Financial Catechism

THE CRISIS AND THE REMEDY.

Speech Delivered by Dr. Samuel McMillan Brice,
of Mound City, Kansas, on the 30th of March, 1882.

MR. CHAIRMAN, LADIES AND GENTLEMEN :  Nations, like individuals, have their periods of rise, progress, decline and fall.

Within these four grand divisions, they, like individuals, are subject to critical periods, in which it requires the greatest skill to carry them through the crisis and strengthen their capabilities for future healthy growth and development.

When the individual, knowingly or unwittingly, violates the law of his physical organization and is suffering the consequence of such violation under the influence of disease, it is the wise physician who can correctly diagnose the case and provide such remedies as will carry his patient successfully over the crisis and build him up again to his normal condition.

So, when governments violate political or economic law and are suffering in consequence of such violations, it requires the same skill in statesmanship to diagnose the condition and provide the remedy that it does in the case of the individual.

As the wise physician employs the simplest means to assist nature to restore the physical system to a healthy condition, so the wise statesman seeeelut, by the simplest means, to remove the cause or the disease in the body politic, and restore it to normal and healthy action.

As individuals are liable to become diseased from the operation of different causes, the means to be used for their restoration to health will vary in character ;  so the causes which produce a diseased condition of governments may vary in character, and require different remedies to remove the disease and restore the government to its normal condition.

The causes which produce disease in individuals or nations are sometimes external and sometimes internal, but more frequently partaking of both characters.

The disease to which I propose to call your attention this evening is of this two-fold character, and for the want of a better name I will call it malignant financial fever.

Our government has suffered from several attacks of this disease, each of which has made serious inroads upon its constitution, but time will not permit me to refer to them in detail.

The last attack—the one from which it is now suffering—commenced on the 25th of February, 1863, a little more than nineteen years ago, when the first national banking law was passed, and, notwithstanding the financial doctors have been continually at work, and declaring the nation was in a healthy condition, they are now compelled to acknowledge that the disease is just approaching a crisis and needs new medication.

In this conclusion I fully agree with them.

A crisis is approaching.

The finance question is forcing itself on the American people, whether welcome or unwelcome.

The fact set forth by the Secretary of the Treasury of the, United States, in his statement of February 6, 1882, that the charters of 396 national banks will expire before the 3d of March, 1883, and that 282 expire on the 25th of February, 1883 (just twenty years from the date of the passage of the first national banking law), and that the circulation of these banks amounts to $69,160,980, establishes the fact that the question can no longer be ignored, and that some measures must be adopted by which the commerce of the country can be protected from derangement by the withdrawal of this amount of currency from circulation.

It is clearly the duty of the present Congress to make provisions to meet this contingency, but if it should fail to perform this important duty it will devolve upon the succeeding Congress to make the necessary provision in the first ninety days of its existence.

With these facts staring us in the face, who can deny the fact that the finance question is not settled, or who can say that it is not the present overshadowing issue in national politics.

Senator Edmunds, in his remarks on the Sherman 3 per cent. funding bill, after referring to the rapid extinguishment of the public debt and the expiration of the charters of the national banks, frankly confesses that the time has come when the people should declare, through their representatives, what the future money of this country shall be.  He says :

“ What are we to do ?  There are four things, and I cannot think of any more.  We are to go on as we are, with the system of national bank notes, with all their good qualities and all their bad ones, although nobody has found any bad qualities in the notes, I believe, but what are said to be bad qualities in the banks themselves.  That is one.  We are to abolish it altogether and go back to the state bank system we had before the war.  That is two.  We are to provide a national currency issued by the Treasury.  That is three.  We are to stand, like Thomas H. Benton, on the doctrine of gold and silver, and nothing else ;  and that will make up the fourth.  Something within those boundaries the public administration of the laws of this country, as it regards the financial welfare of this people (and that is the financial welfare of the day-laborer just as much as it is of the capitalist) is to be conducted.”  (Cong. Record, Jan. 31, 1882, page 47.)

Here we have a frank acknowledgment by one of the leading representatives of the gold standard and national bank interests, that the issue is upon us, and ought to be met and considered in the interest of the people of this count of every condition in life.

As the Senator has laid down these four propositions, I us consider them in their order.

First.  Is it for the interests of the people of the United States to continue the present national banking system ?

Every intelligent thinker must acknowledge upon a moment’s reflection that it is not ;  for the reason that it rests on a national debt, while the holders of that debt are exempted from taxation on the money so invested, and all other interests are taxed to pay the usury on such debt.

The solvency of the national bank notes is based on the ability of the government to liquidate the debt, and no sane person will contend that it is good policy for a nation or an individual to postpone the payment of a debt after they acquire the ability to pay it ;  hence, upon true principles of financial economy we cannot, in justice to the people, continue our national banking system for the reason that we intend to pay the public debt on which it is based.

We cannot afford to continue this system, for the reason that it requires double usury to get it into circulation ;  first, usury on the bonds on which it is based, and then usury on the currency when it is drawn from the bank.

This usury is so much money drawn from the productive industries of the country for the privilege of using the promissory notes of a chartered corporation as a medium of exchange instead of money, and giving the national bankers the privilege of living in idleness and luxury on the usury on what they owe.

Another reason why we cannot afford to continue the present national banking system, is the unbridled power it places in the hands of a few persons to expand and contract the volume of the currency at their own will, and thus set the price on the product of every man’s labor in the whole country.

The powers of such an institution are dangerous to the liberties of the people, as has been seen in the attempts which these corporations have made to control the legislation of the United States, and their present control of the Executive Department of the government.

United States Treasurer Gilfillin, in his annual report for 1881, page 442, in speaking of the danger of the exercise of this power by the banks, says :

“ Aside from the mere difficulty of properly apportioning the expenses of redemption, the Treasurer is more firmly than ever of the conviction that the power now possessed by the national banks of throwing up their circulation at will is wrong in principle, unnecessary and dangerous.  Under a sound system of currency the circulation can be reduced only by the act of the holders in presenting it for redemption.  Under the present system the issuers can suddenly and arbitrarily contract it to any extent ;  and it may be for their interest to do this when there is a legitimate demand for all the currency in circulation, and even more.  There may be-in fact, often is a profit to the banks in withdrawing and selling their bonds when the circulation is already deficient.”

In his annual report for 1880, the same officer states that the banks had been in the habit of surrendering their circulation and selling their bonds at any time when they could make money by it, and some of them repeated the process several times within a year without any regard to the demand for currency for circulation.  Such a power should never be intrusted to any body of men who are not directly responsible to the people for its faithful exercise in the interest of all.  National bankers are not so responsible, and, possessing such power, are a standing menace to free government.

Another insuperable objection to the continuation of this system is, national bank notes are not money.  They are not a legal-tender in any of the commercial transactions between individuals, nor is it possible for them to be made so by any power possessed of this government under the Constitution.

The people of a free government should not allow themselves to be compelled to use anything as a circulating medium which that government does not, and cannot, make a full legal-tender for the payment of all debts, both public and private.

The issuing of money is a right too sacred in its character to be intrusted to the avaricious greed of corporate power.

We come now to the second proposition of the Senator.

Will we “return to the old state bank system we had before the war ?”

With the rottenness of this system stamped upon every page of its history from the first dawn of its existence to the period of its demise, and the vivid recollection of those yet living, of the scenes of misery and destitution caused by the collapse of those swindling institutions all over the country, it appears like an insult to the intelligence of the American people to ask them now if they are willing to resurrect that hideous corpse which was buried seventeen years ago in consequence of its loathsome putrescence, and attempt to rehabilitate it and breathe into its nostrils the breath of life, that it may again poison the currents of commerce and repeat upon this generation the swindling and robbery that it did on the generation in which its existence was tolerated.

It is a matter of history beyond the possibility of successful contradiction that the whole system of banking established on a so-called specie basis is a fraud and a swindle on the people unless every paper promise to pay a dollar has a coin dollar secured in the Treasury for which it is interchangeable, for the reason that the notes, like the national bank notes, are not money, but a promise to pay money—not because the metal in itself is money, but because the government has exercised its sovereign power, and declared it a legal-tender in the payment of all debts, which it has not the power to do with the promissory notes of individuals or corporations.

And right here let me say that in using the word interchangeable, instead of redeemable, I intend to give it its broadest signification.

It must be equal in every essential point or it is not money.  If it is absolutely equal it has no need of a redeemer, except that the government that issues it shall receive it in payment for any and all demands made upon the citizens for money.

As well might the believers in the Christian religion claim that sinful man possesses every attribute of Christ, his redeemer, and yet needs redemption, as for the advocates of a redeemable currency to say that that currency is money, but it must have another kind of money for its redeemer.

There is too much intelligence among the people now for them to entertain any desire to return to that old state specie basis system, where the law permitted three paper promises to pay a dollar issued for each dollar in the vaults of the bank ;  while in practice the banks issued more than twenty dollars in promises for each coin dollar they had in their vaults, and then stole the coin, left their vaults empty, and their note holders and depositors bankrupt.

No, the people will have no more to do with these bogus swindling machines ;  they mean to transact their business in the future with money.

We will reverse the Senator’s order in his two last propositions, and consider his fourth proposition as the third.

Shall we adopt the doctrine of Thomas H. Benton, and have no money but gold and silver.

In the discussion of this proposition, several very important points present themselves for our consideration, which we shall briefly notice.

First, the scarcity of these metals makes it impossible to furnish a metallic currency adequate to meet the demands of commerce, if every ounce that is produced from the mines was converted into coin.

There are only two methods by which gold and silver can be adopted as our only circulating medium ;  and to adopt them we must fall back upon the policy adopted by the sovereigns of Europe for seven hundred years before the establishment of the Bank of England.

We must reduce the weight of our metallic coin until our bullion will supply the requisite number of dollars, or add a sufficient amount of alloy to increase the number of coins, and thereby reach the same result.

In either case, we should be compelled to acknowledge the power of the fiat of the government as the important factor in giving to these metals additional legal value which they must possess in order to represent the vast internal and external commerce of the nation.

But if we should adopt this method the weight and bulk of the coin would make it wholly unfit and inadequate to meet the demand of a great commercial nation like ours, spreading over such a vast amount of territory.

Another objection to a coin currency is the constant loss by abrasion, which it sustains by use.

Statistics develop the fact that coin looses about one-half of one per cent each year, when used as currency in commerce ;  and this loss is irretrievable.

But the most important objection to the establishment of an entire metallic currency is its cost.

It is estimated by the best authorities on mining, that every dollar of gold and silver produced in the United States costs a dollar’s worth of labor to produce it at the mint for coinage.  Then, after being coined and declared money by the government, it requires another dollar’s worth of labor to get it into circulation, so that every dollar of gold and silver coin used by the people as money costs them two dollars instead of one.

Mr. Burchard, the director of the mint, in his report for the fiscal year ending June 30, 1881, pages 289 and 290, says, that the whole amount of all coins, gold, silver and minor, issued since the foundation of the government up to that date, was $1,545,508,866.65.  Each one of these dollars having cost us two dollars’ worth of labor, makes $3,091,017,733.30, which it has taxed the labor of this country to get into circulation ;  to say nothing of the constant loss sustained by use.  The census report of 1870 placed the whole amount of our national wealth at $30,000,000,000 ;  and we have paid more than 10 per cent on this vast amount of wealth for the privilege of using gold and silver for money, when that money does not meet the demands of commerce in time of peace, and has always deserted us in time of war, when its services were most needed.

Nothing can be more absurd than the idea of establishing an exclusive coin currency at such enormous cost, when the Comptroller of the Currency, in his report for 1881, page 202, shows that in all the commercial transactions centering in the city of New York only a little more than one-half of 1 per cent. is done with coin.

The people of the United States have arrived at a state of civilization and progress that demands a currency at once safe, stable and of uniform value in all parts of the country, which will flow freely through all the channels of commerce in peace and in war, and perform all the functions of a medium of exchange at the smallest cost to the people.

This brings us to, the other proposition of the Senator.

Shall we “provide a national currency issued by the Treasury of the United States ?”

The first question that presents itself in the consideration of this proposition is, has Congress the power to issue such a currency and endow it with all the functions of money ?

In answer to this question, I reply that the creation or issuing of money is an act of sovereignty, and belongs originally to the people, and only passes out of their hands when usurped by tyrants by force, or is delegated to representatives in the formation of a government.

Money is an invention of man, called into being by the necessities of a growing commerce, and stands in the same relation to the rude system of barter in the early history of man’s development that the most extensive flouring mill, with all its improved machinery, holds, with the stone mortar and pestle with which the untutored savage cracked the corn for his homely meal, or the elaborate dress of the American lady with the fig-leaf garments of our ancestors in the Garden of Eden.

Barter represents the beginning of civilization.  Money represents its advancement.  Barter is the exchange of commodities by the consent of individuals.  Money is a representative of the value of commodities established by law and sanctioned by the people.  It is the result of organization of government.

In the formation of the government of the United States this power was delegated to Congress, so that body is now clothed with all the power to issue money that was originally possessed by the people themselves.

The sovereign power, originating with the people, to create money carries with it the power to select the material of which their money shall be made ;  the form and size of each piece ;  the value it shall represent ;  and to declare its legal-tender property.

In the transfer of this power by the people to the Congress of the United States there is no reservation of any of those powers.

In the declaration of the Constitution of the United States that “Congress shall have power to coin money and regulate the value thereof and of foreign coins,” the entire question of the selection of the material to be used for that purpose is left discretionary with that body.

If it is objected that the people for a long time had selected and used gold and silver as the material upon which they coined their money, that the authority given to Congress to coin money and regulate the value thereof, only applied to a continuation of the use of those metals with the privilege of setting a value upon the coins, I reply, that the fact that the people possessed the sovereign power to select gold and silver to be used as material upon which to coin money, gave them the same power to select any other material, which they could have done at any time in their sovereign capacity.

Possessing this power to choose, in their sovereign capacity, when they transferred to Congress the power to coin money and regulate its value, they also transferred the power of the choice of material and all other powers which they possessed, which were incidentally connected with the power to create money.

In order that we may not misunderstand the scope of the power thus granted, let us consider what constitutes money :

Money is that which a creditor is compelled by law to accept in settlement of any obligation or judgment ;  and the refusal to accept which, when tendered by the debtor, releases him from the obligation.

When reduced to the last analysis, money is that which is made by enactment of law, by a government of competent jurisdiction, a full legal-tender for all debts, both public and private, and there is no other, nor can there be.

As proof that this fact is universally recognized by the law-making powers, every statute providing for the coining or issuing of metallic coin or paper, to be used as currency, is accompanied with a specific statement as to what extent it shall be a legal-tender.

Up to the limit set in such declaration, any currency issued under the authority of the government is money.  Beyond this point it has no money value.  Gold is the only full legal-tender money we have in the United States at this time, or have had since the standard silver dollar was legislated out of existence by the dishonest and villainous jugglery of 1873, and the revision of the United States statutes in 1874-5.

In 1878, it was restored to its place in the coinage, but shorn of a portion of its legal-tender property by the same remorseless spirit of hostility to the producing interests of the country that struck it out of existence in 1873.

It has been assailed, maligned and derided by unprincipled demagogues and a venal, subsidized press.

War has been waged against it by the executive department of the government.

The Secretary of the Treasury has openly and wantonly nullified the law by refusing to apply it in payment of the public debt, when it was stipulated in the contract and incorporated in the bond that it should be so paid.

He has declared that he could not get it into circulation, because the people did not want it and would not have it that it was a burden to the government, buried in the vaults of the Treasury, and that its coinage ought to be suspended when the last report from that official shows that, of the one hundred millions of dollars which have been coined about thirty-four millions are in actual circulation, and although the remaining sixty-six millions are buried in the vaults of the Treasury, its spirit has risen from the body in the form of silver certificates, and are floating now through the channels of commerce, performing the functions of sixty-six millions of full legal-tender gold which has been deposited in the Treasury for the purpose of obtaining them on account of their excellent qualities and greater convenience.

Why is gold coin the only legal-tender money we have ?  Is it because this metal possesses any inherent property within itself which constitutes it money independent of the action of the government ?

Not by any means.

It is because the government has provided by law that these coins are a legal-tender for the payment of all debts.

The minor coins are all money for a limited amount ;  and above that they are not money at all.

The United States Treasury notes are money for every purpose, except for customs dues and usury on the public debt.

The notes of the national banks are money for the purposes specified on the notes, but they are not money for the purpose of paying customs dues, usury on the public debt, nor in contracts between individuals.

Why ?  Because the Congress of the United States has, by the sovereign power invested in it by the people, enacted laws declaring what shall be money and what shall not.

It will be seen that all of our currency, except gold coin, possesses only a partial legal-tender property, and is only currency so long as the parties using it see proper to accept it as such.

If we grant that the government has power to attach a partial legal-tender property to any material to circulate as money, the logical conclusion is that it has the power to make that same material a full legal-tender.

As Congress has exercised such power repeatedly in its past history, and has been sustained in such action by the highest judicial tribunals of the United States, the existence of such power cannot be doubted.

What, then, is the duty of Congress ?  Money being absolutely indispensable in conducting the commerce of the country, and Congress possessing the sole power to issue it, it is the duty of that body to exercise that power to the fullest extent that, in its judgment, the commerce of the country and the interests of all the people demand.

And as essential to the beneficence of this exercise of power the same body exercising it should have complete control of the volume of the money so issued.

Why should this be so ?

Because Congress is the representative of the people, and they have not only delegated to it the power to coin money and regulate the value thereof, but they have also empowered it to regulate commerce with foreign nations and between the states.

Money being absolutely essential as a means for regulating commerce, Congress must have power to regulate the volume of the currency in order to enable it to regulate the commerce of the country.

Whoever controls the volume of the currency of a country controls its financial and commercial destiny.

This proposition was clearly and forcibly expressed by Hon. James A. Garfield in the House of Representatives of the United States on the 5th day of April, 1880, while discussing the Weaver resolutions, which declare “that all currency, whether metallic or paper, necessary for the use and convenience of the people, should be issued and its volume controlled by the government, and not by or through the bank corporations of this country, and when so issued should be a full legal tender in the payment of all debts, public and private.”

In opposing this resolution, Mr. Garfield said :

“ It would convert the Treasury of the United States into a manufactory of paper money.  It makes the House of Representatives and the Senate, or the caucus of the party who happens to be in the majority, the absolute dictator of the financial and business affairs of the country.”

These were truthful words, fitly spoken, and I would that they could be impressed upon the heart and inscribed upon the intellect of every American in letters of living light that would grow brighter and brighter to the perfect day.

Although these words were spoken in opposition to the principles set forth in the resolution, it does not change the fact.

The question was, Who should exercise this power, the Congress of the United States—the people’s servants, who are responsible to them and chosen by the voice of a majority of the people—or the associated bankers, who are not the servants of the people, not chosen by them and not responsible to them ?

If this power, being vested in Congress, would constitute that body the absolute dictator of the financial and business affairs of the country, it would give that same dictatorship to the national bankers if intrusted in their hands.

If given to them it would simply govern the commerce of this country by the decisions of the bank parlor instead of by legislative action ;  and it is the choice between these two methods of government that is pressing itself upon us now.

It has been shown that gold and silver is inadequate in quantity, cumbersome on account of its weight and bulk, extravagant and oppressive on account of its cost to the people and its constant loss by abrasion, which makes it wholly unfit to be adopted as the sole circulating medium of the country ;  that the people have become too intelligent to go back to the old State bank system or to perpetuate a national debt as a basis for a national banking system.

This being granted, what is the need of the hour ?

What does the commerce of the country and the interests of all the people demand of our representatives in Congress ?

Above all other things, a just, equitable and permanent system of American finance.

It is the imperative duty of Congress to substitute in place of the national bank notes a money equally convenient for circulation, of uniform value, less expensive, without danger to the liberties of the people and wholly under the control of the people through their representatives.

How shall this be done ?

Before proceeding to answer this question, let us see what the national bank notes are, on what they are based and how they obtain their partial legal-tender property.

These notes are simply the notes of private corporations chartered by the government and based upon the usury-bearing bonds of the United States, which bonds are deposited with the Treasurer of the United States as security for the payment of the notes, and the government, whether constitutional or not (and I am not discussing the constitutionality of this act now), gave them the limited legal-tender property they now possess.

So that all the security the people have for the payment of these notes is the ability and willingness of the government to pay the bonds upon which they are based, and all the legal-tender or money property they possess is given to them by enactment of law.

They are creatures of the government, for the payment of which it is responsible, but controlled by individuals for their own private benefit, who are not responsible to the government or the people.

Now, let us consider the method by which they can be withdrawn from circulation and a better currency substituted in its stead.

I would suggest that Congress enact a law that no more charters shall be granted, authorizing individuals or corporations to issue promissory notes to be used as a circulating medium.

Second, let it provide that as fast as the charters of those banks already in existence shall expire their circulation shall be called in and full legal-tender paper money issued by the United States Treasury substituted in its place, and the bonds held as security for the circulation of such banks paid and cancelled.

In case the revenue of the government should prove sufficient to liquidate the bonds (not held by the banks as security for circulation) as they fall due more rapidly than the charters of those banks expire, the law should provide that the bonds held by the banks whose charters would first expire should be called and paid first, and so on until every bank was wound up and the whole amount of the circulating medium issued by the government and under its control.

By this method the national banking system could be disposed of without any infringement on vested rights or any change to the amount of a dollar in the volume of the currency on account of such change.

It is true that Congress reserved the power to alter, amend or repeal the law under which those charters were granted at any time, and, in justice to the whole people, they never should have been granted ;  but since they have been granted, and a large amount of money invested in the business thus created, they should be taken out of existence with as little shock to the commercial interests of the country as possible.

And to prevent, in future, the necessity for such legislation the Constitution of the United States should be so amended as to forever prohibit the Congress of the United States or the legislature of any state from granting authority to individuals or corporations to issue any kind of promissory notes to pass as a circulating medium as money, or instead of money.

This would place the whole control of the finances of the country in the hands and under the control of the people’s representatives, where it rightly belongs.

Congress should then, in its judgment, ascertain as near as practicable the amount of money per capita requisite to meet the demands of the commerce of the country, and issue treasury notes, based upon the wealth and credit of the nation, giving them the full legal-tender property, and make provision for an additional issue above the increase of the coin certificates of such an amount of treasury notes as would represent the annual increase in population and business, and pay them out in the ordinary disbursements of the government.

This would give us an American system of finance based upon the American idea of a government by the people and for the people, instead of copying the British system of a government by the aristocracy and for the aristocracy.

In the English system gold coin is the only full legal-tender.  The Bank of England holds the bonds of the government, upon which the people pay usury, and the bank is authorized to issue a certain per cent. of promissory notes circulation based upon these bonds.  Whatever amount of notes it issues in excess of this amount is based upon gold or coin in the vaults of the bank.

The gold and the bonds are in the hands of the aristocracy ;  they control the money of England, while the people who produce the wealth are compelled to pay tribute to this non-productive class for the use of every dollar they obtain.

What security has the Bank of England note-holder that his note will be paid when presented at the counter of the bank ?

He has the assurance that the British government will continue to collect revenue enough from its subjects to pay the usury on its bonds upon which this circulation is based, and the further assurance from the bank that it will redeem in coin on presentation any amount of its notes in excess of those based on the bonds of the government.

All the notes of the Bank of England based on the bonds of the government are issued on the credit of the government as completely as if they were issued directly from the treasury ;  but the aristocracy, and not the people, receive the revenue derived from such issue.

Right here is a point to which I wish to call your special attention.

The Bank of England is a private institution, bolstered up by the government and supported by the labor of the people, but governed solely in the interest of its stockholders, who, without any scruples, depress and ruin the industries of the country in order to maintain its own power intact.

This is a grave charge.  Now, let us see if it can be sustained by facts.

During the great financial panic in England in 1847, the British government appointed an investigating committee to inquire into, and if possible, discover the cause which had produced such wide-spread ruin and distress.

During its investigation it summoned before it some of the officers of the bank, Mr. John M. Palmer, one of the directors, and afterward governor of the bank when questioned by the committee, stated that when they (the officers of the bank) desired gold to flow into the kingdom, they accomplished it by producing a fall in the value of commodities through contraction.

Let us pursue this investigation for a few minutes, and learn how the officers of that institution view its interests as compared with the industrial interests of that country.

When he was asked this question :  “Is it by interference with trade that your contraction of the volume of the currency acts, and not merely by inconvenience of bill holders ?”  The answer was :  “ It causes the stoppage of both.”

When asked, what would be the effect upon the manufacturers and laborers of the country during such an operation ?  he answered :  “ It destroys the labor of the country.  At the present time, in the neighborhood of London and in the manufacturing districts, you can hardly, move in any direction without hearing universal complaint of the want of employment.”

When asked if he ascribed that condition of things to measures that it was necessary for the bank to adopt to preserve the convertibility of its notes ? he answered :  “ I think the present depressed state of labor is entirely owing to that circumstance.”

He was then asked :  “ Does this pressure of the bank produce foreclosed sales ? ”

He answered :  “ It stops credit at the bank, and sales have to be made to meet private payments.  There is no means of supplying the bank with gold except by diminishing the bank notes, which immediately contracts the currency and lowers prices by increasing the value of money.”

The governor and the deputy governor of the bank, both concurred with the opinion expressed by Mr. Palmer, that there was no other way to insure the security of the bank but by the depreciation of commodity values to such an extent as will invite gold in from other countries to purchase.

They then propounded this question to the governor of the bank :  “ Do you think this system of circulation should be preserved at any cost to the industrial interests of the country ?”

His answer was :  “ I think it desirable that the circulation should be placed on such a footing that it would expand and contract in the same manner that a metallic currency does.  I cannot vary from that.”

This is the testimony given under oath by bank directors, governors and deputy governors who knew whereof they affirmed, and establishes the fact that the English system of finance is managed for the benefit of the holders of the bonds of the government and the stockholders of the bank, without any regard for the other interests which produce the wealth of the nation.

But we are not left to depend on this authority, strong as it is, without further endorsement.

Mr. S.J. Joyce, an eminent English authority, in treating of this subject, says :

“ Against the actual exhaustion of her treasure by drain through foreign exchange, the Bank of England has the power to protect herself, but in order to do this, she must produce upon the money market a pressure ruinous from its suddenness, in its severity.  She must save herself at the destruction of all around her.”

Mr. Sealy, another of England’s noted writers, says in his work on coins and currency :  “ The commerce of the country is now in the power of the Bank of England, as it was before in the legislature.”

For legislative enactments we have substituted the decisions of the bank parlor.  For a responsible government we have substituted irresponsible bank officers.

To these we have confided the commerce of a mighty empire.  Instead of mercantile, manufacturing and agricultural systems, supported by merchants, manufacturers and agriculturists, we have a monetary system endangering the welfare of the merchants, manufacturers and agricultural interests, for the benefit of the fund holders.

I might, in legal parlance, rest my case here.  But I have one more witness which you will permit me to introduce, whose reputation is unimpeached and unimpeachable.  This witness is the Chamber of Commerce of the city of Manchester, England, one of the greatest labor districts in the civilized world.

In 1859, this chamber made a report at one of its regular meetings, in which I find the following language :

“ Although it scarcely comes within the scope of their present object, the board will add a reflection upon the subject of the undue privileges assumed by the Bank of England.  That such a power over the property and even over the lives of the people of this country can be allowed to exist is one of the phenomena of our civilization.  That their directors, twenty-six in number, can in secret session, without the consent of their constituents, decide the value of all property, is to be regarded as one of the greatest crimes against modern civilization.”

There is the character of the English financial system, summed up by English authority and presented in a nutshell.

I leave the case with you, ladies and gentlemen, as an intelligent jury, to decide whether the evidence which I have presented sustains the charge set forth in the indictment or not.

What is your verdict ?  Guilty, or not guilty ?

Let us now, for a few moments, examine the analogy between this English vampire and our own national banking system, and see if we can discover any kinship between the two.

As early as 1791, Alexander Hamilton, an ardent advocate of a strong central government, urged upon the American people the adoption of the English banking system, and when the present banking law was pending, Mr. Spaulding, of New York, who presented the bill in the lower house, said :  “ It is now most apparent that the policy advocated by Hamilton was the true policy.”

Senator Sherman, who had been the attorney and advocate of the national banking system from its first inception to the present time, and ought to understand, it as well as any living man, takes occasion, in one of his reports, while Secretary of the Treasury, to speak approvingly of the fact that :

“ Both England and the United States had settled upon a bank currency secured by government bonds.”

In object and purpose the two systems are identical.  Both are based upon the idea of the absorption of the products of the laboring masses by a small class of non-productive individuals.

The circumstances in the two countries are somewhat different.  In England so completely is the aristocracy established in power, that when they, through their bank parlor, destroy all other interests, justify themselves by saying that it was necessary in order to maintain the supremacy of the bank.

The American people have not become fully educated to that degree of submission, and when the national bankers, with Hugh McCulloch at their head, contracted the currency of the United States to one-third of its former volume, and produced the untold misery which followed, the laborers entered a vigorous protest.

Our American bankers did not possess the honesty or hardihood of the English bankers to admit that this was the legitimate result of their policy.

They professed to be ignorant of the cause of the great calamity, and prevailed upon Congress to appoint a smelling committee to travel over the country and ascertain, if possible, the origin of this dreadful calamity which had fallen upon the country and swept away its wealth as with the besom of destruction.

After months of weary traveling, and calling to its aid wise judges, grave Senators, experienced legislators, bank presidents, and learned professors of colleges, it made its report.

It had found the beast ensconced in its lair.  This profound aggregation of wisdom had scanned the heavens above and the earth beneath with both telescopic and microscopic power—so that, to its mind, there could be but one cause, and that cause was over-production.

This was a wonderful discovery ;  but the plain people could not understand it—they could not understand how an over-production of corn, and wheat, and beef, and pork could place them and their families upon the point of starvation.  They could not understand how an over-production of cotton, and wool, and hemp, and flax, and their conversion into cloths of various kinds, could clothe them in rags, or leave them in a state of semi-nudity.  Or, how an over-production of boots and shoes could turn them barefoot in the frosts and snow of winter—in short, they could not understand how, being surrounded by abundance could deprive them of the ability to procure the necessaries of life ;  common sense taught them that it was not true.

In this comparison, the English banker commits the deed, pleads guilty to the charge, and sets up a plea of justification.

The national banker commits the same act, pleads not guilty, and resorts to falsehood and deception to sustain the lie set up in the plea of not guilty.

The result of contraction was known by them from the beginning, and was entered into with as much premeditation as ever a highwayman entered upon the robbery of a defenceless traveler on the public highway.

Hon. John Sherman said, in a speech delivered on that subject, in the United States Senate :

“ It means the ruin of all dealers whose debts are twice their business capital, though one-third less than their actual property.  It means the fall of all agricultural productions, without reduction of taxes.

“ When the day comes all enterprise will be suspended, every bank will have contracted its currency to the lowest limit, and the debtor compelled to meet in coin a debt contracted in currency.

“ To attempt this is to impose upon our people by arresting them in the midst of their lawful business, and applying a new standard of value to their property, without any deduction of their debts, or giving them any opportunity to compound with their creditors.  It would be an act of folly without an example for evil in modern times.”

So spake the attorney of the national bankers, and they cannot plead ignorance of the result of their policy.  It was cold-blooded, deliberate robbery, without one redeeming trait.

In both systems the banks are permitted to issue circulating notes based on the bonds of the government, drawing usury from the people.

The bank of England is limited by law to $200,000,000, as the maximum of its issue on this basis.  These notes are payable in coin on demand and possess about the same legal tender property as our greenbacks.

Our national banks are not limited in the amount of their issues, only by the amount of national bonds they can procure.

Their notes are not payable in coin ;  neither are they made by law a legal-tender in ordinary business.

In both systems the banks are conducted solely in the interest of the stockholders and bondholders, regardless of all other interests.

The English system is based on the British consol, which the government does not intend to pay ;  and therefore is perpetual—or as nearly so as animal existence can be sustained under the draught upon labor to pay the usury.

The national banking system is based upon the bonds of the United States, which the people are determined to pay, and rid themselves of the bonds and the banks.

The Bank of England note is based on the perpetual bondage of the British subject.

The national bank note is based upon the hope of the perpetual bond slavery of the American citizen.

The English basis is a reality.  The American basis is a phantom.

The English system was established by monarchical power, which has compelled its subjects, by brute force, to submit to its exactions until successful resistance is impossible, and the laborer is driven to pauperism or the grave.

Our national banking system is a scion of the English stock, engrafted upon our free institutions by hostile hands, when we were struggling for national existence, and has been fed by the products of our labor, watered by the sweat of our toiling millions, pruned and trimmed by the secret enemies of civil liberty, until it has grown to a gigantic stature—stretching out its arms, like an enormous devil-fish, over all parts of our great country, and seizing, in its hideous grasp not only the wealth of the nation, but the reins of government.

Shall we submit to this ?

Have we so far forgotten the self-sacrifice, toil and suffering endured by our fathers through seven long years of bloody and devastating war, for the sake of bequeathing to us, their children, a government independent of British domination, that we are now willing to adopt the very system which they suffered, bled and died to free us from ?

To this question there can be but one answer.

Every lover of liberty, male and female, old and young, rich and poor, all over this broad land, will rise up and make the welkin ring with one emphatic No !  And could the blue vault of heaven be converted into one grand whispering gallery, and the spirits of our ancestors who participated in that struggle, with all those who have added their lives to the later sacrifices made upon the altar of our beloved country, together with that numberless host of all lands and nations who have loved the rights of man, be allowed to speak ;  the voice would sound as the trump of an arch angel, and its echoes would extend from world to world, where humanity dwells—No !  No ! ! a thousand times No ! ! !

As Americans, we must adopt an American system of finance, and sustain it by American industry and intelligence, and in that system permit no germ of aristocracy or monarchy to be concealed.

The constitution provides that “no title of nobility shall be granted by the United States.”

Let us see that a moneyed aristocracy does not fasten upon us a system of finance which will ultimately compel us to expunge that clause from the constitution.  We are not mendicants, begging at the door of monarchy to protect us from our own incapacity to govern ourselves.

We are recognized now as one of the leading nations of the earth.  We have grown in population and wealth since the establishment of our government to that degree that our progress has become the wonder of the world.

Our inventive genius and superior skill in mechanism has enabled us to place our wares in the markets of foreign countries and compete successfully with their best efforts at their own doors.

We have, by our agricultural industry, subdued the forest and prairie, until our granaries have become the great storehouse of bread for the million.

We have advanced our means of transportation from the pack-horse on the dimly blazed bridle path through the forest to mill, or trading-post, to the great system of steel-bound tramways, reaching from the Atlantic to the Pacific, with their lateral branches stretching from the great lakes of the north to the Gulf of Mexico, and penetrating every nook and corner of the land, all pulsating, every moment of every day and every night, with the giant power which moves the thousands of trains of cars from point to point, laden with the products of our energy and perseverance.

We have chained the lightning of heaven, and harnessed it to the car of progress, until we have almost abolished both time and space with our telegraph, while our telephone converts states into neighborhoods.

After having accomplished all this, and much more, shall it be said that we are incapable of establishing a monetary system entirely governed and controlled by the people, through their representatives ?

The time has come for us to test this question, and if we fail to meet it like free men we are unworthy of the name.

Let us forever discard the idea of a god-made money, and assert our right as freemen to exercise our sovereign power through the Congress of the United States to issue all the money necessary to meet the demands of our growing civilization, reserving the right which we possess as a nation to select whatever material we deem most expedient for our own interests, and that of whatever material our money shall be composed it shall all be a full legal-tender, every dollar being worth just as much as any other dollar, and its volume under the direct control of Congress.

Right here a question arises which demands our attention.

What shall we do with gold and silver ?

I answer, give them both free coinage, and make the coins a full legal-tender.  Coin all that is presented at the mints, and allow any or all of the coins deposited in the United States Treasury, and certificates of deposit in suitable denominations for circulation issued in their stead, giving them the same legal-tender property as the coin.

This would insure a currency at once safe, stable, equal in value and suited to the various shades of opinion entertained by the people.  They could have gold, silver, paper certificates or treasury notes, as their judgment might dictate, all interchangeable with each other and under their own control.

What would be the result of the adoption of such a system ?

First.  It would cheapen money by permitting it to pass from the Treasury in the ordinary disbursements of the government at the cost of production to the people without usury.

Second.  It would stimulate and encourage productive industry by relieving it of this usurious burden.

Third.  It would inspire the people with such confidence in their monetary system that the coin would all soon flow into the Treasury of the United States, and the gold and silver certificates would rise from these deposits as the spirit rises from the body when deposited in the tomb, and float side by side with the national Treasury notes, through all the channels of commerce, representing the spirit and life of a people’s government redeemed from the shackles of monarchical dictation.

Fourth.  It would strengthen our government by making every citizen interested in sustaining its power and integrity, knowing that the value of every dollar of their money rested on the power of the people to maintain their government one and indivisible.

Then, every American citizen could hold up a dollar and, say, this is my dollar, and I am bound to defend it.

It was issued by my government and I will sustain it with my life.

It would create a monetary system, not resting like are inverted pyramid, on a few millions of dollars of gold and silver, subject to topple over at the approach of the first breath of excitement by having its bases drawn from under it ;  but on all the gold and silver, and all the wealth of this great nation beside.

Can any system be more safe or more just ?

The objector may say, your theory may work well in time of peace and prosperity, but when war comes coin is such an arrant coward that it always runs away in the hour of danger.  Suppose our country should again become involved in war, and the holders of your coin certificates should become alarmed and present those certificates at the Treasury and demand the coin, how would you prevent such a run on the Treasury as to drain it of the last dollar of coin ?

Sir, I would avail myself of the right to act under military necessity.  I would do as that stern old hero, Andrew Jackson, done at the battle of New Orleans, when he was defending our nation from this same spirit of monarchical dictation.

A large cotton-dealer came to the General and demanded pay for the cotton bales which he was using for breastworks.  The General said to him :  “ Is this your cotton ?”

Being answered in the affirmative, he said :  “ Take this musket and march into the ranks and help defend it.”

Sir, the General done right, and I would do likewise.

So I would say to the first shylock who would attempt to draw the coin from the Treasury for the purpose of speculating off of the misfortunes of his country.

I would close the door of the Treasury and say to him, “ this is your money ;  the government has it in charge for your benefit.  Take that musket and march into the ranks and protect it by defending your country like a man.  When peace is restored, if you prefer to handle coin instead of coin certificates, the coin will be subject to your order.”

Sir, this policy would stop all runs on the Treasury.

The oft-repeated lie that gold and silver are cowards would be exploded, and that disgrace removed from the character of these innocent metals.

It is the cowards who have handled them that has ruined their reputation.

Like poor Tray, they have been found in bad company.

Place them in charge of a brave and honest people, and they will never falter or shrink from duty.  Let the people be the guardians of their finances and their government, and both will rest on the wise heads, the honest hearts, and the strong arms of all the people, and no tyrant power can prevail against it.