CHAPTER XLIV.

AFTER THE WOE, THEN COMES THE LAW.

BETSY GASKINS’ sad history and the terrible fate of poor Jobe—for he it

was whose body was found on the cinder-pile—caused great excitement, not

only in Tuscarawas County, but throughout Ohio, and even in many other

sections of the country. One Chicago paper devoted a whole column to

portraying the awfulness of turning an old man from a friendly shelter

on such a cruel night as the one when Jobe Gaskins froze to death. Other

papers in different parts of the Union expatiated on the hardships of

the old couple from the time the hard hand of the law began to push them

from their home until death took pity on them and removed them beyond

the reach of man’s cruelty to man. The lesson of their humble lives was

made the subject of sermons and of editorials everywhere.

By the time of the campaign of 1896, the people of the United States had

become so wrought up that there seemed to be a spontaneous demand for

the restoration of the conditions which prevailed when it was possible

for Jobe Gaskins and his likes to pay off their debts. So universal was

the demand that three parties nominated the same candidate for

president. He made a brilliant campaign; but, owing to his being

handicapped by a plutocratic, mortgage-holding, interest-taking running

mate, he was defeated.

Out of the campaign and the knowledge gained by the people, however,

much good resulted. In many States legislatures were elected that were

above the corrupting influence of the money power. The people were awake

to their needs, and many laws were enacted for the betterment of the

conditions of the common people, particularly the poor and homeless.

Ohio, especially, was active in this direction. It seemed that nearly

every member of the legislature had learned the story of Betsy and Jobe

Gaskins, and had come to Columbus determined, if possible, to provide

laws that would stay the hands of Ohio sheriffs from turning honest

people out of the shelter they had erected by their own industry and

economy, and to make it easier for people to pay for homes.

It was only the second day of the session when sixteen bills were

presented in the House and four in the Senate, all designed to lessen

the hardships of debtors and the burdens of the oppressed.

There seemed to be a unanimity of opinion that county treasurers should

be authorized to receive money on deposit in order to protect the

depositor from loss; that money so deposited should be exempt from

taxation, and that legal interest should be reduced to four per cent.

There was some diversity of opinion as to whether or not the treasurers

should do a general banking business; all agreed, however, that money

should be loaned out on first mortgage real estate security at not to

exceed four per cent. interest. The bills were referred to a committee

appointed for the purpose, and the following is the bill reported back

by the committee, the chairman of which, Mr. L. W. Chambers, of

Ashtabula County, became its champion:

THE BILL.

“_Be it enacted by the General Assembly of the State of Ohio_: That on

and after the first Monday in April, A. D. 1898, any person so desiring

may deposit money in any sum from one dollar ($1) up, with the treasurer

of the county in which he resides, and receive therefor a certificate of

deposit or a credit on a pass-book, and all such money may be withdrawn

on demand unless otherwise stipulated in the certificate of deposit. The

treasurer may require a notice of sixty days for the withdrawal of any

sum exceeding one hundred dollars ($100).

“SEC. 2. The county treasurers of Ohio are hereby authorized to receive

on deposit money from the citizens of their respective counties; keep

the same separate from the other funds received by them; place the same

in a special account, to be called the People’s Savings Fund; provide

such extra clerk hire as may be necessary to attend to the business;

lend the money of such fund on first mortgage real estate security to

such citizens as may apply for same, at a rate of simple interest not to

exceed four (4) per cent. per annum.

“All securities and title of property shall be certified to the

treasurer by the auditor and recorder, and shall be appraised by a board

of appraisers residing in the township where the property is situated.

“Not more than ninety (90) per cent. of the appraised value of any

property shall be loaned thereon.

“The trustees of the respective townships of Ohio are hereby constituted

a board of appraisers of the property on which loans may be asked in

such township. For such appraisement, whether the loan is granted or

not, the applicant shall pay said appraisers a fee of two dollars each.

At least two of such appraisers shall go upon and assess the value of

any such property.

“The borrower shall pay all incidental charges connected with any loan.

The treasurer shall not receive more than one per cent. per annum on the

money loaned, as his compensation for conducting and caring for said

business; all interest received, less expense to said treasurer, shall

be distributed pro rata to the depositors in accordance with the amount

and time of deposit.

“A failure to pay interest for three years shall work a forfeiture of

any loan made under the provisions of this act, and the property shall

revert to the county without process of law further than order of court

upon sworn statement of the treasurer as to such delinquency; and the

mortgagee shall be permitted to occupy such premises for such a length

of time as the payments made thereon shall amount to a yearly rental of

four per cent. and taxes, after which the said property may be rented at

not less than four per cent. and taxes, or sold at private sale at not

less than appraised value.

“Any losses sustained by the depositors, through the defalcation or

dishonesty of the county treasurer, or any other officer of a county,

shall be paid by the county in full, and the said officer apprehended,

his property, as well as any and all property transferred or assigned by

him during his incumbency, shall be confiscated, and he shall be hanged

by the neck until dead, without benefit of trial except to ascertain the

certainty of such defalcation or dishonesty. In such cases there shall

be no appeal, pardon or reprieve.”

No sooner was this law proposed than the telegraph wires were put in use

to notify every banker in Ohio, as well as the principal bankers in

Chicago, New York and other great centers.

Their hired agents were there. In two days the lobbies and corridors of

the State-house at Columbus were crowded with well-dressed, well-fed,

diamond-studded gentlemen from all parts of the country, crying out

against such a law and picturing the direful results that would follow

its passage.

Legislators were buttonholed, wined and dined, threatened, abused,

coaxed, cajoled, persuaded and bribed for some five or six days. The

newspapers of the country denounced the bill as “revolutionary,”

“socialistic,” “destructive,” “ruinous,” and suggested that “the militia

should be called out to drive the anarchistic law-makers not only from

the State-house at Columbus, but out of the State of Ohio.” They

bemoaned “the terrible disgrace that had already been brought upon the

fair name of Ohio,” and claimed that “to uphold the honor and integrity

of the State the bill must be overwhelmingly defeated.” Brilliant

lawyers and leading business men were summoned to Columbus to oppose the

bill and to tell the law-makers how bitterly the people were opposed to

it.

All this time from ten to a hundred homes were being sold weekly by the

sheriff of each county. Thousands were starving in Chicago, New York and

other cities and towns, and all because during all their lives they had

been paying directly or indirectly from six to ten per cent. interest to

these same fat, well-dressed fellows who were now at Columbus trying to

prevent legislation for the relief of the people.

For days it looked as though the bill would be defeated. Very few spoke

in its favor, but one could hear criticism almost anywhere. Two days

before it was to come up for third reading a thing happened, however,

that gave it new life. Bill-posters in all parts of the city of Columbus

filled the bill-boards and store windows with brilliant posters

announcing that on the following night the famous actor James A. Herne

and his company would play

“BETSY GASKINS (DIMICRAT),

WIFE OF

JOBE GASKINS (REPUBLICAN),”

at the Grand Opera-house, for the benefit of the poor of the city, and

that the members of the General Assembly of the State of Ohio had been

invited to attend free as the guests of Tom L. Johnson, of Cleveland.

The large posters in the windows and on the bill-boards showed “Betsy

Set Out in the Big Road,” “Jobe in Berea,” “The Cinder Pile,” and

“Little Jane at the Family Reunion.”

Crowds gathered before the windows and about the bill-boards, studying

the pictures. Strong men and brave women were seen to wipe away the tear

of sorrow as they recalled and rehearsed the sad tale of Jobe and Betsy

Gaskins.

In the afternoon word got out that the legislature had under

consideration a bill that would make it easier for people to get homes.

By morning of the next day it was the talk of the town.

The night of the show the large theater could not hold more than

one-fourth of those who had come to see. The doors were closed at seven

o’clock, and the performance began at once, word being sent to the

disappointed crowd outside that Mr. Herne would give two shows that

night, the doors to open for the second performance at nine o’clock,

and, further, that seats would be free to all, only those paying who

desired to contribute to the fund for the needy.

Immense enthusiasm, tears, and at times laughter, followed the players.

As the hardships, trials and disappointments of poor old Betsy and

innocent Jobe were made vivid and real by the actors, like conditions in

the lives of fathers, mothers, brothers, sisters or friends came to the

memory of nearly every one in the audience, and tears and sobs proved

the interest with which the people were drinking in the great lesson

that was passing before them. Finally, when the curtain fell on the last

act, instead of the crowd rising and hastening to the exits, as crowds

usually do, they sat for some moments as if spell-bound. Then

individuals began to rise in their seats here and there, and, leaning

over, to converse with their nearest neighbors in words and tones of

consolation and hope, as though some great pall hung over them. Women

were crying; the men looked earnest and thoughtful.

This was the condition of the audience when a great tumult was noticed

in the front of the house; loud shouts of men filled the room, while

above all others and on the shoulders of two brawny men there was lifted

a middle-aged man, pale, nervous, yet seemingly calm. Every one seemed

to be trying to reach his hand or touch his garments. He smiled. He was

borne forward to the stage and placed upon it. At the same time two

other men climbed on with him. When the larger of the two, who I

afterward learned was the representative from Seneca County, vigorously

pounded for order, the crowd settled back in their seats and quiet

reigned. Then the big legislator said:

“Ladies and gentlemen, we have witnessed to-night one of the most

wonderful plays ever presented to an intelligent public—wonderful in the

fact that it is so true to life that nearly every one in the vast

audience knows some near or dear one who is only Betsy or Jobe Gaskins

under another name; wonderful in the fact that this proud nation of the

United States, after an existence of over one hundred years, should have

a system of laws that works such terrible hardships on her citizens, and

then claim to be civilized or advanced; wonderful in the fact that these

conditions exist on every hand, in every direction, and yet a nation of

Christians has not risen up against them. But, good people, my heart

swells with joy when I tell you that sitting by my side, carried here in

the arms of admiration, is a man who has set out to relieve the people

of Ohio from such slavery—who has introduced in the legislature a bill

which will come up for a third reading to-morrow, and which will relieve

the poor of many of such hardships as poor Betsy and Jobe Gaskins had to

bear—a bill, if you please, that will make it easier for us and our

children to buy and pay for a home.

“Fellow-citizens, I present to you the Hon. L. W. Chambers, of Ashtabula

County, the chairman of the committee and champion of the bill I have

just referred to.”

The audience arose _en masse_, climbed on seats, cheered, stamped and

whistled, while Mr. Chambers, without a smile, but calmly and

courteously, bowed and sat down.

Then the big legislator, after getting the crowd quiet again, said that

the bill he referred to would enable any one with reasonable security to

borrow money from the county treasury at not more than four per cent.

interest, and that in his opinion the play they had just seen had in

part offset the influence of the lobbying bankers who had been hanging

around the Assembly hall like buzzards for nearly a week.

Mr. Herne then came out and requested the audience to disperse, stating

that four thousand other people were waiting outside for a repetition of

the play.

The audience left reluctantly. No sooner was the theater cleared than

the second audience made a rush for admission. It was only a few moments

until the house was filled again from pit to gallery.

The interest manifested was fully as great as that evoked by the first

performance, and the acting again was superb. At 11:20 o’clock the

curtain fell on the last act for the second time that night.

The next morning early people from all parts of the city could be seen

traveling in the direction of the State-house, in street-cars,

carriages, on bicycles and afoot. All seemed to be intent and anxious.

Fully fifteen thousand people were on the State-house grounds by nine

o’clock. They talked, whispered, argued and made speeches. The sole

theme was Betsy Gaskins and the new law. The antiquated crank was there,

claiming that it “can’t be done,” “better leave things as they are.”

Every now and then a lobbying banker could be seen, slipping along, eyes

cast downward, as though he felt his guilt.

When the session opened the galleries of the Assembly room were filled

with people. The State-house was full. The gavel of the speaker fell.

The chaplain offered prayer. He prayed that right might prevail; that

the poor and heavy-laden might be unburdened; that the bribe-taker,

together with the bribe-giver, might perish from the land; and, above

all, he invoked the blessings of Divine Providence on the acts of that

particular day.

After prayer silence reigned a while. It was broken when a tall, partly

bald, large-faced, keen-eyed law-maker over in the northeast corner of

the hall arose in his seat, took a general survey of the house and

galleries, took a large roll of money from his pocket, and, waving it

above his head, said in thunder tones:

[Illustration: “Behold! See that money!”]

“Behold! See that money! There sit in this house fifty-three men who

know where that money came from, and what it was given for. They know it

because they each have received from the same hand like sums. They came

here sworn to represent the people who elected them; they would sell

them into slavery instead. They are bribe-takers, and have sold their

votes and influence against the bill that comes up to-day. This hall for

the last week has been surrounded by a horde of lobbying bankers and

bankers’ lawyers, buying the manhood of men that the poor may continue

to be oppressed.”

Then, turning and pointing toward a banker from Cincinnati who sat in

the south gallery, he said:

“There is the man! I defy him to deny that he paid me the five hundred

dollars I hold in my hand to vote and work against this bill!”

The banker was livid. All eyes were turned toward him. He sat looking

straight at the legislator, who pictured the banker as a “thief,” a

“murderer,” a “corrupter of justice,” a “despoiler of government,” and

closed by waving his hand over the hall and exclaiming that such

criminals had by their own acts put themselves beyond the pale of the

law.

By this time the crowd had become furious. The Assembly arose as one

man, many with rolls of money in their hands, and a cry went up that was

awful to hear—a cry of _lost manhood found_.

There were repeated calls for order, but there was no order to be had.

Well-dressed, sleek men could be seen hurriedly making their exit from

all the doors of the State-house, and hastening at full speed in all

directions. For more than an hour the tumult continued.

In the meantime some of the spectators had caught the Cincinnati briber

and a lobbying lawyer from Findlay, and, securing a rope, tied them

together, took them out on High Street, and made them run a gauntlet of

some three hundred yards’ length through a maddened concourse of

American citizens. Some had staves, straps, switches; others,

lamp-black, flour, Venetian red, and whatever they could get to deface

and besmirch the fine clothes, fair faces and dignified appearance of

the two corrupters of the law. The pair trotted up and down that space

until they became so fatigued and crestfallen that they fell prostrate

and begged for mercy. They were permitted to go on sworn promises never

again to come to Columbus to bribe or influence the people’s

legislators.

After the tumult had subsided and when quiet had been restored at the

State-house, some forty-eight members, seemingly under the influence of

a stricken conscience, took from their pockets various sums of money and

sent them up to the clerk as a contribution to the fund for the needy.

In all there was $21,468. Many admitted that it was bribe money, and

many others, while not openly admitting it, said so by their convicted

looks. It was a solemn occasion. It seemed as though money and dishonor

had been routed and the spirit of human justice reigned in that hall,

touching each heart with unseen hand.

The bill that would make it “easier for the poor to live and secure

homes” had come to life again. When the bill was read there was a murmur

of general approval. Its champion made one of the most eloquent and

pathetic speeches ever delivered in the State-house at Columbus. He

showed how, at six per cent. interest, all the wealth of the nation may

pass into the hands of the money-lenders every sixteen years, and leave

of the annual increase only enough to support the great mass of the

people with a meager living. He showed how the bankers had conspired

together to rob the nation in time of peril; how they had robbed the

business men, robbed the masses, robbed everybody by their contraction

of the currency and their thieving, unjust laws. He said:

“We have had demonstrated here in this hall to-day the manner in which

the bankers have looked after the interests of the country for the last

thirty-five years. They know no god but money, and with money they have

corrupted the world. They are of no service to either God or man, and

yet they demand that both man and God bow before their will.”

He showed how hundreds of millions of dollars had been stolen from

depositors in the banks of the United States by suspension and failure,

the result of the most dishonest, the most unsafe system of banking

known to the world. “The American banker laughs when asked for security;

takes all the money he can get; breaks up at pleasure, and mocks the

grief of the poor depositors.” Closing he said:

“Fellow-legislators, I appeal to you for the passage of this bill. I

appeal to you in the name of common honesty; I appeal to you in the name

of thousands of hard-working citizens who, desiring to save their

earnings, now have no safe place to put them. I appeal to you in the

name of the millions of husbands and fathers whose shoulders are stooped

under the burdens of high interest and money contraction heaped upon

them by this conspiring horde of money-mongers. Let our motto be:

‘Justice to mankind; equality before the law.’ And let human rights and

human liberty be our ever-burning beacons of guidance.”

Then followed the member from Sandusky County. He took up the feature of

the bill that favored the exemption from taxation of money deposited in

the county treasury. He showed how a tax on money always fell on the

borrower in the way of increased interest; how, if we take taxes from

money and give the people a safe place to deposit, thousands of dollars,

now kept out of circulation and hidden in the homes of the people, would

come out and be used in the channels of trade to the benefit of all. He

then appealed to the legislators to be men and patriots, and to spurn

with contempt the influence of the lobbying money-lenders and

corruptionists.

Many others spoke in favor of the bill, and only one or two offered any

opposition. It was evident from the beginning that the opponents to the

measure were routed, and when it came to a vote the bill passed with

only fourteen votes in the negative.

When the result was announced the scene on the floor and in the

galleries was one of joy beyond description. Liberty, long chained, had

broken her bonds. Men grasped each other’s hands, and women wept with

joy. They saw the dawn of the new day of liberty—freedom from debt.

The bill passed the Senate the same afternoon and became a law on the

18th day of March, 1898.

The news was telegraphed all over the world. The county treasurers of

Ohio were instructed to begin on the first Monday of April to receive

the people’s money on deposit and to loan the same to the people at four

per cent.

In every county seat, in almost every town, post-office or store, around

nearly every fireside, the new law was discussed. When the first Monday

of April came scarcely a man could be found who did not thoroughly

understand this “law for the common good of the common people.” As soon

as the doors of the banks were opened, men began to draw out their

money, carry it over to the county treasuries of the State, deposit it

and depart for home. Others called at the county treasuries, signed

mortgages bearing four per cent. interest, and borrowed money to pay off

their mortgages, held by the banks, drawing seven or eight per cent.

interest, returning home feeling a thrill of new life and new hope.

No sooner would one borrower pay off an old seven or eight per cent.

mortgage at the banks than would some depositor withdraw the money,

carry it to his county treasurer, deposit it, and another borrower would

deposit a new four per cent. mortgage and pay off an old seven or eight

per cent. mortgage at possibly the same bank.

This continued for nearly six months, by which time most of the loans on

which the people had been paying seven or eight per cent. had been

converted into four per cent. mortgages, payable to the various

counties. Most of the bankers were honest and continued to take in money

on old mortgages and pay it out to the depositors until their business

was settled up in full.

In Tuscarawas County the aggregate of the mortgages held by the six

banks was $1,048,692. On this amount the people saved by the new law an

average of three and one-half per cent., or $37,703.22. This sum,

instead of being paid to the bankers of the county each year, was saved

by the borrowers, and, being applied on the principal, helped pay off

the burdens of the people.

The first man in New Philadelphia to withdraw his deposit was Clem

Waltz. He had $2,200 in the First National. He drew it out at 9:10 a.

m., took it to the county treasurer, deposited it at 9:28 a. m.; and at

9:52 a. m. Seymour Grimes borrowed $1,600 of it on his River Bottom

farm, and paid off a mortgage against him held by the same First

National. About the same time Jacob Moore borrowed $500 on his house and

lot on Eighth Street for the same purpose. So by 10 o’clock $2,100 of

that $2,200 taken out by Waltz was back in the bank, and two

hardworking, honest, industrious citizens were paying only four per

cent. interest instead of seven or eight. And Clem Waltz had all of

Tuscarawas County back of him as security for his $2,200, and would

receive three per cent. interest on his money clear of taxes.

About 11 o’clock Robert Witt came into the county treasurer’s office

with $2,000 of the same money that had been paid to the bank by Moore

and Grimes, and by noon it was loaned out to other persons who would

rather pay four per cent. interest than seven or eight. In the afternoon

business was still brisker.

The first day there was $38,000 withdrawn from the various banks;

deposited with the county treasurer; loaned to the same people that owed

the banks; paid back into the banks; taken out and placed in the

treasury, etc.

The first week loans to the amount of $356,828 were thus changed.

Everybody seemed to be happy except a banker here and there. Many

bankers, however, admitted that they were pleased to see the poor have

more chance in life.

In six months’ time all the banks except the First National had closed

up their business and quit. Business in all other lines has picked up.

Two of the ex-bankers are clerks in the county treasurer’s office, while

the others, being rich, have decided not to engage in any business for a

while, feeling that it is due themselves and the community that they

take a long-needed rest.

Betsy’s dream has, at least in part, come true. Jobe’s dream still

remains to be realized. Millions of men are still out of work. But the

people have been aroused. They are thinking hard, and soon they will

act. They will act at the ballot-box, and by their votes they will

declare that “the chief aim of human government should be to secure to

each individual contentment and happiness, and that this can be done

only by securing to all the unrestricted opportunity to labor.”

“Work for the unemployed” is the issue on which the people will fight

and win the battle of the ballots.

There is much talk that a memorial be erected to Betsy Gaskins—not to

perpetuate the memory of her hardships, but to ever keep the people in

mind of the fact that every liberty or right we enjoy has cost much

suffering, distress and woe, and, further, that every advance toward a

perfect state of human society as taught by Jesus Christ has been in

spite of selfish and ignorant wealth, and never by its aid.

Long may the spirit of human justice live, is the prayer of

THE EDITOR.

[Illustration]

BROTHERS ALL.

[Illustration]

BROTHER of mine, if one should come,

Should come to your door to-day,

With the marks of the nails in His hands and the scars

Of the thorns on His brow, and say:

“Brother of mine, I stand in need;

I am He who was crucified;

Will you help me to-day in word and deed?

Will you stand to-day at my side?”

Brother of mine, I know that you

Would give Him this answer true:

“You died for me, and what can I do

But die, if I may, for you?”

Brother of mine, if one should come,

Should come to your door to-day,

With the scars of toil on his hands and the marks

Of the sweat on his brow, and say:

“Brother of mine, I stand in need;

I am being crucified;

I have sought for work from door to door;

I am everywhere denied.

“Brother of mine, I ask not alms;

I have asked no man to give;

I but ask for work to earn my bread;

I ask the right to live.”

Brother of mine, what would you say,

What would your answer be

To this lowly brother of Him who said:

“Even so unto me.”

HENRY BENSON.

Part II

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[Illustration: THE WORLD’S OPPRESSOR.]

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PART II

Present Day Problems

EDITED BY K. L. ARMSTRONG

CONTENTS OF PART II.

[Illustration]

PAGE

I. The Impending Revolution 277

II. The Philosophy of Money 283

III. A Bird’s-eye View of American Financial History. 307

By Samuel Leavitt

IV. The Eight Money Conspiracies 345

V. Financial Authorities 352

VI. Interest and Usury 380

VII. Debt and Slavery 387

VIII. The Laws of Property. By Lyman Trumbull 393

IX. Direct Legislation 401

I.

THE IMPENDING REVOLUTION.

“And the Lord said unto Moses, Wherefore criest thou? Speak

unto the children of Israel that they go forward.”—_Exodus_

14:15.

THE purpose of the following pages is to present in compact form a

series of articles on money and kindred subjects from the point of view

of one who, realizing that a world-wide economic revolution is imminent,

hopes that this revolution will be accomplished by reason and in peace,

not by treason and violence—by book and ballot, not by bullet and

bayonet. It is not intended to make a special plea for the doctrines of

any particular school of economics, or of any political party. The

object is rather to place in concrete the arguments and principles of

many branches of Reform thought which, while widely divergent in respect

of methods, have a common aim in the emancipation of industry.

The many elements which make up the great and growing army of Reform may

be segregated into two divisions—individualists and collectivists. In

the early history of this nation the men who had battled for its

independence were similarly divided into two great parties—one

advocating the centralization of power in the national government, the

other demanding for each State sovereign independence. The flexibility

of our Constitution is ascribed to the wisdom of the fathers, who sought

out and adopted what was best in the ideas of both. So out of the

apparently conflicting elements of the Reform movement will come the

ultimate solution of economic problems.

The editor is in thorough accord with the collectivists, whether they be

known as socialists, nationalists or co-operators, in so far as they

advocate the public ownership of monopolies. The people should own and

operate the railroads, the telegraph, the telephone, etc., as they

already own the post-office. The people should also own and operate the

street railroads, water-works, gas-works, electric light plants, etc.

The notorious corruption of our law-making bodies is due almost wholly

to their power to grant special privileges and to sell public franchises

to private individuals or corporations. Legislative reform that ignores

the cause of corruption is never remedial and seldom even palliative.

Public ownership of natural monopolies will abolish the bribe-taker by

making impossible the bribe-giver.

The editor believes also that it is the duty of the government to

provide for every citizen willing to work full and free opportunity to

earn a livelihood, and therefore advocates government employment for the

unemployed.

The editor further believes that reforms in these directions can only be

accomplished by direct legislation, and a special chapter is therefore

devoted to that subject.

The problem which now presses most persistently for immediate solution

is that of money. The crying need of the hour is to provide work for the

unemployed. Tinkering with the tariff will not do this, because you

cannot make a people prosperous by taxation. You can set the wheels of

industry in motion, however, by putting money in circulation.

And what is money?

_Money is the public credit_, stamped or imprinted upon, or represented

by, metal, paper, or any other convenient substance recognized by law or

usage, and employed as a medium of exchange and a measure of values.

Money is money only so long and in so far as it represents the public

credit. Moses, as well as the early fathers of the Christian Church,

undoubtedly adopted this view of money when they denounced usury, which

is the device whereby the drones in humanity’s bee-hive, monopolizing

the public credit, have in all ages exacted tribute from the workers.

We have seen what money is. Now let us see how we can best circulate it.

Suppose that this country were governed by a czar, an autocrat, with

absolute power to make what laws he pleased for the government of his

people. Suppose this autocrat should issue an order increasing the

standing army to one million men, these one million men to be armed, not

with muskets and swords, but with pickaxes, shovels, etc., and to be set

to work improving roads, reclaiming desert and waste lands, etc. Suppose

these men were paid $1.50 a day in money issued for that purpose by the

government. What would be the result?

One million of men would be taken from the overcrowded labor market, and

at the end of each week nine million dollars would be put in

circulation.

Would it be necessary to pay these men in gold and silver? No. Would not

mere paper money inscribed something like this, in denominations of one,

two, five, ten, twenty and fifty dollars, answer all purposes?

THIS CERTIFICATE, TO THE AMOUNT OF ITS FACE VALUE, WILL BE RECEIVED BY

THE GOVERNMENT OF THE UNITED STATES IN PAYMENT OF ALL PUBLIC DUES, AND

IS A FULL LEGAL TENDER IN THE PAYMENT OF ALL DEBTS, PUBLIC AND PRIVATE.

Would not these certificates pass everywhere for their face value? Would

they not have back of them all the power of the law?

And would they not have the same power if they were issued and ordained,

not by an autocrat holding merely a fictitious authority, but by the

will and the vote of a sovereign people? Would they not be backed by all

the wealth of the nation?

The right to issue money is a sovereign right and should be jealously

guarded by a sovereign people. To delegate this power to banks and

money-lenders is as grave an error as it would be to confer on a class

the privilege of making laws for the whole community.

The volume of money should be regulated to suit the requirements of all

the people and not the greed of those who thrive on usury.

The use of metals for money is unscientific, and they will eventually be

relegated to obscurity with the shells, pelts, tally-sticks and other

cumbrous mediums of exchange employed by our ancestors. But great

reforms cannot be accomplished at once. Gold and silver are the money of

the Constitution. The act of 1873, which made gold alone the basis of

credit, and which, by reducing the volume of money, doubled the burden

of debt, was a violation of the fundamental law of our government. The

wrong perpetrated in 1873 must be righted now. This is the first great

step in monetary reform.

Following this, the issue of interest-bearing bonds must be stopped

forever. The careful student will find that interest is at the bottom of

all our financial ills. Unselfish patriotism must abolish usury by

substituting the credit of all the people for that of the banks.

Every physical or moral ill is the result of some breach of natural or

divine law. For generations we have violated the laws of God as they

relate to money and to land.

“And if thy brother be waxen poor and fallen in decay with thee, then

thou shalt relieve him; yea, though he be a stranger or a sojourner;

that he may live with thee. Take thou no usury of him or increase; but

fear thy God, that thy brother may live with thee.” (Lev. 25: 36-37.)

Moses, the inspired law-giver, the great soldier-poet-statesman, who led

a semi-barbarous people from the slavery of Egypt and made of them a

nation which endured the longest in the world’s history, wrote these

words.

We also read: “The land shall not be sold forever; for the land is mine

[saith the Lord]; for ye are strangers and sojourners with me.” (Lev.

25: 23.)

Let the Christian world cease bickering over questions of dogma and

study again the inspired law of Moses, the law which Christ came to

fulfill, and a solution of all the many questions which now vex us will

soon be found.

Under the Mosaic law, slaves were emancipated, human life was made

sacred, debtors were liberated every seven years, inherited property was

divided and paternal inheritances were alienated, luxury and

extravagance were discouraged, and by forbidding land-monopoly and usury

(in the Bible usury and interest are synonymous) disproportionate

fortunes and vast accumulations of wealth, which have caused the decline

of the world’s great empires and are now threatening the foundations of

modern civilization, were made impossible.

Chattel slavery no longer exists in any part of the civilized world,

imprisonment for debt has been abolished, the right of the people to

rule is established, but humanity is still bound in chains of servitude

as galling and oppressive as in any period of its history. The rule of

kings is passing away, but the autocracy of money and monopoly is seated

on the throne and swaying a more imperious scepter.

But the people have it in their power to overthrow their oppressors. In

this country, at least, we have the ballot. The duty of the hour is to

study political economy, so that this weapon may be wielded

intelligently and effectively. “Education” must be our watchword. It is

only by education that we may hope to gain the three great essentials

for perfect liberty and equality: _direct legislation_—_direct

money_—_direct taxation_. These will establish forever the sovereignty

of the people.

[Illustration]

II.

THE PHILOSOPHY OF MONEY.

“The American people must learn the lesson of money or they

are lost.”

THE word “money” is derived from the Latin _moneta_ (from _moneo_, to

warn), meaning “warned” or “admonished.” _Moneta_ was a surname for

Juno, because she was believed to have warned the Romans by means of an

earthquake to offer sacrifice. In the temple of Juno Moneta coins were

made; hence _moneta_, meaning either a mint, or coin, or coined money.

The English word “money” is defined by Webster as “any currency usually

and lawfully employed in buying and selling;” and the word “currency” is

defined as “that which is in circulation or is given and taken as having

or representing value.”

Varieties of Money.

Until recent times many substances entirely foreign to our modern ideas

of money were used as measures of value, among which were:

_Leather._ In Rome and Sparta 700 B. C., and in Persia, Tartary, France

and Spain as late as the sixteenth century.

_Bark._ China used the inner bark of the mulberry tree in the fourteenth

century.

_Base Metals._ Iron was used by the ancient Spartans, Romans and

Hebrews; tin was used in ancient Syracuse and Britain, while lead is

still used in Burmah and brass in China.

All of these forms of money were stamped with some sort of design

indicating their exchangeable value and by whose authority they were

issued.

_Wood._ Several ancient governments used money made of wood. From the

time of Henry I. (A. D. 1273) up to the foundation of the Bank of

England, in 1694, a period of over four hundred years, England

circulated a legal-tender money make of wood, called “exchange tallies.”

The “tally” issued by the British Exchequer was a stick or bit of peeled

rod upon which notches were cut, indicative of an account, pledge or

other commercial transaction. It was split in such a way as to divide

the notches. One-half the “tally” was given to the payer and one-half

was retained by the Exchequer; and the transaction might be verified at

any time by fitting the two halves together, when the notches would be

found to “tally” with each other if the check had not been tampered

with. Jonathan Duncan said that these wooden representatives of value

circulated freely among the people and sustained the trade of England.

_Wampum._ One of the prevailing forms of money in use among the New

England colonies was wampum. This was simply strings of white and black

beads made from sea-shells found along the New England coasts. In 1641

Massachusetts made these beads a legal tender at the rate of six for a

penny up to the sum of £10; and they were receivable, at that rate, for

all judgments and taxes. In 1643 the limit of this legal tender was

reduced to 40 shillings. In 1649 the colony passed a statute forbidding

the receipt of wampum for taxes, and its use as money rapidly declined,

though it still circulated in a limited way in several of the colonies

as late as 1704.

_Tobacco._ The people of Maryland and Virginia, before the Revolutionary

war and for some time after, in default of gold and silver, used tobacco

as money, made it money by law, reckoned the fees and salaries of

government officers in tobacco and collected the public taxes in that

article.

_Peltries._ In an early day several of the Western States made peltries

a legal tender. In 1785 the people of the territory now called Tennessee

organized a State called “Franklin” and passed the following act, which

is illustrative of similar acts in other States:

“Be it enacted by the General Assembly of the State of Franklin, and it

is hereby enacted by the authority of the same:

“That from the first day of January, 1789, the salaries of the officers

of the Commonwealth be as follows:

“His Excellency the Governor, per annum, 1,000 deer skins.

“His Honor the Chief Justice, per annum, 500 deer skins.

“The Secretary to His Excellency the Governor, per annum, 500 raccoon

skins.

“The Treasurer of the State, 450 raccoon skins.

“Each County Clerk, 300 beaver skins.

“Clerk of the House of Commons, 200 raccoon skins.

“Members of the Assembly, per diem, 3 raccoon skins.

“Justice’s fee for signing a warrant, 1 muskrat skin.

“To the constable for serving a warrant, 1 mink skin.

“Enacted into law the 18th day of October, 1788, under the great seal of

State.”

_Gold and Silver_ have been used as money metals from the earliest times

of recorded history. The Bible has many references to the use of both

gold and silver as early as the age of Abraham.

_Paper._ The first printed bank notes of which we have any record were

issued by Palmstruck, a banker of Sweden, in 1660.

Intrinsic Value.

No kind of money, as such, has any intrinsic value, for the instant the

material of which the money is made is used for another purpose it

ceases to be money. As money, the sole value of the material arises from

its function as a circulating medium; and even the value of gold and

silver as used in the arts and sciences will be largely determined by

the demand for them for money purposes. Of recent years the general

demonetization of silver by the principal nations has depreciated the

value of that metal about one-half, and there is but little doubt that

if gold were similarly demonetized it would correspondingly decline in

value. This was the opinion of Cernuschi. He says: “If all nations

should demonetize gold it would be worth more than copper, but it would

not be worth much more.”

Appleton’s American Encyclopedia (XI, p. 735) says: “After the discovery

of gold in California, Austria, the Netherlands, Belgium and Germany all

demonetized gold and adopted silver as the legal tender at a fixed rate.

In those countries gold only circulated as a commodity, subject to daily

fluctuations in value; and as a consequence, deprived as it was of legal

support as money, it was but little used.”

Upon the subject of intrinsic value the following authorities are cited:

“Congress shall have power to coin money and regulate the value

thereof.”—_Constitution of the United States._

“To coin money and regulate the value thereof as an act of sovereignty

involves the right to determine what shall be taken and received as

money; at what measure or price it shall be taken; and what shall be its

effect when passed or tendered in payment or satisfaction of legal

obligations. Government can give to its stamp upon leather the same

money value as if put upon gold or silver or any other material. The

authority which coins or stamps itself upon the article can select what

substance it may deem suitable to receive the stamp and pass as money;

and it can affix what value it deems proper, independent of the

intrinsic value of the substance upon which it is affixed. The currency

value is in the stamp, when used as money, and not in the material

independent of the stamp. In other words, the MONEY QUALITY is the

authority which makes it current and gives it power to accomplish the

purpose for which it was created.”—_Tiffany, Constitutional Law._

“Whatever power is over the currency is vested in Congress. If the power

to declare what is money is not in Congress, it is annihilated.... We

repeat, money is not a substance, but an impression of legal authority,

a printed legal decree.”—_U. S. Supreme Court (12 Wallace, p. 519)._

“The gold dollar is not a commodity having an intrinsic value, but

_money_ having only a statutory value; and every dollar has the same

value without regard to the material. The gold dollar has not intrinsic

value.”—_Supreme Court of Iowa (16 Iowa Rep., p. 246)._

“Money is the medium of exchange. Whatever performs this function, does

the work, is money, no matter what it is made of.”—_Walker, Political

Economy._

“An article is determined to be money by reason of the performance

by it of certain functions, without regard to its form or

substance.”—_Appleton’s Encyclopedia._

“Money is a value created by law. Its basis is legal, and not material.

It is, perhaps, not easy to convince one that the value of metallic

money is created by law. It is, however, a fact.”—_Cernuschi._

Specie Basis.

Where paper money is made redeemable in gold or silver the paper money

is said to rest on a “specie basis.” This monetary scheme now prevails

throughout the civilized world. In almost every commercial nation a

large portion of the currency in use is paper money, convertible in

theory, at least, into metallic money, at the option of the holder. This

financial system is framed upon the violent hypothesis that real money

can only be made of the precious metals and that paper bills are not

money, but only representatives of money. Those who are addicted to this

theory are in the habit of designating coins made of the precious metals

as “primary money,” “redemption money” or “standard money;” while paper

bills are called “secondary money,” or “credit money,” and are worthless

except as they may be redeemed in “primary money.” The specie basis may

be gold or silver or both. Since the world-wide demonetization of

silver, gold only is the basis in the leading nations of the earth.

The specie basis theory is open to the following weighty objections:

1. It is contrary to the fundamental law of the United States—the

Constitution.

Judge Tiffany, in his work on Constitutional Law, expounding the right

of Congress “to coin money and regulate the value thereof,” says:

“The authority which coins or stamps itself upon the article can select

what substance it may deem suitable to receive the stamp and pass as

money; and it can affix what value it deems proper, independent of the

intrinsic value of the substance upon which it is affixed.”

This learned opinion, which annihilates all necessary distinction

between “primary” and “secondary” money, was followed by the United

States Supreme Court in the celebrated Greenback cases, and hence has

all the authority of law. (See 12 Wallace’s Reports, p. 519.)

2. The specie basis theory is contrary to the facts of history, some of

which will be recited in succeeding pages. Many instances are recorded

in which paper and other material have been successfully used as money

where no redemption in coin was promised or possible.

3. The specie basis theory postulates that a certain amount of

“redemption money” will support or float a proportional amount of

“credit money;” as the specie increases the paper money may be safely

increased; and as the specie decreases paper money must also be

decreased—a philosophy that would lead to the absurd conclusion that

when all specie disappears the people can have no money of any kind. Mr.

R. H. Patterson, a distinguished English economist, truly puts the

paradox as follows:

“The gospel of monetary science now is, that when a country does not

want paper money, it ought to have a great supply of it; and when it

does require paper money it shall have none. When a country has enough

of specie it ought to double its currency by issuing an equal amount of

bank notes; and when there is no specie there should likewise be no

notes. Is it necessary to discuss such a theory? In order to be rejected

it needs only to be stated; in order to be rejected it only needs to be

understood. It is a theoretical monstrosity against which common sense

revolts—a burlesque of reason which even the present generation will

live to laugh at.”

4. The specie basis is insufficient in volume to redeem the credit money

which is necessarily used in business. The entire circulating medium of

the United States is, approximately, sixteen hundred millions of

dollars, of which about one-third is gold, one-third silver and

one-third paper. Since silver was demonetized it is now only credit

money; hence we have but one dollar of redemption money (gold) with

which to redeem two of credit money, or, taking into consideration, as

we should, the vast volume of checks, drafts and other credits which

must finally be redeemed in gold, it is perfectly apparent that the

United States has not one dollar of redemption money with which to

redeem one hundred dollars of credit—and thus the whole theory of

redemption becomes a mere figment incapable of practical realization.

And what is true of the United States is true of all other countries.

5. The specie basis is a breeder of panics. In times of prosperity and

confidence credits are safely increased to accommodate the increasing

volume of business, and the specie basis is sufficient merely because it

is not put to the test, the people preferring paper money because of its

superior convenience. But at such a time a pebble may start an

avalanche. A startling failure occurs somewhere, creditors press for

liquidation, the banks are besieged, and, being unable to redeem their

promises to pay gold, they suspend—and the panic is complete. Such is

the recurrent history of finance in all civilized lands.

Charles Sears, an eminent authority, says of the gold basis:

“Within the last fifty years, say, a money crisis has come quite

regularly every ten years. Something—any one of a dozen causes, few know

what—sets gold to flowing out. Fifty millions withdrawn in a short time

from its usual place of deposit is quite sufficient to make the whole

volume of coin disappear from ordinary circulation as completely as if

it had never existed. The metallic basis is gone—slipped out; the pivot

of the system is dislocated; somebody wanted it and took it, and the

pyramid tumbles down, burying in its ruins three-fourths of a business

generation.”

To the same effect is the opinion of the famous American jurist, Judge

Walker. He says:

“The whole paper scheme is founded on the presumption that the holders

of these bills will not generally ask for specie at the same time; and,

therefore, the amount of specie kept in reserve bears but a small

proportion to the notes in circulation. And this is the great evil of

the system. A general and simultaneous demand for specie cannot possibly

be met, and disaster must follow. To enforce a universal performance of

these promises is to insure their being broken. Every sudden panic,

therefore, must produce wide-spread calamity.”—_Walker’s American Law,

p. 152._

6. The specie basis affords a means by which greedy speculators work “a

corner” in gold and thus extort large sums in profits which the people

eventually have to pay. The laws and official rulings, for instance,

which require the maintenance of a gold reserve in the Federal treasury

and the payment of duties and interest on the public debt in gold,

create a special and imperative demand for the yellow metal; and as the

supply for that kind of money is almost entirely in the hands of a few

great banking firms, the latter can, at their pleasure, extort such

terms as they please when applied to for gold. An instance of the kind

occurred on Feb. 8, 1895. On that day, in order to maintain its gold

reserve, the United States government purchased of M. Rothschild & Sons

and J. P. Morgan & Co., bankers of London, 3,500,000 ounces of standard

gold coin of the United States at the rate of $17.80441 per ounce, and

paid for it in United States four per cent. thirty-year coupon or

registered bonds, interest payable quarterly. These bonds were taken by

the British bankers at $1.04, and were sold by them within ten days at

$1.18, by which the foreign gold exploiters made a net profit of about

eight million dollars—to be eventually paid by the people.

7. The specie basis must inevitably become more and more insufficient

with the lapse of time, and the disasters due to it in the past become

more frequent and distressing. The population of the world is

increasing, barbarous nations are becoming commercial, and commercial

nations are extending their commerce with unexampled rapidity from year

to year. With this increasing business must come a necessity for a

corresponding increase in the medium of exchange—money. But no material

increase of the precious metals is possible. On the contrary, as the

mines successively become exhausted, or deeper and more difficult to

work, it is clear that the annual supply of gold and silver must become

increasingly insufficient to replace that which has been lost or

consumed in the arts and sciences; and hence the difficulties of the

specie basis will of necessity become more and more aggravated as time

goes on.

Considerations such as the foregoing have led to the rapid development

of a new school of finance which, rejecting the specie basis as

antiquated and no longer tenable, professes to find a sufficient

guarantee for the stability of money in

The Legal Tender Basis.

President Grant said:

“My own judgment is that a specie basis cannot be reached and maintained

until our exports exclusive of gold pay for our imports, interest due

abroad, and other specie obligations, or so nearly as to leave an

appreciable accumulation of the precious metals in the country from the

product of our mines.”—_Message, Dec. 1, 1873._

Plentiful experience has demonstrated that a paper money based upon the

authority, faith and credit of the government and made by law a full

legal tender for all debts will serve all the purposes of a staple

circulating medium as effectually as gold itself.

The effectiveness of legal-tender paper depends upon two circumstances:

1. Government can by law compel the people to take it in satisfaction of

private debts, by refusing to enforce contracts payable in any other

kind of money.

2. The government may receive such legal-tender paper in satisfaction of

all kinds of taxes and duties, thus giving such money a positive value

equal to gold.

The United States Supreme Court, in the celebrated Greenback cases,

says:

“Making these notes legal tender gave them new uses (or functions), and

it requires no argument to prove the value of things as in proportion to

the uses to which they may be applied.”—_12 Wallace Reports, p. 519._

Benjamin Franklin, defending the Pennsylvania colonial paper money

before a committee of the English Parliament, in 1764, said:

“On the whole no method has hitherto been found to establish a medium of

trade, in lieu of coin, equal in all its advantages to bills of credit

founded on sufficient taxes for discharging it at the end of the time,

and in the meantime made a general legal tender.”

Thomas Jefferson, in his letter to Mr. Epps, said of government paper

money:

“It is the only resource which can never fail them, and it is an

abundant one for every necessary purpose. Treasury bills, bottomed on

taxes, bearing or not bearing interest, as may be found necessary,

thrown into circulation, will take the place of so much gold or silver.”

President Jackson, in his message, 1829, said:

“I submit to the wisdom of the legislature whether a national one

[currency] founded on the credit of the government and its resources

might not be devised.”

John C. Calhoun, in a speech in the United States Senate, December 18,

1837, said:

“It appears to me, after bestowing the best reflection I can give the

subject, that no convertible paper—that no paper that rests upon a

promise to pay—is suitable for a currency. It is the form of credit

paper in transactions between men, but not for a standard of value to

perform exchanges generally, which constitutes the appropriate functions

of money or currency. No one can doubt but that the credit of the

government is better than that of any bank—more staple and safe. I now

undertake to affirm, and without the least fear that I can be answered,

that paper money issued by the government, to receive it for all dues,

would form a perfect circulation which would not be abused by the

government; that it would be uniform with the metals themselves.”

Legal-tender paper money is usually issued in times of war, when gold

and silver are hoarded or exported from the country; and, as a

consequence, such legal tender is put to the severest possible tests,

those of an imperilled government, disturbed industry and impeded

foreign trade. Nevertheless, history abounds with instances to prove the

entire sufficiency of this kind of money.

In 1156 the Republic of Venice established a system of paper credits

which served as the principal circulating medium of that country until

1797. This money was always at par and frequently at a premium. In 1770

the Russian government issued its own notes, which sustained the

government through two wars and commanded a premium over coin. In 1797

to 1823 England issued $225,000,000 full legal-tender paper with which

to carry on war against Napoleon. In his “Political Economy,” John S.

Mill says of these notes: “After they were made a legal tender they

never depreciated a particle.”

During the colonial period of American history several of the colonies

issued and successfully maintained legal-tender paper money. One

instance is illustrative of them all. In 1739 Pennsylvania issued

$400,000 in legal-tender paper not redeemable in coin, but receivable

for taxes, which was loaned directly to the people on security of land

and plate. This money continued in circulation until it was prohibited

by the British government in 1775. Commenting on the success of this

system, Dr. Franklin said: “Between the years 1740 and 1775, while

abundance reigned in Pennsylvania and there was peace in all her

borders, a more happy and prosperous population could not, perhaps, be

found on this globe.”

During the Franco-German war France issued an enormous volume of

legal-tender paper money, of which Victor Bonnet, the eminent French

economist, says: “In the midst of the greatest calamities that ever

befell a nation, with an enormous ransom to pay a foreign nation, and

with great domestic losses to repair, a credit circulation was

maintained four times as large as its base, without depreciation. This

circulation reached $600,000,000.”

During the war of the rebellion in the United States (1861-5) the

government issued a volume of legal-tender “greenbacks” which, on July

1st, 1865, was outstanding to the amount of $432,687,966.

The first $60,000,000 of this paper money, issued under authority of the

acts of July 17th and August 5th, 1861, and February 12th, 1862, called

“demand notes,” was made a full legal tender for all debts public and

private. This issue never fell below and often was above par as compared

with gold. In a speech delivered in the United States Senate, July 4th,

1862, Hon. John Sherman said of these “demand notes”:

“The notes are now held and hoarded. The first issue of $60,000,000 were

issued with the right of being converted into six per cent. twenty-year

bonds and with the privilege of being paid for duties in customs. They

are now far above par and hoarded.”

In Schuckers’ Life of Salmon P. Chase, p. 225, the author says:

“The demand notes, being receivable for customs the same as coin, kept

pace with the advance in the price of coin.”

All of the greenbacks except the first $60,000,000 were purposely

depreciated by the “exception clause;” that is, they were made a legal

tender for all debts, public and private, _except duties on imports and

interest on the public debt_, which latter were required to be paid in

coin. This exception clause created a special demand for coin, and as a

consequence metallic money rose to a great premium, at one time (July,

1864) being at a premium of $2.85 in greenbacks to $1 in coin. That

these greenbacks were purposely depreciated stands upon the evidence of

Hon. John Sherman, who, in a report as chairman of the Senate Finance

Committee, made on the 12th of November, 1867, said: “But it was found

that with such a restriction upon the notes the bonds could not be

negotiated, and it became necessary to depreciate the notes in order to

make a market for the bonds.”

Speaking of the amendment by which the “exception clause” was passed,

Hon. Thaddeus Stevens, said in a speech delivered in the House, February

20th, 1862:

“It has all the bad qualities that its enemies charged in the original

bill and none of its benefits. It now creates money and by its very

terms declares it a depreciated currency. It makes two classes of

money—one for the banks and brokers, and another for the people. It

discriminates between the rights of different classes of creditors,

allowing the rich capitalists to demand gold, and compelling the

ordinary lender of money on individual security to receive notes which

the government had purposely discredited.... But now comes the main

clause. All classes of people shall take these notes at par for every

article of trade or contract unless they have money enough to buy United

States bonds, and then they shall be paid in gold. Who is that favored

class? The bankers and brokers, and nobody else.”

This conspiracy of the lawmakers, by which the soldier in the field was

paid in depreciated greenbacks while the Wall Street usurer received

gold, did not deprive the paper money of its splendid functions. While

coin rose to a great premium, owing to the special use made of it in

payment of customs and interest on the public debt, the legal-tender

money carried on the great war and conducted the business of the most

prolific and prosperous epoch in the history of the United States.

As a matter of fact the greenbacks, discredited by legislation as they

were, did not depreciate in comparison with commodities, but gold

_appreciated_ owing to the special demand created for it by law. The

people never lost confidence in the government paper money, even in the

darkest hours of the panic of 1873, as shown by the language of

President Grant. He said:

“The experience of the present panic has proven that the currency of the

country, based, as it is, upon the credit of the country, is the best

that has ever been devised. Usually, in times of such trials, currency

has become worthless or so much depreciated in value as to inflate the

values of all necessaries of life as compared with currency. Every one

holding it has been anxious to dispose of it on any terms. Now we

witness the reverse. Holders of currency hoard it as they did gold in

former experiences of like nature.”—_Message, December 1, 1873._

The Functions of Money.

The functions or uses of money are three-fold:

It is a measure of value.

It is a medium of exchange.

It is a means of storing wealth.

As _a measure of value_ money determines in what proportion commodities

and services shall be interchanged. The yardstick measures the quantity

of fabrics; but some fabrics are more valuable than others. A bolt of

silk, for instance, is more valuable than a bolt of muslin—a difference

which the yardstick, alone, cannot indicate; it merely measures

quantities, not values. Here the money measure becomes necessary. The

abstract unit which we call a dollar measures the _values_ of both silk

and muslin, and determines how many yards of muslin should be exchanged

for a yard of silk.

Money is _a medium of exchange_. Smith has a horse and buggy which he

wishes to exchange for a piano belonging to Brown. Brown is willing to

part with the piano, but does not want a horse and buggy; he does want,

however, a gold watch. Jones has such a watch, but wants to dispose of

it for clothing. Wilson has clothing, but he wants coal. For these four

parties to find out each other’s wants and effect an exchange of actual

commodities and adjust the difference in value between the articles

would involve time and labor and make so many difficulties that the

transactions would be greatly delayed, if not defeated. Here money

performs its beneficent offices as a medium of exchange. Smith sells his

horse and buggy for money, and with it purchases Brown’s piano. Brown

buys the watch he wants, and thus money goes from hand to hand,

effecting innumerable exchanges, not only in the small neighborhood, but

in great commercial circles, thereby bringing the antipodes together and

enabling them to supply each other’s wants with the least possible loss

of time and labor.

Money is, also, _a means of storing wealth_. Jackson has a valuable

farm, but is getting too old or infirm in health to work it. He might

exchange it for a great quantity of food, clothing, and other

necessaries sufficient to last him the remainder of his life; but these

articles could not safely be stored so as to preserve them for future

years, and some representative, that can be stored, must be found. Money

is that representative. Jackson sells his farm for money, and with the

money purchases from time to time the necessaries required.

From a brief study of these three great functions performed by money may

be readily determined what should be the characteristics of a perfect

currency, one that would most effectually and justly serve mankind.

As a measure of values and as a means of storing wealth it is clear that

money ought to be stable, that is, it should as nearly as possible have

the same purchasing power from year to year and in all sections of the

country; for when money fluctuates in purchasing power it is obvious

that some men will gain and some will lose without any merit or fault

upon their part, but simply in consequence of the fluctuations in the

value of money. This is particularly true in case of debt, for if a debt

be contracted when money is cheap, and paid when money is dear, the

debtor will evidently lose by the change, and if the circumstances be

reversed the creditor will lose.

To secure such stability or uniformity of purchasing power no measure or

method is so effectual as for the government to make all its money a

full legal tender for all debts, public and private.

As a medium of exchange the volume or quantity of money in circulation

should be sufficiently large to accomplish the transaction of business

without waste or delay. In estimating the necessary volume it is proper

to take into consideration the numbers of population, the magnitude of

business transacted, and, since a nimble dollar will perform the work of

several slow ones, the “effectiveness” or rapidity with which money

circulates; and, since population and business are, upon the whole,

constantly increasing, and the rapidity of circulation (until some

swifter method of locomotion be discovered) remains unaltered, the

volume of money, clearly, ought to be increased from year to year. Few

who have not patiently studied the problems of finance understand the

mighty effects of an expansion or contraction of the money volume upon,

not only the material, but the moral well-being of mankind.

The very heart of the complex money question, the center of all its

divergent issues, is the question of

The Volume of Money.

The volume or quantity of money in circulation is always hard to

determine, principally because banks, brokers and their allies in

official and journalistic positions are generally interested in

concealing or misstating the facts on purpose to mislead the public; so

that, not infrequently, a period of financial disaster steals upon the

people unaware and they are compelled to endure all the miseries of such

an event without being able to detect the cause or apply the remedy. In

such circumstances the masses may dimly perceive that they are being

robbed, yet, unable to detect the means of their spoliation, they

attribute it to every cause but the real one, and thus the spoliators

are enabled to repeat their robbery again and again, undetected by any

save a few whose complaints are regarded as the extravagances of

uninformed or fanatic minds.

To fully comprehend how the exploiters of money may enrich themselves

and impoverish others by merely manipulating the currency, it is

necessary to understand the primary fact that _an increasing volume of

money brings rising prices and business activity, while a diminishing

volume of money causes falling prices and business stagnation_. Upon

this proposition the following authorities are cited:

David Hume, the English historian, in his essay on “Money,” says:

“We find that in every kingdom into which money begins to flow in

greater abundance than formerly, everything takes a new face; labor and

industry gain new life, the merchants become more enterprising, the

manufacturers more diligent and skillful, and the farmer follows his

plow with greater attention and alacrity. The good policy of the

government consists of keeping it, if possible, still increasing as long

as there is an undeveloped resource or room for a new immigrant, because

by that means there is kept alive a spirit of industry in the nation

which increases the stock of labor, in which consists all real power and

riches. A nation whose money decreases is actually weaker and more

miserable than other nations which possess less money but are on the

increasing hand.”—_Essays and Treatises, vol. I, p. 283._

Henri Cernuschi, an ex-banker of Paris, and recognized as, perhaps, the

most eminent of the French writers on finance, says:

“The value of money depends upon its quantity. It is the same with gold

as with greenbacks. If the stock in circulation is augmented the

purchasing power of every greenback is diminished; and so with gold and

silver. The purchasing power is always in relation to the quantity of

the money.”—_Nomisma, p. 15._

“That commodities would rise and fall in price in proportion to the

increase or diminution of money I assume as a fact that is

incontrovertible. That such would be the case the most celebrated

writers on political economy are agreed.”—_Ricardo, Political Economy._

“If the whole money in circulation was doubled prices would double. If

it was only increased one-fourth, prices would rise one-fourth. The very

same effect would be produced on prices if we suppose the goods (the

uses for money) diminished instead of the money increased; and the

contrary effect if the goods were increased or the money diminished. So

that the value of money, all other things remaining the same, varies

inversely as its quantity; every increase in quantity lowering its value

and every diminution raising it in a ratio exactly equivalent.”—_J. S.

Mill, Principles of Political Economy._

Wm. H. Crawford, Secretary of the Treasury, in his report, February,

1820, says:

“All intelligent writers on currency agree that when it [money] is

decreasing in amount poverty and misery must prevail.”

By joint resolution of the United States Congress, August 15th, 1876, a

“United States Monetary Commission” was appointed to inquire into the

prevailing “hard times.” It consisted of Senators John P. Jones, Lewis

V. Bogy and George S. Boutwell, and Congressmen Randall L. Gibson,

George Willard and Richard P. Bland; to whom were added Hon. Wm. S.

Groesbeck of Ohio, Prof. Francis Bowen of Massachusetts, and Geo. M.

Weston of Maine, the three latter acting as secretaries of the

commission. On March 2, 1877, the commission reported. The following

extracts are taken from the report:

“While the volume of money is decreasing, though very slowly, the value

of each unit of money is increasing in a corresponding ratio, and

property and wages are decreasing. Those who have contracted to pay

money find that it is constantly becoming more difficult to meet their

engagements. The margins of securities melt rapidly, and their

confiscation by the creditor becomes only a question of time. All

productive enterprises are discouraged and stagnate because the cost of

producing commodities to-day will not be covered by the price obtainable

for them to-morrow. Exchanges become sluggish, because those who have

money will not part with it for either property or service, for the

obvious reason that money alone is increasing in value while everything

else is decreasing in price. This results in the withdrawal of money

from the channels of circulation and its deposit in great hordes where

it can exert no influence on prices. Money in shrinking volume becomes

the paramount object of commerce instead of the beneficent instrument.

Instead of mobilizing industry, it poisons and dries up its life

currents. It is the fruitful source of political and social disturbance.

It foments strife between labor and other forms of capital, while

itself, hidden away, gorges on both. It rewards close-fisted lenders and

filches from and bankrupts enterprising producers. An increasing value

of money and falling prices have been and are more fruitful of human

misery than war, pestilence or famine; they have wrought more injustice

than all the bad laws ever enacted.”—_Report of United States Monetary

Commission, vol. I, p. 10 et seq._

Pointing out how a contraction of the money volume increases the debt

obligations of the past, R. H. Patterson, especially commended by

Gladstone as one of the ablest of English writers on finance, says:

“And what is such a dearth of money and rise in the measure of value but

an injustice to the many to the gain of the few—an unfair exaltation of

the power of the past over the present, an unfair and undesirable

aggravation of the poverty of the poor and the wealth of the rich—a

stereotyping of classes according to wealth, until they tend to become

permanent? We have seen how powerful and beneficial was the influx of

the precious metals from the New World four centuries ago in breaking

the social bondage which had settled over Europe during the long night

of the Dark Ages, enabling that generation to escape from the heritage

of the past and bound forward upon the new career then opening to

mankind. Such times come from the hand of Providence, and with an

exceeding rarity even in the long career of civilized mankind. But at

least let us avoid the opposite and never allow successive generations

to be unfairly—nay, most unjustly, though it may not be so

meant—handicapped, each in its own race, owing to a growing dearth and

dearness of money.”—_The New Golden Age, vol. II, p. 500._

President Grant said:

“To increase our exports sufficient money is required to keep all the

industries of the country employed. Without this, national as well as

individual bankruptcy must ensue.”—_Message, December 1, 1873._

Hon. John Sherman, in a speech in the Senate, January 27, 1869, said, in

opposition to a bill to contract the currency by retiring the

greenbacks:

“It is not possible to take this voyage without the sorest distress. To

every person except a capitalist out of debt, or a salaried officer, or

annuitant, it is a period of loss, danger, lassitude of trade, fall of

wages, suspension of enterprise, bankruptcy and disaster.... It means

the ruin of all dealers whose debts are twice their business capital,

though one-third less than their actual property. It means the fall of

all agricultural productions without any great reduction of taxes. When

that day comes every man, as the sailor says, will be close-reefed; all

enterprise will be suspended, every bank will have contracted its

currency to the lowest limit; and the debtor, compelled to meet in coin

a debt contracted in currency, will find the coin hoarded in the

treasury, no representative of coin in circulation, his property shrunk

not only to the extent of the depreciation of the currency, but still

more by the artificial scarcity made by the holders of gold. To attempt

this task by a surprise upon our people, by arresting them in the midst

of their lawful business and applying a new standard of value to their

property without any reduction of their debts, or giving them an

opportunity to compound with their creditors, or to distribute their

losses, would be an act of folly without an example in evil in modern

times.”—_Congressional Globe, 1869, p. 629._

In a speech in the United States Senate, March 17, 1874, General John A.

Logan pointed out the cause of the panic of 1873 as follows:

“But, sir, that the panic was not due to the character of the currency

is proved by the history of the panic itself.... No, sir, the panic was

not attributable to the character of the currency, but to a money

famine, and to nothing else. In the very midst of the panic we saw the

leading bankers and business men of New York pressing and urging the

President and the Secretary of the Treasury to let loose twenty or

twenty-five millions more of the same paper for their relief—the very

same men who to-day denounce it as a disgrace to our government. It was

good enough for them when they were in trouble.

“Why is it that representatives forget the interests of their own

section and stand up here as the advocates of the gold-brokers and

money-lenders and sharks, the same class of men whose tables Christ

turned over, and whom he lashed out of the temple at Jerusalem?... Carry

out the theory of the contractionists, and what must be the inevitable

result? Every enterprise and industry must be dwarfed in like

proportion. The busy hum of the spindle will cease its sound in many a

mill which now gives employment to hundreds of active hands and supplies

the comforts of life to many a happy home. The bright blaze of many an

iron foundry which gives life and cheerfulness to the grand scenery

along the streams of Pennsylvania will cease to gild the night with its

rays. And the same industry in my own State, and that of the Senator

from Missouri, which has been so rapidly increasing of late, will be

crippled, and hundreds who now find employment there will be compelled

to seek a home elsewhere for want of work. The undeveloped resources of

the South and West, which we have just begun to appreciate, will rest in

abeyance until a wiser policy shall bring them into use.... Why, sir,

the people were never freer from debt in proportion to the business done

than in 1865, at the close of the war, when Mr. McCulloch began his

system of contraction, and at the very time when eleven million more

people were to be supplied. Was it to be supposed that the activity and

energy which the adequate supply of money had put in operation, and

which was giving prosperity and happiness to the country, would suddenly

dwarf itself to suit financial notions without a struggle? The

inevitable result was an expedient to meet the consequent want, and

credit was expanded. At the very moment above all others when adequate

supply was needed, the opposite course was adopted; and right here lies

the true cause of the late panic, which resulted from a money famine and

not from an excessive supply.... Sir, turn this matter as we will, and

look at it from any side whatever, and it does present the appearance of

being a stupendous scheme of the money-holders to seize the opportunity

of placing under their control the vast industries of the nation.

Therefore I warn Senators against pushing too far the great conflict now

going on between capital and labor.... Capital rests upon labor; but

when it attempts to press too heavily on that which supports it in a

free republic, the slumbering volcano, whose mutterings are beginning

already to be heard, will burst forth with a fury that no legislation

will quell.”

From the foregoing, which is but a small fragment of the immense

literature in harmony with the opinions cited, the following conclusions

may be digested:

1. A diminished volume of money always causes a proportional diminution

in the price of labor and commodities—or, to express it otherwise, money

becomes dear and everything else cheap.

2. This redounds to the advantage of the capitalistic class, who are

thereby enabled to exact more for their money in services and

commodities, to purchase all kinds of stocks and properties at

diminished rates, and to foreclose mortgages and collect other forms of

debts under such conditions as to make “hard times” a harvest for the

creditor class.

3. The debtor class is compelled not only to yield more services and

commodities for the money which it receives or has previously received,

but suffers the further hardship of languishing business and enforced

idleness or diminished wages; and it should be remembered that every

producer is a debtor, even though he has no specific obligations

outstanding; for he will have to aid those who _have_ such obligations

by receiving less prices and wages and by paying relatively increased

taxes, salaries, rents and profits to those members of the debtor class

who are immediately above him in the social scale, and who will seek to

save themselves by shifting the burden of their obligations onto those

who are below.

[Illustration]

III.

A BIRD’S-EYE VIEW OF AMERICAN FINANCIAL HISTORY.

BY SAMUEL LEAVITT,

_Author of “Our Money Wars,” “Dictator Grant,” etc._

“I am astonished at nothing in our business life so much as

the absence of an earnest, determined endeavor on the part

of our men of brains to find the cause of these chronic

crises and hard times and then set upon the track of some

remedy therefor.”—REV. HEBER NEWTON.

WHAT may well be called the American system of money has been gradually

evolved, during three hundred years, from the bitter experiences of the

most practical people that ever trod this globe. Franklin, Jefferson,

Jackson, Calhoun, Clay, Gallatin and Benton were its prophets. But it

first began to take definite shape during our civil war under such men

as Edward Kellogg, Thaddeus Stevens, Henry C. Carey, Stephen Colwell,

Pliny Freeman, Ben Wade, Oliver P. Morton, Henry Wilson and John

Thompson; and later, Warwick Martin, Peter Cooper, Thomas Ewing, Wendell

Phillips, John E. Williams, George Opdyke, John G. Drew, John P. Jones,

William D. Kelley, B. F. Butler and others.

What first strikes the observer in a bird’s-eye view is that the whole

modern movement toward a rational money system was started by that

much-maligned genius, John Law, in France, in 1715. His system was one

of the first recent revolts against the tyranny of metal money. He was

the real founder of the Bank of France and the present French system.

The _Encyclopedia Britannica_ calls him an “unequaled financier.” His

great thought was plenty of government paper money, and France has kept

that thought. Law was finally beaten by politicians and the King’s

mistresses when he tried to improve his system.

Turning homeward, we find the first American coin money, succeeding the

wonderfully useful wampum, came very curiously—coin usually does. In

1652 a mint was set up in Boston to coin silver into “pine tree” money.

The silver came mostly from the West Indian trade. Our rulers in England

then, as now, only busied themselves in stealing from us any good money

we could get hold of. Singularly enough we depended largely then upon

another class of pirates—the buccaneers of the Spanish main, who spent

most of their plunder on our shores, where were the nearest civilized

ports. This was a great blessing—“a blessed providence”—to our Puritan

ancestors and the coin money economists of those days.

In 1745 we had another blessed influx of silver. Governor Shirley, of

Massachusetts, and his pious Puritans, went over and captured Louisburg,

Cape Breton, from the French, with fire and sword, and made a big loot.

This so tickled Mother Britain that, for once, she sent us a lot of

silver to “ransom” Louisburg. This enabled Massachusetts to steal away

the trade of Rhode Island.

In 1690 the first issue of paper money was made in Massachusetts. This

was before the establishment of the Bank of England. It was for £7,000.

In 1703 £15,000 was issued, which was made a legal tender for private

debts. In 1716 another issue to the amount of £150,000 was authorized.

Mark the style of it, as compared with the wild-cat projects of the

present Congress, and see which is the most reasonable and conservative,

and then inquire if the Farmers’ Alliance plan is so foolish: “The bills

were to be distributed among the different counties of the province, and

to be put into the hands of five trustees in each county, to be

appointed by the legislature, to be let out on real estate security in

the county, in specific sums, for the space of ten years, at five per

cent. per annum.” Another act for £50,000 in bills was passed in 1720,

“which resulted in clearing Massachusetts of debt in 1773.”

In 1723 Pennsylvania led a number of States in issuing paper money. In

this year a great crisis occurred in England and the Bank was suspended.

The coin of the American colonies was required, and drawn over, in

England’s selfish and peremptory way, to prepare the bank for

resumption. All coin left Pennsylvania, though the State possessed laws

raising its value. Then the State issued treasury notes, and kept them

in use until 1773, when English jealousy caused Parliament to make all

such issues void. Some of the money was issued, says Adam Smith, on land

security of double the value, and redeemed in fifteen years. It was made

legal tender and remained at par with coin for forty years. The

necessary notes were redeemed, by their payment for taxes, without loss

to any one. This is the familiar history of Pennsylvania and the

statement of Franklin. The cutting off of this money was the chief cause

of the Revolution. The tea-party in Boston harbor was only a side-show.

Continental money was issued by Congress when we had no government—no

power to tax. Yet if made full legal tender, with no mad promise of

coin, fifty million dollars might have been enough. Gallatin says: “It

saved the country.” Jefferson: “It expired without a groan.” Calhoun:

“It is the ghost conjured up by all who wish to give private banks

control of government credit.” It was used in place of a war tax, and

the people so regarded it.

French assignats broke the spell of royal tyranny in Europe. Such is the

power of a live nation to use and absorb money that nine billion

dollars’ worth of it was issued before it broke down. Even then the

cause of the tumble was that it had no suitable foundation. It was

founded on land taken from the priests, and naturally fell when that

land was returned to the churches.

Our Coin for a Century.

We come now to the coin money of the last half of the eighteenth and the

first half of the nineteenth century. Through ignorance of it, some

silver advocates are dismayed by the fact that so little silver was

coined here before 1878. The great point to be shown is that we had no

need to coin, because so much came from abroad. The way metal money

flowed here during the wars between England and Spain reads like a fairy

story. The treasures of Mexico and South America passed through here and

gave many temporary and flitting coin deposits. Then from the opening of

the Napoleonic wars until 1820 the most of Europe, including England,

was using paper money. So coin came and stayed here. In fact, coin

stayed back in our Western wilds often when it was scarce in Eastern

sections and large cities. Through all smashes and wild-cat times,

Western banks paid coin until 1820. Those were good times for planters

on new soil. The old Virginia planter, in his blue swallow-tail coat

with brass buttons, and his ruffled shirt, always had a pile of

doubloons in his desk. He did not know that European war and paper money

put them there.

The banks, warned by wild-cat experiences, grasped at all coin as they

do now at gold. One bank sucked all there was in North Carolina and

owned the State. It was so plenty in the twenties, in New England, that

they shipped it to Europe.

A point never to be forgotten by silver men, in answer to the gold man’s

statement about small coinage of silver, is that from the foundation of

the United States money laws were passed giving legal value to foreign

coins. Our mistaken ratio of 16 to 1, instead of 15½ to 1, made it

generally useless for us to coin silver, when we could have plenty from

abroad that was legal tender. One fact alone shows how immensely we were

using our own silver and foreign silver and gold—viz.: the panic of 1857

was largely due to the demonetization of our small silver and those

foreign coins. In 1853 Congress demonetized all silver halves, quarters

and dimes in sums of over $5.00. Much of the reserves of the banks was

in these fractional silver coins, which had been full legal tender, and

in larger gold and silver coins of the United States and other

countries. The silver dollars of Spain, Mexico, South America and the

United States were worth a premium over gold, and were bought by the

Rothschilds and sent out of the country, though they did big service

while they stayed here. But the banks did not hold them as reserves. So

the demonetization of our small silver deprived the banks of a large

portion of their reserves and of paying their circulation therein.

Up to February, 1857, all foreign gold coins and the silver coins of

most nations were, in the United States, full legal tender with our

coins at the values fixed by our laws; and gold being, since 1834,

overvalued in the United States, immense quantities of these gold coins

came here and remained. Another reason why we did not coin silver

dollars is found in this fact: gold was superabundant. These gold coins

were also held by the banks as reserves in large quantities.

But on February 21, 1857, Congress demonetized all foreign coins. This

took them out of the banks. They went abroad never to return. And this

was one chief cause of the panic of 1857. The facts above given,

properly circulated, should forever silence the quibbles of the gold men

about the non-use and non-coinage of silver up to 1878. From 1861 to

1878 we used but little coin.

The gold men sneeringly ask if we want to go on a 50-cent dollar like

Mexico. It is true they have worked their diabolical will on some of

those weak nations, where the currency is thrown into horrible confusion

thereby, and foreign business is made almost impossible by the rise in

the gold dollar to a $2.00 dollar. They have come near Mexicanizing us

in this respect, but have failed as yet. Their plea for the deposits of

workingmen in savings banks is like the howl the mortgage people are

always raising about the poor widows and orphans of the East, to whom

the Western farmer should willingly pay high interest. Wise nations

legislate for producers, rather than for interest-suckers—male or

female.

United States Banks—Wild-Cat and State Banks.