HOW ENGLISH CAPITALISTS GOT A FOOTHOLD.
There are thousands, if not millions, of people in the United States
who, if asked how they accounted for the fact that there are so many
millionaires in the United States, could not give us a satisfactory
explanation of the phenomenon.
It is a fact that there are hundreds who have amassed fortunes ranging
from $1,000,000 to $100,000,000 each, within the last thirty years, and
but very few people have any idea how they have made such immense
fortunes in so short a time.
Not only our own people have made these vast fortunes, but hundreds of
foreigners have accumulated immense wealth in this country, and now hold
it. To give an idea of the immensity of these fortunes, I will call the
attention of the reader to some well-known facts. First, to the fact, as
is shown by Poor's Railroad Manual, that there is now about
$5,500,000,000 of railroad bonds and floating debt, and there is about
$4,500,000,000 of railroad stock, making a total of about
$10,000,000,000, and this vast wealth is in the hands of comparatively
few people.
Then there are national bonds to the amount of about $600,000,000. In
addition to these are the bonds that have been issued by the States,
counties, cities, towns, and school districts, amounting in the
aggregate to probably $3,000,000,000. Then there are, according to the
last census, about 9,000,000 of mortgages upon the farms, homes, and
property of the people. The aggregate of these 9,000,000 of mortgages is
probably not less than $5,000,000,000, and all of this vast amount of
bonds, stocks, and mortgages draw interest, requiring about
$1,000,000,000 each year to pay interest.
All of this wealth is in the hands of but a small percentage of the
people, and what is incomprehensible to the masses is the fact that a
very large per cent of it is in the hands of foreign capitalists. Of the
$10,000,000,000 of railroad bonds and stocks, it is a conservative
estimate to say that one-half of it belongs to foreign, principally
English, capitalists. The question is often asked, How did they acquire
this property? What did they give us in exchange for it? Was it gold,
silver, or merchandise? If neither of these, what did we get? To prove
that they did not send us either gold, silver, or merchandise in payment
for at least $5,000,000,000 of our railroad bonds, we have only to refer
to the report of the Secretary of the United States Treasury for 1891,
and we find that since the close of the war, in 1865, our exports of
gold, silver, and merchandise have exceeded our imports in the sum of
$872,000,000; so that it is very clear that we have been sending them an
enormous amount of money and merchandise over and above the amount we
have imported from them, and whatever may have been received from the
railroad bonds is still to be accounted for. To understand how they have
acquired this hold upon the resources of the country, imposing a burden
on the people that is surely and certainly reducing them to the
condition of paupers and serfs, we shall have to go back to the days of
the war, and review the financial policy of the Government, and point
out how the laws have been framed exclusively in the interest of
capital.
During the war the Government issued many kinds of paper money, such as
greenbacks, seven-thirty notes, one-year notes, compound-interest
notes, and one, two, and three year notes, all amounting to nearly
$2,000,000,000. This money was put in circulation by paying it out at
its full face value to the soldiers, sailors, and creditors of the
United States, but the Government would not receive it back in payment
of duties upon imports, but would receive it from any one who wished to
purchase five-twenty Government bonds, taking it at its face value.
The interest on these bonds was 6 per cent, payable in coin. This
continued until February, 1863, when the laws were enacted that provided
that after July 1, 1863, the paper money should not be received in
exchange for bonds having interest payable in coin. The result of this
was that shortly after the law went into effect the paper issued by the
Government rapidly depreciated, and very soon it was worth only about 40
cents on the dollar, but our soldiers were still compelled to take it at
its full face value, that is, 100 cents on the dollar.
At the close of the war, in 1865, our Government issued many hundreds of
millions of their depreciated paper and paid it out to the soldiers,
sailors, and other creditors of the Government at its full face value,
100 cents on the dollar.
After the soldiers had been paid off in the depreciated currency of the
Government, and it had gone into general circulation, one of the most
gigantic schemes ever concocted by the money-power was then devised.
The object was to destroy the money of the country, and issue in its
place many hundreds of millions of dollars of Government bonds drawing 6
per cent interest in coin, payable semi-annually.
During the winter of 1865-66, an agent of the Rothschilds went to
Washington and secured the enactment of a law providing that any person
might take any of the depreciated paper that had been issued by the
Government for the purpose of paying off the soldiers and the other
expenses of the war, and exchange it at its full face value for bonds of
the United States drawing 6 per cent interest in coin, payable
semi-annually, and that the money paid for such bonds should be
destroyed within three years after the close of the war. By this means
nearly $1,000,000,000 of the currency of the country was withdrawn from
circulation and destroyed, and an equal amount of 6 per cent coin bonds
were issued in place of the currency that was so destroyed.
No laws that were ever enacted, and no decrees that were ever
promulgated by any tyrant that ever sat upon a throne, ever enabled a
few to amass wealth as rapidly as they were enabled to do under the
provisions of these laws.
Under the provisions of the laws of 1863 the currency was depreciated to
less than 50 cents on the dollar, and under the law of 1866 hundreds of
millions of dollars were bought up by the Rothschilds and other English
and European bankers, at from 40 to 60 cents on the dollar, and were
converted into five-twenty United States bonds drawing 6 per cent
interest in coin, the interest to be paid semi-annually. This was
equivalent to 12 per cent upon the actual cash paid for the depreciated
paper with which they bought the bonds.
But this was only a part of the profit they were enabled to make. The
interest was paid every six months in gold. The interest on
$1,500,000,000 every six months was $45,000,000, and as the law that
required the duties on imports to be paid in coin had never been
repealed, gold was for many years at a high premium. The bondholders
could take their $45,000,000 every six months to the gold-room in Wall
Street and sell it for 50 per cent premium. This was equivalent to 9
per cent on the face value of the bonds and 18 per cent on the coin they
had paid for the currency with which they had bought the bonds.
But this was not all the profit they were enabled to make, for still
other laws had been framed in the interests of capital and speculators.
Congress had assumed all the power that was claimed by the kings of old
who claimed to rule by divine right; that is to give away the land of
the nation to whomsoever they saw proper, and exempt it from all
taxation for a term of years. In the exercise of this right they had
given to individuals and corporations more land than there is in Great
Britain; more land, in fact, than any king of England ever claimed to
own. This land was given for the purpose of enabling these favored
corporations to build railroads for themselves (not for the people); the
people had no interest in the roads, and could only use them on such
terms as the railroad companies might dictate.
Railroad companies could not build railroads with land; it took money to
build them; but the English bondholders had $50,000,000 or $60,000,000
coming in every six months for interest on their United States bonds,
and they were willing to lend it to the railroad companies and take
railroad bonds, secured by mortgage upon the railroad and their lands.
Now, as there were a great many railroad companies that wanted to borrow
money, they began to offer extra inducements to secure loans; they
offered their bonds at 10, 15, and often 20 per cent discount. These
railroad bonds usually drew 6, 7, and even 8 per cent interest, which
was paid semi-annually. The profits made by these English capitalists
were immense. Never in the world's history had such profits been made.
The wildest dreams of John Law and the South Sea schemers were more than
realized.
To fully understand this, let us take the actual results of one year's
operations. The English capitalists, we will say, in 1867, invested
$500,000,000 in the purchase of $1,000,000,000 of our depreciated
currency. They took it to the United States Treasurer and exchanged it
for United States bonds drawing 6 per cent interest in coin. At the end
of six months they drew $30,000,000 in gold coin, and took it to the
gold-room and sold it for $45,000,000 in greenbacks. Then they exchanged
their greenbacks for railroad bonds at 20 per cent discount. They would
thus receive about $54,000,000 of railroad bonds drawing 7 per cent
interest. At the end of the next six months they would draw another
$30,000,000 in coin and sell it for $45,000,000 in greenbacks, and
exchange them for another $54,000,000 in railroad bonds. They would also
draw 7 per cent interest on the first $54,000,000 of railroad bonds,
which, for six months, would be $1,840,000. The account of the first
year would stand as follows: $500,000,000 in gold brought $1,000,000,000
of depreciated currency, and was exchanged for $1,000,000,000 of United
States bonds; one year's interest on $1,000,000,000 amounted to
$60,000,000. This was sold in the gold-room for $90,000,000 in
greenbacks. Then the greenbacks were exchanged for railroad bonds at 20
per cent discount on the bonds. In this way at the end of the first
year, for their investment of $500,000,000, they found themselves in
possession of $1,000,000,000 of United States bonds, and $108,000,000 of
railroad bonds, and $1,840,000 in cash for the first six months'
interest on the first $54,000,000 of railroad bonds. Nor was this all
the profit of the English capitalists, for in 1869 they secured the
passage of a law by Congress pledging the Government to pay not only the
interest but the principal of the United States bonds in coin. This
rapidly increased the value of the bonds, and in a few years they were
eagerly sought for by English capitalists, and they rose to a premium of
25 per cent in gold on their full face value.
Within five years after the passage of the law of 1866, the bonded debt
of the United States reached the sum of over $1,800,000,000. The
interest was paid in coin, and was sold in the gold-room in Wall Street
at a premium until 1878, and the profits realized upon the sale of this
gold were simply enormous. These profits were promptly invested in
railroad bonds at a discount of from 5 to 25 per cent.
In 1866 the bonded indebtedness of the railroads had got up to
$2,165,000,000, and was in the hands principally of English capitalists,
who had paid for them with the profits they had made on the United
States bonds they had bought at a discount of from 40 to 60 per cent.
Not only the British capitalists made enormous profits, but our railroad
corporations and speculators made still greater profits. For every
dollar of the bonds they sold to the English capitalists they issued a
dollar or more of the railroad stocks, so that in 1876 the amount of
railroad stock reached the sum of $2,248,000,000.
From 1876 to 1890 the English and European capitalists continued to
invest the interest they drew upon their Government and railroad bonds
in the new issues of railroad bonds, so that, in 1890, they had secured
the enormous sum of $4,828,000,000 of railroad bonds, and it took
$219,877,000 to pay the interest annually. During the same time the
railroads had increased the amount of railroad stock to $4,495,000,000
and it took $80,000,000 to pay the dividends.
The railroad people not only made vast fortunes out of the
$4,495,000,000 of watered stock (for it was in reality nothing but
water, for the actual cost of building the roads was no more than was
received from the sale of their bonds to the English capitalists), but
they made hundreds of millions of dollars from the sale of the lands
that had been given to them by the Government, and had not cost them one
cent, not even for taxes. They ran their roads through their lands for
thousands of miles, and wherever they thought proper they would lay out
towns and cities and sell the lots at fabulous prices.
They also induced towns, counties, and cities to issue millions of
dollars of bonds and give to the companies, as a bonus, to run their
roads through such towns and cities.
When we look at these facts, that are matters of history and can not be
gainsaid, is it not plain to every man of common sense, that the policy
of the Government for the last quarter of a century has been in the
interest of capitalists and speculators, and against the interest of the
producing classes, who, either directly or indirectly, must pay the
interest annually on this vast accumulation of wealth that is in the
hands of the favored few?
And to pay this vast amount of interest in gold, as these capitalists
insist upon, and are trying to compel the people to do by using every
means in their power to prevent the free and unlimited coinage of
silver, will, in the near future, reduce the producing classes to the
condition of serfs.