THE MAGIC "JIMMY"
It was at this stage that the class which is now the "System"--of which
the mighty robber of barbaric days was the prototype--began to cast
envious eyes at the accumulated earnings of a prosperous people locked
up and safeguarded against depredation, while the owners (the public)
rested easy in the conviction that they had fully protected themselves
against the spoilsman. The "System" reasoned: "If only a way could be
devised to win control of the seven institutions so that all the
benefits the people intend for themselves may revert to me and yet I be
exempt from the punishment provided for those who attempt unfairly and
dishonestly to secure such benefits, I can get a much easier and surer
possession of the results of the labor of the people than I was wont to
when I took them by might."
A need defined is half relieved. Outside the treasure-house was the
robber enviously surveying its strong walls and iron doors, its locks
and bolts, specially designed to defy the felonious intentions of such
as he. How safely to win his way in and possess himself of the piled-up
gold was his problem. And as he waited and watched, the lawyer, at his
solicitation, invented for him a magic "jimmy"--an instrument with which
he could not only break through the outside door, but as easily force
his way past the complex locks of the chambers inside. What was still
better, this magic "jimmy" was also a license to enter upon and take
possession of others' properties and use them for his own benefit. It
conferred on its owner a legal privilege to steal. The robber was
satisfied. The "jimmy" which the lawyer had brought him was the
"trust."
All this sounds very hyperbolical and far-fetched, perhaps, but it is
exactly what a "trust" is. The "trust" may also be defined as a master
key to the people's financial structure, which enables its owner to
enter any or all of the separate institutions I have mentioned, and
combine any or all of them, without affecting their respective
organisms, into a new organization which possesses the potencies and the
privileges of each, but is unhampered by the legal restrictions of any
one of them. Like electricity, the exact nature of a "trust" does not
admit of rigid definition, but it is a force which can be exerted only
in conjunction with financial organisms, which it joins and yet
releases, adds power to, and exempts from consequences. Let us suppose
that two men are made into a "trust"--this human combine becomes at once
free from the bondage of matter and the senses, sees out of the back of
its head and passes in and out through solid walls. It has all the
combined strength and more that the two men had and all their human
privileges and possessions, but it evades nature's laws as to
individuals, and the laws of man both as to individuals and other
material things.
To put the description in still another way, a "trust" is an institution
which endows itself with the right to use any or all of the seven
institutions of the people as the people use them, but so made that its
user derives from the institutions the benefits the people intended for
themselves, and yet is immune from the legal consequences of
appropriating such benefits. Two or more men make a "trust" by
combining--acquiring the control of--an insurance company, a trust
company, and a savings-bank. The new organization _is_ all of these
institutions, performs the functions of all of them, yet can legally do
with their incomes, capital, and surpluses things which, from the very
nature of each, none of the institutions is allowed to do--the new
organization is all of these institutions until the law attempts to
bring it to book; then it evades being any one of them. The trust
company is empowered to lend money on speculative ventures which the
insurance company and savings-bank may not do, so the "trust" lends the
insurance company's vast accumulations and the savings-bank's hoard
through the trust company with great profit or tremendous loss and
enjoys immunity from the consequences which should follow such
disobedience of the law. Moreover, when the trust company shows a profit
the "trust" appropriates it, and when a tremendous loss is sustained the
insurance company or the savings-bank must bear it.
An illustration: A, B, and C form a "trust." A and B are president and
controller of a savings-bank and an insurance company respectively. They
organize a trust company with $1,000,000 capital, of which the insurance
company furnishes the majority; they then elect C president and
controller of the trust company, and make him their associate or a
dummy. The trust company receives $5,000,000 of the people's money on
deposit. The insurance company deposits $5,000,000 of its surplus funds,
and the savings-bank $5,000,000 more. The trust company now has
$15,000,000 of the people's savings in its control with which by law it
is allowed to do certain things; but what it does with the $5,000,000 of
the savings-bank and the $5,000,000 of the insurance company the law
specifically says neither one of the institutions can do itself. The
"trust" then purchases for $5,000,000 the stock of an industrial
corporation. It borrows the $5,000,000 and an additional $5,000,000,
which represents its own first profit, from the trust company through
irresponsible dummies, depositing the industrial stock as collateral.
The "trust" next causes the trust company to issue bonds for
$15,000,000. These bonds are based upon and secured by nothing of worth
but the stock. The trust company offers these bonds for sale. The
insurance company buys $7,500,000 of the bonds, and the trust company,
through dummies, the other $7,500,000. By the operation so far the
"trust" shows a profit of $10,000,000. After making this profit and the
true worth of the bonds becoming known, these decline back to the
original worth of the stock upon which they are based, $5,000,000, and
there is the tremendous loss of $10,000,000 made. The trust company
"busts," and there is a loss to its depositors of $10,000,000. This loss
is divided as follows: $3,333,000 to the savings-bank, $3,333,000 to the
insurance company, and $3,333,000 directly to the people, less the
small amount which will be recovered from the stockholders. (These
losses will be affected in an unimportant way by the $1,000,000 original
capital.)
In this case the "trust" has done nothing for which those responsible
for it can be held civilly or criminally liable. Neither has the
insurance company, the savings-bank, nor the trust company, and yet, if
there had been no "Trust" and any one of the three institutions had made
the loss directly through its own actions, the officers of that
institution would have been civilly and perhaps criminally held
responsible.
The utility and convenience of the "trust" having been demonstrated, it
became a popular instrument for financiers desiring to accomplish all
manner of illegal purposes. Especially was it an apt tool for the
"System," which in the meantime was perfecting its control of the
people's institutions. The owners of railroads running through the same
territory, finding cumbersome and hampering the restrictions with which
the community they served had safeguarded its interests, formed
"trusts." Straightway there were valuable results--the combination was
emancipated from the regulations which had bound its individual members;
competition was eliminated and rates were raised.
As time went on new "trust" possibilities were discovered and other
institutions linked up--corporations of all kinds, insurance companies
and national banks and savings-banks, were brought together for the
benefit of the "System" and the detriment of the public. The end of the
trustification of the institutions of the nation is not yet, but the
people are to be shown a way by which the plundering process can be
reversed and through which they can make their freedom complete and
absolute by the complete and absolute enslavement of the "System"
itself.