Ever since the Revolution there has been war between Jefferson’s

treasury notes and the sharp fellows who wish to collect interest on

their debts. In the lush wild-cat times bankers did not care whether

they made their scoop by shoving out bank notes so far that they would

hardly ever come back, or lending interest-bearing credit to their

neighbors. Now the telegraph, railroad and redemption banks would make

hard sledding for State wild-cats.

The United States banks (private) were so mixed with the wild-cats for

fifty years—1791 to 1841—that they need describing. The first, in 1791,

was got up by Federals who hated treasury notes. But fortunately there

was much honesty then, and it was so managed that its notes were like

full legal-tender greenbacks. Those were halcyon days. The wild-cats

were around, but got little game. They made their first big inflation in

New England. The Yankees thought they could swing out to any degree when

the Anglo-Spanish and the Napoleon wars made coin so plentiful?’ here.

There was a great rush of banks between 1811 and 1816, when the second

United States Bank came in. It was a fraud from the start, violated its

charter and was founded mostly on personal notes. But it swung its

twenty years. The great plan of the wild-catters was to get its treasury

notes, good as gold, and drawing interest, for their red dogs. Right

here let us affirm that, for short, all State bank money may be called

wild-cats, red dogs and shinplasters. For such it always proves in panic

times. The Chicago _Tribune_ says that the Democrats are “committed upon

both principle and tradition against a Federal currency—committed also

to State banking.” Not so. Jefferson was strong for Federal money, _i.

e._, treasury notes. The Whigs were always as much given to wild-cats as

the Democrats. Again the _Tribune_ tells of 34,000 who took the benefit

of the bankruptcy act in 1841-2-3, but says nothing of the hundreds of

thousands who failed between 1873 and 1890, under the crush of

Republican gold resumption, without any such release. Intelligent

Democrats could show billions of loss from Republican financiering

against hundreds of millions under Democracy. Give the poor devil

Democrat his due. He makes a clumsy attempt now to cover his rascality

in voting against silver bills by all his talk of returning to

wild-cats. The cheeky Republicans offer no shadow of a real remedy for

our financial ills.

To return to the time of the twenties. The new, hopeful country kept

having booms in spite of bad money. After the close of the war of

1812-15, “blessed peace,” said Matthew Carey, “came and brought two

thousand merchant buyers to Philadelphia.” Fortunes were made. It was

funny as a circus. The brokers stuffed the United States treasury full

of shinplasters, not good thirty miles from home. Congress said “resume”

in 1817. Banks said, “Go to the devil.” With twenty-two millions “on

hand,” Congress had to borrow half a million to keep house on. The big

bank was given over to favorites, bribery and corruption, but ruled the

land. There was a whirligig between the branches of the big bank and the

little banks. The latter bought, with their red dogs, from the branches,

drafts on Eastern cities. The drafts bought European goods. Meanwhile

the branches socked it to the wild-catters up to five and ten per cent.

a month, till they redeemed their red dogs with the proceeds of another

crop.

In 1818 the president of the big bank resigned when it was near ruin. A

new president, Cheves, saved the bank, in the Bank of England fashion,

by ruining a lot of small banks and merchants. In 1820 came “stay laws”

and a “relief system.” Men could redeem their lands and negroes in two

years by paying ten per cent. down. North Carolina had an awful time.

Robber bankers of Newbern became the practical owners of the State and

sucked its blood. Were ruling still in 1833.

In 1825 the great Nick Biddle took the presidency of the bank, and ran

the whole country, till knocked out by Jackson. Biddle was the biggest

boss yet; moved crops; lent ten millions at a time to the government.

Some thought he gave the rising sun a boost. When there was a run, he

only allowed his branches to cash their own drafts. In 1832 was high

water time for this fine old Philadelphia gent. President Jackson, who

hated all undemocratic high kicking, made him pay the government debt

from his government deposits. Jackson stopped the abnormal boom in wild

lands by his “specie circular,” ordering only specie to be taken for

United States lands. Then, to check the torrents of extravagance, he

ordered the useless thirty-seven millions that he had foolishly put in

State banks distributed back to the people of the States. The

wild-catters paid eighteen millions, and then all broke, beginning in

New York in May, 1837. That was a grand smash. Jackson had a glimpse of

the greenback remedy in his muddled head. Jefferson and Calhoun always

had it.

Parallel with all this was the Mississippi tomfoolery of 1830 to 1840.

That State borrowed thirty millions on the old personal note plan from

Holland, and fooled it away in ten years. Slaves were then the only good

assets. These were run off to Texas, and “Gone to Texas” (G. T. T.) was

a familiar inscription.

The College Professor and the Facts.

Prof. Laughlin of Chicago University said in his recent speech before

the Sunset Club and the Bankers’ Association:

“It seems to me that one of the greatest misfortunes that this country

ever suffered was that temporary, and to the present time lasting,

intoxication connected with the issue of United States notes or

greenbacks. From the foundation of our government, in 1789, to February,

1862, the United States government never issued any paper money.”

The Chicago _Herald_ of December 10 voiced the same falsity thus:

“In fact, the government never did anything of the kind until 1862, when

Congress authorized an issue of legal-tender notes.”

Are these men simply reckless liars, or are they ignorant of the facts?

Here are the facts: From 1812 to 1860 U. S. treasury notes were issued

at least twenty times; that is, in every time of emergency, when the

bankers’ wild-cat money could not possibly keep business going. These

notes were receivable for all debts due the government, including

interest on the public debt and custom-house dues; and that fact made

them universally acceptable by the people—better than gold. In these

respects they were better than the greenbacks; for never until the

infernal exception was put upon them, in 1862, did the government refuse

to receive its own treasury notes.

Here are most of the dates and amounts of those issues—all by acts of

Congress readily traced: June 3, 1812, $5,000,000; February 25, 1813,

$10,000,000; March 4, 1814, $10,000,000; December 26, 1814, $25,000,000;

February 14, 1815, $25,000,000; October 12, 1837, $10,000,000; March 21,

1838, $10,000,000; May 31, 1840, $5,000,000; June 30, 1842, $5,000,000;

August 31, 1842, $6,000,000; July 22, 1846, $10,000,000; June 28, 1847,

$23,000,000; December 23, 1857, $20,000,000; December 17, 1860,

$10,000,000.

Is that lie nailed? The above treasury notes were hampered in various

ways. The money-lenders persuaded Congress that it would be “contrary to

the laws of the Medes and Persians” if the notes drew no interest. So

they were generally heavily handicapped in that way. Sometimes they only

drew one mill per annum, sometimes nothing. When they drew none the

Shylocks at once cried that the country was ruined. They liked them well

enough plus interest, because they were sharp enough to get hold of them

and pull in the interest, while they managed to cram the United States

treasury full of their wild-cat stuff.

To thoroughly verify these serious statements, let us look at the

statutes under which these issues were made and the particulars of their

issue:

_Act of June 3, 1812 (Statutes 2, p. 366)._—This law authorized the

issue of $5,000,000 treasury notes, to run one year, bearing five and

two-fifths per cent. interest. They were made receivable for all debts

due the government, and were to be paid to such public creditors and

other persons as were willing to receive them. They might also be used

to procure loans, or might be placed to the credit of the treasury in

banks at par and accrued interest.

_Act of February 25, 1813 (Statutes 2, p. 801)._—This law authorized the

issue of $10,000,000 treasury notes to mature in one year, bearing five

and two-fifths per cent. interest per annum. Terms same as act of June

3, 1812.

_Act of March 4, 1814 (Statutes 3, p. 100)._—Authorized an issue of

$10,000,000 on same terms as above. No charge to the government was to

be made by the banks which credited the notes.

_Act of December 26, 1814 (Statutes 3, p. 161)._—Authorized the issue of

$25,000,000 treasury notes in place of a loan of $25,000,000 previously

authorized. Ten millions of these notes were to be applied to the

payment of $10,000,000 previously borrowed. Otherwise they were like the

above.

_Act of February 14, 1815 (Statutes 3, p. 213)._—This law authorized the

issue of $25,000,000 treasury notes in addition to other issues. Up to

this time the Secretaries of the Treasury, Mr. Gallatin and Mr.

Crawford, had complained that the treasury notes so far issued were made

too large for common circulation, though their standing among the people

was good and the people were desirous of having them. They said treasury

notes had taken the place of coin and equalized the exchange throughout

the country. To meet the wishes of these secretaries and of Jefferson

and Madison, as well as the people, these $25,000,000 treasury notes for

circulation were authorized and issued. The most of them were required

to be less than $100 in denomination, and to be payable to bearer, while

those of $100 and over were to be made payable to order and to pay by

indorsement, and were to bear five and two-fifths per cent. interest.

The smaller ones were to bear no interest. They were also, for the first

time, made receivable for six per cent. bonds. They were made to

circulate as money, and to have the characteristics of coin, but they

were not redeemable therein. They were legal tender to the United

States. These notes, after being paid into the treasury, were to be

reissued.

When these $25,000,000 treasury notes of small denominations were made

to circulate as money, and to bear no interest, the indignation of all

the banks in the country was aroused. They saw that if those notes went

out among the people, and became the money of the country, there would

be an end to the circulation of bank notes. Such was the truth. There

was, therefore, a general combination in New England, New York, Delaware

and Pennsylvania to kill them off. The old Bank of the United States,

chartered in 1791, the charter of which expired and which was not

renewed in 1811, was then, as the law allowed, closing up its affairs.

The debts of the people to this bank were very large. The bank was

pressing for payment. The people presented these treasury notes, which

did not bear interest, in payment. The bank, to destroy the credit of

the notes, and to force the recharter of a national bank, refused to

receive the notes of the government in payment to the bank. As the bank

would not receive the notes from the merchants, the merchants were

reluctantly compelled to refuse to receive them for debts due and for

goods sold. The New England banks, and those of Delaware, were also

deeply involved in this conspiracy to destroy the credit of these

treasury notes, as all such are now. The embargo and non-intercourse

laws of Jefferson and Madison had destroyed the carrying trade of New

England, and had caused a suspension of the New England banks in 1809

and 1810. The people of New England were, therefore, greatly opposed to

the war with England. They did all they could to cripple the government

in carrying it on. They refused all loans, even of bank notes, and were

very hostile to all treasury notes, especially to those intended to take

the place of bank notes, as were those of 1815.

By a general combination between State banks, the old national bank

bondholders and bullion brokers, these notes of the United States were

forced to a discount for a short time. One of the strongest arguments in

favor of having all treasury notes made full legal tender is here

presented. Had they been legal tender to the people, as well as to the

government, all the efforts of the banks and brokers to reject them and

reduce their value would have been fruitless. If the legal tender

character were removed from the greenbacks the national banks would at

once discredit them to-day.

Immediately after these efforts of the banks to discredit treasury

notes, an application was made to Congress for a charter for another

United States bank, which proposed to take from the government, as part

of its capital, $15,000,000 of these same treasury notes, to withdraw

them from competition with bank notes. (Just as the rascally

conspirators at Washington are now trying to do with three hundred and

forty-six million greenbacks.)

Mr. Madison vetoed the bill, principally on account of this provision.

But $28,000,000 of bonds were substituted for treasury notes, as capital

of the bank; and by a combination of the Federal party and a few

Democrats it was chartered. The charter provided that no other such bank

should be chartered by Congress for twenty years. This implied, also,

that all treasury notes intended to circulate as money should be

withdrawn, and that this bank should furnish all the national paper

circulation for twenty years.

For this privilege the bank paid $1,500,000. The contract on the part of

the government was disgraceful, but, having been made, it had to be

carried out; and it was carried out, as the following acts of Congress

show:

_The Act of March 3, 1817 (Statutes 3, p. 377)._—The second Bank of the

United States had just gone into operation. Congress was compelled to

comply with its part of the contract. It, therefore, passed this law,

which repealed all laws authorizing the reissue of the “treasury notes

of 1815.” But the people had these government notes, and they preferred

them to bank notes or coin. They knew that the repeal of the law

authorizing their reissue could not affect the value of those then in

their hands, for a valuable consideration paid the government. They,

therefore, held on to the notes (as our people should now, in spite of

Sherman, Gage & Co.) Instead of paying them into the treasury, where the

law required them to be destroyed, the people held on to them, and used

them in business, greatly to the annoyance of the bank and of the

Secretary of the Treasury, then a bank man (Mr. Dallas). This officer

ordered the collector of revenue to refuse to receive these notes for

duties on imports, supposing that by this means he could injure their

credit and force their presentation at the treasury for payment in coin

or national bank notes, that they might be canceled. This gave rise to a

suit in Boston. A firm presented treasury notes in payment of duties on

imports, for which the law creating them provided that they should be

received. The government refused to receive them, and brought suit for

the duties. The defendants pleaded a tender of treasury notes. The

government answered that they were not legal tender. Judge Story, in

1819, heard the case, and decided for the defendants. The decision is

that “Treasury notes are legal tender for everything for which the

government makes them receivable.” This decision is in 2 Mason, pages 1

to 18. This decision, though against the government, was never appealed

to the Supreme Court. It, therefore, stood as the law of the land.

_The Act of May 3, 1822 (Statutes 3, p. 675)._—Treasury notes still

remained out among the people, to the annoyance of the bank and the

Secretary. The decision of Judge Story raised instead of depreciating

them in the estimation of the people, and increased the anxiety of the

bank and the Secretary respecting them. The notes did not come to the

treasury for destruction. (Just so the people acted when John Sherman

tried to make them take 5-20 bonds and give up the greenbacks.) They

remained among the people until May 3, 1822, when Congress again came to

the rescue of the bank and passed the law of that date, which provided

that these treasury notes should not be received by any collector of

revenue in the United States, and that they should be received and paid

at the treasury only. All that came into the treasury were to be

destroyed. The people wished to retain these notes; but the bank forced

Congress to act against them; and Congress, by destroying their

receivability, compelled their surrender by the people. We hear no more

of treasury notes thereafter until 1837, when, as usual, the necessities

of the government again called them into being.

_The Act of October 12, 1837 (Statutes 5, p. 201)._—The banks had all

suspended, with nearly $40,000,000 government bonds. Not one year before

the law had made these banks public depositories, with their promise

that they would always pay coin for all liabilities. The government had,

in 1835, paid off the last dollar of the national debt. The surplus then

in the treasury was nearly $40,000,000. This was in the banks. The

government had no money to pay ordinary expenses, unless the treasury

used suspended bank notes. This Mr. Van Buren, the President, refused to

do. He called Congress together to meet the emergency. Its remedy for

the emergency was treasury notes (as it should now be), which Jefferson

says are the only reliance of a nation. This act of October 12, 1837,

provided for the issue of $10,000,000 treasury notes, in denominations

not less than $50, running one year. The law left the interest which

they were to bear discretional with the President and the Secretary of

the Treasury; but in no case was it to exceed six per cent. Congress

appeared too timid to make these notes money bearing no interest. The

Secretary, knowing that the people needed them as money, complied with

the law by making many of them bear one mill interest per annum. As such

they circulated freely as money, and the people were delighted to get

and use them. They answered all the purposes of coin, and equalized the

exchanges throughout the country. The banks did not, at that time,

possess sufficient power to injure them. Men now living remember them

and their usefulness, although, imitating the foolishness of the Bank of

England, they were never paid out of the treasury but once.

_The Act of May 21, 1838 (Statutes 5, p. 228)._—This act authorized the

reissue of the $10,000,000 treasury notes issued under the act of 1837,

which had been canceled. They should have been used till worn out, and

then replaced _ad infinitum_. It has taken time and a great war to open

the eyes of the people and Congress to see what Jefferson saw in 1813.

And now, again, many are forgetting the facts.

_The Act of May 31, 1840 (Statutes 5, p. 370)._—This law renews the act

of 1837, relating to the issue of treasury notes, and makes the

following modifications: 1. That they were to be issued in place of

those redeemed; not to exceed in this issue $5,000,000. 2. They were to

be redeemed in less than a year, if the treasury was in a condition to

redeem them. 3. When ready to redeem them, the Secretary of the Treasury

was to give notice. 4. After due notice, these notes should cease to

bear interest, if they remained out. This act was to continue only one

year. It is evident that Congress supposed the necessity for issuing

treasury notes would soon cease. But it was mistaken. Treasury notes

continued to be issued up to 1848.

_The Act of July 4, 1840 (Statutes 5, p. 385)._—This was the first

independent treasury act of the days of Van Buren. It had good features,

but was badly bungled. The money of the government was to be kept by the

government (instead of the banks), in the mints, custom-houses,

post-offices and treasury building. The fool part of it was that after

January 3, 1843, no payment should be made to the government in anything

but gold and silver coin. The banks were suspended. The government was

being sustained by treasury notes. But still this law provided that

after January 3, 1843, treasury notes should be excluded from the

treasury as well as bank notes. An appeal was made to the people, in

that year’s election, upon this law, and Van Buren and his coin payments

were knocked out by Harrison with wiser plans.

_The Act of July 21, 1841 (Statutes 5, p. 438)._—This was among the

first Whig acts, and they in turn made fools of themselves. They favored

a national bank, but opposed treasury notes. The law provided for the

issue of $12,000,000 six per cent. bonds. The principal purpose was to

redeem the good treasury notes of the Democrats. A Pittsburg man was

sent to England to sell the bonds. Though the United States had paid its

national debt in 1835, the bonds were no go. The Whigs, having failed to

found a bank and sell these bonds, were compelled to rely upon the

much-despised treasury notes of the Democrats.

_The Act of April 15, 1842 (Statutes 5, p. 473)_, was a final effort to

shove the bonds. They were increased to $17,000,000, the time extended

indefinitely up to twenty years. They could be sold at less than par.

The rich, strong young nation could not do it, though taxes and duties

were pledged for payment. The war was going on between the Whig Congress

and sensible President Tyler. The latter advocated the issuing of all

the paper money as well as metallic money by the government; but

Congress wished the money issued by a national bank. The President

vetoed the bank bill. Congress, by way of heading him off, passed the

act to make treasury notes bear six per cent. interest, to hinder their

being used as money.

_The Act of June 30, 1842 (Statutes 5, p. 766)._—This provided for

$5,000,000 treasury notes to run one year. Interest five per cent.

Otherwise like most of the others, as to legal tender, payment to public

creditors and placing them in banks.

_The Act of August 31, 1842 (Statutes 5, p. 581)_, shows a lingering

hope of selling the bonds. If not successful, the government was to

issue $6,000,000 more of treasury notes (trotting out the despised

pack-mule again), which might even be reissued. What a let-up! Br’er Fox

Shylock, he lie low!

_The Act of March 3, 1843 (Statutes 5, p. 614)_, authorizes the issue of

new treasury notes to supply the place of those redeemed.

_The Act of July 22, 1846 (Statutes 5, p. 39)._—The Democrats resumed

power in 1845. This act authorizes $10,000,000 treasury notes in place

of those destroyed.

_The Act of August 6, 1846 (Statutes 9, p. 59)_, finally established the

independent treasury on a sensible basis. It made all treasury notes and

gold and silver coins equal in payment of all debts to the government.

This held till 1861, and many of the provisions are still law, but badly

enforced, as when our recent Presidents deposited many millions in

banks.

_The Act of January 28, 1847 (Statutes 9, p. 118)_, authorized

$23,000,000 (more than $500,000,000 now) to fight the Mexican war. No

interest was fixed. They mostly drew one mill, and the people gladly

used them as money.

_The Act of December 23, 1857 (Statutes 11, p. 237)_, provided for

$20,000,000 treasury notes to take the place of coin, the banks having

suspended with the coin in their vaults. (Heaven, or something,

generally saves the banks.) These were, like most of the previous

issues, with nominal interest. The plain people took them gladly.

_The Act of December 17, 1860 (Statutes 12, p. 121)_, provides for

$10,000,000 treasury notes, running one year, at six per cent. The

interest was to run and the notes remain out until sixty days after

notice of readiness to redeem. Otherwise they had the old provisions.

_The Act of February 8, 1861_, authorized the issue of treasury notes,

or a loan of $25,000,000 to take up treasury notes.

_The Act of March 2, 1861 (Statutes 12, p. 178)_, provides for a loan of

$10,000,000 to take up treasury notes and for government expenses. Same

old story. If bonds not sold, then more notes.

This brings us to the act of July 17, 1861, when the gigantic

$250,000,000 of loans and notes came up. The further history is well

known. That just given will surprise those who thought treasury notes

began with the rebellion.

Safety Fund—Suffolk and Redemption Banks.

As many of the foolish propositions now put forth for “reforming the

currency” are only feeble imitations of the Safety Fund, Suffolk System

and Redemption Bank System that arose before the Rebellion, a brief

account of them will be given here. In the thirties and forties there

were as many so-called systems as there were States. The Suffolk System

of Massachusetts, among those first started, alone deserved the name of

system. In 1829 that State decreed that no bank should operate unless

fifty per cent. of its capital was paid in coin. Notes must not exceed

twenty-five per cent. of the capital. Liabilities, except deposits, must

not exceed twice the capital. Such provisions, however, amounted to

little, because, much of the loans being simple credits, there was small

inducement in the strong banks to overissue notes. As no provision was

made for reserves, the coin to set a bank in motion could be bought and

sold again right after the organization. The Redemption system,

afterward adopted, was much better, but, as will be shown, only a harm

in panic times.

The New York banks were placed mostly in New York City and the Hudson

River towns. In 1829 the Safety Fund System arose there. It allowed the

banks under it to issue notes to twice the amount of their paid-up

capital, and loans to twice and a half the amount. Every bank under it

had to pay the State Treasurer, annually, one-half of one per cent. upon

its share capital—these payments to continue till each bank had a sum

equal to three per cent. of its share capital. The amounts so paid were

to be held as a common fund for the discharge of notes or other

liabilities of any bank of the system.

In 1841 and 1842 eleven of the Safety Fund banks failed, making a loss

to the creditors of $2,588,933. The fund was then $86,274. The whole

amount of the fund to September 30, 1848, was only $1,876,063. The

balance of the loss was provided by the State, which was to be

reimbursed by further additions to the fund. That was very nice for the

banks. In 1842 the act was so amended that the fund became chargeable

only with the losses to the public on the note circulation, just as it

is the case with the national banks now.

In 1838 New York founded the “Free Banking System,” by which banks could

be formed without application to the legislature. These associations

were required to deposit with the State Comptroller United States or

State stocks equal to a five per cent. stock, or bonds and mortgages on

improved real estate worth twice the sum secured, and equal in amount to

their note circulation. The Comptroller issued the notes to them. Up to

1843 twenty-nine of these banks failed—circulation, $1,233,374; nominal

value of securities, $1,555,338. These produced $953,371, or 74 per

cent. of the circulation secured. The law was then amended to exclude

all but United States stocks, and those of the State, which must be

equal to six per cent.

A wiser provision had been adopted in 1840, requiring all the State

banks to redeem their notes, either in New York City, Albany or Troy, at

a discount of one-half of one per cent. In 1851 this discount was

reduced to one-quarter of one per cent. After 1851 two New York banks

started the Redemption System. The notes of such of the country banks as

kept deposits with them were returned, the redeeming banks dividing the

discounts between themselves and the issuers. This system was useful, as

it forced a constant redemption; but see how it worked in 1857.

After 1838 no more Safety Fund banks were chartered, and the system

gradually lapsed. But a curious story could be told of how it ran

through the West. That region was deluged with “safety” money—all but

the safety. In 1846 the new Constitution of New York took from the

legislature all power to pass any act granting any special charter for

banking purposes; such organizations to be under general laws. After

1850 bank stockholders were to be liable to the amount of their shares

for all the debts, and holders of notes to be preferred creditors.

Now, for the redemption banks in 1857. These banks, useful in their way

in ordinary times, did harm in that panic. A few years before a new

source of profit was suggested to some New York banks. If the redemption

that was distributed among the money-brokers could be monopolized by one

or two institutions it would yield a rich revenue; and it could easily

be attracted by reducing the rates of redemption so low as to exclude

individual competition. The system was based somewhat upon the Suffolk

system. Coupled with the payment of interest on country deposits, it had

grown into astonishing activity before 1857. It worked admirably as a

piece of machinery, with the popular commendation that it restricted the

bank currency by enforcing prompt redemption, and saved the merchants a

heavy brokerage. It was a great convenience in the first days of the

panic, when private capital was withdrawn from the purchase of currency,

and when the merchants, but for the redeeming banks, would have been

overburdened with unavailable notes.

But the redemption system, like everything else that was susceptible of

abuse, was turned aside from its legitimate purpose and made to answer a

mischievous end. The low rate at which the bills were taken in New York

accelerated their return _in bulk_, as a basis of exchange, or for

credit in account. Thus their distinctive character as circulation was

in a great measure destroyed. The cheap redemption, so desirable in a

common state of the market, became virtually a premium on the currency

of New York. The tendency, then, was to take it out of a healthful

circulation and throw it back to its source, whereby it profited nobody

so much as the stockholders of the express companies. The country banks

might keep their own bills in a perpetual circulation, by exchanging

them with each other, and thus creating a trade in them. The same

packages were not unfrequently kept unopened in the circuit, and

reissued in bulk, as often as they were needed to supply balances.

In a panicky time such redeeming banks must either put more capital into

the service or reject the bills. In 1857, in spite of the best

management, the currency circuit was kept up; the bills of one bank were

paid for the bills of all the others.

Another evil arose from these banks. The credit given to an unsecured

currency by their indorsement gave it a wide circulation, to the

displacement of bills that were based upon State and United States

stocks. It was now seen that this credit had no other basis than a

current deposit by the issuing bank, which deposit was in very small

proportion to its outstanding bills; and that the redeeming bank was

prompt to the hour in repudiating those bills if the deposit was not

maintained. This was a fallacious credit, entirely independent of the

separate ability of the issuing banks. The general result was that bills

were _likely to fail in transit_, and they would not then be admitted as

a deposit, which would involve the rejection of others. And so the row

of bricks began to tumble in both directions.

There was no incident of that panic that spread its terrors abroad with

such sure and rapid steps as the rejection, by the redemption banks, of

bills which they had been accustomed to receive on deposit. If it had

been possible to remove all other causes of excitement, that alone would

probably have involved the suspension of specie payments. It filled all

the shops of the country with alarm. It created mobs in the savings

banks, and pushed forward the panic, by exciting the fears of the

multitude.

The Example of France.

Professor Laughlin has the gall, as few of his confreres have, to appeal

to “the example of France,” after the Prussian war of 1871, in not

“interfering with her media of exchange.” It is hard to tell whether his

statement is based upon impudence or ignorance. She interfered with all

the ideas of propriety entertained by his clique in a way that has been

secretly their despair ever since. Yet hear his glorification of a

scheme that cuts all the ground from under him. He says:

“France borrowed largely, collected large amounts of capital by the

creation of her national debt, and, on the other hand, retained her

circulating medium in so perfect a condition that the moment the war was

over she slipped along smoothly upon the wheels of industrial success

and prosperity, without any derangement of her business. And, during

that time, she carried through one of the most magnificent schemes of

exchange, in the form of the payment of indemnity, that has ever taken

place in history. She actually paid that foreign indemnity of the war to

Germany practically without deranging the rate of exchange in France.”

He don’t tell how. Don’t tell that she flooded all the avenues of trade

with her paper money, and thus made her goods so plenty and cheap that

Germany bought them instead of her own, and was then in turn nearly

bankrupted; so that France paid three quarters of the “milliard” in

French goods!

But hear the true story from Wendell Phillips, an all-round, up-to-date

reformer, whose motto was, “Act in the living present.” When the

monopolizers of black men were beaten he turned to face the monopolizers

of all men and women. Here is his eloquent picture:

“France has just paid Germany one billion dollars. Her chief cities have

been sacked and plundered. Humiliated by defeat, torn by civil

dissensions, she laughs, while all the rest of Christendom wade through

the mire of bankruptcy. Her ships are full busy, and what little other

nations do is in carrying to and fro her manufactures. Her homes are

happy, her streets crowded with passing trains loaded with goods; all

her mills hurrying night and day to get even with her demand upon them.

Labor walks rejoicing and capital sleeps easy, fat with its gains. What

magician has done this? Paper money. Like the rest of the nations, she

ran to its protection during the stress and strain of her German war.

Unlike and wiser than the rest of us, she has not hurried back to coin.

Wiser than we, she received the paper she offered to others. This

honesty has its reward. Her paper is, to-day, more valuable than gold.”

Among the great results of this policy were an abundance of gold and

silver coming from abroad, until $1,200,000,000 was found to be in the

country.

Lest some may doubt the statement about the Germans only getting a

little gold for that indemnity, an extract is here given from “Our Money

Wars,” p. 152.

“Ivan C. Michels says: ‘The indemnity from France to Germany, after the

war of 1870-71, including interest at five per cent. per annum, amounted

to $1,060,209,015. After crediting France with the value of certain

railroads in Alsace and Lorraine, the amount of indemnity due Germany

was $998,172,069, or 4,990,860,349 francs, which was paid by the French

government through the Bank of France. At my request the Bank of France

furnished to me several years ago the following statement as to the mode

of having paid said indemnity:

Francs.

In bank notes of the Bank of France 125,000,000

In French gold coins 273,003,050

In French silver coins 239,291,875

In German bank notes 105,039,045

Bills of exchange drawn in thalers 2,485,513,729

Bills drawn on Frankfurt in florins 235,128,152

Bills drawn on Hamburg in marksbancs 265,216,990

Bills drawn on Berlin in reichsmarks 79,072,309

Bills drawn on Amsterdam in florins 250,540,821

Bills drawn on Antwerp and Brussels in francs 295,704,546

Bills drawn on London in pounds sterling 637,349,832

——————-

Total francs 4,990,860,349

“‘The patriotic people of France raised the vast sum by a loan in less

than six months from the time the government appealed to them. Germany

expected to receive for years to come five per cent. per annum on the

indemnity bonds; but the Bank of France, through the French bankers,

drew on Germany, England, Scotland and Belgium, and in four months’ time

the whole indemnity was paid. Never in the history of the world has this

financial transaction been equaled, and I doubt that any other banking

institution could have succeeded so well as the Bank of France. Germany

expected the payment in gold coin or bullion, having previously and

purposely demonetized silver. But the fact remains that actually in gold

only 273,003,050 francs, equal to $54,600,610, was paid by the Bank of

France, and that sum only left France, was remelted in Germany and

coined into reichsmarks. England, with her gold standard, had to part

with her gold to the amount of 637,348,832 francs, equal to

$127,469,964. Bills of exchange on the German bankers throughout the

German empire, especially on Hamburg, Berlin and Frankfurt, came to

3,064,901,180 francs, equal to $612,986,236, nigh on two-thirds of the

whole amount of the indemnity. This magnificent stroke of finance on the

part of the Bank of France and the French bankers came near ruining the

leading German bankers; and forty-one banking houses throughout the

German empire had to suspend temporarily, not being able to honor the

drafts made upon them. The extravagance of the German people during the

war of 1870-71 brought them into debt to France for luxuries, wines,

etc., to an enormous extent; and when the Bank of France purchased bills

of exchange from the French bankers, who drew on their German

correspondents, a panic ensued, and the Germans suffered more than is

generally supposed.’”

The above from Michels shows that he saw but dimly what Phillips saw so

plainly, that government paper money, nourishing all industries, gave

France that victory. Michels catches a glimpse of the truth when he

speaks of luxuries, wines, etc.

To get a clear view of the French financial genius we have to go back to

1848, when Louis Philippe abdicated and the republic was founded amid

great confusion. The French have an instinct for finance far superior to

anything yet shown—by our rulers at least—in England and America.

“Paris,” says Victor Hugo, “is the city of the initiative.” It is not

afraid to start things. It is not, like Washington and New York, always

asking what London would do or think. Taking Louis Blanc’s advice in

1848, it started national work-shops to insure the employment of surplus

labor. Those did good for a time, but they were soon perverted and

destroyed by a treacherous Jew who got hold of them.

Another new departure was more successful. “Besides its regular

financial operations,” says the London _Times_ of February 16, 1849,

“the Bank of France made vast advances to the city of Paris, to

Marseilles, to the Department of the Seine, and to the hospitals,

amounting in all to 260,000,000 francs. But even this was not all. To

enable the manufacturing interests to weather the storm, at a moment

when all sales were interrupted, a decree of the National Assembly had

directed warehouses to be opened for the reception of all kinds of

goods, and provided that the registered invoices of these goods so

deposited should be made negotiable by indorsement. The Bank of France

discounted these receipts. In Havre alone 18,000,000 francs was thus

advanced upon colonial products, and in Paris 14,000,000 on merchandise.

In all 60,000,000 francs was thus made available for all the purposes of

trade. Thus the great institution had placed itself, as it were, in

direct contact with every interest of the community, from the Minister

of the Treasury down to the trader in a distant part. Like a huge

hydraulic machine, it employed its colossal powers to _pump a fresh

stream into the exhausted arteries of trade_, to sustain credit and

preserve the circulation from complete collapse.”

How like “a grimacing dance of apes” our American way of handling

financial crises looks, in comparison with the above.

The Bank of England.

Prof. Laughlin showed the usual gold-bug worship of British finance in

this:

“In the Bank of England the first moment of stringency the rate of

discount is raised. That has the effect of preventing all unnecessary

loans. The borrower who has good collateral will get the money if he is

willing to pay an increased rate. Our system is such that we can loan

until we come to the legal limit; and is deficient in that respect, as

we cannot loan at a greater discount because of the iniquitous action of

the usury laws. You can help a customer by increasing the rate. Just at

the moment of the greatest stringency our American system is deficient.”

Ordinary decorous language would fail to characterize that infamous

statement. The fact is that the British system is utterly brutal. Our

“iniquitous usury laws” prevent a man from giving everything he has to

the banks in hard times. The British system is that of Jay Gould in his

gold corner of 1869. He settled with his debtors by “taking all they

had.” He was merciful, and forgave them the balance; which is the usual

stock exchange style.

In coin-paying eras corrupt governments and Shylocks have debased coins

to make them go further. In these credit-mongering times they try to

bring their coin basis down to one metal, gold, and clamor for extreme

fineness of that, in order to make their inverted pyramid of credit go

further and sell dearer. The policy of Great Britain, for instance, has

been to make gold, its standard, so dear and inaccessible to the

foreigners and debtor class that they would find the other commodities

in the market cheaper than the gold in the market, so that settlements

in other commodities would be preferable. The retention of gold in the

Bank of England, by raising discounts in panicky times, though murderous

(“kindness,” says Mr. Laughlin) to individual active business men, is a

necessary factor in this piratical scheme, and the fulcrum upon which

England derricks into her treasure vaults the plunder of the whole

world. Business is made a lottery, turning out dazzling prizes that keep

merchants from rebellion. Long-headed American Shylocks hope to see the

United States as much more successful in plundering the globe, in this

way, as our country is larger than England.

Finally, as to Laughlin, with what bitter scorn this statement from the

“closet scholar” will be greeted by the thousands of manufacturers who,

during panics, have had to shut their factories for lack of cash “to pay

the hands”—though they had all but gilt-edge collateral:

“The monetary function has to do solely with exchanges of goods; it

hasn’t anything to do with their production.”

The Washington “Currency Reformers.”

In finishing this bird’s-eye view of the financial history of this

country, a brief review of the current financial plans cannot well be

avoided. It may be said of them, in a general way, that no other set of

robbers ever before attempted to secure a law guaranteeing them

unrestricted right to plunder with unlimited government protection. The

out and out black-flag pirates, as represented by Walker of

Massachusetts, have a plan as simple and explicit as a patent medicine.

It runs thus: “Retire the greenbacks, kill silver once for all, and let

the bankers manage the currency.” This obsolete idea, that banks should

issue money, is showing all the vim of a death struggle. But a thousand

columns of speeches in the _Congressional Globe_ on the safety of the

national bank system are answered by this solitary fact: In the year

1893, three hundred and sixty banks west of the Alleghanies, owing

$125,000,000, went to smash, and about a dozen bankers are now in prison

or exile, while many more escaped as by fire.

THE BALTIMORE PLAN, which a while ago had the sanction of the

Comptroller, Secretary of the Treasury and the President, is, in a word,

a scheme for issuing circulating notes by both national and State banks,

otherwise than upon the pledge of government bonds as now. The banks are

to issue notes upon their own assets, supplemented by a deposit of a

certain amount of greenbacks, as a safety and redemption fund. The

theory of this plan is that when any special demand for currency arises

the banks will make a special issue of notes to supply it; and that as

soon as this demand ceases the banks will retire the notes it has called

out. Thus the quantity of currency available will, it is assumed, never

be either deficient or excessive; and there will never be at any point

either a monetary stringency or a monetary plethora. Were the function

of currency exclusively that of facilitating exchanges, such a system

(like that of 3-65 interconvertible bonds) might be useful. But currency

serves the additional purpose of measuring the price of commodities; and

since its relation to those commodities is determined by its volume, any

change of its volume changes its value also, and consequently impairs

its stability as a measure of prices.

Again, as to the State bank feature of the Baltimore plan, the idea

prevails extensively in the agricultural districts of the West and South

that the chief business of a bank is to lend money to borrowers. That is

why they clamor for the removal of the ten per cent. tax on State banks.

An abundance of greenbacks and silver would do away with most of the

need of borrowing from banks. That’s what’s the matter with the banks.

No further mention is needed here of the schemes of Carlisle, Springer,

Vest and others. They seem all dead at this writing, and they certainly

should be damned. Even the New York _Tribune_, a monopolists’ own, says

of one of the safety-fund schemes:

“The bankers are to have free issue; and when one fails the government

is to collect from the other banks and redeem its currency. But in time

of panic the government would not and could not do that.”

On the other hand, the New York _Sun_, edited by a man who was a radical

socialist in his youth, and now a bitter, hardened, cruel cynic,

although lately a Greenback paper, is as rabid as the New York _Evening

Post_ in advocacy of gold and gold only. It says of the latest

safety-fund humbug:

“The new bill, like the old one, authorizes an inflation of our paper

currency, by at least $550,000,000, without providing for its redemption

in gold, and without any effectual provision for diminishing the volume

of outstanding legal tender. Our New York financial magnates, who have

put up, this year, $116,000,000 in gold, _to save the treasury from

suspending gold payments_, ought to bestir themselves in opposition to

this latest administration folly, if they would not see all their

efforts go for naught and the catastrophe which they have labored to

avert rendered inevitable.” [!!]

In Chicago we have Lyman Gage’s plan. Mr. Gage is a man of intellect who

resembles some of those orthodox clergymen who, by a long course of

theological dissipation, _i. e._, reasoning from false premises, have

impaired their naturally fine faculties. Mr. Gage, if we must credit him

with sincerity, has come to the same condition by financial dissipation.

But his plan is not as vicious as some. To furnish the needed foundation

for national bank circulation he would have the treasury issue

$250,000,000 of 2½ per cent. bonds, for which greenbacks or Sherman

notes should be paid. The money paid would not become an asset of the

government. It would be canceled, destroyed, burned up. Of his scheme

the Chicago _Times_ well says:

“Like other bankers, he thinks the chief end to be sought is to relieve

the government of the duty of issuing the circulating medium of the

country. Upon this point we must note an emphatic disagreement with Mr.

Gage, and with the whole school of financiers of which he is a type.”

A specimen of the demoralization and danger of the times is seen in a

recent statement of Senator Gorman, that he and Quay had settled in

their minds that a certain government bond scheme, like that of Mr.

Gage, in eight items, including some about silver, was about the only

proposition that could pass the present Congress. No. 3 among the eight

items coolly dismisses the greenback thus: “The legal tenders to be

retired and canceled as the bonds are put out.”

On the other hand, the Chicago _Inter Ocean_, which is repenting of some

of its financial sins, and remembering what a good Greenback paper it

was in 1878, says:

“One of the perils of the present financial situation is the disposition

shown to reopen the greenback question. It took fifteen years to fight

the great battle. Secretary McCulloch attempted to take snap judgment

against legal-tender notes, paying them off at a rapid rate. Illinois,

through one of its Congressmen, E. C. Ingersoll, stepped in the very

first day Congress convened after that payingoff process had begun with

a resolution which stopped it. Then began the intriguing of the Eastern

bankers to destroy the greenbacks, and when the last decisive conflict

occurred Illinois was again in the leadership, G. L. Fort being the

especial champion of the greenback cause as against both the

contractionists and the expansionists. There was a great victory. For

half a generation the anti-greenbackers have been quiescent. They have

come to the front again with this session of Congress. The knock-out

received in caucus Monday ought to satisfy them that the greenback is

here to stay. There never could be a better money. It is good for its

face the world over. In that uttermost end of the earth, China or Japan,

the United States legal-tender note is good for its face value, and,

whatever changes are made, that part of our currency should remain

intact. Should the current of Congressional events occasion a show of

hands in the Republican party on this question, no doubt an overwhelming

majority would say, as did the Democratic caucus, let the greenbacks

alone.”

An extraordinary scene in the House between Representatives Hepburn and

Hendrix so fairly illustrates the muddled stupidity and impudence of the

gold-bugs that it deserves notice here as a sign of the situation. Mr.

Hepburn described Mr. Hendrix as a self-heralded national banker, who

came here with oracular utterances to tell the House what to do. Mr.

Hepburn said his self-laudation was impaired by the recollection of his

speech sixteen months ago, when the same conditions existed. Mr. Hendrix

then found the panacea for all financial ills in the repeal of the

Sherman silver law.

Before describing this discussion, attention should be called to the

fact that the panic of 1893 was immediately brought on by the bankers

because Secretary Carlisle undertook to perform about the only good deed

he has ventured upon as Secretary, _i. e._, to pay the Sherman treasury

notes according to the letter of the act of July 14, 1890, in silver,

_just as France would have done_. Now mark how Hendrix “opened his mouth

and put his foot in it,” and how, finally, Hepburn tripped him.

Mr. Hendrix described at some length the process by which the gold was

withdrawn by speculators for shipment abroad, and then proceeded to

contrast this with the situation in France, where the Bank of France

refused to pay, except where actually necessary, more than five per

cent. of gold on its demand obligations. These aggressions on our gold

reserve must be stopped, and if the pending bill would stop them, afford

relief, take the government out of the banking business, as it has been

taken out of the silver business, he would vote for it.

“Does the action of the Bank of France, in refusing to pay more than

five per cent. in gold,” asked Mr. Hepburn, “impair the credit of that

bank?”

“No.”

“Then would the credit of the United States be impaired if the United

States should exercise its discretion and redeem the Sherman notes in

silver?”

“Yes, I believe it would at this time,” replied Mr. Hendrix.

“Why?”

“Because of the general distrust of the government’s ability to pay in

gold. One hundred and fifty-nine million dollars of Sherman gold

promises [?] to pay cannot be met without gold.”

“But the notes are redeemable in coin, not in gold,” was Mr. Hepburn’s

parting shot.

Mr. Hepburn declared that Mr. Hendrix had pointed out unwittingly the

remedy for the present evil when he told the House that the great

banking houses of Europe exercised their discretion about depleting

their gold vaults. “Why will not the Secretary of the Treasury exercise

the same discretion?” he asked, amid a round of applause. “The exercise

of this discretion did not impair the credit of European banks. Who

dared to say that the credit of this country, with 65,000,000 people

behind it, and an unlimited taxing power, would be impaired because it

refused to kneel at the demands of the Shylocks?”

“Why have not the Republican Secretaries of the Treasury exercised that

discretion?” asked Mr. Pence of Colorado.

“I have not been Secretary of the Treasury,” replied Mr. Hepburn hotly.

“When I am I will answer. I am as fully convinced, however, as I am that

I am alive, that if the Secretary of the Treasury were now to exercise

his discretion and pay gold when legitimate redemptions were asked, and

refuse it to sharks and speculators, the evils from which we suffer

would cease to be.”

A broader view is that the prime motive of the Secretary in exercising

his discretion should be the welfare of the government; and gold should

be refused where its payment is likely to hurt the treasury.

----------

In the foregoing pages we have attempted to give such a bird’s-eye view

of American money and finance as would serve as an example and warning

for the future. We behold in this short story how our finances were

continually run upon the rocks and shoals of a false “political

economy,” so-called, and how they were occasionally pulled off—though

remaining most of the time stuck fast in the most dismal way.

As to the general aspects of the money question this is added:

Our financial kings have kept two purposes in view. _First_: To have our

money issued by and for the special use of private institutions called

banks; and to have this money scanty in quantity and of fluctuating

value. _Second_: To issue, foster and maintain, by all possible means,

bonds and other interest-bearing obligations, as the most convenient

means of transferring to the few the product of the industry of the

many.

To maintain these humbugs, they use learned language, like doctors

writing prescriptions in Latin. All the expert handlers of money,

stocks, etc., hate nothing so much as that which is best for the other

classes, viz., steady values. Their delight is in ups and downs; and

then, if speculators, their effort is to be on the winning side. With

brokers, every change is profitable. With them it is: “Heads I win,

tails you lose.” Copernicus said of the work of these traitors: “It is

not by a blow, but little by little, and through a secret and obscure

approach, that it destroys the state.” Further back in the ages Plato,

Lycurgus and Solon saw this most plainly.

The new American system of money is plainly and briefly this: Abundant

government fiat paper money—founded upon the wealth and credit of a

great, stable nation; such money to be kept at a steady purchasing power

by the increase and decrease of its volume; and to be quite void of

intrinsic value, and quite free from particular commodities as bases for

the monetary units.

For the present we wish free coinage of gold and silver at 16 to 1. The

ultimate of gold and silver will probably be free coinage for all who

bring them to the mints, into suitable coins stamped with their weight

and fineness, and returned to the owners to be used as they choose. And

no one will lie awake nights for fear the metals will go abroad.

When we get that “honest” fiat paper dollar, nothing will call for an

extra session of Congress quicker than any prospect of a change in its

purchasing power, after we have once got it to a generally satisfactory

point, say about the buying power of our dollar in 1866. While any kind

of a change, up or down, suits many gamblers and speculators, the steady

increase in the buying power of the dollar, for thirty years past, has

been destroying the producers of this country and largely creating the

pestiferous breed of millionaires.

The bulk of our money wars have been crowded into the past thirty years.

We might call them “Our Thirty Years’ War.” Its history has been

utterly, wofully and willfully misrepresented by such pseudo-historians

as Sumner of Yale and David A. Wells.

Those years nearly cover the great and little panics of 1837, ’47, ’57,

’60, ’73, ’84, ’85, ’90 and ’93. Vast tomes might be written concerning

the manifold causes. One cause has always been foremost in them—scarcity

of legal-tender money.

At times our rulers have tried to deceive us by a great show of abundant

currency. Such were the fifteen kinds of money thrust upon the nation to

confuse it during the civil war, by McCulloch and Sherman.

Why need we here repeat the many-times-told tales of the craft of the

national banks, demonetization of silver, the mystery and raised value

of gold, Rothschild tricks, the control of our finances and politics by

Europe, and the gradual merging of the gold Democrats and Republicans

into practically one party?

The bankers’ rebellion of 1881, which conquered President Hayes. The

whirling of stock values up two billions then and down again in 1883.

The deluge of trusts and syndicates in full tide in 1887. The bogus

silver bill of 1890. Cleveland’s object-lesson of ruin and misery in

1893. The counting out of victorious Bryan in 1896. And now the ghostly

attempt to bring prosperity by tariff bills and Lyman Gage “currency

reform,” while millions of deceived, disappointed, dazed, discouraged,

almost maddened Americans suffer all the tortures of poverty.

And the end is not yet.

[Illustration]

IV.

THE EIGHT MONEY CONSPIRACIES.

“When I stand in the United States Treasury, I stand on

English soil.”—NATHANIEL P. BANKS.

“HUGH McCULLOCH hamstrung the whole nation. His management of the

finances, while it enriched him and made him a great London banker, has

cost the American people more than the war did.” These words were

uttered by Hon. William D. Kelley, and they are true as gospel. They

would be equally true if the name of John Sherman were substituted for

that of Hugh McCulloch.

That the constant aim and object of the manipulators of our financial

legislation since the war has been to contract the currency and to

burden the people with interest-bearing debt, thereby enriching the

usurers and impoverishing the producing classes, is evidenced in the

following brief summary of the eight principal enactments affecting

money which passed Congress since 1861:

1. =The Exception Clause.= (Feb. 25, 1862.) In 1861 and 1862 demand

treasury notes to the amount of $60,000,000 were issued by the

government and made legal-tender money for all debts, public and

private—equal to coin. Wall Street could not gamble in legal-tender

paper money; so, as soon as the legal-tender act passed the House and

was sent to the Senate, the Shylocks placed on the greenback what is

known as the “exception clause”—“Except duties on imports and interest

on the public debt.” This practically demonetized the United States

treasury note, and cost the producing classes millions of dollars. The

greenback “went down,” or, more correctly speaking, gold “went up,”

until $1 in paper money was valued at only 37 cents when compared with

gold. John Sherman said: “We purposely depreciated the greenback, to get

sale for our bonds.” He was willing to destroy the people’s money to

appease the greed of gold gamblers at home and abroad.

2. =The National Bank Act.= (Feb. 25, 1863.) This scheme was introduced

in the Senate and advocated by John Sherman in the interest of

bondholders and capitalists, just one year after legal-tender notes were

authorized by law, and before sufficient time had been given to test

their utility. The express object was to have the bank notes supersede

the legal-tender notes, after the investment of legal tenders in bonds.

“I look upon the national bank, as now recognized by law,” says Myers in

his “Money, Its History and Functions,” “as one of the most gigantic

schemes for robbing the people ever devised by man. I cannot conceive of

a single reason for perpetuating the system one day beyond the time

required to settle its affairs. The national banks of this country have

cost the people, in thirty years of their existence, over

$6,000,000,000. The credit which the banker sells at from 7 to 15 per

cent. costs him only 1 per cent. on actual circulation; hence it is

virtually a present to him. He draws interest on this credit; on what he

himself owes. His note is not money, nor is it in any sense a legal

tender between man and man. It is simply a ‘promise to pay.’ The banker

_lends his credit_, with which he has supplied himself by gift from the

government, and the borrower _pledges his wealth_; the banker being far

more secure than the holder of the banker’s paper. The banker takes pay

for something he does not furnish; for the capital (wealth) is furnished

by the borrower. So the banker gets something for nothing, and the

borrower pays for that which he never receives.”

Banks are run on the deposits, rather than on any capital the banker

himself may have. The patrons of the bank furnish the capital, and also

the security. The banker lends other people’s money to other people; on

this he draws interest; he conducts his business on _your_ money and

_his_ credit, which _you_ furnish him.

Now, if the government can afford to let the banker have _credit_ at 1

per cent. on actual circulation, why can’t the treasury supply all the

people with legal-tender money at the same rate? Why not issue the money

direct to the people and then pay interest into the United States

treasury, instead of into the coffers of corporate institutions?

National banks are expensive luxuries which we don’t need. So let the

people unite in demanding their abolition at once, and then institute in

their stead United States banks, sub-treasuries if you please, backed by

all the people, and hence absolutely safe. This would make a government

for the _people_, instead of for the corporations. Let us do business on

the credit of the people—on the credit of the government; not, as we are

now doing, on the credit of banks and bankers.

3. =The Funding Act.= (April 12, 1866.) Commonly called contraction.

This law authorized the Secretary of the Treasury to retire the

legal-tender notes by investing them in 6 per cent. bonds. Contraction

continued until some $1,500,000,000 were destroyed, and a corresponding

amount of 6 per cent. bonds issued. The treasury notes, or legal

tenders, were nearly all non-interest-bearing. This reduction of the

currency was an outrage upon the people. The volume should have been

increased to keep pace with an increasing population. But Shylock must

have interest.

4. =The Credit-Strengthening Act.= (March 18, 1869.) This law provided

that the legal-tender treasury notes be paid in coin, as also all

interest-bearing obligations of the government. Prior to the passage of

this law public obligations had been payable _in the lawful money_ of

the country; the greenback was lawful money, redeemable the same as gold

and silver coin, except duties on imports and interest on the public

debt. The credit of the nation was good, and needed no strengthening.

The war was over, and the country was prosperous and the people

contented. Why, then, add another burden?

5. =An Act Refunding the Public Debt.= (July 14, 1870.) This act

authorized the issue and sale of $1,500,000,000 United States bonds, to

refund 5-20 bonds and make them conform to the law of 1860. To fund

means to put public obligations into stocks and securities, making them

interest-bearing.

The public debt should have been paid, as at first provided, in the

lawful currency of the country, gold, silver and treasury notes. The law

of 1869 added $500,000,000 to the 5-20 bonds, by making them payable in

_coin_; then to refund the bonds, just to please English Shylocks, is

villainy unnamed and unnameable.

6. =The Demonetization of Silver.= (Feb. 12, 1873.) The act of 1869 had

made all public obligations payable in coin, gold or silver; while the

act of 1873, clandestinely passed, by omitting the silver dollar from

the list of coins enumerated, practically demonetized silver, making the

public debt, interest and all, as well as the paper currency, payable in

gold coin—a further contraction of the volume of currency.

The silver dollar was created by the Congress of the United States on

April 2, 1792, and made the unit of value. It contains 412½ grains of

standard silver, nine parts pure silver, one part alloy. At that time

the mints of all the principal nations of the world were open to the

free coinage of both gold and silver. That is, all of such metal

presented to the mints could be converted into money without any charge

except the actual cost of coining. The ratio then was about 15½ to 1;

that is, one ounce of gold was equal to 15½ ounces of silver. January

18, 1837, the ratio between gold and silver coins of the United States

was changed to 15.988 to 1, commonly referred to as 16 to 1.

The act demonetizing silver was understood by few, and, in fact, many of

those who voted for it, and President Grant, who signed the bill, were

unaware of its actual meaning and effect. The money speculators of

England, backed by cupidity and ignorance on this side, were its real

instigators. There was every reason in the world why England should

desire the demonetization of silver here. She is a creditor nation, and

her capitalists hold vast amounts in government and other securities

abroad. From this country alone the capitalists of Great Britain derive

each year more than five hundred millions of dollars for interest on

their investments, all of which is paid in gold or its equivalent. The

United States produces an enormous quantity of silver, but we very

humbly submit to the gold standard as set up by Great Britain. We deny

ourselves the right to use a metal of which we have an abundance and

adopt one more scarce and, consequently, more expensive. By this policy

we are forced to purchase gold abroad, thus adding constantly to the

burden of a perpetual, interest-bearing national debt.

By accomplishing the demonetization of silver in this country, England

gained a double victory, for the governments of the Latin Union, France,

Belgium, Italy, Switzerland and Greece, were soon afterward forced to

suspend silver coinage. The gain to England and the loss to the other

countries involved, especially to the United States, by this general

demonetization of silver, can hardly be estimated. The loss, of course,

was the heaviest in this country, where the production of silver is very

large, where so many are engaged in agricultural pursuits, and where a

large and freely circulating volume of money is so essential to

commercial activity.

Before silver was demonetized, we were under the burden of an enormous

national debt, but every dollar of this was payable in silver. The

stimulated demand for gold, and, consequently, its increase in value,

was not the only gain to England. She now buys our cheap silver bullion,

exchanges it at its coinage value for products in the silver-using

countries of Asia, Africa and South America, and nets a profit of over

one hundred per cent. by the transaction. We then buy from her at gold

prices and pay with gold or products at prices which, by forcing us into

competition with the world, England fixes herself.

7. =The Resumption of Specie Payment.= (January 14, 1875.) This law

provided for the retirement of the fractional currency ($45,000,000) and

the legal-tender treasury notes, their places to be supplied by national

bank notes, which are not a legal tender between man and man. The name

“specie payment” is simply a blind; it does not mean anything; to get

rid of the much despised greenback was the real object of the act. The

moneyed aristocracy had long ago confessed their inability to “control”

the “greenback as it is called.” Had the provisions of this law been

carried out, it would have added to our annual interest charge about

twenty millions of dollars.

8. =The Sherman Purchasing Clause.= (July 14, 1890.) This act was a

miserable makeshift or substitute for a free coinage bill. It provided

for the purchase of not less than 2,000,000 nor more than 4,500,000

ounces of silver bullion per month, 2,000,000 ounces of which was to be

coined each month into silver dollars until July 1, 1891. Instead of

redeeming the treasury notes issued in the purchase of silver with their

equivalent in silver, upon the demand of the holder, the Secretary of

the Treasury was required to redeem these notes in gold or silver coin

at his discretion. The legal-tender power of the silver dollar was

modified so as to read: “Except otherwise expressly stipulated in the

contract.” In 1893 President Cleveland called Congress together in

extraordinary session to consider the financial condition of the

country. November 1, 1893, the Sherman law was repealed, leaving us on a

single gold basis.

[Illustration]

V.

FINANCIAL AUTHORITIES.

“Above all things good policy is to be used, that the

treasures and money of the state be not gathered into a few

hands; for, otherwise, a state may have great stock and yet

starve. And money is like muck, not good unless spread. This

is done by suppressing, or at least keeping a strait hand

upon the devouring trade of usury, engrossing, great

pasturages and the like.”—BACON.

THE following is a carefully prepared collection of quotations from the

writings and speeches of eminent statesmen, jurists, financiers and

economists, ancient and modern, foreign and American. It will be found

not only interesting and instructive to the casual reader, but of

extreme value to the student for reference:

_Alexander Hamilton_ (report on the mint, 1791): “To annul the use of

either of the metals as money is to abridge the quantity of the

circulating medium. It is liable to all the objections that arise from a

comparison of the benefits of a full with the evils of a scanty

circulation.”

_Benjamin Franklin_, April 3, 1792 (Jared Sparks, page 255): “Want of

money in a country reduces the price of that part of its products which

is used in trade. A plentiful currency will occasion the trading produce

to bear a good price.”

Page 185 of his autobiography (speaking of his pamphlet on “The Nature

and Necessity of a Paper Currency,” for the purpose of increasing the

circulation): “It was well received by the common people in general, but

the rich men disliked it, for it increased as well as strengthened the

clamor for more money. The utility of this currency by experience became

so evident as never to be much disputed, so that it grew soon to be

£55,000, and in 1879 to £80,000, since which it rose to £350,000, trade,

buildings and inhabitants all the while increasing.”

_Daniel Webster_: “A contraction of the currency, even if not sudden,

contracts business, discourages enterprise and restrains the commercial

spirit. A sudden contraction aggravates these circumstances.”

_Henry Clay_ (debate on the sub-treasury, 1840): “The proposed

substitution of an exclusive metallic currency to the medium with which

we have been so long familiar is forbidden by the principles of eternal

justice. Assuming the currency of the country to consist of two-thirds

paper and one of specie, and assuming, also, that the money of a

country, whatever may be its component parts, regulates all values, and

expresses the true amount which the debtor has to pay his creditor, the

effect of the change upon that relation, and upon the property of the

country, would be most ruinous. All property would be reduced in value

to one-third of its present nominal amount, and every debtor would, in

effect, have to pay three times as much as he had contracted for. The

pressure of our foreign debt would be three times as great as it is,

while the six hundred millions, which is about the sum now probably due

to the banks from the people, would be multiplied to eighteen hundred

millions!... A man, for example, owning property to the value of $5,000,

contracts a debt of $5,000. By the reduction of one-half of the currency

of the country, his property in effect becomes reduced to the value of

$2,500. But his debt undergoes no corresponding reduction.... But if the

effect of this hard money policy upon the debtor class be injurious, it

is still more disastrous, if possible, on the laboring classes.... Of

all the subjects of national policy, not one ought to be touched with so

much delicacy as that of the wages—in other words, the bread—of the poor

man. In dwelling, as I have often done, with inexpressible satisfaction,

upon the many advantages of our country, there is not one that has given

me more delight than the high price of manual labor. There is not one

which indicates more clearly the prosperity of the mass of the

community....

“The revulsions of 1837 produced a far greater havoc than was

experienced in the period above mentioned. The ruin came quick and

fearful. There were few that could save themselves. Property of every

description was parted with at sacrifices that were astounding, and as

for the currency, there was scarcely any at all. In some parts of the

interior of Pennsylvania the people were obliged to divide bank notes

into halves, quarters, eighths, and so on, and agree from necessity to

use them as money. In Ohio, with all her abundance, it was hard to get

money to pay taxes. The sheriff of Muskingum County, as stated in the

Guernsey _Times_, in the summer of 1842, sold at auction one four-horse

wagon at $5.50; ten hogs at 6¼ cents each; two horses (said to be worth

from $50 to $75 each) at $2 each; two cows at $1 each; a barrel of sugar

at $1.50, and a store of goods at that rate. In Pike County, Missouri,

as stated by the Hannibal _Journal_, the sheriff sold three horses at

$1.50 each; one large ox at 12½ cents; five cows, two steers and one

calf, the lot at $3.25; twenty sheep at 13½ cents each; twenty-four hogs

for 25 cents for the lot; one eight-day clock at $2.50; a lot of

tobacco, seven or eight hogsheads, at $5; three stacks of hay at 25

cents each.”

_Horace Greeley_ (“Political Economy,” page 65): “They [false

economists] assume that if half the money in a country leaves it for

goods imported, the residue will perform the functions previously

devolved on the whole, save only that there will be a general reduction

of prices. I, on the contrary, issue an appeal to the experience of

mankind to sustain me that in such cases the remainder, so far from

subserving the end formerly answered by the larger volume of currency,

will not even subserve half of it, for it will all but cease to

circulate at all.... In its absence the people will quite generally be

driven back to barter, a discouragement of industry and a long stride on

the downward road to barbarism.”

_Treasurer Spinner_ (that portion of his report for December, 1873,

which was suppressed by President Grant): “When ... legitimate money

becomes more and more abundant, credits are asked for and given on

shorter and shorter time, until the time comes when there is money

sufficient to transact all the legitimate business and to effect all

necessary exchanges of the merchantable commodities of the country; then

private credits will be almost entirely unknown, as will commercial

revulsions and consequent panics.... Inflation can only be when the

people are excessively in debt. Such is not the position when money is

plentiful; for when money is plentiful people get out of debt and

acquire habits of promptness, punctuality, and pay as they go.”

_George S. Coe_ (“Financial History of the War”): “As the war progressed

and the country became poorer, the currency increased. It is strange

that all other property was eagerly sought for in preference to this,

and that prodigal expenditure became the law of the land.”

_Report of George S. Coe, John J. Knox, James Harsen Rhoades and W. P.

St. John_ (committee of New York Chamber of Commerce, 1891): “The

enlarged volume [of legal-tender money], besides disturbing the

equitable relations of men to each other, at once adjusts itself to the

prices of all commodities and relatively enhances their cost, so as to

absorb at once whatever advances their cost.... This is why thoughtful

men see in any issue of legal-tender notes the way to inevitable

destruction.”

_Robert G. Ingersoll_: “We have passed through a period of wonderful and

unprecedented inflation. For years every kind of business has been

pressed to the very sky line. A wave of wealth swept over the United

States. Tatters became garments and garments became robes. Walls were

covered with pictures, floors with carpets, and for the first time in

the history of the world the poor tasted all the luxuries of wealth. But

monopoly changed that paradise into hell by creating a money famine.”

_John J. Ingalls_: “No people in a great emergency ever found a faithful

ally in gold. It is the most cowardly and treacherous of all metals. It

makes no treaty it does not break; it has no friend it does not sooner

or later betray. In times of panic and calamity, shipwreck and disaster,

it becomes the agent and minister of ruin. No nation ever fought a great

war by the aid of gold. In the crisis of the greatest peril it becomes

an enemy more potent than the foe in the field.... In our own civil war

it is doubtful if the gold of New York and London did not work us

greater injury than the powder and lead and iron of the rebels. It was

the most invincible enemy of the public credit. It was in open alliance

with our enemies the world over, and all its energies were evoked for

our destruction. But, as usual, when danger has been averted and the

victory secured, gold swaggers to the front and asserts supremacy.”

_Hugh McCulloch_, Secretary of the Treasury (1866): “The process of

contracting the circulation of the government notes should go on just as

rapidly as possible without producing a financial crash.”

_John A. Logan_ (Feb. 17, 1874): “You may theorize and argue to the

farmers until you are hoarse, and you will fail to get them to prefer

low prices to high ones for their products.... The people have and do

realize that their most prosperous times were when currency was the most

plentiful....

“I can see the people of our Western States, who are producers, reduced

to the condition of serfs to pay interest on public and private debts to

the money sharks of Wall Street, New York, and of Threadneedle Street in

London, England. And this will be accomplished by withdrawing the

treasury notes from circulation, and destroying them until the banks can

control the entire volume of money.... It was the contraction and

increased want of currency, and not a superabundance, which produced the

necessity for running in debt.

“Falling prices and misery and destruction are inseparable companions.

The disasters of the dark ages were caused by decreasing money and

falling prices. With the increase of money labor and industry gain new

life.

“I can see benefit only to the money-holders and those who receive

interest and have fixed incomes. I can see, as a result of this

legislation, our business operations crippled and wages for labor

reduced to a mere pittance. I can see the beautiful prairies of my own

State and of the great West, which are blooming as gardens, with

cheerful homes rising like white towers along the pathway of

improvement, again sinking back to idleness. I can see mortgage fiends

at their hellish work. I can see the hopes of the industrious farmers

blasted as they burn corn for fuel, because its price will not pay the

cost of transportation and dividends on millions of dollars of

fictitious railway stocks and bonds.”

_Preston B. Plumb_ (Senate, April, 1880): “The contraction of the

currency by 5 per cent. of its volume means the depreciation of the

property of the country three billions of dollars.”

_The Chicago Tribune_ (1878): “Straight along for four and a half years

the dollar has grown dearer and larger, the debts heavier and harder to

pay, and the value of property has withered; business has been done at a

continual loss. Real estate—lands, lots and improvements, the foundation

of all wealth—has gone down year after year in value, while the

mortgages have devoured it, wiping out equities and all that had been

paid thereon, and annihilating multitudes of fortunes.”

_President Grant_ (message, 1870): “Immediate resumption, if

practicable, is not desirable. It would compel the debtor class to pay

beyond their contracts the premium on gold at the date of their purchase

and would bring bankruptcy and ruin to thousands.”

Message of 1873: “The experience of the present panic has proven that

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

that has ever been devised.

“To increase our exports, sufficient currency is required to keep all

the industries of the country employed. Without this, national as well

as individual bankruptcy must ensue....

“Prices keep pace with the volume of money.”

_John Sherman_ (1869): “The contraction of the currency is a far more

distressing thing than Senators suppose. Our own and other nations have

gone through that process before. It is not possible to take that voyage

without the sorest distress. To every person except a capitalist out of

debt it is a period of loss, of danger, lassitude of trade, fall of

wages, suspension of enterprise, bankruptcy and disaster.”

_William D. Kelley_ (House of Representatives, Jan. 3, 1867): “The

experiment [on contracting the currency], if attempted as a means of

hastening specie payments, will prove a failure, but not a harmless one.

It will be fatal to the prospects of a majority of the business men of

this generation, and strip the frugal laboring people of the country of

the small but hard-earned sums they have deposited in savings banks. It

will make money scarce and employment uncertain. It will increase the

purchasing power of money, and by thus unsettling values will paralyze

trade, suspend production and deprive industry of employment. It will

make the money of the rich man more valuable and deprive the poor man of

his entire capital, the value of his labor, by depriving him of

employment. Its final effect will be widespread bankruptcy.”

_Toledo Blade_ (May 17, 1877): “In financial crises the thing men want

is money; that which everybody must receive in payment of debt or

forever thereafter forego all claim of interest thereon. What men want

in such seasons of panic and distress is that which will pay a note in a

bank, will meet the exactions of government, will avert the sacrifice of

homestead, warehouse or other property by sheriff’s or marshal’s sale;

which, being money, will, when tendered in payment, arrest such

proceedings.... The existence and inflexibility of the law are

indisputable. If the volume of money is increased creditors complain

that the prices of commodities are further enhanced.”

_George William Curtis_ (_Harper’s Weekly_, July, 1877): “There can be

no doubt that as the volume of money decreases the purchasing power

increases.... It is unquestionably true that it is a maxim of money that

the increase of its volume decreases and the decrease increases the

purchasing power of the unit.... It may be a fair question whether the

demonetization of silver did not increase the value of gold.”

_Thomas Ewing_ (November 22, 1877): “No greater wrong can be inflicted

on the people by government than a contraction of the volume of the

currency. The prices of commodities, whether land, product or labor, are

determined absolutely by the effective volume of the currency. An

increase of the volume raises the price of commodities.”

_James G. Blaine_ (House, February 7, 1878): “The destruction of silver

as money and establishing gold as the sole unit of value must have a

ruinous effect on all forms of property except those investments which

yield a fixed return in money. These would gain an unfair advantage over

other species of property.”

_James A. Garfield_ (1880): “Whoever controls the volume of currency is

absolute master of the industry and commerce of the country.”

_Senator Mills_, of Texas (House, February 3, 1886): “But the crime that

is now sought to be perpetrated on more than fifty millions of people

comes neither from the camp of a conqueror, the hand of a foreigner, nor

the altar of an idolator. It comes from the cold, phlegmatic marble

heart of avarice—avarice that seeks to paralyze labor, increase the

burden of debt, and fill the land with destitution and suffering to

gratify the lust for gold—avarice surrounded by every comfort that

wealth can command, and rich enough to satisfy every want save that

which refuses to be satisfied without the suffocation and strangulation

of all the labor of the land. With a forehead that refuses to be ashamed

it demands of Congress an act that will paralyze all the forces of

production, shut out labor from all employment, increase the burden of

debts and taxation, and send desolation and suffering to all the homes

of the poor.”

_Leland Stanford_ (Senate, March 10, 1890): “An abundance of money means

universal activity, bringing in its train all the blessings that belong

to a constantly employed, industrious, intelligent people.... Abundant

and cheap money places the power in the hands of the industrious....

Cheap and abundant money means co-operation of labor to an extent

hitherto unknown.... Would go far towards aiding his [labor’s]

intelligence, toward realizing his highest destiny. It seems to me that

the great thought of humanity should be how to advance the great

multitude of toilers, increase their power of production and elevate

their condition.... To me one of the most effective means of placing at

man’s disposal the force inherent in the value of property is through

furnishing a bountiful supply of money.... If money were suddenly

annihilated from all business affairs there would be a general

suspension of business all over the country. It is the duty of statesmen

to furnish the means, if possible, to find out the way by which the

Creator’s design for the highest advance of civilization is to be

obtained. Want, discomfort and misery are not necessarily the heritage

of the industrious and provident man. So far as I can ascertain, no

government has ever attempted to furnish an adequate supply of money or

establish any standard by which its want could be ascertained.”

_John G. Carlisle_ (in the House, February 21, 1878): “According to my

views of the subject the conspiracy which seems to have been formed here

and in Europe to destroy by legislation and otherwise from

three-sevenths to one-half the metallic money of the world is the most

gigantic crime of this or any other age. The consummation of such a

scheme would ultimately entail more misery upon the human race than all

the wars, pestilences and famines that ever occurred in the history of

the world. The absolute and instantaneous destruction of half the entire

movable property of the world, including houses, ships, railroads and

other appliances for carrying on commerce, while it would be felt more

sensibly at the moment, would not produce anything like the prolonged

distress and disorganization of society that must inevitably result from

the permanent annihilation of one-half the metallic money of the world.”

_John G. Carlisle_ (speaking for the Bland bill, 1878): “It will reverse

the grinding process that has been going on for the last few years.

Instead of constant and ruthless contraction, instead of constant

appreciation of money and depreciation of property, we will have

expansion to the extent of at least $2,000,000 a month, and under its

influence the exchangeable value of commodities, including labor, will

soon begin to rise, thus inviting investments, infusing life into the

dead industries of the country, and quickening the pulsations of trade

in all its departments.”

_Secretary Windom_ (Jan. 31, 1891): “The ideal financial system would be

one that should furnish just enough absolutely sound money to meet the

legitimate wants of trade, and no more. Had it not been for the peculiar

condition which enabled the United States to disburse over seventy-five

million dollars in about two and a half months last autumn, I am firmly

convinced that the stringency in August and September would have

resulted in widespread financial ruin.”

_Chauncey M. Depew_: “Fifty men can paralyze the whole country, for they

can control the circulation of the currency, and create panic whenever

they will.”

_Hon. G. G. Symes_, of Colorado (commenting on the demonetization of

silver): “There would be truly enough money to do the business after the

shrinkage of prices and the financial disasters. For the new order of

things and basis of values there would still be gold enough to carry on

the business. It would only require one-half after the new condition and

basis was reached. The monometallists, then, would still argue that gold

was not scarce.”

_Henry Clews_, Wall Street financier (March 16, 1895): “Wall Street

keeps a quick eye upon the prospects of the suggested international

silver conference. It sees in the adoption of a world-wide policy of

bimetallism the certainty of a material increase in the metallic money

of the commercial nations, and assumes that, in such case, there would

be a general rise in values and a consequent speculative boom of wide

dimensions.”

_Franklin H. Head_, of Chicago (business man): “That an increase in the

quantity of money reduces prices, and a diminution lowers them, as

stated by Mill and other economic writers, is the most elementary

proposition in the theory of currency, and without it we should have no

key to any of the others.”

_Amasa Walker_, of Massachusetts: “Other things being equal, the amount

of currency in circulation determines the prices of everything that is

for sale; and these are increased or diminished as the volume of the

currency is increased or diminished.”

_A. B. Hepburn_, of the United States Treasury (_Forum_, 1894): “When

credit is withheld a money stringency is easily created.”

_Prof. William G. Sumner_, of Yale (“History of American Currency,” page

205): “In 1872 this issue was forced out of between forty and fifty

million, reducing a redundancy and enhancing retail prices.” Page 211:

“The war being ended, the financial question took this form: ‘Shall we

withdraw the paper, recover specie, reduce prices, lessen imports and

live economically until we have made up the waste and loss of war? Or

shall we keep paper as money?’ Mr. McCulloch proposed to contract

inflated paper and pursue the former alternative.” Page 221: “The whole

story goes to show that the value of paper currency depends upon its

amount.” Page 329: “If, therefore, a nation has a specie currency, a

drain upon it by an adverse balance of trade, a foreign payment, or any

other similar cause, would immediately produce a lowering of prices and

a return of current specie until the natural level was once more

restored.”

_Prof. Francis A. Walker_, Yale (“Money,” page 57): “The value of money

in any country is determined by the quantity existing. Its power of

acquisition depends not upon its substance, but upon its quantity....

That prices will fall or rise as the volume of money be increased or

diminished is a law that is unalterable as any law of nature.” Page 210:

“Gold and silver undergo great changes of value and become in a high

degree deceptive. Prof. Jevons estimates that the value of gold fell,

between 1789 and 1809, 45 per cent.; from 1809 to 1849 it rose 145 per

cent., while in the twenty years after 1849 it fell again at least 30

per cent.... When the process of contraction commences the first class

on which it falls is the merchants of the large cities; they find it

difficult to get money to pay their debts. The next class is the

manufacturer; the sale of his goods at once falls off. Laborers and

mechanics next feel the pressure; they are thrown out of employment. And

lastly the farmer finds a dull sale for his produce.”

_Robert Ellis Thompson_, M. A., University of Pennsylvania (“Political

Economy,” page 151): “The influx of money into a progressive country is

one of the most powerful promoters and increasers of production. When it

is plenty all sorts of productive work is stimulated. Labor is the

master of capital, and industrial enterprise gains a more than

proportionally large return for its outlay.” Page 209: “The possession

of a large quantity of money enables any country to organize its

industries upon such a scale as to carry its division of labor to such

perfection as will bring down the prices of all the products of

industry, while affording a larger return to both capitalist and

laborer. It therefore makes such a country a cheap place to buy in,

mainly because of that accumulation of money which was to make

everything dear.”

_Professor Thompson_ (“Political Economy”) quotes Thomas Tooke, page

208: “If money has increased, industry and trade are increased.... If

iron and cotton are scarce, those who need them suffer by the scarcity,

but it has no effect upon the prices of other materials. If, on the

other hand, money is scarce, the price of everything else is affected.

Every one must make exchanges, just as when the water falls in the

rivers traffic is interrupted because the vessels are aground.”

_Professor Francis Bowen_, Harvard (“American Political Economy,” page

280): “The whole process of exchange may be compared to the process of

weighing a well-poised balance, the money and the merchandise being

placed on the opposite arms of the lever. Increase the weight on the

money side, and the merchandise is sure to rise.” Page 281: “The

equalization of money is but another name for the equalization of

prices.” Page 244: “The probability of the notes being redeemed at some

future day, more or less remote, is not the cause even of the

depreciation in the value of paper money, ... but solely on the relative

amount of the currency compared with the needs of business. How great

are these needs? Commerce needs money or currency enough to enable it to

perform its peculiar function; that is, to make the prices of

commodities in the home market equal or as nearly equal as possible to

the prices of the same commodities in foreign markets.” Page 245: “If

there is only $100 to buy flour with, and only ten barrels of flour

offered for sale, the competition of buyers and sellers must fix the

price at $10 a barrel. If there was twice as much flour, the number of

dollars being the same, the price must be reduced to $5. On the other

hand, double the quantity of money; there would be $200 available for

this purpose, and, as at first, only ten barrels to be sold; the price

would rise to $20 a barrel.” Page 301: “The general principle is that

the value of money falls in precisely the same ratio in which its

quantity is increased. If the whole quantity of money in circulation was

doubled, prices would be doubled; if it was only increased one-fourth,

prices would rise one-fourth.”

_President Steel_, Lawrence University: “The conventional unit of lineal

measure must not be a line which averages a foot, though it may be

fourteen inches to-day and nine inches to-morrow; for the same reason it

is desirable that the unit of value should have the same purchasing

power next week as it has now.”

_Prof. Francis Wayland_ (“Elements of Political Economy,” page 297): “If

there is more money in a country than is needed for its exchanges, the

price of goods is raised and it is sent abroad for new purchases. If

there is a scarcity of money in a country, the price of goods declines,

and money comes in from other lands to be exchanged for them.” Page 298:

“If money is abundant because business is stagnant and exchanges are

few, it is a sign of adversity rather than of prosperity.”

_Edwards Pierpont_ (_North American Review_): “When currency is small it

is always easy for a few lords of corporations and rich money-lenders to

combine and lock it up, and thus throw down the price of stocks, wheat,

cotton and other commodities, and work a corner on the currency. Thus

the market is made tight and extortion easy.”

_John Sheldon_ (_New England Yale Review_, March, 1890): “This is of

supreme importance, for prices tend to carry with the amount and not

simply with the kind of legal-tender money in circulation. The greater

the amount the higher the range of prices; the less the circulation the

lower the prices. Prices tend ever to follow up and down the amount of

legal-tender money in circulation; they do not tend to fixity of the

particular kind of money or standard used.”

_Alexander Baring_ (before the committee, House of Lords, 1819): “The

reduction of paper would produce all those effects which arise from

reduction in the amount of money in any country.”

_Sir Robert Peel_ (May 6, 1844, speaking of the act to regulate the

currency): “There is no contract, public or private, no engagement,

national or individual, which is unaffected by this.”

_Lord George Bentinck_ (Parliamentary Debates, about 1847): “Of all the

subtle devices which the wit of man has contrived to despoil the

community of their property, nothing equals the contrivance of laws

which limits the currency to gold.”

_Lord Beaconsfield_ (“Agricultural Depression”): “Gold is every day

appreciating in value, and as it appreciates in value the lower become

prices.”

_Sir Walter Scott_ (speaking of abundant currency): “It is not less an

issue that the consequences of this banking system as conducted in

Scotland have been operated with the greatest advantage to the country;

have converted Scotland from a poor, miserable and barren country into

one where, if nature has done less, art and industry have done more than

in perhaps any country in Europe, England itself not excepted.”

_Encyclopedia Britannica_ (1859): “A fall in the value of precious

metals, like a fall of rain water after a long course of dry weather,

may be prejudicial to certain classes. It is beneficial to an

incomparably greater number, including all who are engaged in industrial

pursuits, and is, speaking generally, of great public or national

advantage.”

_North British Review_ (November, 1861): “Metallic money, whilst acting

as coin, is identical with paper money in respect to being destitute of

intrinsic value.”

_William Jacob, F. R. S._, gives statistics of the world’s volume of

money from the year 14 A. D., when it was $1,790,000,000, to 806, when

it had fallen to $168,000,000. The price of a horse in England then was

£1 15_s_ 2_d_; an ox, 7_s_ 2_d_; a cow, 6_s_ 2_d_; sheep, 1_s_ 2_d_;

goat, 4_d_.

_Ernest Seyd_ (1867, speaking of a reduction in volume): “Throughout the

world a fall in prices will take place, injurious alike to the owners of

solid property and to the laboring classes, and advantageous only, and

unjustifiably so, to the holders of state debts and other contracts of

that kind.” (“Bullion,” 1868:) “On this one point all authorities are

agreed: that the large increase in the supply of gold has given a

universal impetus to trade, commerce and industry, and to greater social

development and progress.”