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 matters.

But as patriots who had saved the nation financially, 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 manipulate 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 insurance 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 obligations payable in gold coin or lawful money.

Our currency consists of minor coins, national bank notes, silver certificates, gold certificates, and now Federal Reserve bank notes.

As previously pointed out, the medium of exchange may be contracted by an increased demand, the volume 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 opportunity 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 wished, 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 business.  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 having 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 confusion 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 Federal 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 comply 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, beliefs, 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, spurned 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 believed, 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 IDOLATRY OF PARTY.  Your ancestors organized a political party for a live issue of their day.  They created 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 voting for principles.


The “benevolent patriots” responsible for the “bankers’ panic,” as usual wanted to shift the responsibility onto someone, or something else, and it is wonderful what a good publicity bureau can do.

You 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 responsibility on their own best handiwork, the national banking system, which they have acclaimed “the best financial 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 economist 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 present system of issuing the currency.  Even those who have looked upon it as having been heretofore a measurably 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 real 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 organized anywhere with a capital of $25,000, and issue currency, by 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 aiming 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 privilege 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 assured, 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 :  “We do

    No Need for Money 123

not need money for the transaction of our business ;  just credit 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 law to provide the credit necessary to meet the reasonable requirements of business, but which at the same time will be safeguarded so as to confine credit within the bounds of conservative 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 minnows ;  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 of 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 Federal Reserve law went into effect in November, 1914,

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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 retirement 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 circulation 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.


The real reasons given for the demonetization of silver, and later against the resumption of free coinage ;  were just the same as has inspired every one of the other similar moves :  First, to contract the volume of money in circulation, to expedite control ;  and second, to increase the value of debt obligations.

At that time we did not have any currency, 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 successfully, so it was a choice between the two metals of gold and silver, and it did not take long for them to decide.

    Silver Coinage Discontinued 125

The production of gold had been steadily decreasing 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 produced was secured from the silver ore.  Discourage the production of silver, and the production of gold would still further decline, but silver was our standard and the popular money metal with the people and could not be demonetized in the open ;  it must be accomplished by stealth in the interests of the creditors and bond-holders, and this was accomplished in part in 1873, unknown even to many members of Congress.  We ceased the coinage of the legal tender part :  the silver 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 foundation, 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’?  Representing, 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 bondholders and creditors would not dare openly to advocate 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 VALUE of the debt, or dollar. * * *

“Third.  To encourage the development of an American 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 legislation 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.”

From 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.

    Retirement 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 dollars.  Since 1883, there have been 197,673 silver dollars melted, and recoined as minor coins, instead of adding the small amount of silver necessary to restore the weight.  This is a loss, paid for by the people, of probably 45 cents on every dollar, but a contraction of the currency in the interest of money monopoly.

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 exportation 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 redemption.

The weak points in the greenbacks were, first, that the government promised to redeem in coin—one special 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 bankers, 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 interest to be charged, and, as Mr. Reynolds puts it so plainly, “with proper safeguards against over extension 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 overwhelming majority of both dominant political parties.

Now for the proof as to the authors of the propaganda ;  and I will quote from the address of George M. Reynolds, president of the Continental and Commercial National Bank of Chicago, and vice president of the National Bankers’ Association.  We may call it official.

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 generally known to the public as ‘greenbacks.’  These are notes of the government

    Retirement of 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 administration, 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 possesses the moral courage to lead a movement in Congress looking to the issuing of 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 defaulted 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, the 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 greenbacks ?  Nothing ;  the same old United States !

What did he propose to substitute for this “lawful money,” the greenback ?  A Federal Reserve Association note, not “lawful money,” 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 address, 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 secured 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 threatening to postpone their plans, loaned them in one lot $500,000,000 “without any security whatever”;  just the unsecured bonds, obligation of the government of Great Britain, or France. This has been largely increased, probably four times

    Retirement of Greenbacks 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 obligation of their government.  How absurd, Mr. Reynolds !

“No more flexible than the other paper circulation.”  Why ?

Because the National Bankers’ Association secured a law prohibiting any further 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 statement 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 shameful 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 business men present, for many of our bankers are interested in other lines of business, and are exceptionally good business men, and how must such a statement appear to them, 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 of our public service corporations.  It has not cost the government one dollar beyond the clerical help and the expense of renewals and reissue of the spoiled notes.

132 Legislative Contraction    

But how are we to meet these 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 expenses, 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 ewer since, because they have performed the same functions as gold, with the two exceptions insisted 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 was 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 republic—betimes—never hesitate to discredit and dishonor it, if thereby they can promote their own selfish interests.  This is just another case in point.

    Had Jackson Been President 133

The greenbacks were redeemable in COIN (gold or silver coin).  The option was with the government.  When the bankers made the effort during Cleveland’s administration to force the retirement of the “annoying” greenbacks and to repeal the act for the purchase of silver bullion, it was by the usually effective panic method, “want of confidence” in the government’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 would 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 would 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 unwilling to trust our own “Uncle Sam,” for the payment of their share of the greenback holdings in gold unless he keeps in his treasury (out 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 South 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 European 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, unless we put up 40 per cent gold security back of our bonds.

If that is their real sentiment, then I can understand 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 whatever back of them.”  Now, what do you think of that ?  Why do they keep these discredited, annoying, unsecured 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 courage 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 hesitate, 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 ultimate 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 banker, or anyone else, perform the same functions as the coined gold or silver dollars, and much more complete service than the bank currency, or bank credit, to which 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.  They may never again have so subservient a Congress as the present one, and yet they may postpone action until after the general election, but the fight is on ;  that is, if there is any fight left in the people.


In our public life, apparently everything is being subordinated to an extension of our foreign trade.

Note the press reports of the many booster meetings 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 secure this expansion of foreign trade and commerce ?

That is the important proposition for you to consider.

First.  The federal government—the whole people—through our consular service, ship subsidies, subventions, 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 advantage 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 “pauper labor of foreign countries” with which the American voter has become so familiar.

Third.  The American manufacturer must be protected against the competition from the same foreign countries in our own markets, and the American consumer 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 foreign trade.  Thus far, it is all one-sided.

A Third View—Production.

The three principal factors in production and distribution 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 expense of securing this same “pauper labor” to compete with them in the open shop at home.

The farmer must submit to the world’s competition, that industrial labor may live cheaper, and thus be able to work cheaper.

Second.  Next in importance as a factor in production comes money.

Ordinarily, we think of it only in connection with, the interest paid on the capital invested in a particular business.

That is a wholly 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 interest 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 farmer has to pay.

Next comes the transportation company, paying interest on three or four times the amount of money invested ;  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 debt 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 producer, 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 consumer.

Follow that briefly and consider what it means to and for the men who control the system, and you will

    Multiple Interest 139

have 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 transportation at the minimum of expense.

Money without private profit in interest, and transportation 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 foreign 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 favors, 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 transportation, 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 accumulate 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 nation.

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 nations who had forced similar favors (?) 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 developed, 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 interest ?  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 beneficiaries have their great profits in peace as well as war.

Developing Canada.

One of our greatest competitors in farm products is our good Canadian neighbors to the north.  We note by press reports that we have recently loaned them $100,000,000 at around 4 per cent interest.

James A. Farrell, president of the U.S. Steel corporation, 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 States capital was evident in American trade predominance in Canada, where about $700,000,000 of American capital has been invested, in branches of American factories, mining, timber, and agricultural enterprises, all tending to develop Canadian resources and expanding Canadian demand for American products.”

If we can loan our money or credit at 4 per cent for the development 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 and South America by home needs, and there looms up a world to conquer, more surely by exploitation than by war.

Wall Street Astonished.

At a noted financial dinner at Washington, D.C., a short time ago, to show our sympathy and consideration for our neighbors to the south, whose national bonds have been difficult to negotiate at 8 and 10 per cent and upwards, our then Secretary of State suggested 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 might 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 Central 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 enlightened statesmanship.”

Who 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, unprotected, 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 gilt edged, we paying all of the expense and a small annual interest.  But it does not appeal to or electrify our financiers who prefer the profits of exploitation to that of home development.

What do you think ?  How does it appeal 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 the other way, and would be if agriculture were placed upon an equal footing with commerce and industry in our own country, and we gave as much consideration to our own needs as we are giving to the needs of foreign countries.

Our small business men, and our professional men, should realize that they, too, should be very much interested.

Our “natural pilots” as Myron Herrick calls them, in their haste to accumulate vast wealth have failed to see the rocks just ahead.

If it were your private business, what would you do ?



It will be interesting to study the object and trace the history of the late Rural Credit campaign which seemed to spring up spontaneously, and to have struck a strangely new chord of non-partisan harmony.

A great issue in the interest of agriculture alone.  In fact a special privilege that was to be forced upon an unwilling class if necessary.  It was so unusual that a student of the several farmers’ movements of the past, especially those with a knowledge of the strong opposition every effort for agricultural betterment made by the organized farmers themselves had been met with, might well have hesitated to enthuse over it.

For one, the writer was suspicious from the start, and pursued a “policy of watchful waiting.”  He remembered the old advice to “beware of Greeks bearing gifts."  It was a well played part in the great conspiracy to change our financial system from money to credit, by the enactment of the Federal Reserve law ;  in effect delegating a vital public, or government, function for private exploitation.

This fake Rural Credit movement was not inaugurated by any farmers’ organization, and must not be connected in any way with the old Farmers’ Alliance movement in favor of the government loaning money on land security and on the non-perishable products of labor stored in government warehouses.  That was a safe, sane and sound proposition, backed by the twenty-one farm and labor organization of that time.  It was not limited to farmers, but for manufacturers of staple products and the owners of land, to encourage development and home building in the town and city as well as in the country.

It was neither special privilege nor class legislation.

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To Aid President Taft and the Republican Party.

The origin of the Rural Credit campaign, then, was not with the farmers, or in the interest of the farmers.  It was in fact a “bunco game,” conceived by the practical politicians, for the double purpose of tiding over a political emergency of the Republican party ;  and covering up a change of plan for the enactment of the Aldrich central bank.

Overconfident, because of the easy victory in 1907, they had openly advocated the Aldrich plan, and it was exposed to such an extent as to insure its defeat.  President Taft had been outspoken in its favor, and it was hurting the prospects of his re-election.  Senator Aldrich, instead of touring the West, abandoned the tour with one meeting in Chicago. The open advocacy of the Aldrich bill suddenly ceased, and they proceeded to do, under cover, what they could not accomplish in the open.

President Taft was their first choice for President.  The first part of his term had been unfortunate in many respects.

The revision of the tariff had been a disappointment.  It had not reduced the cost of living as had been promised.  The advocacy of the Aldrich currency bill had proven unpopular.  The progressive element in the party was gaining rapidly in strength.  So far as the farmers were concerned, the climax came with the adoption of the reciprocity agreement with Canada, the openly avowed purpose of which was to reduce the cost of living by admitting farm products free of duty.  The farmers of the North and West had always been the strong arm of the Republican party.  They were in an insurgent frame of mind, angry over their betrayal and sacrifice and defeat loomed big.  The political managers of the party were in real distress.  What could they do to cause the farmers to forget, and win them back into the fold ?  The National Bankers’ Association was not exactly in distress, although anyone hearing Mr. Reynolds talking to a meeting of bankers would have cause to think

    Keep Farmers’ 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 exhaustive 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 citizenship” 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 farmers’ 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 genius who outlined the plan.  He was the first one I heard of urging the bankers, and instructing them how to educate the farmers.  He claimed 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 Rural Credits    

farmer customers that they did not need money for the transaction of business ;  just credit and a check-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.  Perhaps 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 National 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 investment 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 succeeded 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 American 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 side, 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 agriculture.  For once the dear neglected farmer was having his inning.  It was great.  Such publicity, such attention, such advertising.

The commissioners were feted in Europe, and conducted 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 official report of Mr. Herrick, endorsed by President Taft, and published at public expense, for general distribution during the campaign of 1912 when both political 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 Department of State under instructions issued by my direction to the diplomatic officers in Europe on March 18th last, have been effectively supplemented by the American Bankers’ Association, the Southern Commercial 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 created 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 failure 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 farmer has received money, at times, at rates lower than those current in commercial loans.”

“The most noticeable fact revealed by the investigation 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 distribution 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 cultivation, 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 unfilled 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 renewal charges, the interest rate paid by the farmers of this country is averaged at 8½ per cent as compared to a rate of 3½ to 4½ 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 the rate paid by the American farmer is away too low.

Page 14 :  “In Austria, Germany, Finland, Ireland, France, Russia, the Balkan States, and practically everywhere, 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 Europe.  There is no question on this point and the investigation so far conducted shows quite as conclusively that such societies could be of great benefit to farmers in many parts of the United States.”

Page 20 :  “They are in fact government institutions, clothed with summary executive 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 mortgage loan, never tried in America and have made real estate securities so safe, convertible, and cosmopolitan that in Europe they sell as readily as government bonds.”

Page 23 :  “The most noticeable fact revealed by the investigation of the European land credit institution is the all-pervading presence of the state in every nation. * * *  Subsidised in 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 nation.”

Page 10 :  “With their aid poverty and usury have been banished, sterile fields have been made fertile, production has been increased, and agriculture and agricultural 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 associated 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 Agriculture, 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 feature.  His work was careful, non-partisan and invaluable.  The American farmers owe Mr. Lubin a greater 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 agricultural investments and development.

Is it any wonder that the American farmer was intensely interested, and had a right to hope and expect 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 Republican party, and backed by the organizations men-

    The House of Morgan Won 151

tioned, and in convention by both Republican and Democratic parties ?

Clearly the intention was to convey that impression ;  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 Morgan, 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 attachment, 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 parties 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 ;  long 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 farmers a great service.  It puts them upon an equal footing with other business men and masters of industry,

152 Origin of Rural Credits    

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.”

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 marketing of the 1915 crop demonstrated beyond any theory or guess. (See page 39.)