Chapter 10 - NATIONAL BANKING MONEY POWER BRINGS ON THE PANIC OF 1893

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"The greatest financial mistake of my life was in what I had to do with the passage of the present National Bank Act. It ought to be repeated; but before it can be done there will be such a contest between the banks on the one side, and the people on the other as has never been witnessed in this country."-Salmon P. Chase.

"Fifty men in these United States have it within their power, by reason of the wealth which they control, to come together within twenty-four hours and arrive at an understanding by which every wheel of trade and commerce may be stopped from revolving, every avenue of trade blocked, and every electric key struck dumb. Those fifty men can paralyze the whole country, for they control the circulation of currency and can create a panic whenever they will." -Chauncey M. Depew.

After the events narrated in the preceding chapter, Mr. Cleveland once more assumed the duties of the high office to which he was elected.

His conduct previous to his inauguration, in attempting to influence Congress before he was invested with the constitutional power to address that body, in the official capacity of President, aroused the gravest fears of the rank and file of the Democracy.

With much sorrow, the people saw their chosen idol ally himself with the national banking money power, and they perceived that he intended to use the immense patronage of his office to coerce Congress into submission to his will.

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To add further to their misgivings, President Cleveland, in the appointment of editors of influential newspapers to highly-salaried offices, evidenced his plain purpose to subordinate the press to his views.

The number of leading journalists appointed by him to the most lucrative and honorable posts, far exceeded similar appointments made by any of his predecessors.

To the intense disgust of that great party which had so frequently honored him, he relegated tariff reform to the background.

He aggravated this distrust, which was now manifested against him, by appointing one of the ablest corporation lawyers of the country to the office of Attorney-General; via., Hon. Richard Olney.

The only leading appointment made by him, which anywise allayed this feeling of distrust, was that of John G. Carlisle for Secretary of the Treasury.

During his career in Congress, Mr. Carlisle was the ablest opponent of the national banking system and a single standard of gold that the country ever knew.

For logic, argument, and eloquence, his arraignment of the money power, in 1878, and 1882, was the most notable ever heard in Congress.

Subsequent events will show that he became the greatest apostate to a noble cause that ever appeared in American history.

President Cleveland had long recognized the splendid ability of Mr. Carlisle as an opponent to the national banking money power, and he resolved to convert him into an advocate of that merciless greed which had hitherto absorbed the wealth of the people.

Hence his appointment.

That the time had come in which to make a bold stroke for the perpetuation of its system, this money power immediately perceived upon the accession of Mr. Cleveland to the Presidency.

This power knew that President Cleveland was a man whose firmness, energy, and ability, had been seldom equaled by any of his predecessors in office, that he was a staunch friend of the gold standard and of the national banking system, and, therefore, it determined to wreck the country, if necessary, to teach the people an "object lesson."

It resolved to bring an a panic, the like of which had never been visited upon any people.

Every monetary panic from which the American people had suffered, was the deliberate work of that class of men who pompously ascribed to themselves the sum and substance of all the financial wisdom of the nation.

The national banking money power, in planning and consummating the panic of 1893, had several objects in view.

First, The permanent withdrawal and destruction of the greenbacks and the treasury notes of 1890, amounting to $5oo,ooo,ooo, and the issue of an equal amount of bonds, running from fifty to one hundred years. These bonds were to serve as a basis for national bank notes, the issue and control of which would net the banks at least $4o,ooo,ooo in interest per annum.

Second, The withdrawal from circulation of more than 5oo,ooo,ooo silver dollars, and the substitution therefor of an equal amount of bank notes, the loaning of which would annually bring the banks an additional profit of $4o,ooo,ooo.

Bonds were to be issued to take up these dollars, the bullion composing them to be thrown upon the market and sold as "old junk," to use the phrase of National Banker Lyman J. Gage.

Third, The wrecking of those great railway properties of the country which it did not control, by depreciating their stocks and bonds during the panic, buying such stocks and bonds at the lowest possible figure, thus securing ownership of all the means of transportation.

Fourth, An opportunity to exhibit its power over Congress and the people.

The immensity of this money power is almost beyond comprehension. The head and front of this great power is the Clearing House Association of New York City, composed of the membership of sixty-six national banks, whose deposits aggregated nearly a billion of dollars in 1893.

A large part of this vast accumulation of money, held by these associated banks, was not loaned to be invested in legitimate business enterprises. It was utilized to manipulate the price of stocks.

That accurate financial writer of the New York Sun, Matthew Marshall, in the early part of 1893, stated that one half of all the loans of these associated banks were made to the stock speculators of Wall street, those men who organized cliques and rings to wreck railroad properties.

With few exceptions, the thirteen thousand banks scattered over the land obey the dictates of the Clearing House to the minutest letter.

New York City is the seat of the most gigantic concentration and combination of capital in the Western Hemisphere. It is the home of those great banks, of the loan and trust companies, and of the majority of the enormously wealthy life, fire, and marine insurance companies of the United States. Wall Street is the arena of the railway, gas, street railway, sugar, coffee, and oil magnates. It is a city where a fortune of less than ten millions is not considered worthy of public notice. The great banking house of Rothschild is ably represented by the Belmonts; Lombard street, London, has its agent there in the person of J. Pierpont Morgan.

New York City is the center of exchange of America Thirteen thousand banks of the United States, private, state and national, continually maintain large deposits of money in her national banks for the payment of drafts.

These deposits of money from all parts of the nation amount to many millions, and tend to make money scarce in the South and West, and concentrate it in a few banks in the metropolis.

According to the provisions of the national banking law, the national banks of the great sties of the country were selected as the reserve agents of the 3,7oo national banks throughout the country. By that law, these banks were required to keep in reserve from fifteen to twenty-five per cent of the total amount of deposits in their custody; and they were authorized to deposit this great Reserve Fund in the national banks of New York City, a system which further added many millions of dollars to the holdings of those banks, with a consequent drain .of money upon all other districts of the nation. The banks of New York City were thus enabled, from these immense accumulations of money, to mate loans at the low rate of one per cent, stroke for the perpetuation of its system, this money power immediately perceived upon the accession of Mr. Cleveland to the Presidency.

This power knew that President Cleveland was a man whose firmness, energy, and ability, had been seldom equaled by any of his predecessors in office, that he wag- a staunch friend of the gold standard and of the national banking system, and, therefore, it determined to *wreck the country, if necessary, to teach the people an "object lesson."

It resolved to bring on a panic the like of which had never been visited upon any people.

Every monetary panic from which the American people had suffered, was the deliberate work of that class of men who pompously ascribed to themselves the sum and substance of all the financial wisdom of the nation.

The national banking money power, in planning and consummating the panic of 1893, had several objects in view.

First, The permanent withdrawal and destruction of the greenbacks and the treasury notes of I 89o, amounting to $5oo,ooo,ooo, and the issue of an equal amount of bonds, running from fifty to one hundred years. These bonds were to serve as a basis for national bank notes, the issue and control of which would net the banks at least $40,000,000 in interest per annum.

Second, The withdrawal from circulation of more than 5oo,ooo,ooo silver dollars, and the substitution therefor of an equal amount of bank notes, the loaning of which would annually bring the banks an additional profit of $40,000,000.

Bonds were to be issued to take up these dollars, the loan and trust companies, and of the majority of the enormously wealthy life, fire, and marine insurance companies of the United States. Wall street is the arena of the railway, gas, street railway, sugar, coffee, and oil magnates. It is a city where a fortune of less than ten millions is not considered worthy of public notice. The. great banking house of Rothschild is ably represented by the Belmonts; Lombard street, London, has its agent there in the person of J. Pierpont Morgan.

New York City is the center of exchange of America. Thirteen thousand banks of the United States, private, state and national, continually maintain large deposits of money in her national banks for the payment of drafts.

These deposits of money from all parts of the nation amount to many millions, and tend to make money scarce in the South and West, and concentrate it in a few banks in the metropolis.

According to the provisions of the national banking law, the national banks of the great cities of the country were selected as the reserve agents of the 3,700 national banks throughout the country. By that law, these banks were required to keep in reserve from fifteen to twenty-five per cent. of the total amount of deposits in their custody; and they were authorized to deposit this great Reserve Fund in the national banks of New York City, a system which further added many millions of dollars to the holdings of those banks, with a consequent drain of money upon all other districts of the nation. The banks of New York City were thus enabled, from these immense accumulations of money, to make loans at the low rate of one per cent. deposited by these banks to secure their circulating notes, reached the magnificent sum of $419,887,111.

We do not include in this calculation the usury gathered from their currency or bank notes.

In its yearly almanac for 1893, the New York World, a journal friendly to national banks, shows that the Profits of those banks from 1872 to 1891 were the vast aggregate of $1,o81,998,586.

Their average capital during that period was $5oo,ooo,ooo.
There are scores of these banks, which, after distributing great dividends to their stockholders, have a surplus and undivided profits exceeding their entire capital stock.
These facts are taken from the sworn reports of the officials of these banks.

At the hearing before the Committee on Currency in December, 1894, George C. Williams President of the Chemical National Bank of New York City, gave the following sworn statement as to the profits of his bank. We here quote the evidence of Mr. Williams in reply to the questions of Mr. Warner, a member of the committee:

MR. WARNER: So that the capital of your bank now represents how many millions of dollars?

MIR. WILLIAMS: Our capital is $3oo,ooo and our surplus about $7,ooo.ooo.

MR. WARNER: Your stock is worth about $4.300 a share?

MR. WILLIAMS: Yes, Sir; it sells for that. It sells for more than it is worth.

MR. WARNER : Forty-three times as much as its par. What is the amount of your bond deposit?

MR. WILLIAMS: The Chemical Bank has never taken out any circulation whatever. Our bond deposit is $5o,ooo; but we have never circulated any notes.

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The Chairman pursued this line of questioning, and elicited the following admissions:-

THE CHAIRMAN: Mr. Williams, some members of the committee desire to understand exactly the condition of your bank. What did you state the capital was?

MR. WILLIAMS: Three hundred thousand dollars.
THE CHAIRMAN: And the surplus?

MR. WILLIAMS: The surplus and undivided profits are about $7,000,ooo. The surplus is $6,000,ooo and the undivided profits a little over a million dollars, making a little over $7,000,000 Of surplus and undivided profits.
THE: CHAIRMAN: And how much deposits?
MR. WILLIAMS: Thirty million dollars.

THE CHAIRMAN: What dividend do you pay per annum on your stock?
MR. WILLIAMS: We pay now 15o per cent. per annum.
The astonishing annual profits of that bank is shown by the following:-
THE CHAIRMAN: You stated the dividend last year was 15o per cent.

MR. WILLIAMS: Yes, Sir.
CHAIRMAN: What were the undivided profits of that year?
MR. WILLIAMS: Well, I have not it in mind; but owing to the panic our profits last year were not as large as usual. Usually we expect to add to our surplus 1oo per cent. besides the dividend we pay of 15o per cent.

THE CHAIRMAN: That is $300,ooo a year?
MR. WILLIAMS: Yes, Sir.

Mr. CHAIRMAN: And a dividend of 15o per cent besides?
MR. WILLIAMS: Yes, sir.
In the year of the panic of 1893, this institution gathered in a profit Of 250 per cent.
A partial list of other banks of New York City is appended, to illustrate their unheard-of profits:
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The par value of the stock of the Mechanics' National Bank is $25 per share; it is now worth $195 per share.

The par value of the stock of the Importers' and Traders' National Bank is now worth$500 per share.

The par value of the stock of the Hanover National Bank is $1oo per share; it is now worth $340 per share.

The par value of the stock of the Gallatin National Bank is $5o per share; it is now worth $300 per share.

The par value of the stock of the Broadway National Bank is $25 per share; it is now worth $25o per share

The par value of the stock of the Chatham National Bank is $25 per share; it is now worth $300 per share.

The par value of the stock of the City National Bank is $1oo per share; it is now worth $6oo per share.

The par value of the stock of the Corn Exchange National Bank is $1oo per share; it is now worth $300 per share.

The par value of the sock of die Fifth Avenue National Bank is $1oo per share; it is now worth $3,000 per share.

The par value of the stock of the Chase National Bank is $1oo per share; it is now worth $5oo per share.

The par value of the stock of the Fourth National Bank is $1oo per share; it is now worth $185 per share.

The difference between the face, or par value, of the stocks of these banks, and the market value thereof, results from the surplus and undivided profits, which are accumulated after the payment of large periodical dividends to the stockholders.

Not satisfied with these unparalleled incomes, these national banks, in connection with others of New York City, constitute that Clearing House, which persistently claimed the special, bounties of the Government in the way of tens of millions of prepaid interest, premiums on bonds, and gratuitous loans of public money, aggregating hundreds of millions of dollars.

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The money kings at the head of these banks are the most persistent and greatest beggars on earth.

They are the financiers who have brought on every panic since 1865, and, from the tumbling of stocks and wreckage of fortunes, gather in the wealth of the country.

In 1896, the great trust companies of that city held deposits of money aggregating $242,000,000; and paid dividends Of 25 to 40 per cent. to their stockholders.

They were as strong in 1893.

These trust companies are the holders of hundreds of millions of dollars in bonds of railway, street railway, gas, and electrical companies, located chiefly in the West and South. The income from these stocks and bonds accelerates the flow of money to the East.
Many of these corporations, whose stocks are so held by the capitalists of New York City, are bonded from two to five times their actual value, thus operating as a heavy burden upon those communities who have granted these corporations valuable franchises. A single street railway corporation in one of the Western States was purchased by two Eastern speculators for $2,000,000; they at once proceeded to issue bonds upon this property to the amount of $4,000,000, which they sold to a trust company in New York City. They also issued stock to the amount of $4,500,000, which was disposed of by these scoundrels, making a total debt of $8,5oo,ooo upon a property costing but $2,ooo,ooo. The people of that city pay the interest upon these bonds, and the dividends upon this stock, by submitting to exorbitant charges.

This money power, with the eyes of Argus and the hands of Briareus, has likewise seized upon the natural gas resources of the West.

A syndicate of Eastern capitalists purchased the natural gas properties in the State of Indiana, the total outlay in cash being $3,500,000. It immediately proceeded to issue bonds thereon to the amount Of $8,250,ooo, which were sold to a trust company in New York City. The proceeds of these bonds paid for the entire investment besides yielding a surplus or bonus of S2,600,000. In addition stocks were issued on this property to the amount of $8,9oo,ooo. The interest and dividends on these stocks and bonds are squeezed out of the people of that State, and the money goes to increase the hoards of the millionaires of the East.

The same is true of the stock-yards of the West. A single stock-yard company of Kansas City is enormously over-capitalized. In order to make the dividends to transmit to the Eastern stockholders, corn was bought at ten cents per bushel, and sold at one dollar per bushel to those who are compelled to feed their stock shipped through those yards. Such is the robbery practiced on the West by what is called the culture and sound finance of the East.

The more than one hundred thousand miles of railways traversing the West and South, cost, on an average per mile for their construction. The average bonded indebtedness is $63,000 per mile, and the interest on these bonds is met by extortionate rates of transportation acting as a means of levying heavy tribute upon the agricultural products of these sections. These bonds are chiefly held in New York City and England.

The iniquity of this system can be faintly understood, when it is borne in mind, that many of these railways were originally built by immense contributions of money and land by cities, townships, counties, and States, through which they run, in addition to the enormous land grants bestowed upon these corporations by the general Government, the last of which aggregated more than two hundred million acres of valuable public lands.

The wealth of the insurance companies is almost incalculable. There are single life insurance companies in that city, whose resources equal that of sovereign States. Three of these corporations have assets exceeding $6oo,ooo,ooo. The agents of those companies are planted over all the entire West and South, and the periodical flow of money to the East rivals the revenue of nations. This volume of money takes its origin from nearly every farm house, hamlet, village, town, and city in the Union, converges at the general agencies, and thence pours a mighty flood of dollars into the treasuries of the home companies.

From 1869 to 1889, a period of twenty years, the State of Illinois contributed $138,425,433 to the various insurance companies of the East. It received back, in the way of losses paid, only $84,929,204, leaving a surplus or profit over expenditures Of $53,496,229. This drain was from a single State.

The aggregate from the West and South in the last twenty years would reach billions.

These insurance companies, in turn, loaned this money to the South and West at exorbitant rates of interest, resulting in an additional drain on those sections.

Then there are the loan and mortgage companies of New York City and the East who make a specialty of loaning money on the farm lands of the West and South.

The holdings of these companies aggregate more than one billion dollars; and the annual flow of money to the East for interest charges is at least $15o,ooo,ooo. In speaking of the astonishing increase of the mortgage debt of the West, Frederic C. Waite said:

"The most astonishing increase of all, however, is in the real estate mortgage indebtedness, as disclosed by the investigations of the eleventh census. Let us remember that this is largely the debt of the hardest working and the poorest paid of all our American citizens, namely, the farmers and the laborers who are trying to obtain a home of their own by honest toil. In the twenty-one States for which the mortgage indebtedness has been tabulated, the aggregate amount in force, at the close of 1889, was four thousand He hundred and forty-seven millions with the great States of Ohio, Texas, and California, and whole groups of lesser States yet to be heard from. The grand aggregate will be no less than six thousand three hundred millions. The aggregate in 1880 was only about two thousand five hundred millions."

The number of these loan and mortgage companies is very great, not only in New York City, but in other Eastern cities.

In an article upon this subject, the Political Science Quarterly, for September, 1889, said:

"Boston numbers more than fifty agencies of farm mortgage companies. It is computed that Philadelphia alone negotiates yearly more than $15,000,000 on Western loans. Kansas and Nebraska have one hundred and thirty-four incorporated mortgage companies. The companies organized under the laws of other States but operating in these two States increase the number at least two hundred.

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"In this reckoning, no account is taken of firms and individuals, although a large amount of money is directly invested by lenders of this class."

The financial resources of Boston are a mere bagarelle, when compared with those of New York City, (et the former has more than fifty of these loan and mortgage companies.

The Forum, for March, 189o, makes the following astonishing statement:

"It is impossible to say bow much has been invested in the West in real estate securities, but the amount is enormous Five mortgage companies it Topeka, Kans., report that the loans made by them, and still outstanding, amount to $22,000,000. Of this sum go per cent. has been invested in Kansas. Five companies at Kansas City, report $68,ooo,ooo outstanding. This amount has been placed in a dozen Western States."

This remarkable state of affairs in the West and South will be considered strange, in view of the facts that these sections are the food-producing regions of the country, and, that while they feed this whole nation, they furnish more than three fourths of the exports which maintain a balance of trade in favor of the United States.

The high-handed and oppressive manner, in which these loan agencies and companies have invoked the law to foreclose their mortgages on the farms of the West, is a scandalous abuse of power.

As the improved farms were only pledged for the payment of a sum of money never exceeding in any case more than fifty per centum of the value of the naked land, the security was good.

Nevertheless, many thousands of suits for foreclosure were instituted on the slightest failure to pay the interest coupons; decrees of sale were accordingly entered, and the land sold to pay the debt, whereupon these mortgagers would bid in the entire mortgaged premises for a fraction of the claim, obtain the property for a mere nominal sum, and yet hold a large residue of the judgment over the head of the unfortunate debtor to seize what other property the mortgagor would happen to Possess, and thus sweep away all into the coffers of these voracious usurers.

This iniquitous use of the process of the law to rob the debtors of the West and South of their whole -substance, is a dark and damnable blot on the jurisprudence of the United States, and it would shame the hardened nature of a Bashi Bazouk.

The future historian will marvel at the patience displayed by these people under the circumstances.

Closely allied to the moneyed corporations of New York City, and having an unity of interest with them, are the 3,700 other national banks scattered over the country.

An examination of the list of officers and directors of the national banks of New York City, Boston, Hartford, New Haven, Providence, Philadelphia, Brooklyn, Baltimore, Chicago, and other leading cities, reveals some marvelous facts.

It will demonstrate that the presidents and directors Of the national banks of the first-named city, control the operations of the loan and trust companies, the gigantic life insurance corporations, the sugar trust, and the Stock 10, exchange.

These financial magnates are heavy stockholders in what we called natural monopolies, such as street railway companies, and corporations which furnish water and light for the cities of the nation.

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H. O. Havemeyer, the sugar trust ting, is the heaviest stockholder in the Western National Bank. Russell Sage, the great stock speculator of New York City, is the chief owner of the Importers' and Traders' National Bank. And so the list could be indefinitely extended, showing that the great stock gamblers of Wall street, the organizers and managers of oppressive trusts, the wreckers of railroads, the heads of great insurance companies, the merchant princes, the high1y protected manufacturing lords, the owners of great newspapers, are the individuals at the head of the national banking money power.

In the city of Chicago, all the members of the great packing house arid stock-yard trust are heavily interested as owners and directors of national banks. Its millionaire merchants, grain gamblers, owners of street railway stocks, and gas properties, dictate the election of officers of these banks.

As another means of securing control of the entire volume of money, the national bank managers, with wonderful prescience, organized trust companies in every great cityof the country to act in the capacity of receivers, trustees, executors, administrators, and guardians, with the intention of monopolizing the probate business of the courts.

Proof of the strongest nature can be produced, to show that these national banks have loaned money to flourishing manufacturing enterprises, then, at an opportune moment, forced their debtors into bankruptcy, had their trust companies appointed receivers of the trust estate, charged enormous fees for settling up the affairs of the bankrupts, while the officers of these banks, as private individuals, bought in the assets of these unfortunates at a great sacrifice.

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It is said of a national bank president, who is also at the head of one of these trust companies, that he keeps himself thoroughly versed in the financial condition of the debtors of his and other banks, that he carefully watches the growth of the business of these debtors until they become ripe for plucking, and that, as a bon-vivant examines a fowl to ascertain its condition, so this great financier waits for his victim until he reaches that stage that he can be thrown into bankruptcy, when he pounces on him as the vulture pounces on its helpless prey. The receivership of his trust company does the rest.

Up to the early part of 1893, this money power had built up a system of bank credit that was stupendous in its proportions.

Under its manipulations of the volume of money it had forced nearly all business on a bank-borrowing basis.

In a report of the Comptroller of the Currency for 1893, the loanable funds of all the banks of the United States, on the 3oth day of June of that year, aggregated $6,412,939,954.

It may seem a mystery to many how it can be possible, that, with a volume of money of but $1,6oo,-ooo,ooo in the nation, these banks have a loanable fund of four times that amount.

The process, or legerdemain, by which these financial institutions expand $1,6oo,ooo,ooo of actual money to $6,412,939,954 of loanable bank credits, and exact the highest rate of interest on the latter is a matter which has confounded many students of finance.

The process of the banks, in building up this colossal system of credit, and subordinating the immense interests of the country to their dictation, is very simple. The loanable funds of the banks consists of their paid-up cash capital, deposits, and their loans to customers.

This expansion of the loanable funds of a bank can be most clearly explained by the example of the First National Bank of Chicago, of which Lyman J. Gage was President, previous to his appointment to the Secretaryship of the Treasury.

This bank has a capital of $3,ooo,ooo, loans and discounts of $17,723,727 and total assets of $39,5oo,ooo. The query arises how can a bank with but $3ooo,ooo capital loan nearly $18,ooo,ooo and have assets of nearly $40,000,000?

It makes these loans out of the money daily deposited with it, or, more dearly speaking, on what it owes to others. It not only controls its own money, bet the money of the business community in which it is situated.

To further illustrate the methods of banks in swelling the amount of loanable funds, and consequently their power to reap interest therefrom, take the following case: A merchant goes to one of these great banks, and his credit being first class, he borrows $3oo,ooo on thirty, sixty, or ninety days' time. The interest is deducted out of the loan in advance, and the balance credited to the borrower, who does not take this money out of the bank to hie place of business. This borrowed money remains with the bank for the payment of checks drawn against it by the merchant. Owing to this process, the bank, while making a profit out of the loan, still has the use of the money out of which to make additional loans, and so this process goes on indefinitely.

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The supply of money in the bank for the payment of checks and drafts is maintained by the daily deposits of its hosts of customers.

This is the identical process bywhich the system of banks have expanded $1,6oo,ooo,ooo to $6,4oo,ooo,ooo of loanable interest- bearing bank credits.

This loanable bank credit means an annual income of at least $4oo,ooo,ooo to these institutions.

This is a substantial reason why the system of banks, throughout the length and breadth of the land, eulogize credit, and why they are opposed to a sufficient volume of money, and why exalt credit above actual cash.

This vast income of the banks operates as a tax upon the people - a tax which ultimately falls with crushing weight upon the laboring man.

The wholesale merchant borrows a large sum of money from one of these great banks at the prevailing rate of interest which is deducted in advance. He adds this payment of interest to the cost of the goods, and charges a profit upon the whole amount thus invested. The retailer buys these goods with the interest charge and the profit mingled with the price. In many cases. he borrows the money under the same process as the wholesale merchant, and he adds the interest charge to the cost of the goods so purchased, and thus he extracts a profit upon his from the ultimate purchaser, who is the consumer of them.

Therefore, these enormous profits of the credit system of the banks levy tribute upon every article necessary for the sustenance and comfort of life.

In this connection, let it be borne in mind that the sole class upon whom rests the enormous burdens of government, and from whom has been extorted those almost incomprehensible sums of money that found their way into the coffers of the bankers and bond-holders, is the producers of wealth.

The creation of wealth arises in three ways; via., transmutation, transformation, and transportation.

The man who plows, sows, and reaps, is engaged in the first-named process; the mechanic, or laborer, who adds value to the raw material, is an example of the second; the distribution of the products of the agriculturist, and the stilled or unskilled workman, falls in the province of the last named.

These processes are the sole means of adding to the stock of material wealth.

Bankers, merchants, and those belonging to what are called the learned professions, do not add a single penny to a nation's stock of wealth.

The banker and the money lender merely gathers toll from those, who borrow the medium of exchange to carry on business.

The merchant of every description who obtains a profit on the merchandise he buys and sells, merely takes the difference between the cost and selling price of goods from the customers, and adds it to his own possessions. This process does not add a farthing to the wealth of the nation as a whole.

Lawyers, physicians, and all other members of the professions, only absorb what is produced by others.

There is no way under heaven by which these classes of persons add anything to the wealth of a people

All township, municipal, county, State, and Federal officers, are merely consumers of what is produced by those who are engaged in the processes of transmutation, transformation, and transportation.

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Every tax levied and collected by the Government, and its various political and territorial subdivisions, is a transference of health from the people, to be in turn, given to those who are the official organs of lawful authority.

These definitions of the producing and non-producing classes are matters of every-day observation, and are susceptible of complete demonstration.

It is upon the shoulders of the producing class that rest the crushing weight of government, the enormous gains of national banks, and other wealth-consuming elements.

These burdens are surely bearing down the people into a bottomless abyss of bankruptcy.

One of the means that greatly increased the power of the national banks of Net York City, was their selection as depositories of government funds during the last thirty years.

In a speech of Comptroller Eckles, at a banquet given in his honor by these banks, he thus extols these pets of the Government. He said: -

"As government depositories the national banks have received, stored in their vaults, and accounted for $5,356,625,891 without expense to the Government. Allowing the rate of three eighths of one per cent. as a reasonable compensation for such services, which is the same as that fixed by the act of March 3, 1875, as the compensation of disbursing officers for public buildings, it would amount to $2o,o87,347."

Think of it! These few banks had the use of more than five billions of government money, increasing their loanable funds to that extent, and from which they gathered scores of millions of profit.

Through the agency of the railway and the telegraph, the national banking money power of today can reach every part of the United States in twenty-four hours. The national banks know the value of organization, and they have brought it to a perfection that would excite the admiration of a Napoleon.

Shortly after the inauguration of President Cleveland, the national banks of New York City transmitted the following infamous circular to the thousands of banks scattered throughout the United States. The contents of the circular are as follows: -

"Dear Sir: The interests of national bankers require immediate financial legislation by Congress. Silver, silver certificates and treasury notes, must be retired and national bank notes upon a gold basis made the only money. This will require the authorization of from $5oo,ooo,ooo to $1,ooo,ooo,ooo of new bonds as a basis of circulation. You will at once retire one third of your circulation and call in one half of your loans. Be careful to make a money stringency felt among your patrons, especially among influential business men. Advocate an extra session of Congress for the of the purchasing clause of the Sherman law an act with the other banks of your city in securing a large petition to Con for its unconditional repeal, per accompanying form. Use personal influence with congressmen and practically let your wishes be known to your Senators. The future life of national banks as axed and safe investments depends upon immediate action, as there is an increasing sentiment in favor of Government legal tender notes and silver coinage."

While the national banks of that city were engaged in this conspiracy to wreck the business interests of the country, they were raiding the gold reserve of the United States Treasury to force an issue of bonds.

Coincident with the appearance of this circular, which advised the bringing on of this panic, the following remarkable document was put forth by the national banking money power. It is as follows:-

"Dear Sir: The present financial situation requires the following action by Congress, which should be favored by all interests, to wit: -

"1. Pass a resolution repealing purchase clauses of Sherman silver bill.

"2. Pass a bill authorizing the issue of $3oo,ooo,ooo of United States 3 per cent. bonds, payable in gold, directing United States Treasurer to sell $1oo,ooo,ooo immediately in Europe, with stipulation that none of them should be resold within the United States; the Treasurer to take this $1oo,ooo,ooo of gold and issue $1oo,ooo,ooo of gold certificates against it, and deposit them in the different national banks of the United States pro rata to their capital and circulation, upon adequate security being given to the Government securing such deposits; such deposits to be preferred liens upon all assets of each bank, etc.

"It should also direct the Treasurer to sell $1oo,-ooo,ooo of such bonds immediately in Europe under similar conditions, the money to be placed in the United States Treasury or left on deposit in London, Paris, and Berlin, for use by the Government in paying deficiencies between the Government's receipts and expenditures, and drawn as needed.

"The remaining $1oo,ooo,ooo should be held subject to sale whenever the necessities of the Government or the financial interests of the country demand it.

"Bringing $2oo,ooo,ooo of gold to this country, in addition to the balance of trade in our favor, would immediately establish confidence in out financial strength.

"3.Pass a resolution calling an international conference to establish an international agreement as to the use of silver as currency, to be held within twenty days after the passage of such resolution. Twenty days' notice by cable is amply sufficient to allow time for every government to appoint men who understand the

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subject thoroughly, and have them meet at some convenient place.

"The delegates representing the United States should be selected by Congress and named in the resolution, two of them to be Senators from the silver States and two of them equally representative of the other side of the question.

"4.Pass the act increasing national bank circulation to par of deposited bonds.

"The above legislation would immediately inspire confidence here and abroad in American finances and start n the wheels of business, now helplessly clogged.

"For the future the following action should be taken:

"5. Pass a resolution appointing a committee, to consist of five New York bankers of the highest standing and one each from Boston, Philadelphia, Chicago, St. Louis, Cincinnati, Nashville, Atlanta, Savannah, New Orleans, Galveston, San Francisco, Denver, St. Paul, Detroit, Buffalo, and Pittsburg, the committee to immediately meet, consider, and report to an adjourned session of Congress a bill incorporating a United States national bank, founded on the same lines as the national bank of England and the national bank of Prance, to be entirely divorced and free from politics; and it being expressly stipulated that one half of the committee shall be selected from Republican banters and one half from Democratic bankers.

"A national bank is absolutely necessary for the future financial safety of the country. Under present conditions there is no elasticity to our currency.

"Five per cent. of our financial business is done with cash, 95 per cent. with credit.

"Today credit is largely destroyed, which leaves us trying to do more than one half of the business of the country on the insignificant per cent. cash, and a considerable proportion of this cash hoarded and taken. out of circulation.

"To meet emergencies lite this, we should have a national bank, having power to make almost an unlimited issue of currency with the same power and self-interest, when confidence returns, to take and return all this specially-issued currency and retire it.

"The bank of England and the bank of France have power to issue - millions upon millions of additional currency whenever necessary to protect and conduct the finances ofthe country, and they exercise this power, arid therefore such extreme panics as ours are unknown in those countries. When the crisis is over, this extra currency is retired.

"There is no question as to the safety of this power; it has been exercised by these great banks in these two countries for generations, and has been their financial salvation, and we can have no permanent financial. safety in the United States until we create a similar national bank or else make the United States Treasury a bank and authorize and direct that in times of panic and destruction of credit the Government shall issue currency to an extent necessary to meet the emergency, and deposit it in the national banks of the country. Of the two measures, it is certainly preferable to have a great national bank, founded on almost exactly the lines of the Bank of England, thus taking financial question and management entirely out of the influence of politics, because the government of the First National Bank of England is entirely in the hands of the greatest business men of the country, who have no interest whatever in politics, except as citizens.

Yours truly,

Wm. R. Conway."

This document was placed in the hands of members of Congress with a view of influencing their action. The first demand, couched in this circular, requested Congress to repeal the purchase clause of the Sherman law. The second demanded the passage of a bill authorizing the issue of $3oo,ooo,ooo of United States bonds, payable in gold, and $1oo,ooo,ooo of gold thus received, and for which interest was to be paid by the nation, should be given to the different national banks as a loanable fund.

The third demands the repetition of that farce - the calling of an international monetary conference. The fourth - the passage of an act permitting national banks to increase their circulation up to the par value of the bonds deposited by these.

Fifth, The passage of a resolution authorizing a committee of banters to frame a bill incorporating a national bank, operating on the same principles as the Bank of England. This proposed bank to be endowed with the power of making an unlimited issue of currency, the volume of which could be contracted whenever the self-interest of the banks saw fit to curtail this volume of money.

Thus the Tory-Eastern system of finance was outlined by the money power. The historical incident of Didius Julianus bidding-in the Roman Empire, that he might absorb its entire revenues for his personal benefit, was not a circumstance compared to the monumental greed of the national banking money power.

Subsequent history has fully demonstrated that several of the demands set forth in this circular have found their way upon the statute-books of this nation, and that the remaining are gradually taking the form of proposed legislation.

This great scheme of building up a mighty system of bank credit would place seventy millions of Americans at the mercy of the money mongers of London and New York City.

This bank credit system, embodied in the national bank plan, has its center in London, and this would be true of any system of bank currency, no matter how carefully framed.

This was the case with the United States bank, and it applies more emphatically to the present system.

In a great speech on the banking question, Thomas H. Benton, more than fifty years ago, so clearly, logically, and powerfully traced this bank credit currency system to its source that it merits careful reading. He said:-

"The banks at that center to which currency flows, hold the power of controlling those in regions whence it comes, while the latter possess no means of restraining them; so that the value of individual property, and the prosperity of trade, through the whole interior of country, are made to depend on the good or bad management of the banking institutions in the great seats of trade on the seaboard.

"But this chain of dependence does not stop here. It does not terminate at Philadelphia or New York, It reaches across the ocean, and ends in London, the center of the credit system. The same laws of trade, which give to the banks in our principal cities power over the whole banking system of the United States, subject to the former, in their turn, to the money power in Great Britain.

"It is not denied that the suspension of the New York banks in 1837, which was followed in quick succession throughout the Union, was partly produced by an application of that power; and it is now alleged, in extenuation of the present condition of so large a portion that their embarrassments have arisen from the same cause. From this influence they cannot now entirely escape, for it has its origin in the credit currencies of the two countries; it is strengthened by the current of trade and exchange, which centers in London, and is rendered almost irresistible by the large debts contracted there by our merchants, our banks, and our States.

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"It is thus that the introduction of a new bank into the most distant of our villages, places the business of that village within the influence of the money power of England. It is thus that every new debt which we contract in that country seriously affects our own currency and extends over the pursuits of our citizens its powerful influence. We cannot escape from this by mating new banks, great or small, state or national. The same chains which bind those now existing to the center of this system of paper audit, must equally fetter every similar institution we create. It is only by the extent to which this system has been pushed of late, that we have been made fully aware of its irresistible tendency to subject our own banks and currency to a vast controlling power in a foreign land; and it adds a new argument to those which illustrate their precarious situation. Endangered in the first place by their own mismanagement, and again by the conduct of every institution which connects them with the center of trade in our own country, they are yet subjected, beyond all this, to the effect of whatever measures, policy, necessity, or caprice, may induce those who control the credits of England to resort to."

This great statesman, who so ably exposed the dangers of a bank currency which would degrade the United States into a mere dependency of the "Little Isle beyond the seas," has long since passed away, but his solemn warning still beckons to the people, and points oat the folly of trusting themselves to the embrace of that boa constrictor - the banking monopoly.

In the month of April, 1893, the New York bankers had a conference with Secretary Carlisle at Washington, in which they demanded that he issue bonds to the amount of $150,000,000. Secretary Carlisle would not accede to their demands at this time.

The refusal of Mr. Carlisle to grant the demands of these bankers angered them, and they returned to New York City determined to force an issue of bonds at all hazards.

They continued to raid the gold reserve more fiercely than ever.

In the meanwhile, with a few honorable exceptions, the banks throughout the country executed the man-dates couched in that circular issued from New York City.

Loans were refused, and outstanding obligations were remorselessly called in by these tools of the money kings. As an excuse for that conduct, it was asserted that "confidence" was lost.

The press of Net York City, with few exceptions, owned body and soul by the national banking money power, aided in the work by its senseless clamor.

It called attention to every shipment of gold that went out of the country as a fearful calamity.

One of these newspapers daily printed in largo figures on its front page the low state of the gold reserve. They denounced the silver dollar as a "5o-cent dollar," a "dishonest dollar," a "fiat dollar."

In short, the vocabulary of abase w