115, 197-198. 
 
 There is no parallel in the world's history, where a 
 nation of free citizens have willingly, legally and en- 
 thusiastically placed themselves in voluntary servitude 
 to a group of deceitful, unreliable, unworthy, disloyal, 
 selfish oppressors. 
 
 The Republican and Democratic parties have held 
 their 1916 national conventions, and each has unani- 
 mously "pointed with pride" to the legislation giving 
 the House of Morgan this great monopoly in violation 
 of the spirit of our constitution. 
 
 If a man deceives you once it is his fault; if he 
 deceives you a second time, it is your fault. The same 
 should be true of political parties. Both dominant 
 parties have now deceived the American voters twenty- 
 five times (fifty years) in succession and are prepar- 
 ing to do so indefinitely, so long as you support them. 
 Why not ? 
 
 The Democratic and Republican parties are fin- 
 anced, owned and controlled by private monopoly. 
 
 Four revisions of the tariff; two by each, have fa- 
 vored private monopoly. 
 
 Tell me in advance of an election what interest, or 
 interests are financing the campaign of an individual, 
 group of individuals, ox political party, and I will tell 
 you what their record will be if elected. 
 
 They pay no money until assured of service. 
 
 They are not publicly known in the transaction, 
 for such publicity would defeat them. In fact they 
 will emphatically, publicly and officially deny such aid. 
 
THE ORGANIZED FARMERS IGNORED 289 
 
 As an illustration, recall the official denials before the 
 1904 presidential election, and the Roosevelt-Harriman 
 correspondence after the election. See pages 95-96. 
 
 There was nothing unusual about this episode, ex- 
 cept the publication. 
 
 In conferring a monopoly of money on the sys- 
 tem, they have vied with each other. For the two 
 most important measures, changing to the gold stand- 
 ard, and from government money to bank credits, the 
 Democratic party has the credit. Practically in all else 
 the credit must go to the Republican party. In the 
 past three years it has been non-partisan, almost unani- 
 mously. 
 
 A vote for any candidate, for any office of either 
 party is a vote to perpetuate monopoly control. 
 
 On the theory that "something must be done for 
 the farmer" they unite on a fake rural credit act with 
 a land loan board of five members to govern and con- 
 trol. The organized farmers asked for a representa- 
 tive on the board, and they were ignored. 
 
 Served them right. Instead of begging for one 
 representative, they should have demanded a majority 
 of the board. 
 
 WE MUST CHANGE THE SYSTEM. 
 
 The bi-partisan representative system of govern- 
 ment has proven an utter failure for the people, and 
 a complete success for private monopoly. 
 
 Then it is up to the people who have suffered to 
 change the system. 
 
 Popular government, the initiative, referendum and 
 the recall would give us the opportunity, but we in 
 South Dakota, the first state in the Union to adopt 
 the initative and referendum, have seen how easily it 
 has been nullified by a political party, controlled by 
 private monopoly, in control of the legislative and 
 judicial machinery of the state. 
 
 The Prohibition party is right in claiming that pro- 
 hibition to be successful must be adminstered by a 
 government in favor of the principle of prohibition. 
 
 The Socialist party is right when they claim that 
 public ownership of public utilities would be a failure 
 
 10 
 
290 DIRECT CONGRESSIONAL CONTROL 
 
 administered by a government controlled by private 
 monopoly. 
 
 Wbat better illustration do we need than tbe al- 
 leged regulation and control of our public highways — • 
 our railroads — by a pro-railroad Interstate Commerce 
 Commission; or 
 
 The government control of our monetary system by 
 a Federal Reserve Board, controlled by the House of 
 Morgan; or 
 
 Private monopoly and trust busting as it has been 
 administered ever since the enactment of the Sherman 
 anti-trust law, by trust controlled officials. 
 
 There are several issues large enough and import- 
 ant enough to warrant the organization of a national 
 political party to secure their enactment and enforce- 
 ment. Some of them can be, and are being gradually 
 and progressively enacted hj state legislation, and 
 will be finally and fully solved by national constitu- 
 tional amendments and legislation. 
 
 The one overshadowing issue, that of the private 
 control of the transportation, distribution and ex- 
 change of the products of labor cannot be solved by 
 state legislation. It is a purely national problem. 
 
 I herewith submit a base which was adopted by the 
 National Farmers' Alliance and Industrial Union 
 twenty-one years ago at "Washington, D. C, which is 
 broad enough to cover the whole private monopoly 
 ground, and upon which every independent American 
 citizen should be willing to unite. 
 
 "Whenever any public utility or necessity becomes 
 a monopoly in private hands, the community, small 
 or large, should take possession of same by right of 
 eminent domain, paying a just value therefor, and 
 operate same in the interest of the whole community. 
 
 "Whatever any community, large or small, can do 
 for the individual members of that community, more 
 economically and efficiently, than the individual mem- 
 bers thereof can do for themselves, the community 
 unit should do, whenever a majority of the voting 
 units so decide.' 
 
THE PARAMOUNT ISSUE 291 
 
 There can be no question as to the fact that our 
 medium of exchange is now controlled absolutely by a; 
 private monopoly, charging exorbitant rates of in- 
 terest. 
 
 It is also an incontrovertible fact that any charge 
 for the use of this public utility, in excess of the cost 
 of administration, whether it be for the medium — 
 money — of the transmission of intelligence by mail, 
 ■wire, wireless, or phone ; or for the transportation by 
 rail or water, or in the distribution of the products 
 of labor, is a tax on labor and must be paid by the 
 producer, or consumer, or by both. 
 
 The paramount issue then should be to stop this un- 
 necessary and unjust system of taxation and provide 
 a system to be administered without private profit. 
 
 Every special privilege, carrying with it the power 
 of taxation, direct or indirect, is at the expense, of the 
 whole state, and the more indirect the more expensive. 
 
 Where and How Begin. 
 
 "We must stop the further contraction of money in 
 circulation. 
 
 Stop the further demonetization of money by de- 
 coinage. 
 
 Make every dollar coined, or issued by, or being 
 an obligation of the government, lawful money, a fuU 
 legal tender for all debts, public or private; in lieu 
 of the present indefensible system of issuing a sham, 
 deceptive pretense for money and which can be used 
 as money by the bankers but not by the people. 
 
 Repeal the Federal Reserve bank law and all spe- 
 cial privileges connected with the administration of 
 public utilities. 
 
 We should provide for a medium of exchange that 
 would respond automatically to demand for use. 
 
 We should encourage home development, and dis- 
 courage foreign investments by American citizens. 
 
 We should have a fixed national policy that when- 
 ever or wherever any American citizen makes an in- 
 vestment abroad, for the development of a foreign 
 
292 GOOD CITIZENSHIP, 
 
 country, he should look to that country for the pro- 
 tection of that investment. 
 
 That used to be international law, and is good com- 
 mon sense. 
 
 How to Accomplish. 
 
 There is only one way to accomplish this change of 
 system, and that is by a union of all those who are op- 
 posed to the private monopoly of public utilities into 
 one National Party with that as the paramount issue. 
 
 It is immaterial what the name of the party may be. 
 
 The party must be free from any shadow of de- 
 pendence on, or of being financed or controlled by any 
 beneficiary of special privilege. 
 
 It must be openly financed and supported by the 
 people for whose benefit it is intended. 
 
 GOOD CITIZENSHIP. 
 
 To be a good citizen is not alone that you should 
 be industrious, self-supporting, law-abiding and a 
 good neighbor. You may be all those and yet not a 
 good citizen in so far as the duties you owe yourself 
 and the community you live in. 
 
 Definition: "T^he status in a free state of a person 
 possessing the elective franchise and permitted to take 
 part in legislative and judicial deliberations." 
 
 To, be a good citizen then, under that definition, 
 would require a careful study and thoughtful investi- 
 gation of all proposed legislation affecting commodity 
 welfare, that you might safely take an active, intelli- 
 gent, independent part in all legislative affairs. 
 
 If you do not understand a question, it were better 
 to not vote at all, than to vote wrong. Remember, 
 you do not have to vote, as so many good people seem 
 to think ; nor do you have to take a choice between two 
 evils. When you do, you stultify yourself, and vote 
 against your judgment, and best interests. 
 
 The average citizen has not given the attention he 
 should to this very important duty so vitally affecting 
 his own welfare and that of the community, of which 
 
IMITATION SINCBREST FLATTERY 293 
 
 lie is a part. Perhaps, because he did not realize the 
 importance of it, or maybe he was too busy working to 
 make a living, or possibly he placed too much con- 
 fidence in some of his fellowmen, but in the majority 
 of cases it was just because he had formed a thought- 
 less bad habit of placing party before principles. 
 
 "Whatever the reason, this neglect of duty gave an 
 opportunity for a comparatively few men, who under- 
 stood the folly of partisanship, and the advantage of 
 co-operation, to secure the things they wanted, to or- 
 ganize to secure legislation for their own special in- 
 terests. 
 
 They realized how much more practical it was to 
 own and control the party than be owned by the party. 
 
 The first question they ask themselves is: Can 
 we trust the party to do as we want? Have they kept 
 their private pledges to us, in the past? Are they 
 pledged to our present program? Unless they are sat- 
 isfied on these points, they will not support them. 
 They have succeeded, because they always work and 
 vote for what they want, and in time they get it. 
 
 ' ' Imitation is the sincerest flattery " ; "Go thou and 
 do likewise." 
 
 "^lYe cannot expect to have, and never Avill have, 
 faithful and efficient public service until we apply ex- 
 actly the same business principles to our public affairs 
 as we do to our private affairs. 
 
 "We must treat our public employes just as we do 
 our private employes. The fact that they are em- 
 ployed by the community, small or large, should not 
 exempt them from faithful service in accord with the 
 terms of employment. 
 
 The legislative positions are, next to the judiciary, 
 the most important, and, as a rule, receive the least 
 attention. 
 
 You would not for a moment think of giving an 
 unlimited, irrevocable power of attorney to a stranger, 
 to transact your private business, and yet that is just 
 what you do in your public business, under our pres- 
 ent representative system of government. 
 
294 PUBLIC SERVICE A PRIVATE SNAP 
 
 "We give to our legislative employes an irrevocable 
 and unlimited power of attorney for from two to six 
 years, with unlimited power of taxation, direct and in- 
 direct. In addition they have, and they exercise, the 
 power of granting public franchises for public service 
 in transportation, distribution and exchange, Iwith 
 power of taxing for service all the traffic will bear. 
 They make public service a private snap. 
 
 Why longer tolerate, or permit, this great differ- 
 ence between public and private service? The one is 
 just as much your business as the other. 
 
 In the employment of a public servant, for that is 
 just what you do when you elect them, and more 
 especially for a legislative position, the questions you 
 should ask yourselves are: 
 
 Has he qualified himself to serve in that capacity 
 as a student of political economy? 
 
 Has he shown that he is competent? 
 
 Does he represent my principles? 
 
 Can I trust him to represent me and my interests? 
 
 Business Practice. 
 
 V/hat is your practice in your private business 
 affairs ? 
 
 You wanted to employ a man for the season on 
 your farm. There was Nels and Bob, each of whom 
 you had employed in the past and they had proven to 
 be incompetent, unfaithful and wholly unreliable. 
 "Would you choose between them, or would you try a 
 new hand? 
 
 Or suppose you are a, manufacturer, using up-to- 
 date business methods, as you would have to, to suc- 
 ceed. Would you employ any one Avho applied for a 
 job, or would you insist on having competent, expert 
 help for the several departments of your factory? 
 
 If a member of your family were sick, would you 
 send for a lawyer? 
 
 If you wanted an man to run your engine, would 
 you hire a common day laborer? 
 
 If you wanted a competent bookkeeper, would you 
 employ a person who could neither read nor write 1 
 
CAMPAIGN CONTRIBUTORS CONTROL 295 
 
 Very foolish and absurd questions, you say. Sure, 
 they are; for you would use good bijisiness judgment 
 and common sense. 
 
 Have you done so in the past with candidates for 
 public employment ? 
 
 The probabilities are that you did not pay the 
 slightest attention to their selection ; you left -that for 
 the party managers to attend to. 
 
 The Party Managers. 
 
 There is nothing the practical politicians in con- 
 trol of a political party delight in so much as a large 
 campaign fund; not for educational purposes, but the 
 very reverse; to deceive the honest citizen, and in in- 
 fluence the dishonest. 
 
 To secure this " fund, the party managers must 
 select those candidates only vsrhom they believe will 
 "play the game"; that is, abide by the decisions of 
 the party caucus. 
 
 The party managers take their cue from the con- 
 tributors, who in turn control the party caucus, and 
 the result is just as certain as any other well planned 
 business transaction. 
 
 The Voters. 
 As for the voters? Oh! they don't count after elec- 
 tion. They have saved, or tried to save, their party, 
 and having done their partisan duty, it is now up to the 
 officials to do theirs, and then what a change. 
 
 The representative-elect is under no obligation to 
 the voters ; they belonged to, were owned by, the par- 
 ty; and their vote for him was simply an incident. 
 They would have voted for his opponent, whom they 
 had declared to be the meanest and worst man in the 
 party, had he been nominated instead. 
 
 The public oiBcial's obligation is to the party ma- 
 chine and not to the party voter. 
 
 And the Party. 
 
 The political party is under no obligations to the 
 voter who belongs to it, and has no thanks due for 
 obeying the master's call. 
 
296 PLACE PRINCIPLES BEFORE PARTY 
 
 The party could not have won without the cam- 
 paign contributions. 
 
 Blind idolatry of, and obedience to, party is de- 
 struetiA^e of every function of true citizenship. 
 
 To become a slave of your party, is to become a 
 slave of the very worst elements of your party. 
 
 Good Men Fallacy. 
 
 Under the present system as practiced by the two 
 dominant parties, there is always a recognized "boss ' 
 or "leader" for each faction. 
 
 His aides are a few practical politcians, who are 
 used to doing fine work. Long before the campaign, 
 and before you have given any attention to it, this 
 inner circle meets in secret, to talk matters over atd 
 fix things for the coming campaign. 
 
 Do they discuss principles? No! Principles are 
 a nuisance. Their bi-annual harvest is approaching 
 and prospective political patronage. "What they want 
 is a campaign fund. They plan accordingly. 
 
 If they think they have a safe majority, they will 
 nominate the "faithful workers." If not, or if they 
 are in a minority, they must select "some good men" 
 who can draw votes from the opposition. 
 
 Now these "good men" are under no obligations 
 to the voters. They are under obligation to the men 
 who selected them, and secured their nomination and 
 election, If they fail to "play the game" their use- 
 fulness to the machine ceases, and they are retired. 
 A great many good, sincere, earnest reformers have 
 had their wings clipped and public usefulness perma- 
 nently destroyed by accepting a nomination and elec- 
 tion to office on an old party ticket. 
 
 It is the good men and women who thoughtlessly 
 perpetuate the bad system in control. 
 
 The good citizen who realizes the true duties of 
 citizenship, who tries to reform one of the old parties 
 from within, takes much greater chances than the 
 good girl who marries a drunkard in hopes of reform- 
 ing him. She occasionally succeeds ; the former never 
 has. 
 
THE PROBLEM DISCUSSED, 
 
 The problem discussed in this book is not only 
 nation-wide, but world-wide, and of necessity, for a 
 work of this kind, tp keep it within the limits for 
 general circulation, much had to be sacrificed to brev- 
 ity, and many points left undeveloped. 
 
 The new system of national bank credits versus 
 government money. 
 
 Of government control as provided by the Consti- 
 tution ; or delegated control as per the Federal Reserve 
 Act for private profit. 
 
 The inconceivable and rapid increase in private and 
 public obligations payable in lawful money, and the 
 rapid destruction, contraction, and concentration of 
 lawful money, with which to meet these obligations. 
 
 The rapid concentration of our great industries in 
 the hands of a few men who will soon control the 
 money and the credit of the nation. 
 
 The preferences given by these men to foreign in- 
 vestments and developments over that of American de- 
 velopment. 
 
 The great and unwarranted expense by taxation 
 of the American citizens for the building and main- 
 taining of a great navy to protect foreign investments, 
 and enforce collections; and of a greater army to co- 
 erce American labor at home ; are all involved in this 
 reA'olution in our financial system, and briefly touched 
 on in the limited space of this book. 
 
 I realize fully that much that should have been 
 said has been left unsaid, and some statements made 
 that may seem incredible. 
 
 I propose to continue a study of this problem, and 
 earnestly desire that readers of this book will feel free 
 to write me for further particulars and information 
 along those lines. 
 
 I am sure that it will aid me in the continued study 
 'Of this our greatest economic problem. 
 
 —THE AUTHOR. 
 
A SPECIAL REQUEST. 
 
 Now that you have read the book through, I have a 
 special request to make of you. 
 
 In exposing this great conspiracy, I have recalled 
 many facts that students knew, but have not applied 
 of late, or coupled them up, link by link, as they were 
 patiently, persistently, and efficiently made, always 
 under cover, or by false representations as to what 
 was intended. 
 
 The chain of evidence is complete, though perhaps, 
 to keep the book within the price I had planned, not 
 developed sufficiently. 
 
 Probably you did not grasp the intent of the author 
 in many of the earlier pages, until you hd finished, 
 and perhaps you will not now until you re-read the 
 book. 
 
 For thirty years of a very busy life I have given tliis. 
 problem some study, with very limited material for re- 
 search, and without the means to employ help. 
 
 Twenty-five years ago I clearly saw the possibility^ 
 and probability, of a private monopoly of our medium 
 o fexchange, and pointed it out in a text book prepared 
 at the request of the National Farmers' Alliance and 
 Industrial Union, of which I was President. 
 
 The average man looked upon it as an idle dream, 
 and the beneficiaries of special privilege denounced it 
 as wild-eyed, visionary, patrnalistic, anarchistc, social- 
 istic, and several other similar pet names. 
 
 I have watched the game as played, but not neither 
 the time nor means to expose it. I now point to actual 
 facts accomplished, the official policy for the future as- 
 outlined, the greed and ambition of the beneficiaries, 
 an dthe unpatriotic preference in sacrificing home for 
 foreign development. 
 
 The study and exposure should be continued, and 
 will be if this preliminary effort is sustained, which 
 will be indicated by the sale of this book. 
 
 My special request is for your assistance, in cir- 
 culation, in writing for, and giving information, and 
 offering sugestions, all of which, including adverse- 
 criticism and correctons, will be appreciated; for I 
 feel that another book should soon follow for the fur- 
 ther development of this vital American labor prob- 
 lem. —THE AUTHOR. 
 
INDEX. 
 
 A 
 
 A Dangerous Trap 175 
 
 An Independent Investment, System 182 
 
 America First ': 186 
 
 A Public Trust, For the Good of All 228 
 
 Agriculture Our Greatest Industry 6 
 
 A Splendid Conception, But — 229 
 
 A Thrift Campaign 269 
 
 A Deceptive Legislative Trick 55 
 
 Aldrich, Sen., Ready for the Fight, Discarded. 109-119 
 
 Agriculture Recognized (?) 259 
 
 Assay Office Rushed Decoining Gold 37-79 
 
 Applicant and Security 188 
 
 Aldrich Senator 108-227 
 
 Aldrich Central Bank 16, 107, 112, 119, 227 
 
 Aldrich Plan; Warburg the Author 113-227 
 
 American Manufacturers' Association 158 
 
 Acceptances ; Favors Foreign Trade 235 
 
 B 
 
 Bankers Promote Fake Rural Credits 8 
 
 Bankers' Panic of 1907 30-96 
 
 Banking a Department of Government 54 
 
 Banking: Is It a Business? 159 
 
 Bankers : Will They Consent to Be Controlled ? 220 
 Banker, World's, World's Creditor, World's 
 
 Conftrol 248! 
 
 Banks, Our State 276, 277, 279 
 
 Banks, Suggestions for Commercial 283 
 
 Banking Laws, Gross Violation of 58 
 
 Bankers Defy Comptroller of the Currency. . 59 
 
 Blind Idolatry of Party 120 
 
 Blinded by Aspirations 140 
 
 Bulk and Package Freight 21 
 
 Bank Deposits Are Credits, Not Cash Deposits. 64-225 
 
 Baker, City National Bank, N. T 86 
 
 Bryan, W. J., Hypnotized 107 
 
 Bank Credit and a Check Book All That is 
 
 Needed 64-122-224 
 
 Barrett, Hon. C. S., President Farmers' Union. 155 
 
 Banking, Government or Private, the Issue.... 227 
 
Banking "a Public Trust for the Good of All" 
 
 228, 237, 238, 262 
 
 Big National Bankers, Arrogant, Insolent, Law- 
 less 220 
 
 
 
 Comptroller of the Currency 
 
 23, 24, 25, 42, 58, 164, 176, 218 
 
 Contraction of Money, Effect of 38 
 
 Commodity Rates 237 
 
 Concentration of Gold 257 
 
 Currency, No Desire to Issue 257 
 
 Campaign Fund,, $100,000 173 
 
 Congress, Put on Record *. . 209 
 
 Conspiracy, the Great 92 
 
 Closing Scene, the 101 
 
 Climax, the Terrible 101 
 
 Class Legislation Unnecessary and Unjust 177-190 
 
 County Unit, the 188 
 
 Co-operate Rather than Criticize or Antagonize 223 
 
 Credit Instead of Money the Policy 122-224 
 
 "Commercial Paper" Requirements Drastic . . 233 
 "Common "Welfare" (?) "Good of AH" (?), 
 
 a Joke 228, 237, 262 
 
 Confidence Impaired, Restored 92 
 
 Constitution, In re Money 54, 86, 109 
 
 Competition, World's 69 
 
 Canada, Open Door for 16, 22, 23 
 
 Commercial West 70 
 
 Competitors, Our 11-22 
 
 Credits, Free and Uncontrolled (?) 115, 232, 233 
 
 Committee, Joint, Report of on Rural Credits . 163-170 
 
 Commercial Banks Suggestions for 283 
 
 Congress; Can It Delegate Constitutional Power 54 
 
 Currencjr, a National 69 
 
 Currency, a Flexible 41 
 
 Currency for Counter Use Only Needed 
 
 Ill, 122, 213, 227 
 
 D 
 
 Discriminations Against Agriculture 
 
 14. 83, 114, 163, 173, 235 
 
 Discriminations, Reeent Legislative 16 
 
 Discrimination, Transportation 17-71 
 
Demonetization of Gold Coin 37, 61, 79, 203 
 
 Disaster Threatened by Great Production .... 44 
 
 Developing Canada 140 
 
 Developing Central and South America 141 
 
 Developing Europe After War 251-264 
 
 Duplicate, Is Federal Reserve Act a Duplicate 171 
 Discount, the Federal Reserve Board Policy . . 232 
 
 Deposits Not Money, Mere Bank Credits 65 
 
 Discount Rates Should Be Uniform 237 
 
 Delegated Power; Will They Use It? 86-94 
 
 Democratic Party 
 
 14, 31, 91, 94, 119, 147, 151, 153, 162, 185 195 287 
 Distinct System of Banking for Investmnets. . 162 
 Duplicate System of Banking for Agriculture 170 
 Deception, the Legislative Rule 
 
 87,. 88, 90, 110, 115, 121, 133, 227, 238, 272 
 
 Dire Necessity a Stimulus 254 
 
 E 
 Equal Opportunity for All Fundamental ..11-177-181 
 Emergency Currency to Aid the Farmers .... 240 
 
 Efficiency, Wonderful Lesson in 239-260 
 
 Elasticity of Credit; Not Money, Main Object. 239-240 
 Equal Footing for the Farmer Promised 
 
 113, 151, 158, 162, 192 
 
 F 
 
 Farmers Should Sell as Well as Produce 8 
 
 Free Trade for One, Free Trade for All 11 
 
 Farmers' Necessity, Speculators' Opportunty. 15 
 
 Federal Reserve Act 29, 30, 37, 48, 57, 61, 122, 167, 227 
 
 Fixed Per Capita Absurdity 35-41 
 
 Federal Reserve Banks ... .38, 49, 60, 61, 80, 122, 159 
 
 Federal Reserve Board 40„ 48, 57, 60, 81, 227, 228 
 
 Federal Reserve Act a Failure 50-160 
 
 Foreign Trade, Our 136 
 
 Farmers Rural Credit Betrayal 194 
 
 Federal Reserve Bank Notes 76, 124, 212 
 
 First Legislative Steps 215 
 
 Financial Revolution, the 65, 95; 109, 238 
 
 Federal Treasurey Drained to Aid Conspirators 103 
 
 Folk, Gov., of Missouri 107 
 
 Farmers, Keep Their Eyes on Europe 145 
 
 Farmers' Open Forum, the 69, 178, 197 
 
Free, Elastic and Uncontrolled Credit (?).... 233 
 
 Farmer Pays Highest Interest Rates 24, 162, 163 
 
 Flexible Currency 41 
 
 Financial Quack Doctors 92 
 
 G 
 
 Gold Money 28, 37, 42, 60, 68, 74, 202, 206 
 
 Gold Imports Create Near Panic 53 
 
 Gold Base Not Needed 191 
 
 Gold, the Money of the World 67 
 
 Gold the "Mollycoddle" 73 
 
 Gold Certificates Not Lawful Money 74 
 
 Gold Coinage Decreasing 76-203 
 
 Gold Coin Practically Out of Circulation 73-80 
 
 Good Citizenship 292 
 
 Greenbacks to Be Retired 82, 91, 127, 209 
 
 Gardner, Hon. Obadiah, Ex-U. S. Senator. . . . 155 
 
 Gold, Premium on 71, 79, 81,. 101, 203, 239 
 
 George, Lloyd^ Britain's Prime Minjister 70-237 
 
 Goose ; Patient, Silly 10 
 
 Gold, Bullion, Certificates 208 
 
 Government Control of Banking; An Absurd 
 
 Claim 230 
 
 Government Control by Commission a Farce 
 
 226, 243, 245, 247 
 
 Good Men Fallacy ; Bevrare 296 
 
 H 
 
 Herrick, Myron T 8, 23, 55, 142, 145, 195, 199 
 
 Houston, Secretary of Agriculture. .. .20, 55, 154, 244 
 
 Henry, R. L., Texas 116 
 
 Harding, W. P. G., Federal Reserve Board. . . ., 242 
 
 I 
 
 Interest, Multiple 137 
 
 Investment Problem, Our 172-182 
 
 Interest Rates; Will They Be Higher? 262 
 
 Interest Rates to Be Fixed by States. .24, 26, 218, 223 
 
 Infant Industries 160 
 
 Independent In vestment System 182 
 
 Independent Political Action Necessary 187 
 
 Inflation, Danger of 56, 92, 119 
 
 International Money 70-237 
 
 Insurance, National, for Farmers 13 
 
• J 
 
 Jefferson, Thos 56 
 
 Jackson, Andrew 56, 104, 108, 115, 133 
 
 Joint Congressional Committee Report 163-170 
 
 K 
 
 Keep the Farmers' Eye on Europe 145 
 
 L 
 
 Loftus, George, the Great Leader 9 
 
 Law, John, and the Mississippi Bubble Outdone 253 
 
 LaFollette, Senator R. M 97 
 
 Lawlessness Unparalleled 99 
 
 M 
 
 Money : Base on Value 43-76 
 
 Money, Volume, What Should It Be? 32 
 
 Money Discriminations 23 
 
 Money and Its Functions 27 
 
 Money Monopolized for Private Profit 
 
 29, 31, 58, 83, 117, 217, 227 
 
 Money, Rapid Concentration of 29, 37, 38, 121 
 
 Money, Hoarding of, Indefensible 51 
 
 Money, Free for One, Free for All 185 
 
 Money, Make All Issued a Full Legal Tender 
 
 Lawful Money 204 
 
 Jiloney Direct Without Interest 60 
 
 Money ; the Change from Government Money 
 
 to Bank Credits 64-122 
 
 Money, a World's Money Very Dangerous. ... 68 
 
 Money; Wheat and Cotton Our International 
 
 Money 70 
 
 Money, Lawful, in Circulation 77-80 
 
 Money, Lawful, Located 78 
 
 Morgan, the House of 
 
 31, 37, 57, 75, 79, 80, 82, 106, 118, 138, 140, 151, 223 
 
 Morgan Crowned Sovereign 95-106 
 
 Morgan Changes Tactics 107-110 
 
 Money, Our Future as Planned 111, 122, 213, 227 
 
 Money Limited to Counter Use Ill, 122, 213, 227 
 
 Money, a Public Utility 51, 55, 229 
 
 Money Monopoly Nonpartisan 91 
 
 Morgan, J. P., Financial Agent of Allies 256 
 
 Marketing, Better Important 6 
 
 Morgan is Cash King 117 
 
 McAdoo, Secretary of Treasury 38, 203, 240, 242 
 
N 
 
 "Natural Pilots" Desert Us 157 
 
 National Bank Notes Not Lawful Money 211 
 
 National Banks — Member Banks 271 
 
 Non-Partisan Wholly 91 
 
 National Bankers (Big); Arrogant; Insolent; 
 
 Lawless 220 
 
 National Insurance for Farmers 13 
 
 National Bankers' Association 
 
 23, 110, 113, 133, 151, 153, 218 
 
 National Bank Act Limits Interest Rate 24-219 
 
 National Farmers' Alliance 40, 94, 174, 290 
 
 Norton, Col. S. F 42 
 
 National Banks Unfaithful Public Servants... 
 
 51, 58, 103, 163, 176, 221, 217 
 
 National Bankers Defy Government 
 
 25, 58, 103, 163, 176, 220 
 
 National Currency 69 
 
 National Banks Forced to Pay Premium 81-101 
 
 Nelson, Senator K 102 
 
 National Citi zens' League Ill 
 
 North and West vs. South 245 
 
 
 
 Ocean Rates Increased 19 
 
 Owen, Senator 55, 130, 168, 227, 231 
 
 Old Dog Tray 200 
 
 P 
 
 Perkins, Geo. W 89, 105, 156 
 
 Politics, Very Cheap 247 
 
 Profitable Farming More Important Than Bet- 
 ter Farming 7 
 
 Private Monopoly Insists on But One System. . 278 
 Panic Threatened to Coerce State Banks (by 
 
 Warburg) 279 
 
 Power to Fix Rates of Interest 57 
 
 Political Reasons for Quick Action 199 
 
 Promised, What Was 162-178 
 
 Pound Sterling and Foreign Exchange 71 
 
 Public Utlity 227, 229, 290 
 
 Political Platform Resolution 214 
 
 Promised; What Was to the Parmer. .151, 162, 178. 200 
 Practical Politicians 11, 87, 245, 295 
 
Public Service a Public Trust 85, 226, 262 
 
 Power; Uulimited jto Fix Rates of Interest 
 
 Conferred 57 
 
 "Preparedness"' Intended for Home Coercion. 31-86 
 
 Public Highways, Railroads 21 
 
 Party Loyalty 88 
 
 Power Delegated; Will They Use It? 86-94 
 
 Panic or Threat Thereof Most Effective "Wea- 
 pon .'88, 91, 106 
 
 Panic of 1907 ; Effect on Farmers 100 
 
 "Pilots, Our Natural", Desert the Ship 157 
 
 Panic Planned for 1913 246 
 
 Polities, Very Cheap ,246 
 
 Peculiar Custom; Pay Interest on Your De- 
 posit 275- 
 
 R 
 
 Railroads Public Utilities 18-21 
 
 Rural Credits, Origin of 143 
 
 Rural Credits Sidetracked 163 
 
 Rural Credit Act Worthless 17$ 
 
 Rural Credits 8, 110,, 143 
 
 Reserves in National Banks 256 
 
 Reserves, Total ; Where Are They? 256 
 
 Roosevelt, Ex-President 83, 88„ 95, 102, 105 
 
 Retirement of National Bank Notes , 122 
 
 Retirement of Federal Reserve Bank Notes. . . . 124 
 
 Reynolds, G. W 
 
 64, 82, 87, 110, 112, 122, 224, 227, 231 
 
 Rural Credits ; What Was Promised 162 
 
 Republican Party ..14, 31, 91, 94, 119, 151, 162, 287 
 
 Rich, J. H., Federal Reserve Bank 38, 227, 262 
 
 Root, Blihu 83 
 
 Representatives in Congress Deceived . . 87, 88, 90, 262 
 Representaives in Congress; to Whom Respon- 
 sible 1 87 
 
 "Rule of Reason" Written Into Law 106 
 
 Speculators" Harvest 15-41 
 
 Silver 61, 124, 205, 207 
 
 State Aid in Europe 147 
 
 State Aid or Charity 161 
 
 11 
 
Suggestion for State Administration "Without 
 
 Private Profit 187 
 
 Standard of Value, Our Unit of 202-214 
 
 Stain, Wipe Out the Ugly Stain 211 
 
 Supply and Demand, Law of 48-264 
 
 Standardization of Credit Base 273 
 
 Summing Up, General 286 
 
 Shyloek; "When He Demands the Pound of 
 
 Mesh 81-203 
 
 Sudden Change in Tactics ; "Why? 153 
 
 Sherman Anti-Trust Law "Violated 104 
 
 State Banks 276 
 
 Silver Certificates 207 
 
 Security Compared .190-237 
 
 State Aid; Use of Community Credit the Solid 
 
 Rock 161, 187, 189 
 
 Strict Accountability, Parties Held to 178 
 
 Something for the Farmer 199-200 
 
 Simpson, Hon. Jerry 11 
 
 Sovereign House of Morgan 57, 72, 82, 95 
 
 Sacred Joss, Gold 74 
 
 Standard Silver Dollars to Be Retired 82-83 
 
 "Spoon Feeding" 157-160 
 
 Supply and Demand, Law of 48-264 
 
 Standardization of Credit (Circular 13) 273 
 
 T 
 Transportation a Tax on Exchange of Labor 
 
 and Farm Products 17 
 
 Transportation Tax Increased Unreasonably. ., 19 
 Taft, Ex-President "Wm. H 
 
 23, 55, 83, 89, 111, 144, 162, 183, 195 
 
 Trust, a Public 228 
 
 Twin Arms of the House of Morgan 196 
 
 Teddy Captured and Tamed 106 
 
 Trade, Our Foreign 136-186 
 
 U 
 
 Unit and Standard of Value 202-214 
 
 Usury 25, 58, 176, 215 
 
 W 
 
 "Wilson, President 
 
 12,, 55, 83, 113, 151, 162, 170, 178, 183, 195, 227, 242 
 
"Wilson, President Dee-lighted 113 
 
 Wall Street Astonished 141 
 
 We Must Change the System 289 
 
 "Widow's Mite," the 176 
 
 World Power Their Aim at Our Expense 140 
 
 Windom, Bx-Seeretary of Treasury 43 
 
 Warburg, Paul M 
 
 64, 75, 87, 111, 113, 224, 227, 231, 250 
 
 Wold, Theodore, Federal Reserve Bank 227, 239, 262 
 
 War Foreign Predicted for Gain 84, 86, 136 
 
AGENTS WANTED IN EVERY COMMUNITY. 
 WBITE FOR TERMS. 
 
 If this book has met with your approval and you 
 think that the information contained therein should 
 receive a large circulation, then I hope that you will 
 assist in any way you can. 
 
 Neither the House of Morgan nor any of its many 
 arms will aid in its circulation, but the reverse. 
 
 Indeed I have already felt the power of financial 
 blacklisting. 
 
 It is not a book that can be sold through the ordin- 
 ary channels of book stores, because the average man 
 has not the slightest idea of the impending danger. 
 
 It cannot be successfully advertised through the 
 press. 
 
 First. Beause I have not the means to advertise. 
 
 Second. The controlled section of the press would 
 not advertise it even for pay. 
 
 I must depend for its circulation upon interested 
 individuals, and soliciting missionaries. For the latter 
 I think that there will be a fair compensation, and a 
 satisfaction of serving humanity. 
 
 Further proof of the Conspiracy is rapidly develop- 
 ing, and should be exposed promptly as it develops. 
 To this I will gladly devote my time if sustained by 
 proper encouragemetat. The best evidence of that 
 to me will be in the sale of the book. 
 
 Every one who reads the book can sell at least one 
 copy, many of you can sell five copies. I will always 
 be glad to hear from readers of the book, and especially 
 students of Financial Freedom for Labor. 
 Sincerely yours, 
 
 — H. L. LOUCKS. 
 
THE PUBLIC 
 
 AN INTERNATIONAL JOURNAL 
 OF FUNDAMENTAL DEMOCRACY 
 
 The Public is an editorial paper which discusses 
 state, national and international affairs from the Sin- 
 gletax point of view. 
 
 It abstains, however, from mingling editorial opin- 
 ions with its News of the Week. This news story, 
 written by democrats, covers in concise and plain 
 terms all the news of historical value. 
 
 Kead The Public for information on 
 
 Taxation of Land VaJues, 
 
 Direct Legislation, 
 
 Public Ownership of Public Utilities, 
 
 Commission Government, 
 
 Free Trade, 
 
 Internationalism, and for able, non-par- 
 tisan discussion of all political, economic 
 and social problems. 
 
 Familiarity with The Public will commend it as 
 a paper that is not only worth reading, but also worth 
 filing. 
 
 Published Weekly at One Dollar a Tear. 
 Send orders to 
 H. L. LOUCKS, Watertown, S. D. 
 
THE FARMERS' OPEN FORUM 
 
 Washington, D. C. 
 A MONTHLY MAGAZINE— ONE DOLLAR A YEAR 
 
 Established for and devoted to, as its name implies, 
 the free, fair and full discussion of Farm Economics, 
 as selected by its readers. 
 
 One of the topics now under discussion is "Financial 
 Freedom for the Parmer." And this is what Hon. C. 
 B. Kegley, President of The Rural Credit League of 
 America, said about it in his annual address as Master 
 of the Washington State Grange, June 5th, 1917 : 
 
 There seems to be some question in the minds of 
 some of our most worthy Patrons as to the value,, to 
 farmers, of the federal farm loan act, and to settle these 
 differences • a discussion has been commenced in the 
 Farmers' Open Forum by Brothers H. L. Loucks and 
 George P. Hampton. Neither of these brothers need 
 any introduction to the farmers of this state. The 
 whole-souled devotion of both to the farmers' cause has 
 been proved again and again under the severest tests, 
 and, what is equally important, they are strong per- 
 sonal friends, with full confidence in the sincerity and 
 integrity of purpose of each other. Their difference is 
 purely a difference of the head, and as both have na- 
 tional reputations for their mastery of national affairs, 
 and for their ability to express their views, I look for- 
 ward to this series of articles as among the most educa- 
 tional, useful and clarifying on financial matters as 
 they affect the farmer that have yet appeared in print. 
 I urge every farmer to get these articles, read them, 
 and discuss them in meetings and with their neighbors. 
 I not only urge this on farmers but on bankers, mer- 
 chants and professional men who honestly want to get 
 the farmers' viewpoint and to co-operate with the 
 farmers to bring about a common understanding of 
 what really constitutes financial freedom. Patrons, I 
 shall look with intense interest during the year to see 
 which of our Subordinate Granges and which of our 
 members are most active in this important work. It is 
 up to us to see to it that so far as we are able this dis- 
 cussion is carried to a conclusion that will clear the 
 cobwebs out of our minds on this most vexatious of all 
 the great questions. 
 
 ORDER FROM H. L. LOUCKS, WATERTOWN, SO. DAK„ 
 
USURY 
 
 A TIMELY BOOK 
 
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 loan of any kind. 
 
 This book clearly shows that usury was condemned by 
 Moses, by David and Solomon and Jeremiah and Ezekiel and 
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 39 Chpters, 300 Pages, Cloth Bound, $1.00. 
 
 Send orders to 
 
 H. L. LOUCKS 
 
 WATERTOWN, SO. DAK. 
 
Exodus From Poverty 
 
 or 
 
 The Other Economics 
 
 By 
 
 AMOS N. CRAFT, D. D., Ph. D. 
 
 ECONOMIC PUB. CO., FARGO, N. D., $2.00 
 
 This is no ordinary book. 
 
 A great hope now seems possible — the abolition of pov- 
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 This book is in a class by itself. It affords a key that 
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 This author suggests a Government Experiment or a 
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