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Lyman E De Wolf.

Money; its uses and abuses, coinage, national bonds, curency, and banking, illustrated and explained online

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any of such associations as depositories of the public money,
except the receipts from customs.

Sec. 65., Reserves to Congress the right, at any time, to
amend, alter or repeal this act.

This presents enough of the Act to show that in principle
there is no essential difference between the State " Wild Cat "
system and the JSTational. The National, however, does not
pretend to base the issue of paper upon the gilded device of a
gold-base, but it substitutes by solemn injunction on the banker,
that he shall keep on hand " in lawful money of the United
States, twenty-five per cent, oi its outstanding notes of circulation
for the redemption thereof: Provided, That clearing house cer-
tificates and balances due from other associations in good stand-
ing and subject to sight draft, may be counted as part of such
reserve to the amount of three-fifths thereof. In other words,
tlie bankers are required to hold in their breeches pockets, or
vaults, certificates which they have exchanged with each other,
to the amount of fifteen per cent., and ten dollars of legal tend-
ers of their own, or their depositors, with which to redeem a
hundred dollars of their own notes. If, however, the bankers
under the stronger provision of State laws, and under the
solemnities of an oath, could not be relied upon to hold securi-
ties of silver and gold, certainly they cannot reasonably be
expected to find pockets or vaults strong enough to hold " legal
tenders," or banker's certificates any better ; but, even if they
could, the fund is entirely inadequate for the purposes of
redemption. But the truth is, that under neither system is any
attention paid to such provisions further than to be on a lookout
not to forfeit their special privileges ; the fund relied upon for
redemption is the avails of the customers' notes, and the surplus
deposits generally on hand ; gold and silver, legal tenders, and
bank-certificates in " good standing," cut no figure in the matter
of redemption — they are merely the clap-trap, or 'stool-pigeon



166

for the amusement of the public. Under this system it is im-
portant to make a big exhibit of pretended securities otherwise
the naked deformity and downright robbery of the system would
be too bare-faced and outrageous to be tolerated. Stripped
stark naked, the people would soon discover that royalty, or the
bankers special class privileges, even in a republican or demo-
cratic garb, differs from robbery only in the silk gauze covering
of law. There is no essential difference between banking under
State laws, and that of the so called National banking system.
Neither systems are intended to establish justice in the national
finance, both are intended to make unjust gain under color of
law, and therefore the issues of paper, under neither, are based
upon the capital of the banker, but practically upon that of the
people. Lest this point should be overlooked by not having been
made sufficiently clear, we will proceed to illustrate it by bank
returns, March, 1836, Bank of United States circulation,
$19,195'81V; specie, $12,175,476; deposits, $16,759,667. How
could this bank pay $16,759,667, with $12,175,476, and redeem
its notes with specie. The Commissioner's Reports of the banks
of Connecticut, Irom 1837 to 1849, twelve years, shows an
average circulation of $11,669,457, and an average of $478,719
of specie, four per cent, on every one hundred dollars of papei-.
And it is more than probable that a majority of this specie, if
not the whole, belonged to depositors and not to the bank
owners.

This exhibit of capital is not materially improved under the
National Banking Act, this does not require either coin or bul-
lion for the redemption of the notes. The requirement that
bankers shall keep on hand fifteen per cent, of banker's certifi-
cates and ten per cent. " legal tenders," may produce any amount
of bank frauds and perjury, but if this is the fund relied upon
for redemption, as has been shown it is not adequate for
that purpose. The pledge of bonds with the Secretary for the
ultimate redemption of the notes, has no bearing upon this
question. Such security really gives no present efliciency or
value to the paper as money, for the reason, that business
demands in making an exchange, a legalized tally or counter of
the commodity, which is a legal equivalent for every com-
modity at its market value. A bond, or note therefore, bearing
six per cent, interest, payable semi-annually, and the principal at
twenty years, does not fill this money requirement. Hence then,



167

neithei* national bonds, legal tenders, nor banker's certificates,
are what give efficiency and value, to banker's notes as money,
but it is the notes and securities given by the business public.
The value of these depend upon the value and use made of the
property purchased from the industrial classes.

The annual productions of the United States may be estimated
at something over $1,500,000,000.

If we suppose profits and interest amount to forty per cent.,
then the security for the banker's notes may be thus expressed :

Farmer's property $1,500,000,000

Profits on first sales 600,000,000



$2,100,000,000

This $2,100,000,000, will be good collateral security, and a
reliable fund with which to redeem $1,500,000,000 banker's
notes, and the interest. No other capital is required or used.
Those indebted to the bank will be glad to get this $1,500,000,000
of bank-notes, to take up their $2,100,000,000 of individual
notes. Estimating the farmer's products in second hands at
$2,100,000,000 — this would give the fanners $1,500,000,000, and
the banking and business class $600,000,000, or estimated at first
cost, it makes a distribution of the farmer's j^roperty as follows :

Farmers $1,071,428,620

Bankers and business class 428,571,380

The farmers have sold their $1,500,000,000 of produce at
market price, and got $1,071,428,620, and they cannot tell
precisely how this metamorphose of values was effected, or how
in the end a majority of their surplus productions got out of their
hands, and into the hands of those who do not labor, or perform
much useful service.

If however, there is a desire to find out this injustice, it can
be directly traced to these unjust bond and banking laws. They
make a gross monopoly of money and of business. The business
class perform an actual service in making exchanges. The bank-
ing class produce nothing, control the exchanges by a monopoly
created by law, perform a very trifling service, and reap lai'ge
gains, mere class laws perquisites. They furnish no actual
capital. Their office is principally that of bookkeepers of the
nation's industries, being by law allowed a pension, rent, or



168

interest out of these industries four times the value of the service
rendered.

Banker's notes are used in the place of account books, and
i-edemption of their notes is a simple cancellation or balancing of
accounts through the machinery of bank-bills, promissory notes,
and other commercial obligations, or securities. For this book-
keeping service, by a series of class laws, the bankers have
secured to themselves without useful service about one-seventh
of the productions of the nation as an annual tribute due to
these modern " Cesars " — or in other words their annual income,
or seignorage by way of interest, considerably exceeds two
hundred millions of dollars. If this subsidy of law, depended
upon actual service rendered, and not on arbitrary law, it would
not probably exceed ten millions of dollars.

The National bank and bond system of the United States can
only justly be viewed as a culmination of nearly a hundred years
of English banking brigandage under State laws into the largest
and most centralized money despotism, the world has ever
beheld. The model for this system is purely English, but rich
as her history is in every form of tyranny and oppression, she
has never dared attempt to carry out such an atrocious system
as ours, at anything more than half the rates and upon a minia-
ture scale. When thei-efore, the executive of this nation
declares, that "national honor" requires that "every dollar of
government indebtedness shall be paid in gold, unless otherwise
expressly stipulated in the contract,'' it is an unequivocal decla-
ration for an exterminating war upon the rights of the labor
classes. It is not merely a premium oflFered to the belligerent
doctrine, gold- gambling and stock-jobbing dignitaries of the
old world ; but it contains a scathing rebuke to any claim of
rights for the toilers who pay every dollar of this debt. It gives
point and force to the almost prophetic declaration of William
Pitt, the great English statesman who said : " Let the Ameri-
cans adopt their funding system, and go into their banking
institutions, and their boasted independence will be a .mere
phantom." That day has at length arrived when the Americans
have gone into their funding and banking systems. The decree
has also gone forth that financiers whether native or foreign, are
to be paid six per cent gold interest, and one hundred dollars
gold for every forty furnished by them. Henceforth too London
stock-boards are to be the seat of Government for the great



169

American Republic. There the annual fruits of American
industry are to be gathered and "worthless rags" converted
into solid gold.

It is difficult to present any adequate idea of the evils which
must flow from this gigantic false paper-money and bond
monopoly. To the American mind, it does not seem possible,
that such immense natural resources can annually be absorbed,
and yet that each succeeding year shall bring an increased
demand.

Under the State system, if the bank broke, the loss could be
pocketed, and there the wrong ended, but under this paper con-
verted into bonds, the two hundred milhons of dollars annual
interest, are a perpetual draft upon labor which can never be

satisfied.

Any comparison therefore, or any lesson which can be drawn
from the past history of banking in this country will give but a
faint idea of the rapid centralization of wealth, and the depletion
of the many, which must inevitably flow from this fruitful
source of oppression and wrong.

The old Alchymists tried in vain to discover a process
whereby every thing could be transmuted into gold, but it was
left to American statesmen through the banker's gold rimmed
spectacles to discover a mode whereby the national laboratory
can transmute everything into gold, not even excepting banker's
wild cat promises. While their granaries and vaults are being
filled by this National class legislation, they seem to think that it
is astonishing that their system can be thought otherwise than
universally beneficial. Institutions to which men have been
accustomed, however wrong and absurd, come at lengtli to be
considered as necessary to social order, and the well-being of
the State. Hence, as long as evils are, or can be tolerated, men
are disposed to bear up under them as incurable. Say, in his
work on Political Economy, speaking upon this subject observes
that " certain individuals who have never caught a glympse of a
more improved state of society, boldly affirm that it cannot
exist, they acquiesce in established evils, and console themselves
for their existence by remarking that they could not posssibly be
otherwise — in this respect reminding us of the Emperor of Japan,
who thought he should have been suflbcated with laughter on
hearing that the Dutch had no King. The Iroquois were at a



170

loss to conceive, how wars could be carried on with success, if
prisoners were not to be burnt."

That a rightly instituted paper-money under governmental
control would be much cheaper and better than coin there is no
doubt. Even curri-ency unjustly instituted for the purposes of
private gain has in every civilized nation practically taken tho
place of coin for the last hundred years. But are we as a people
therefore, so indissolubly wedded to this state-paper-labor-
plundering system, that we are willing to perpetuate it as the
great essential element of National power, as a perpetual boon
granted to financiers for their benevolent guardianship of the
rights and pi'operty of the people. Do we really believe that
the labor-classes ought to pay to these faithful custodians of
government and people over $200,000,000 per annum interest, or
rent, for furnisliing paper tallies, or counters, in the exchange of
the annual productions of the nation. That such a system will
produce a fluctuating market for stocks and property is certain.
Tliat we may thereby build up a vast gold-speculating, stock-
jobbing money monopoly and despotism, which will make our
" boasted independence a phantom," is shown by the unjust
principles which lie at its base.

If anything more is needed to establish this fact beyond the
power of controversy, it can be found in the history of American
banking, and its great prototype and exemplar the Bank of
England.

No nation has ever come within the range of this English bond
and money system, which has not found it a mill-stone around
the neck of labor which cannot be lifted. The Ultima Thule of
the system is a centralized government, a relentless purse proud
and heaitless aristocracy, supported and sustained by class law,
and an utter and hopeless pauperization of labor. These results
are as sure to follow the continuation of this system as death is
to follow as the appointed lot of every human being. The only
outlet and pathway of' safety to the labor classes is the abolish-
ment of coinage, gold bonds and banking, a reduction of interest
at least two-thirds, the establishment of money based upon
property, at rates not exceeding its cost, and under direct
governmental supervision and control.



CHAPTER XII.



IRREDEEMABLE CURRENCIES.



The wrongs of banking are nowhere so speedily and so
extensively manifested as in some great national calamity. Let
war sweep its desolating course over the counti-y, and thereby
disturb its productive industries, then in proportion to the wide
spread desolation will be the exacting demands of the financial
classes.

While the industrial population freely sacrifice their lives and
their fortunes, capitalists are benignly devising ways and means,
to make the greater gains out of their country's misfortunes.
Having previously shaped the financial legislation and thereby
cuntroUed the exchanges, they are easily enabled to accomplish
this end. An increased demand of staple articles for consump-
tion, is sure largely to increase the price, an increase of price at
once enlarges the demand for the accustomed medium of
exchange — this supply being by governmental abdication a
monopoly in the hands of the financiers and bankers, they at
once commence an organized and systematic course ot extortion.
Its magnitude is proportioned or moderated only by the exigen-
cies of government and people. What is lacking in previous
laws, will soon be supplied by fresh legislation under their dicta-
tion. As the land is drenched in blood, their gains Avill be
increased. At the present day the settled line of policy is to
exhaust the small supply of currency which is easily done.
Then a resort is made to the manufacture of interest bearing
bonds to be sold in market at such prices as shall be settled
upon by the tender consciences of these licensed plunderers of
the p eople — the so-called capitalists.

Formerly a forced loan was made at the point of the bayonet,
or some species of revenues, or property was pledged for the
redemption of these issues, or for their payment. Ol this



172



character were the issues of the assignats of France — they were
in legal effect a sort of French bond and mortgage combined,
whereby an individual interest in the forfeited church-estates was
pledge^ as the funds for the redemption of the obligations, or as
its only base, the bond was substantially in the following form :



Law of 25 May,
1793


Republic of
France


FIFTEEN sous


One and
Indivisible


The 2d year of
the Republic


OQ

OQ

>

1^


FIFTFEN CENT BOND

I>ATABZE TO BBAMJEB,

GERARD. FEGUBT.
BUTTIN.

SERIES. 1552.


H

s

CO

1


The Law pnnishes with
Death the •Counterfeiter.




15s




The Nation will recom-
pense the Informer.



The French National Assembly having appropriated the
Church Estates to national purposes, instead of thi-owing the
land upon the market when its value was so largely depreciated,
issued these bonds called "Assignats," which represented the
land as assigned to the holder. These bonds were principally
for 100 francs, (£4) each. Though some were issued as low as
ten or five francs and even lower. The first issue was 4i)0 rail-
lion francs, these were issued in the spring of 1790, and bore
interest but subsequent issues did not. This system once
inaugurated was afterwards repeatedly applied to the property of
wealthy persons who abandoned their country and whose estates
were confiscated by the State. Assignats based on these for-
feitures were issued until they reached the enormous amount of
45,578 million of francs. Besides the country was flooded with
forged Assignats manufactured abroad, under such circumstances
the value of these securities soon began to decHne. In June



173

1793, one silver franc was worth three hi paper, and in August,
six. The state appUed the usual legislative penalty appliances to
compel acceptance at their full nominal value, but of course this
expedient failed in a country where the kings had taught the
people to worship only gold, and where untold misery had been
produced by the Mississippi Bubble Act of John Law, based
upon cotton plantations, to be planted in the then wilderness of
Louisiana, and upon ship loads of prostitutes shipped from
Paris to people that delightful French Paradise. With such a
prelude it was not likely that pains and penalties could give a
money credit to a most baseless and credit destroyed bond —
especially when the populace had already shouldered the loss.
A few wealthy sharks had enriched themselves by purchasing
the bonds for a trifle, and thereby obtained the lands which
these bonds represented. In March 1776, a Louis d'or (24
francs) brought 7,200 francs in " Assignats," during this year the
government substituted the mandats, a new paper-issue, by
which the Assignats wer§ redeemed at 3'oth their nominal value.
These mandats were convertible into public lands at their
estimated value and the holder could enter into possession at
once, while the Assignat was an undivided interest in the land
which could only be realized by public sale. A law passed in
1796, restored business to its ancient channels by leaving every
one to transact business in such medium as he chose, providing
also that mandats should be taken at their current value, and
taxes received either in coin, or mandats at that rate. Thus
ended the reign of Assignats in France.

The Mississippi Bubble Act of John Law — the Assignats of
France and Russia — the continental coin obligations of the
United States, and all other similar paper-issues have not the
least tendency to show whether a good paper-money can or can-
not be issued by the government. These paper-issues should be
viewed as the direct result of imperfect and unjust laws instituted
in times of great public peril, and all of them based upon the
extremely unjust class ideas out of which all government-bonds,
money and currency have so far originated. All taken together
are designed to benefit a ruling or controlling class by creating
unjust and arbitrary gains largely in excess of the natural
rewards of productive industry.

In these laws is truly verified the declaration that wlien the
wicked rule the land mourneth. How more grave injustice, or



174

gross inequality of distribution of property can be compressed
into a legislative enactment than is included in this whole
financial system, is as yet undiscovered? Why these revolu-
tionary land and coin bonds should be denominated an "irre-
deemable currency," any more than the money and currency out
of which they originated, cannot well be explained. These
bonds were never redeemed, and no banker's currency has ever
yet been instituted which has been truly a redeemable currency.
The latter answei-s in sunshine, but both perish in a storm. The
former have defrauded the masses out of a few hundred rail-
lions, the latter out of as many thousands of millions. They
should all be branded as "irredeemable currencies," originating
in such barbarism and despotism, that they ought no longer to
disgrace the statute books of a free and enlightened people. The
great industrial classes although they may not be able to trace
these evils back to their source, they know full well that they
are grossly wronged by the system, and the greenback was the
nearest approach to a correct system of anything yet attempted
in legislation — they therefore justly desire to retain this money,
and to get rid of the National bankers, they do not see the
propriety of paying two interests, when one is twice what it
ought to be, and more than twice what it is, in the despotic
countries of Europe. Republican governments should not
duplicate the bad deeds of European despots. Such roses do
not render a sweet perfume, though christened Democratic or
Republican.



CHAPTER XIII.



ELASTICITY AND CONVERTIBILITY.



Elasticity and convertibility are enigmatical terms designed
and used by financiers to cover up some of the gross iniquities of
banking,. Elasticity is thus happily described by one imaginative
financial writer in the banking interest. He says : " The value
of a bank medium consists in its elasticity — in its power of
ultimate expansion and contraction to suit the wants ot the com-
munity — in truth the merit of a bank medium is nearly in propor-
tion to the flexibility of its means." Unfortunately for the truth
of this beautiful theory, bank flexibility and business wants,
generally run in counter directions. When business demands
increased facilities, the inexorable banker's interest demands a
rigid contraction.

Convertibility ostensibly denotes coin redemption at the will
of the holder — but practically it denotes a will that must never
be exercised in that direction, without a certain and inevitable
defeat.

At the present time the use of these two terms are designed
to pave the way for the destruction of the "greenback" — the
ushering in of a plentiful supply of gold interest bonds, and to
secure the absolute and unconditional supremacy of the so-called
National-banking.

Capitalists who have made millions upon millions of dollars in
the issue of the worst species of a non-elastic and non-redeem-
able currency, are suddenly seized with an epidemic, if not a
contagious gold convertible fever — they are horrified at the
shocking depreciation of a non-convertible, iri-edeemable govern-
mental paper-money. What a monstrosity ? Having converted
a much worse class of an unsecured, no interest bearing cur-
rency into the people's property — ^then with large interest and
profits added, converted it back again into a six per cent, interest



176

bearinty gold bond. If tbey can now convert the balance of the
"greenbacks " into the same class of bonds into wliich they have
previously funded their irredeemable wild cat trash, it will con-
stitute the banker's paradise regained.

Yet, ill their eagerness to reach these paradisaical joys, if
they should omit to mention the important fact — it will be well
for us at least, to remember, that the greenback is now lawful
money for all purposes but two — interest on the public debt and
impost duties — for this unjust discrimination against labor and in

favor of tiie capitalists to them the country is principally

indebted for this National discredit of the greenback.

Patriotism is said to be that unselfish and hallowed feeling of
disinterestedness, which freely sacrifises property and life if need
be, for the good of one's country. A patriotism and love of
country so pure as wholly to leave out selfhood, cannot take
filthy lucre in. But that patriotism which influenced the capital-
ists to take part in our late fratricidal contest was one which left
the widest margin for profits. When they found that the ignoble
many were placed between them and danger and that they could
control the National financial legislation solely for their own
gain, their patriotism then knew no bounds. Yet it does not
however seem to be a patriotism of a very exalted character, or


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Online LibraryLyman E De WolfMoney; its uses and abuses, coinage, national bonds, curency, and banking, illustrated and explained → online text (page 17 of 19)