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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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have committed, there is none which in enormity and extent,
can compare with the wrongs inflicted upon mankind by the
establishment of usury, or "interest." The legal distinction
between interest and usury, is an Alexandrine one — it is a divid-
ing line between petit larceny and robbery. No good reason
can be given it is apprehended why in justice and equity, interest
should be lawful, and usury unlawful. Neither has any reference
to a just compensation.

It may be laid down as an axiom in the science of political
economy, that each person in the body politic, is entitled to that
portion in the distribution of the annual productions, that his
mental and physical labor has added to the common stock, or
contributed to the general welfare of the State. Equally true is
it, that governments are instituted among men, for the purpose
of securing domestic tranquility in the establishment of just and
equal laws, and the most essential or fundamental law in any
nation, is that Avliich institutes money. For by it labor is
rewarded and property distributed. If then there is any
inequality or injustice in the law instituting money, it invades with
injustice every transaction in business, and this injustice increases
in a geometrical ratio in every transaction — subsequent to the
first.

Kellogg, in his New Monetary system claims, that " there are
only two purposes to which tlie yearly products of labor can be ,
applied." One is the j^ayment of the yearly rent or interest on
the capital employed, and the other is the payment of labor."
That "the law of interest, or percentage on money, as much
governs the rent or use of all property, and consequently the
reward of labor, as the law of gravitation governs the descent
of watei-." He further says that " with the present accumulative



188

power of interestj'there is no more chance of the laboring classes
gaining their rights by combining their labor to increase pro-
duction, than there would be hope of success that by combining
their labor they could reverse the course of the rivers, and make
them run to the tops of the mountains, and pile up the water on
their summits. The law of gravitation, in the latter case, would
not be more sure to overpower all their labor, and frustrate all
their plans, than the present governing power of the interest on
money, is sure to gather up the increased production, and add it
to the wealth of capitalists. The fault is in the law which
governs the distribution of property; and combinations to
increase production would no more effect any general change in
the distribution, than combinations against the law of gravitation
would effect a change in its general governing powers. The
evil is legislative, and the remedy must be legislative." And Mr.
Campbell has shown in his " True American System " that
putting the population of the United States in 1790, at 4,000,000,
and the property at $1,000,000,000 — this sum loaned at eight per
cent, per aimum interest for seventy years would amount to
$54,639,310,642. This shows the gross injustice of this system
of distribution and the utter impossibility there is in attempting
to meet by any exertion ot physical labor, the demands of such
an iniquitous law, or to secure under it by mere labor anything
more than a scanty pittance of one's annual earnings.

If we descend into particulars the enormity of this wrong is
made still more apparent. In 1856, the banks of the United
States, loaned as appears from their reports, $684,000,000, this
at six per cent, interest would be upwards of $41,000,000. How
much business was done outside the banks cannot easily be
ascertained, but taking the average rate of interest to be ten per
cent., and the amount of discount and interest paid outside of
bank deals would probably exceed $68,000,000. So that the
whole sum paid for 1856, must exceed $100,000,000.

For the year 1857, the clearings of the New York cleairLng
house were about $7,196,000,000. If this sum drew on an
average two months interest, and under the revulsion fifteen per
cent., it would amount to over $71,000,000 in New York City
alone. Taking the whole United States, it is a very moderate
estimate to place it at $450,000,000. Able financiers have put it
as high as $900,000,000 — at the present time the amount would
exceed $1,000,000000, but $550,000,000 will not reach the amount



189

paid. The interest on the government debt last year was some
$137,000,000, and for the next year it is estimated that it will
reach $145,000,000. It then the wrong consisted in the inequality
of the law, simply and in awarding so high a rate of rent, we
should have no hesitancy in declaring it one of the most grievous
wrongs which could well be infli(;ted upon the masses.

The objection however to the payment of interest does not
rest upon the ground of its excessive amount alone, but it is
based upon the more substantial principle, that the requirement
to pay interest, or any sum above the governmental cost, is a
direct violation of the first and most essential principle of govern-
ment and of right.

The issuing of money and all its substitutes is the exercise of
a governmental power the highest known. No power but the
sovereign power, is adequate to the institution of money. No
individual, nor any number of them short of those constituting
the sovereign power, are competent to say what shall be money,
and how it shall be instituted, what are to be its functions, or
how it shall bo regulated or controlled. These are questions
which must be authoritatively settled by the supreme power of
the State — the unfaithful exercise of this power, or its total
abandonment and entire abdication, does not destroy the right,
or excuse those who have violated this solemn duty.

We have seen that the only fund used for the redemption of a
currency, is the avails of the property purchased, the furnishing
and regulating of the medium, is as much a matter of govern-
mental control, as is coinage or the instituting a court; and to
make laws granting out this power to corporations or to individ-
uals, and fixing tolls and other regulations, is simply letting out
the governmental power, for private use, and private gain — 4,he
leasing out of Congress, the Army, Navy, or Judiciary, would
be no more a gross violation of governmental rights, and of
governmental duties.

The origin of this system like the cumbrous and unjust modes
of taxation, is barbarism and despotism. Custom or usage has
so far obscured the spoliation of the people's rights, that the
yoke is rendered easy, and the burden light. We do not stop to
enquire until a failure of crops, a financial crash, or fell war's
hellish scenes obliges us to lift the curtain, and behold the hideous
deformity and rottenness of the whole system. What else, but
blindfold custom could make the people willing to pay some



190

$900,000,000 or perhaps $1,000,000,000, in the annual exchange of
then- products of $1,500,000,000, when the whole cost to the
capitalists are simply the complicated, legalized tallies or counters
of tlie property — or what else could make them willing to pay
between $7,000, and $8,000, in assessing, collecting, storing
and furnishing the circulating medium to pay the President a
salary of $25,000, and all other officers and public expenditures
at the same rate. The government could, and would under a
rightly instituted system like the greenback, pay that sum and
not cost per annum exceeding $250.

In making this estimate of $900,000,000, or $1,000,000,000 per
annum interest — the whole range of interest on notes, bonds,
accounts and all classes of dealing with the discounts of notes
by bankers and other dealers are included. The single item of
discounts or interest on the money, and on the public debt, will
as hereinbefore stated, exceed $200,000,000, that was confined
exclusively to the items named, whereas this last estimate
includes the annual deranging, cumulative power of interest in
every department of business and trade, and which may be
justly chargeable to the unjust mode of instituting money, and
the establishment of interest by National and State laws.



CHAPTER XV.



PREMIUMS ON GOLP.



The theories respecting premiums on gold, and the deprecia-
tion of paper-money from over-issnes as shown by increased
prices, whether of products or gold, like our paper-money system
are a precious moi'ceau of British manufacture, out of which the
American people are making themselves exceedingly rich ; by
paying for these valuable paper-theories an enormous tariff in
solid gold. The only abatement or loss on our side ot the
balance sheet is found to be, that the British pile up gold, by
way of our interest bonds, and we pile up gold bonds by way of
interest. But as the labor class must earn it, and we have plenty
of wild lands, gold mines, and other like things which England
desires, the difference between a loss to us, and their gain is only
a few billions of dollars, which is so trifling a matter that we
cannot afford to lose the good opinion of the British Aristocrats,
by daring to enquire into the soundness of their theoi'ies, or the
justice of their demands arising under the operation of those
theories.

The author of money in the Encyclopedia Britannica says :
" The premium on gold in 1814 is an indigestible fact for those
who contend that bank-notes being issued in proportion to the
demand, have not been depreciated from excessive issues." Yet
the history of the British paper-money like our greenback, under
precisely similar circumstances, furnishes a full and complete
refutation of this encyclopediast's position, but the objects of the
British financiers like that of ours, being by legislation to take
the difference, or loss out of the people in gold, through gold
interest bonds, the truth could not be perceived by them, any
more than it can by those at home and abroad who desire to
plunder us by the same means, and to a much worse extent.

The following are the facts as shown by the tables of the



192

British market during the years named. From 1809 to 1810,
increased circulation of paper-money twenty per cent,
premiums on gold ye^^ seven per cent., from 1810 to 1811 the
increase of the circulation was two per cent., while the premium
on gold rose ]5^ per cent. ; from 1811 to 1813, increase of circu-
lation three per cent., increased premium on gold eleven and a
half per cent; from 1813 to 1814, increase of circulation ten per
cent., premium on gold fell six per cent. ; from 1814 to 1815,
circulation increased nearly three per cent., premium on gold
fell eleven per cent. ; from 1815 to 1816, circulation decreased
over one per cent., premium on gold fell sixteen and a half per
cent; from 1816 to 1817, circulation increased five per cent.,
premium on gold same as in 1816 ; in 1818 decrease of circula-
tion over five per cent., premium on gold more than doubled.
In 1819 decrease of circulation eight per cent, premium on gold,
rose over one per cent. If Encyclopediast or any one else
maintaining the British gold regulating, and currency inflation
theories ; can find anything in these facts to show that there was
any connection between the increased circulation and the pre-
mium on gold, there would be at least some excuse for the whole-
sale slaughter of business by cun-ency contraction.

Mr. Tooke in his work on prices, gives the following explana-
tion of the fluctuations of prices in the British market during the
period above described. He says, " the relatively high prices of
articles in the interval from 1793 to 1814, may be ascribed to
the following general circumstances :"

" 1. The frequent recurrence of seasons of an unfavorable
character — there having been in that interval no fewer than
eleven seasons in which the general produce of corn, but more
especially of wheat was deficient.

" 2. The destruction of a great source of supply of trans-
atlantic produce by the revolution in St. Domingo, which
rendered sugar and coffee and most other West India produce
scarce and dear during the earlier part of the war.

" 3. Obstructions and prohibitions of export from the con-
tinent of Europe of articles of which whether as raw materials
of our manufactures, or naval stores, or food we stood in urgent
need.

"4. Increased cost of transportation, by higher freights and
insurance incidental to a state of war, generally aggravated by



193

the peculiar commercial hostility and exclusion which marked
the latter years.

"5. The difference of exchange which in the last five years of
the war averaged twenty per cent.

" 6. A higher rate of interest, in consequence of the absorp-
tion by the Avar loans, of a considerable proportion of the savings
of individuals'"

The causes of the decline, and of the lower range of prices
from 1814 to 1837, except 1816-'17, which was a moment of
great scarcity over all Europe, were :

1. A succession of more favorable seasons in the last twenty
years from 1818, there having been but five seasons in which the
produce of wheat was decidedly deficient.

2. The removal of obstacles from the several sources of foreign
supply ; a great extension of some of them and the discovery of
Qew ones.

3. A great reduction of the charges of importation by low
freights and insurances and the improved and cheaper and more
rapid internal communication.

4. A rise in the foreign exchanges, and consequent reduction
of the cost of all imported commodities.

5. Improvement in machinery, in chemistry, and in the arts
and sciences generally, all tending to reduce the cost of pro-
duction of numerous articles, or to provide cheaper substitutes.

6. A reduction of the rate of interest.

There is not as far as I have been able to discover, any
considerable commodity in the whole range of articles embraced
in the most extensive list of prices, the variations of which
do not admit of being distinctly accounted for by circum-
stances peculiar to it, in the relation of supply, actual or
contingent, real or apprehended to the ordinary rate of con-
sumption without supposing any influence from the bank
restriction beyond the degree in which the difference of
exchange, which could not have existed but for the re-
striction, may be considered to have operated distinctly, on the
cost of production."

McCuUoch states, "that there is not a single commodity that
has fallen in price since 1814, the fall of which may not be
satisfactorily accounted for without such reference."

Here then is the solution of British statesmen and savans,
showing that the high and constantly fluctuating premium on



194

gold did not originate from currency inflation. Although all that
is stated may be and undoubtedly is true — yet it would be
strange, if reasons of state did not otherwise control, that the
most essential causes, should not have been mentioned.

In 1776, England went into a war with her colonies, now the
United States, to tax them without the right of representation ;
that war was a heavy draft upon the productive industry of that
country for men to be sent abroad to fight the battles, as well as
for gold to funiish supplies and munitions of war. When these
two resources, men and gold failed ; for men, she hii-ed the Hes-
sians to do her butchery, and for gold, sold interest bonds at a
large discount. From that moment the difficulties of England
commenced in earnest — a war with France, followed by a general
continental war — a larger demand for men and money, and to
pay this, required an interest indebtedness to be largely increased.
The large increase of the interest bearing debt, with the de-
creased supply of labor, for a long time made a constantly
increased demand for paper or other money, to denote tlie cor-
responding increase of prices thereby created. Higli prices, and
high premiums, were the products of largely increased interest
and discounts on money and bonds, added to the difficulties of
decreased production. The increase of paper therefore, being
actually based on property and not any one species of property,
did but make the increased cost of prodnction. The inflation
then, was not in the paper-money as money, but as we have seen,
in the increased burthens created by interest and discounts.
Hence the decreased paper-circulation brought an increased
premium on gold with but one exception. The exceptional
cases are rung in our ears by the capitalists without mercy.
While the rights of the people are thereby held in abeyance,
charlatan legislators at the instance of capitalist-knaves, succeed
in charging over to the labor-classes the whole burthens and
wrongs of this financial legislation in an interest bearing bond,
to be made the base of an interest bearing paper-money. Thus
the capitalist without service and without light consumes the
annual productions of labor. Under this machinery of law and
custom, British financiers and liberty crushing despot statesmen
have fastened upon the productive industry of England over
$4,000,000,000 of rent beai'ing bonds which really represents that
amount of property eat up and destroyed by war, to fasten the
iron chains of despotism on her American colonies. Failing in



195

that she brands upon the brow of her labor-population the Cain
or vagabond mark of perpetual slavery, to feed a -worse vagabond
set of aristocrats.

Money loaned at ten per cent., will double in seven years three
months and five days ; at nine per cent., in eight years and fifteen
days; at eight per cent., in nine years and two days; at seven
per cent., in ten years, two months, and twenty-six days ; at six
per cent., in eleven years, ten months, and twenty-one days ; at
five per cent., in seventeen years and eight months; at three per
cent., in twenty-three years, five months and ten days ; and at
two per cent., in about thirty-five years.

As in the bonded system the bond marks, the amount of what
the government had consumed during the year with the interest-
increased cost of production added, it is a correct mode of cal-
culation under that system to compound the interest. If then
the British debt was $1,000,000,000 in 1780, and it be supposed
that the increased price of property by this interest be put at four
per cent, per annum, in seventeen years and eight months the
bond debt would have been increased to $2,000,000,000; in
thirty-five years and four months to $4,000,000,000 ; and in 1820,
forty years, to the enormous sura of $6,153,846,153. The larger
portion then of $4,000,000,000, besides what was paid, may
justly be viewed as the rich legacy bequeathed to the labor-
classes of England by her aristocracy in the base attempt to
fasten the iron yoke of despotism upon the American colonies.

The pretence of going down to a gold-base only marked the
point where British statesmen thought best to limit the interest
burthen which they proposed to fasten around the necks of their
labor-subjects — the enactment of such a law simply increased
the burthen to the extent of the discount on the paper. It had
no tendency to establish a stable currency, but just the contrary.
Increasing the value of the bond by such arbitrary enactment
did not add to the productive industry of the country one penny,
but it did put just that increase into the pocket of the capitalist
who held the bond with a double interest and cost of collection
to be taken out of the laborer's property that much deci'eased.
Hence this legalized mode of stealing with the double interest
device left the labor-classes at the mercy of the capitalist, and
either death, or a financial crash every few years is the only way
any abatement of their burthens can be obtained.

By the adoption of this British gold-bond, gold-base money-



196

system — the American unnamed nobility have succeded in fasten-
ing upon the necks of the labor and useful business classes, for
the benefit of themselves, and their English, French, and other
foreign co-adjutors heavier burthens than King George in his
palmiest days of despotism ever dreamed of establishing.

We have thus it is believed fully demonstrated that the fund-
ing of the American debt and going down to a gold-base has
no tendency to establish a stable currency, but merely largely
to increase the burthens of labor, to carry up a paper denomina-
tional value by enactment from forty cents to one hundred cents
on the dollar — to change a reliable government paper-money
based on property, not bearing interest and furnished at cost, to an
irredeemable double interest bearing, fluctuating banker's paper-
money, falsely pretended to be based on national bonds with
perhaps a small percentage of gold. To resist then this
European bond-interest-enslaving money system, the people must
arouse themselves and put down this despotic money-power, or
they are destined ere long to hear the last peal of the funeral
dirge of departed liberty.



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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 19 of 19)