The
Kingdom
Of Shylock
(Revised)
By
Frank Anstey M.P.
THE
By FRANK ANSTEY, M.P.
REVISED EDITION
melbourne;
labor call print,
patrick stREEt
1917.
CONTENTS
Page.
Love of Country .. .. .. 1
The Clutching Hand .. .. .. 5
Lords of Lootery .. .. .. .. 8
Mammon the Overlord .. .. .. 13
The Mighty Swindle .. .. .. 17
Gorging the Vultures .. .. .. 22
The New Bondage .. .. .. 26
The Dawning Slavery .. .. .. 31
The Profiteers’ Programme .. .. 35
Australian Money Trust .. .. .. 40
The Unseen Grip .. .. .. .. 44
State Aid to Robbery .. .. .. 48
A Nation’s Credit .. .. .. .. 52
The Capitalist Arsenal .. .. .. 57
National Currency .. .. .. 61
National Redemption .. .. .. 66
National Instrumentalities .. .. .. 70
Historic Note Currencies .. .. .. 75
War Values .. .. .. .. 79
Standard of Value .. .. .. 79
Money Trust Armies .. .. .. 80
Foreign Exchange .. .. .. 81
Foreign Exchange and Gold .. .. 87
Foreign Exchange and Local Currency .. 88
Foreign Loans .. .. .. .. 89
Shifting Foundations .. .. .. 90
Currency—Notes and
Cheques .. .. 90
American Banks .. .. .. .. 91
Australian Banks .. .. .. .. 92
Bank Capital .. .. .. .. 93
Bankers’ Agreement .. .. .. 94
War Profiteers .. .. .. .. 94
Things to Remember .. .. .. 95
Those Who Return
Found on the body of Sergeant Leslie Coulson—killed
on the
Who made the Law that Death should stalk the valleys?
Who spake the word to kill among the sheaves?
Who gave it forth that Death should lurk in the hedgerows?
Who flung the dead among the fallen leaves?
Who made the law?
Those who return shall till the ancient pastures,
Clean-hearted men shall guide the plough-horse reins,
Some shall grow apples and flowers in the village,
Some shall go courting in summer down the lanes –
Those who return
Those who return shall find that peace endures,
Find old things old, and know the things they knew,
Walk in the garden, slumber by the fireside,
Share the peace of dawn, and dream amid the dew –
Those who return
Who made the Law? At noon upon the hillside
His ears shall hear a moan, His cheek shall feel a breath,
And all along the valleys, past garden crofts and homesteads,
He who made the Law,
He who made the Law,
He who made the Law shall walk alone with Death
THE MONEY POWER
Plutocracy is more despotic then
monarchy; more insolent than aristocracy; more selfish than bureaucracy. It
accumulates by conscious fraud more money than it can use, and denounces as
public enemies all who question its methods or throw a light upon its crimes.
(W.
J. Bryan, New York Reception, 1906).
All
undertakings in the field of industry are now dependent upon the consent of the
banker.
The
Stock Exchange activities of the banks are becoming more and more the
controlling force in every department of economic life.
Modern capitalism is the child of money-lending
Money-lending contains the root idea of capitalism
In money there is no thought of production
In money-lending economic activity has no meaning
—Werner
Sombart in “The Jews and Modern Capitalism.”
PRELIMINARY
“The triumphant nation of tomorrow will be that which defeats the others on the economic
field, by reorganising the
conditions of human toil, and by bringing more justice and happiness to mankind.”
—“Zola” in “Truth”
Page 171.
In days of old the feudal baronage sallied forth with sword
and spear to levy toll upon terrorised producers. They were masters of highways
and waterways, and in the name of their overlordship exacted tribute from the
toiling people. They were the self-evident personification of tyranny. To rise
against them, destroy them, escape their vassalage, was to leave an open road
along which the products of free men could pass untolled.
Organised resentment and bloody victory were the sole essentials for the
spontaneous development of industry in its primitive forms.
But the days of primitive industry and primitive Radicalism
are passing. Under the freest political institutions exist
financial oligarchies more rapacious than the old-time baronies. They bleed, not with sword nor spear, but by subtle processes that leave
a people impoverished, they know not how or why. The mechanism of robbery is
complex and impersonal. The operators are out of sight. The public only know
them as benignant gentry distributing tracts or charity by the wayside.
In theory the Labor Movement is a protest against
Capitalism. In practice it is its endorser and subsidiser. Legislation is
enacted to make the baronage of Capitalism bearable and acceptable to
democracy, but the baronage remains. Its exactions, if less outwardly brutal,
are none the less extensive and complete. Not in the least do we touch its
sacred edifice, impinge upon its prerogatives, or limit the unseen power which
predatory wealth exercises upon the political machinery of the State, the lives
of the people, and the economic future of the Nation.
We see States and Nation governed by
the machinery of past centuries. We have seen a Labor Government in N.S.W.
upholding the absurdity of an Upper Chamber to nullify its own
proceedings. We have seen Governments of working men upholding as rigidly as
the most rabid Tories all the procedures, formalities, mummeries and ceremonies
of obsolete forms of government. In the midst of a flood tide of economic and
scientific progression the legislative and administrative methods of
Governments stand petrified in the chamber of dead ages.
The organisation
of Labor upon the basis of craft is not less obsolete than all the other
instrumentalities of past centuries. The members have need
to think in terms of a wider brotherhood. True freedom consists in a state of
mind as well as exterior surroundings. The mind must expand as well as the
machinery of production. There is mental slavery as well as physical, and
slavery is not abolished because men vote for their own enslavement, contented
to be well fed. The Labor policy must be radical in fact as in name. It must go
to the root of things or it goes nowhere.
This movement of ours talks of “The
Means of Production, Distribution and Exchange.” Of the first two we
read much, hear much—upon the last we are silent in speech and policy. Yet in
the modern world the last is fundamental in industry, in statecraft, and in
war.
It is in coping with the problems of
Finance that the world has got to find its regeneration. All reorganisations of industry, all social projects, all efforts to climb out of the pit of misery into which the
war propels the toilers are dependent upon the first. No skin-plaster
legislation, no mere policy of alleviation, will meet the position. Revolution
in action and method is the one saving instrumentality, the sole alternative to
a long grinding period of absolute slavery.
I make no apology for this
statement. I do not stand alone, nor in poor company.
I remind the men and women of Australia of the speech made last May (1917) by
Lloyd George to a Labor delegation. He said:—
The whole of
society is in a molten state. You can stamp upon it almost anything you like,
provided you act firmly and determinedly. There is no time to lose. Unless the opportunity
be seized it may pass. The post-war settlement will
succeed in proportion to its audacity. Have audacity by new ways and methods,
and you will get a really new world. If not, then God help the country.
This impulse, this essential action,
cannot come from one man or a few Revolutions come from the miseries, the
dissatisfactions, the passions of the masses. The duty of leaders is to be
ready for it, and when it comes, guide it along the right channels.
It is in this spirit that I offer to
the men who take an interest in the affairs of their country some facts for
their consideration. It will be noticed that I do not offer them the exploded
theories of the text books. I present the spectacle of the machine in operation
in Europe, in America, in England, in Australia. I give them the sources of my
information into which they can dive further if they wish. I present them with
no academic dissertation, but with the admissions and affirmations of men who
live on the game. The business is buttressed with a dead language. I endeavor
to present it in a language all can understand.
Here is a summary of financial
facts, of much reading through dreary records and evidences of many
Commissions. Here is a record of financial buccaneering, financial legislation
and capitalist methods of waging war at a profit. Here is a description of the
only solid foundation upon which all policies of effective reformation and
national progress must rest.
This booklet by its reference to
documents and historic facts, has something more than
passing value. It is a booklet, to which the holder in years to come, even if
he does not agree with its conclusions, can turn to and ask, “Where is it?” To
that extent, if for nothing else, it possesses some value to all students of
economics, to all would-be leaders of men, and all those lovers of their
country anxious to understand its problems and help in quiet ways.
It is not a question of a class or
of class interests. The class struggle will disappear with the exterminated
interests of the predatory cliques. It is a question of the capacity of the
State to meet the rising tide of its responsibilities. It is a question of the
economic reorganisation on lines that will furnish
its people with an attractive existence and attract others from abroad. It is a
question of how and by what means its territory shall be utilised,
its resources developed, its wealth multiplied, so that by its wealth and its
people—the abundance of the one and widespread ownership by the other, the
essentials of a self-sustained community will be secured.
Slavish acceptance of transmitted
ideas, stolid attachments to old methods and old fetishes accomplish nothing.
That was society stagnates, ossifies, and becomes the prey of the first
besieger. Note the helplessness of Governments, their aimless drift on the
stream of events, their lack of national objective, their
poverty of policy. These things provoke disaster, and Australia is moving to
the crisis.
FRANK
ANSTEY. [Acknowledgments to Claude Marquet
and other Artists—F.A.]
ERRATA: Read “supporters inside” for “supporters outside” on line 21, page 36. Read “watered” for “valued” on line 16, page 76, “to” for “by” on line 16, page 89.
Love of
Country
“Romford, Essex,
“May 30, 1915.
“I look over this beautiful, delightful
country, and I wonder if it is really true that there is so much bloodshed
and horror in the world. Yet, last night by my window went the wounded
westward, and this day, as for months past, go brave men eastward to
the slaughter, and the Jews are making much money.”
Mother in England to
her son in Australia.
Where is the Englishman
who does not love the land of his nativity. Where is
the one, who, in the hour of struggle, does not forget all that is bestial in her
cities, and remember only, all that is beautiful in the things left undefiled.
Hills and dales, rolling
downs and valleys, woodlands and meadowland brooks and streams that yet flow
untainted to the sea, daisies and primroses wild growing in the unfilled
pastures, blackbirds and thrushes, finches and linnets warbling in the hedges,
the lark up yonder in the sky—these pictures pass
before the Men of England, “heirs of glory,” wherever in the wide world they
be, even as visions unfold in the passing hours of slumber. I love a
country, and love it very dearly, is not to be stone deaf to the **** trump of
existing facts.
Through all the
centuries long lines of unnumbered and now forgotten dead have marched forth
from every village, along every road and byway, do battle for this little sea-girt
isle.
And amongst those men
were kings. Kings in reality, not figurehead kings, who were English—not
Germans. Kings who beckoned “come”—not pointed “go.” Kings who said, “the place in front is mine”—not “the view from here” (a
hundred miles behind) “is fine.” Kings whose sceptre
was the battleaxe, not the golf-stick. Kings whose slogan of “Follow the King” meant follow him to the
battlefield—not to the water-bottle.
PATRIOTISM.
Beside the King rode the
fighting barony of England, and behind them ye yeomanry
from Kent and Devon and the hills of far Northumbria.
There were men, as always, too old or fat to fight, and men, even then, whose
thoughts on money bent gave them no stomach for ye battle. But none escaped the
sacrifice. None were permitted to dodge their share of the common burden. Those
who did not contribute their bodies contributed their money. One or the other
they had to give. Wealth as well as human beings were
offerings upon the altar of country. No Shylock could make a profit from war—he
got no interest. No trader could “engross” or corner the necessities of life—he
got the hangman’s knot. He was regarded as a traitor, and got a traitor’s doom.
And this was the law of the land for long centuries.
IN DAYS OF OLD.
Thus it was that England for over a thousand years
waged war at home and abroad—wars of aggression and defence—wars
by sea and land—wars on Spanish main and coasts of Tartary—wars
against Armadas of old Madrid and fleets of the bold Van Tromp—wars in Normandy
and Flanders—wars of Roses and of Roundheads—wars inside and outside, civil and
foreign, somewhere, always—and yet she emerged from that thousand years of
bloody strife free of debt, no harpies within her borders to gather interest
from the blood of battle. Give your life or give your money. That was
patriotism in the days when patriotism meant “love of country,” and not a
blood-sucking, money-lender’s parody.
THE BLACK FLAG.
But times have changed. Dutch finance, a Germanised throne and capitalised
industry are the marks of the transformation. Kings no longer go forth to
battle, and Money no longer freely serves the Nation that protects it. Men may
die, but Money makes no sacrifice. It looks upon bloody war as a rich gold mine
yielding fat dividends for ever and ever without end. Human bloodsuckers, who
risk neither life nor limb nor penny, wax fat on Armageddon. They constitute
the “Money Power” that bestrides all countries, and makes all nations its
slaves. It exercises political power under every form of government. It makes
the world one wide dominion over which its black flag flies unchallenged.
The “Money Power” is something more than Capitalism.
It is its product; and yet its master. “Capitalism,” in its control of the
great agencies of production, is observable and understandable. The other lurks
in vaults and banking chambers, masquerading its
operations in language that mystifies or dazzles. Industrial Capitalism may
roll itself up into great monopolies in production and distribution. It cannot
exist for an hour apart from the powers that hold the “Monopoly of
the Instruments of Exchange.”
Modern Capitalism throws ever-increasing power into
the hands of men who operate the monetary machine.
These men constitute “The Financial Oligarchy.” The key
to power is combination and concentration. They control banks, trust companies
and insurance. They control the savings of the people. They say to whom the
savings shall be lent and from whom withheld. They
finance industries in which they are interested, and withdraw facilities from would-be
rivals.
Such is the Modern Money Power.
Profits are piled up in bank
credits, reinvested, and reinvested until the field of industrial activity is
exploited to its limit. Money, in the language of the market, becomes “plentiful”
and “cheap.” In other words, the industrial outlets are diminishing, and the
rate of interest, the “reward of capital,” is falling. Something must be done—it
is done. International hatreds are stimulated. People prepare for peace by grinding
the axe of bloody slaughter. Armaments are demanded, loans are raised and the
right to levy perpetual tribute on the nation is given in return. Even this is
insufficient to mop up profits as rapid as their accumulation.
THE PROFITEERS.
So war comes. Any pretext suffices.
War must come. It is the product of the predacious instinct in every age and
clime. But there is a difference. Under every other economic system, war
placed the yoke of slavery on the conquered foreigner. Under capitalism, war is
made the instrument of the enslavement of men of kindred race and blood.
It was Count Von Moltke,
himself a warrior, who, in the preface to his book on the Franco-Prussian war, said : —
“The great conflicts of modern times
break out contrary to the will and wish of nominal rulers. The Stock Exchange
has acquired an influence so great that it is able to call armed nations into
the field to fight in its interests. Blood flows in order that the demands of
High Finance may be liquidated.”
It was another writer of no mean
repute who said : —
“The magnitude and appalling
character of the influence on the welfare of the whole nation, exercised by the
Stock Exchange, is entirely due to the fact that the securities dealt in on its
floors represent in paper form the bulk of the business of the nation.”—Frank Hirst in “The Political Economy of War.”
So war comes. War borrows millions
of the piled profits—interest rises. More millions of
loans—higher and yet higher interest. Much rubbing of
hands on the Stock Exchanges—3½ per cent, yesterday, 4½ to-day, and 5½ or 7
tomorrow. Men may rot on battlefields, but money gathers an ever-increasing
harvest of rich ripe fruit.
Levy men? YES.
Levy money? NO! NO! NO! Gott in Himmel. That ish confishcation. We will
lend it to you at much interest.
So the nation can levy men—but not
Money.
Men may die.
Money lives.
Men come back armless, legless,
maimed and shattered.
Money comes back fatter than it went, loaded with coupons, buttered with a perpetual lien on the toil of the fathers and mothers and sisters and brothers of the men who died, that the nation might live.
Where is the “love of country” to those vampires who batten and grow rich on the rotting carcases of the world’s humanity?
<
The
Clutching Hand
“The ‘capitalisation’ of private industry is
followed by the ‘capitalisation’ of the Nation. To be
in pawn, to be mortgaged and bled, to be divided into stocks arm bonds and
debentures, and sold in pieces is the fate of Nations.”
John A. Hobson, “Evolution
of Capitalism.”
OLD
JEWRY.
There was a time in the
history of the British race when the jobber pursued his gambling in Change
Alley or the Jews’ Walk, in the surreptitious manner of the accursed. He had
one eye on the speculative customer and the other on the passing police. The
Jew Medina came in the train of William the Dutchman. He gave Marlborough £6,000 a year for the first tips of victories in
France or Flanders. All the tricks bound up in rising and falling prices, lying
reports from the seat of war, the pretended arrival of couriers, the formation
of financial cliques to work the market, cabals and connivings
behind the scenes, the whole system of Mammon’s Wheels—Medina, the father, knew
them well, and worked them to the full. His successors have amplified his
methods.
After Medina came the
Jew, Manessah Lopez. He amassed a fortune in the
panic which followed the false news that Queen Anne was dead. He “bought on the
slump and sold on the rise.” Then came Samson Gideon and the Goldsmids—Abraham and Benjamin.
These were succeeded by the Rothschilds.
THE REIGN
OF THE ROTHSCHILDS.
The Napoleonic wars made
the fortunes of the Rothschilds. From 1797 to 1821 the
British nation was on a paper currency. It was for the most part the paper
currency of the private banks. They increased their note circulation from
seven to 50 millions—that of the Government
increased from nine to 27. The first depreciated—the last stood steadfast. With
their Private notes they bought interest-bearing bonds. The notes flowed
through channels commerce back to the banks, ready for the next loan. Loans were
floated as low as £40 in the £100—the average £60. The nation was loaded
with a bonded debt of 870 millions—dead men on the battlefields—profits for the
cormorants.
The Rothschilds
combined banking and brokerage. Behind the operator on the market stood the
backer, the banker. He brought to the bulling and bearing and thimble rigging
all the resources of deposits entrusted to his care. These were manipulated for
fortune making. “Loan floating,” as distinct from lending, became a new
occupation. Come into the good thing. Subscribe to the loan. The loan is “floated.”
Fortunes are skimmed off in brokerage and commissions. The “money
market” is tightened, scares worked, prices depressed, the public sell, the
riggers buy, confidence is restored, prices rise, the public buy once more,
perpetual game of depression and inflation, colossal fortunes made not by
honest trade but by public deception, financial tricks and market fakes.
Here are all the instruments of the spieler and tick-tacks of the race-course, garbed in
respectability, and sheltered and hossanahed by the
Law and the Church.
PATRIOTS TO EVERY
FLAG.
The Empire of High Finance has
become intricate and extensive. Around the throne have gathered satraps and
satellites, catching the sunshine. The dynasty of the Rothschilds
is more powerful than ever—compatriots and puppets do its will and share the
spoils. Its dominion is over nations. Its influence and its interests are as
much in Berlin and Vienna as in London. Its titles and distinctions are
gathered from every flag. Alfred Rothschild, ex-director of the Bank of
England, partner in the firm of N. M. Rothschild and Sons, holds the Grand
Cross of Austria, the first-class Order of the Crown of Germany, was, until the
outbreak of war, Austrian Consul-General in London. Then he became an ardent Britisher—a welcome guest in every profit-mongering
household, waxing fat on the blood of the dead soldiery of Britain.
His son, Albert Rothschild, born in
Germany, educated in Germany, a member of the Imperial Yacht Club of Germany,
an attache to the German Embassy in London, became an
ardent Britisher as soon as war broke out. His
patriotism went with his interests. The Majesties of the Kingdom of Finance
are exempt from anti-German hostility. The nation may die—the perquisites of
the parasites will be preserved. Any nation suits, so profits are undisturbed.
CAPITAL-ISM.
When a business is floated into a
company of so many shares of £1 or £10, that business is “capitalised.”
Rich quick comes not from the processes
of legitimate industry, but the market manipulation of negotiable shares. The
actual business is a thing to monkey with; to boom or stiffen, to the spieler’s needs. Shares are let out and pulled
in.
Every time they come in, they come
loaded with the loot of a deluded public. Between the boom and the burst, the
inflation or depression, the price at which the victims buy and the price at
which they are squeezed out dry the riggers of the market draw to themselves
the savings of the trustful.
THE MONEY POWER.
This group of speculators (financiers)
properly designated and distinguished as “the “Money Power,” controls the
whole mechanism of exchange, and all undertakings in the field of industry are
subject to its will and machinations. It wields an unseen sceptre over thrones and populations, and bloody slaughter
is as profitable to its pockets as the most peaceful peculation.
No nation can be really free where this financial oligarchy is permitted to hold dominion, and no “democracy” can be aught but a name that does not shake it from its throne.
Lords of Lootery
“This
reckless and remorseless brutality comes from men who speak our language; who
were born under the same skies and nurtured in the principles of a common
faith. It comes from the cold, phlegmatic heart of avarice—avarice that seeks
to paralyse labor and increase the burden of the
nation’s debt—avarice that refuses to be satisfied without the suffocation and
strangulation of all the labor in the land.”
Senator James Mills, in the U. S. Senate.
If you get a grip of the pre-war
scheme of the American Money Thugs, you will comprehend the operations of
Mammon’s wheels in every land.
MONETISED SECURITIES.
In the American Republic the banks
can deposit bonds in the National Treasury and draw currency notes on the basis
of bonds deposited.
W. J. Bryan, in the U.S. House of
Representatives, June 5, 1894, described the system thus:—
“A bank invests 100,000
dol. in 2 per cent, bonds. It deposits the bonds in the Treasury and receives 90,000
dols. in bank notes. This is
a return of so much of the capital expended for the purchase of bonds, so that
the bank is only out 10,000 dol. On that sum the bank receives 2,000 dols. interest, less 1 per cent. tax on circulation. If a private citizen buys bond he can
only draw interest. If a bank holds the bonds it can not only draw interest
upon it, but draw 90 per cent, of its value in national notes.”
In 1900 the Yankee banking
corporations lobbied through Congress an amendment of the National Note Act. They
secured the abolition of the 1 per cent. tax, and got
an increase of notes from 90 to 100 per cent, of deposited bonds.
In 1902 the banking corporations
secured a further amendment of the National Note Act.
By this amendment the banks could
secure national guaranteed notes not only on a deposit of Federal bonds,
but upon deposits of municipal bonds of railway stocks, bonds of Steel, Beef, Standard
Oil, and other securities of specified corporations.
THE MONEY TRUST.
Between 1902 and 1907 the banking
corporations deposited such securities and drew notes to the extent of
250,000,000 dols.
Armed with these and other
resources, the men controlling the great trusts and the principal banks of
America organised a scheme of complete dominance over
the industrial and financial life of the American Nation. They waged a war of
extermination against every competitor.
Against this policy President
Roosevelt set his face. He prosecuted and secured against Standard Oil verdicts
that loaded the Trust with penalties to the extent of 29,000,000 dol.
At once the Standard Oil banks
(under Rockefeller), the Steel Trust banks (under Morgan) and the Beef Trust
banks (under Armour) entered into an offensive
alliance. This Triple Alliance dominated the financial world of America. It had
a majority on the Clearing House Association of all the big cities.
The New York Clearing House
Association commenced proceedings. It commanded every independent bank to come
to heel and take orders. Those who refused were expelled from the Clearing
House (October 20, 1907), on the ground that such banks were no longer worthy
of public confidence Such action destroyed confidence in the blackballed banks,
and caused a run. Charles Barney, of the Knickerbocker
Bank, and Howard Maxwell, of the Brooklyn, committed suicide; all others
capitulated.
THE SYSTEM.
Within three days (from October 20
to 23, 1907), every bank in the United States had been brought to heel, taught
obedience and mobilised for action. The
representatives of banks expelled on the 20th, having duly made submission,
were re-admitted to membership. Every bank received its orders, its ammunition
and the hour of action.
Next day (Oct. 24, 1907), the strike
of the Bank Trust against the nation commenced. Every bank, from the Atlantic
to the Pacific, refused to pay out gold; refused to pay anything but a paper
currency of its own creation—a currency with which every bank throughout the
United States had been previously stocked—the incontestible
proof of preparedness.
The paper notes of the American
Money Trust were designated “Clearing House Certificates.” They were of all
denominations down to two dollars. Every bank at the preconcerted
signal paid out in this currency. With it wages were paid and business
conducted throughout the United States.
THE ULTIMATUM.
On October 25 (1907) Pierpont Morgan
declared on behalf of the Banking Association of America that:—
“We will continue
to trade in a paper currency, and pay no more gold, until we get from President
Roosevelt the necessary guarantee against adverse legislation. The people can
take paper money or leave it—they will get nothing else. The mills, mines and
other industries controlled by ourselves or allied interests will slacken down
or close until we get effective guarantees against anti-trust prosecutions.”
This was the ultimatum
of the Money Trust to the subject nation.
STAND AND DELIVER.
The banks held the country by the
throat. If any depositor moved process, the great magnates could carry him from
court to court for years. If the Government enforced the law of cash
redemption, the Banking Trust threatened to close its doors. Only a
revolutionary, seizure, that Congress was not prepared to enforce, or the press
to endorse, could defeat the conspiracy of the Financial Thuggery.
PAPER CURRENCY.
Throughout the United States the
newspapers of the Trusts and bank officials set out to prove that paper money
issued by private bankers was as good as gold, or better. The President of the
Bank of California said:
“These ‘Clearing
House Notes’ are based on a deposit of the highest class ‘A’ security. Currency
that represents good security is good currency. The laboring man is working for
a living. These notes are available for him, if married, in the payment of
household bills, rent, etc.; and, if single, for such enjoyments as he may seek.
He gets value for his labor—what more can he ask? He can get no more with gold
money than he can with this paper.”
The banks refused to pay gold, but
they enforced payment in gold. To refuse to find it was to have bank facilities
withheld and be ruined. By this process every ounce of gold was bound to find
its way to the bank vaults and stop there. Mercantile houses and producers were
unable to meet their obligations. Immense quantities of goods were hurriedly
shipped to Europe in order to secure gold.
When the banks went on strike it was
not a period of falling trade or industrial depression.
“The Economist,” of December 21,
1907, said: “There never had been such prosperity in the history of America.”
The “Contemporary Review” (January,
1908), said: “It was a time of exceptional prosperity.”
Never were the gold reserves of the
banks so large as when they refused to pay out.
“The Economist” said: “There was a
criminal hoarding by the banks.”
Lord Welby,
of the British Treasury “Contemporary,” January, said: “The stock of gold in
the
In this last fact is the answer to
those who assert that a paper currency will drive gold out of a country. “The
Economist” (November 9, 1907) pointed out that, while the private banks in the
United States inflated their note issues in ten years by ₤67,000,000, the
stock of gold increased £175,000,000. The international balances had been
favorable to the United States, and gold flowed in to settle those balances,
irrespective of the internal currency.
The inflowing gold was cornered by
the Money Trust, and its emission to the general community was barred.
The inability of the mercantile
community to meet the gold claims of the Bank Trust, or to secure credit,
brought about widespread collapse. More and more mines, mills and factories
fell into the hands of the Trust at depreciated values. Hordes of men were out of
work. The United States Attorney-General denounced the conspirators as—
“Pirates, whose operations
are worse than those of the notorious Tweed gang-”
In these circumstances there went up
from all sides, even from the Anti-Trust journals, demands and appeals, urging
President Roosevelt to “come to terms.”
CONQUEROR MORGAN.
The London “Standard” (December 7,
1907), reported what followed. It said:—
“Mr. Pierpont Morgan
is in virtual control. He has made it too ‘strenuous’ even for Mr. Roosevelt. Mr.
Roosevelt sent an invitation to Mr. Morgan to come to White House and discuss
the situation. Mr. Morgan consented to go only when Mr. Roosevelt sent him a
personal letter promising a different attitude towards financial interests in the
future.”
The President capitulated, forwarded
his apology, and made the desired promises.
Morgan met Roosevelt on November 16,
1907.
The agreement was:—
1st. That
2nd. That
no effort be made to collect the Standard Oil lines.
3rd. That no further action be taken
against Trusts or Combines controlled by Morgan, Rockefeller and Armour.
4th. That
portion of the Sherman Anti-Trust Act be suspended.
5th. That
gold previously paid into the Federal Treasury for bonds be left on deposit in
the private banks.
THE TRUST MAGS.
The terms were accepted. The New York
“Herald,” in its issue of November 25, 1907, said:
“Roosevelt has received his lesson.
We shall hear no more of his attacks on the Trusts.”
The London “Daily News” (December 6)
said:—
“The Trust magnates hardly seem to
have moved a finger, yet they have made their power felt throughout the civilised world. They have made no sacrifice, but, on the
contrary, will emerge wealthier men than before. They have brought the most
powerful Government in the world to its knees; they have forced it to suspend
certain laws, and made it promise to interfere with them no more.”
In the Morgan-Roosevelt compact, Morgan
agreed, on behalf of the banks to withdraw Clearing House Notes and resume “full
and free payment of cash.”
[sentence
missing]
the banks there (United States) have
reverted to cash payments.” It expressed the hope that American financiers
were about to abandon their “marauding tactics.”
On February 3, 1908, the cables
announced that Roosevelt had issued against the Banking Trust “the most
impassioned and stirring document ever issued from the White House.” The Morganites had refused to keep their part of the agreement.
THE REAL RULERS.
To this Morgan replied, denying any
such promise. He said:—
“The banks will take their own time
to resume specie payments, and will continue to use their own notes so long as
it suits their convenience.”
His only promise, said Morgan, “was that
the banks would not tie up commercial houses with a demand for gold.”
In its issue of February 13, 1908,
the Melbourne “Argus” announced that the American banks were still “issuing
their own paper currency in defiance of the law.”
That same month Senator Aldrich, of
Rhode Island, introduced and carried through a Bill to legalise
the hitherto illegal operations of the banks.
In addition (May, 1908), under the
Emergency Currency Act, the Government was authorised
to issue to the banks Government-guaranteed notes to the extent of 500,000,000 dols., upon a deposit of public or private bonds, “trade
bills or other securities.”
So a capitalist Government, acting
on the “advice” of bankers, can, and does, issue currency based, not upon gold,
but upon bonds, bills and other securities.
A Labor Government worthy of the
name could do ditto for the Nation.
Mammon the Overlord
“The Money Power preys upon the Nation in times of peace, and conspires
against it in the hour of its calamity. Conscienceless and compassionless, it
enervates its votaries, while it impoverishes its victims. It can only be
overthrown by the awakened conscience of the Nation.”
W. J. Bryan, Madison Square Gardens, New York City, August 20, 1906.
THE REAL
RULER.
The Yankee financiers,
under Pierpont Morgan, have brought to their fullest bloom the germinations of
Medina and the Rothschilds. A long chain of banks and
insurances, the savings and premiums of the people, are their instruments.
THE MONEY
MISH.
During the six years,
1910 to 1916 the Yankee banking corporations, under the triple mastery of
Morgan, Armour and Rockefeller, organised
and perfected an additional scheme of robbery and domination. It replaced the
old Clearing House Certificate swindle, and rested securely on the legal sanction
of the speaking-tubes of the Trust in politics.
The preliminary to the
new move was the organisation of the Monetary
Commission, under the chairmanship of Senator Nelson Aldrich.
While this commission
was sitting, Woodrow Wilson, then (1911) prospective candidate for the Presidency,
chanced to say in New York: —
“The greatest monopoly
is the Money Monopoly. The financiers are more powerful than the nominal rulers.”
Next day the “New York
Times” asked Wilson what he meant by “Money “Monopoly.” The following morning
(June 17, 1911), the New York “World” came out and said: —
“The
day the ‘Times’ asked Governor Wilson what he meant by the ‘money monopoly,’
the newspapers announced that Mr. Morgan’s Bankers’ Trust Company had bought
from the Equitable Life Assurance society its holdings in the Mercantile Trust
Company, and that by this transfer the aggregate assets of the banks dominated
by J. P. Morgan and Co. exceeded 1,000,000,000 dollars. This 1,000,000,000
dollars is not Mr Morgan’s money, but it is in the
hands of the Morgan interests, which can say who can borrow it and who cannot
borrow it.
When Mr Morgan took over the Equitable from Thos. F. Ryan, he
paid more than 2,500,000 dollars for stock that can only earn 3514 dollars a
year; but what he really bought was control over the Equitable’s 400,000,000 dollars of assets and 80,000,000
dollars of surplus.”
This control of banks
and insurances by a few men constitutes the Money Trust. It is here in
Australia as in America.
Morgan testified before
the Pujo Committee that there was no such thing as a
Money Trust; that he did not control anything; that he had no wish to control
anything. Yet the committee reported that, by his control of banks, insurance
and other companies, he controlled not less that 25,000 million dollars, could
say where it should flow and from where it should be diverted.
PREPAREDNESS.
The Nelson Aldrich
Monetary Commission presented its report. It was based upon an investigation of
the banking and currency systems of all countries.
It epitomised
the most recent innovations in banking, and the most advanced policy in
currency.
It directed attention to
the statement of the Japanese Minister of Finance, that “in point of the perfectness of organisation the
National Bank of Belgium stands highest.” It directed attention to the special
discount system; to the fact that notes were issued, not upon gold, but
upon all classes of securities, and to the statement of the governor of the
National Bank of
Upon the information
contained in these reports, with additions born of their own experience and
interests, the Money Kings proceeded to reorganise
(in their own interests) the currency and banking system of the United States.
Maurice Patron, in his
report to the Commission on the Bank of France, had said:—
“It is
difficult to understand how, in certain countries, an undertaking of such
universal interest should be left to private enterprise.”
But the Money Kings were
determined that (he system should be in their hands, extending their security,
power and profit. Increased facilities to trading public were merely
incidental.
THE
START.
Everything being ready,
the new system was given a legal existence by the Federal Reserve Act of 1913.
The Act creates an overlordship of five Financial Magnates, with the Secretary
of the Treasury and the Comptroller of the Currency as ex officio members.
The banks of the U.S.
are grouped into 12 divisions.
In each division there is one great “Central
Bank.” All gold reserves must be kept in the Central.
In each “Central” there
is a “Federal Agent.”
Each “Central” through the “Federal
Agent” or supervisor, is an issuer of paper currency to the member banks. This
currency is guaranteed by the Nation.
The private banks are relieved of
all responsibility to redeem their obligations in gold.
Currency is not issued against gold.
It is issued upon securities of every description bonds and deeds, “drafts and
bills arising out of commercial transactions”—securities previously deposited
with the banks by the public as securities for loans.
The United States Treasury Report,
of July, 1915, says (page 58):— “Elasticity in note issues is provided by a new
form of currency based primarily upon the re-discount of commercial paper.”
This is the “Re Discount System,”
the system that necessitates a “Central” bank to work it; the system that in
varied forms exists throughout Europe; the system that the Monetary Commission
was instituted to popularise and localise
in America.
Paul Warburg told the Commission
that: —
“The European financial system is
constructed upon discounts as its foundation; the American system is
constructed upon bonds and stocks as its foundation.”
The American money kings seized the
European system, engrafted it on their own, got a combination of both, and the
advantage of both. The great “Central” is the reservoir which other banks can
tap for currency on securities deposited by the public.
The immense gold stocks now held
(1917) in America, have no more connection with the paper currency than wheat
or cotton stocks. Gold is the bankers’ dice in the international gamble—not an
internal currency.
R. H. Howe, in his book on banking
(1916), states:—
“The coins in
The Yankee Money Trusts Magnates have
developed a paper currency by capitalists for capitalists, buttressed by the
Capitalist State.
When war broke out in Europe, the
American Government brought into operation the Emergency Currency Act of 1908,
and on August 4, 1914, Congress passed through both Houses an amendment raising
the authorised Government Note Issue from 500 to 1,000
million dollars.
This was in addition to, and apart
from the note issues of the Centrals, just as the British Government’s note issue
of August, 1914, of ₤100,000,000 was apart from and in addition to the
issues of the Bank of England.
In both countries they were issues
to banks only.
In both countries the banks could
take all the bonds, deeds, liens, receipts, bills, and other securities lodged
by the public as cover for loans, and upon those pledges get legal tender
currency, with which to trade and make further loans.
But in neither country
were these facilities available to the average citizen—they were for
bankers and brokers only.
In the United States these National
legal tender notes were issued to the banks on the basis of 90 per cent,
on bonds 75 per cent on commercial bills, and 66 per cent on deeds.
Thus in the United States there is
the cheque currency of the individual bank,
redeemable in the “Reserve Note” of the “Central,” redeemable in its turn on
the legal tender note of the Government!
Thus a Government that functions in
the interests of the great banking corporations, is an
instrument of great monetary value to the capitalists who own and control that
Government.
That which capitalists can do in the
interests of capitalists, the democratic State can do in the interests of the
Nation.
The Mighty Swindle
“With
the first breath of national danger the fabric of financial fakery tottered to
its base. It would have tottered to ruin unimaginable had not the Chancellor of
the Exchequer backed the banks with the credit of the Nation.”
Oswald Stoll in “The People’s
Credit.”
“The
Great War will be long remembered for other things besides the destruction of life
and the reconstruction of the map of Europe. On the financial side the most
notable event is the universal abandonment of the gold standard, not openly
admitted, but described in the kind of language familiar from the bulletins of
defeated armies.”
“Quarterly Review,” April, 1915.
When you have read this you will
know how the Financial Patriots of England worked the War for Profit.
The moment war broke loose in Europe
the much-extolled “British System of Finance” fell to pieces. The bottom fell
out of the “Money Market.” The Stock Exchanges closed. The banks were unable
to meet their obligations.
The “Daily Chronicle,” of
The British Government came to the
rescue.
It called together the heads of the
great banks and representatives of the Stock Exchange.
It asked them to devise a scheme,
whereby they might be saved at the expense of the people.
This Finance Committee consisted of
Lord St. Aldwyne, Lord Revelstoke,
Sir John Bradbury, Sir Walter Cunliffe, Austen
Chamberlain, each one a chief of a bank tottering to ruin.
This committee instituted a process
of salvation based upon the guarantee of the British Nation.
The credit of the State, ever
powerful where gold is a failure, saved the situation.
The guarantee of the British Government
gave a security which privately controlled gold was incapable of giving.
STATE AID TO CAPITALISM.
The first step of the Government was
to issue to the private banks millions of £1 and 10/- notes, to enable
the private banks to meet obligations to depositors.
The banks were closed four days to
give the Government time to print and issue the notes essential to the
salvation of the banks.
When the banks reopened they paid
their obligations in notes manufactured and guaranteed by the British Nation.
The total authorised
issue was £100,000,000—afterwards increased. These notes had written across
their face, “legal tender for any amount.” These notes were not “Bank of
England” notes. They were issued from the Treasury. They did not carry any
promise of redemption in gold.
Lloyd George, speaking in the Queen’s
Hall, London, said: —
“Have you any of those little £1 notes?
“They are only scraps of paper.
“What are they made of?
“Rags!
“What are they worth?
“The whole credit of the British
Empire.”
With these notes the banks met their
obligations.
These notes took the place of gold,
and by the end of December the notes in the hands of the public amounted to
₤103, 000,000. (“Times History of the War,” page 264, vol. 7.)
The Government further arranged that
private banks might re-discount at the Bank of England all internal bills and
securities upon which they (the private banks) had advanced, and that all settlement,
whether between the Bank of England and the private banks, or the private banks
and their debtors, should be postponed until twelve months after the war.
“The Investors’ Review” (August 22, 1914)
reported that the country was operating on pure credit money with the mechanism
of exchange excellent condition.
In other words, the country was
working on a paper currency, guaranteed by all the resources of the British
Nation.
It was a proof of the correctness of
the statement made by Stoll in his book, “The People’s Credit,” that:–
“Banking credit is really national
credit, because in every crisis it is the Government that is compelled to
step in and provide notes and discount facilities to save the banks.”
THE GREAT CONSPIRACY
[sentence
missing]
and acquiescence of the British Government they
organized and perpetuated on the British race the most gigantic swindle of
modern times.
The “Clarion” of August 7, had given
warning, it said: –
“The democracy is uniformed, and
without guidance, at a time when the greatest and most bare-faced piece of
thimble-rigging is about to be perpetrated.”
The institutions controlled by the
Money Kings held hundreds of millions of bills for goods for goods delivered to
Continental houses, including Germany. These bills, as far as Germany was
concerned, could not be met because of the war, and could not be met in the
case of other Continental houses because the war had disastrously affected
them.
On August 13, 1914, the British
Government guaranteed all bankers, discount brokers and other holders of
worthless commercial paper against loss.
It did more. It monetized those
bills. It issued to the banks certificates to the extent of those bills. The
certificates authorized the directors of the Bank of England to discount the
useless bills and issue notes thereon.
The Bank of England, guaranteed and
secured against loss by the Government, “did not,” so says the “Investor’s Review,” “even draw the line against the
acceptance of German firms.” The Germans might never be able to pay,
“but,” so says the same authority, “the Government acted to secure the British
holder against loss.”
The Bank of England directors
consisted of the Governor, Sir Walter Cuncliffe, and
24 “financiers,” who were directors of assisted institutions.
THE ROBBER’S
INDEMNITY
By the 2nd September,
1914, the Bank of England had discounted waterlogged bills to the extent of ₤95,000,000.
The London “Economist” (August 29),
defending the banks against a charge of harsh treatment of the public, used
these words:–
“IT IS TRUE THE GOVERNMENT HAS
GUARANTEED THE BANKS AGAINST LOSS ON BILLS, WHICH LOSS MAY WORK OUT AT ANYTHING
FROM ₤50,000,000 TO ₤150,000,000, WHICH WILL, OF COURSE, BE ADDED
TO THE NATIONAL DEBT.”
“Of course” – “added to the National
Debt” – “of course.”
The “Economist,” in its issue of
September 12, after saying that under “the 13th August arrangements”
all bank losses will be added to the National Debt, said :–
The loss must be
enormous because the Bill of Exchange Act declares that when a bill is payable
after sight is negotiated, the holder must present it within a reasonable time,
otherwise the drawer and endorser are discharged from
obligations. The banks are the holders. The war renders it impossible for them
to present ‘in reasonable time.’”
Thus, had not the Government come in
to load the loss upon the British Nation, the Money Kings would have had to
carry their own baby.
No Government on earth—not even a
Labor Government—will guarantee the worker against loss from unemployment. Not
even when that unemployment is the result of war, or drought, or pestilence. But
every Government no matter what its name (that functions in the interests of
Capitalism) will take active steps to save the Money Bags from loss, and this
felonious practice it will justify in the name of “public interest” and “popular
well being.”
But from where, it may be asked, did
the British Government get the hundred odd millions to compensate the Lords of
the Money Market for the losses on useless trade bills?
It could not get it from men and
institutions whose credit the war had destroyed. The only credit and the only
currency in Great Britain was that created, secured, and guaranteed by the
nation.
SOMETHING FOR NOTHING.
The Government issued to the private
banks and discount houses of England legal tender currency notes in place of
unredeemable trade bills. With these notes the bankers met their obligations
and renewed their trade.
When the war is over the Government
will call in the non-interest-bearing notes, and issue to the Money Kings
interest-bearing bonds. This they will get for nothing in return. This
will be designated “compensation for losses.” The compensation for the losses
sustained by the men who fought the battle of their country will be—Nothing. The soldiers returning; from the war will be taxed
to pay interest to the robbers who stayed at home, and drew “compensation for
losses” while the nation was struggling for its life.
Thus British capitalists,
manipulating a Government that functioned in the interests of capitalists,
loaded upon the British people for nothing in return—a load of debt almost
equal to the indemnity which the Germans imposed upon the French nation at the
end of the Franco-Prussian War.
And these millions of
loot were only part of the plunder.
Gorging the
Vultures
“These
are the men who, without virtue, labor or hazard, are growing rich as their
country is impoverished; they rejoice when obstinacy or ambition adds another
year to the slaughter and devastation; and laugh from their desks while they
are adding figure to figure and cipher to cipher.”
Frank Hirst. Editor of the “Economist,”
in his book, “The Political Economy of War.”
The gigantic scoop of August 13 was
not sufficient. That scheme gave the banks compensation on all “pre-war” debts.
By what are known as the “4th September arrangements,” a new and larger scheme
of plunder was devised. Stripped of all verbiage, gloss, glamor
and mystification, it amounted to this:—
All had debts contracted by banks
between the 4th August, 1914, and a year after the end of the war, will be made
good by the British Government, and added to the National Debt.
This dose was hard to swallow. The “Economist,”
in its issue of September 12, said:
“There is much to
be said for compensating banks, discount and accepting houses for their losses,
but in equity one person who has been ruined through no fault of his own has
just as much right to be relieved at the taxpayer’s expense as another person.”
The result, from the standpoint of
the great financial establishments, was magnificent. The gold basis upon which
they traded and drew profits had failed in the hour of need, but no matter. The
State had come to their rescue. The State had taken over their losses. It had given
them a State-guaranteed currency. It borrowed back that currency with interest.
After the war, it would add all bank losses to the National Debt, give bonds as
“compensation,” and pay interest thereon.
PILED PLUNDER.
When the 4th September
plunder scheme became known, Robert Blatchford’s
paper, “The Clarion,” (Sept. 11) came out with this statement:—
“Other auxiliaries to
the Gold trust will shortly come bobbing up and asking for the National Credit to
help them on their felonious way, and these credits and guarantees will
continue to be freely bestowed. That notorious highwayman, Dick Turpin, and the
Heathen Chinee, were not in it with these thieves of
to-day. Why, the game of ‘Under which thimble the pea’ becomes a standard of
high and honorable conduct compared with the chicanery going on under the very
eyes of the fleeced ones. The people of England have been robbed, are being
robbed, and are about to be further robbed on a larger scale than any recorded
in history.”
The “Clarion” spoke true. Not the
robber scheme of August 13 nor that of September 4 could satisfy the felonious
hunger of those who stayed at home to rob while others went abroad to die. Not
enough that they had loaded the living with debt and fashioned new chains of
servitude for the unborn. The tigers had tasted blood. All the retainers and
hangers-on of the Kingdom of Finance must come into the feast.
In the same issue of the “Clarion” Richard
Temple said:—
“Having backed the shareholders
in the banks, the Government is preparing, in obedience to the financial Press,
to back the members of the Stock Exchange.”
And it was so.
THE STOCK JOBBERS.
The “Economist” of
Under this new scheme the Stock
Exchange operators (who gave such a jubilant reception to William Morris
Hughes) could deposit their waterlogged securities in the Bank of England, and
draw credit to the extent of 60 per cent, of the value of such securities as at
the time of the closing of the Stock Exchange.
The credit thus secured was actually
more than the money they could get if compelled to sell.
Against these credits they could
draw by cheque. If till money was required, they
could draw a portion of the ₤100,000,000 of notes issued by the British
Government.
With these “credits” and Government
notes, obtained by a deposit of their unsaleable
securities, they were able, to resume business and patriotically lend to the
Government at interest the currency that the Government had created.
THE GREATEST ROBBERY
IN HISTORY
The editor of the London
“Investors’ Review” (September 19) stated
“Credit is being created against unexisting assets in amounts of unprecedented magnitude at
a time when the ordinary uses for it are unusually restricted.”
“These things are done,” said the “Investors’
Review,” “to support the money market.” It added:—
“These credits are called into being
either in the form of notes or in the shape of advances by the Bank of England
under Government guarantee.”
Thus the British Government advanced
credit to men whose credit was dead upon securities that were valueless. Then, because the ordinary channels for the investment of money
were “unusually restricted,” the Government for the found a field of profit for
the profit-mongers by borrowing “the credit called into existence by the
Government” from the very men to whom the Government had given credit upon “unexisting assets.”
IN ALL THE WORLD THERE NEVER WAS
SUCH A ROBBERY—THE ROBBERY OF A NATION STRUGGLING FOR ITS LIFE.
The nation needed food, clothing,
guns and ammunition to carry on the war.
If a legal tender currency note was
good when issued to bankers for compensation or to stockjobbers as a
circulating representative of unsaleable securities,
it was equally good if issued to the industrial community as a circulating
representative of the nation’s obligation to those who supplied the requisites
of war.
But the British Government that issued
legal tender notes for the salvation, use and profit of the private banks
would not issue legal tender notes for the salvation, use and profit of the
nation.
The Government issued
interest-bearing bonds and debentures, and called upon the financiers to
subscribe to the war loans.
VAMPIRE PATRIOTS.
But the “financiers” had no credit
outside of that guaranteed by the Government. They had no currency outside of
that furnished by the Government. How could they subscribe to the loans?
They did it by lending to the
British Government the legal tender currency notes that the Government had
previously given to the banks and financiers as compensation for commercially
rotten bills and waterlogged securities.
As a result, there went into the
vaults of the private banks debentures and bonds armed with the privilege to
suck for ever millions per annum from a people struggling on the battlefields
of Europe to maintain the national life. And while they were struggling, the
bonds of slavery for the survivors were carefully stored for suckage in the vaults of the vampires.
There might have been some
justification for saving the banks and great financiers from ruin, on the
ground that their ruin would have involved all in a common disaster.
But what justification was there in
furnishing insolvent institutions with a currency to enable them to loan that
currency to the Government that gave it, and to make a profit from the war? It
was pitiless robbery.
On December 22, 1915, Lloyd George,
in reply to a question in the House of Commons, admitted that the
State aid to financial institutions reached up to nigh £200,000,000.
Nobody ever heard of a Government
that guaranteed the workers against loss. But the Kings of Finance must not
only be saved, their power of robbery must be extended, their riches augmented,
and the toiling multitude ground in the mill of financial servitude.
The New Bondage
This
war will make bondsmen of us all, and the economic rule of the bondlords—the greatest oligarchy the world has witnessed—will
become absolute.
Henry Slobodin,
in the “International Socialist.”
The
most important lesson of modern warfare is the fact that a knot of men,
financiers, politicians and profiteers, can capture the mind of a nation,
arouse its passion, and in the name of patriotism impose a policy of slavery.
John A. Hobson, “Evolution of
Capitalism.”
NATIONAL CREDIT.
The London “Observer” of September
26, 1914, said:–
“The Government is
proved to be the ultimate supporting influence of credit.”
In its issue of
Yet that Government paid interest
for a credit that was not only inferior to its own, but incapable of existence
without the vitalising power of national sustenance.
EGYPTIAN BONDS.
On October 7, 1914, the London press
announced that, as it was not possible for the banks to follow usual practice
and ship gold to Egypt to finance the cotton crop, the British Government had
come to the rescue. It had authorised the Egyptian
Government to accept from the banks deposits of Egyptian bonds, and issue to
them a note currency based on bonds. With this currency the cotton growers were
paid.
Yet this, that a Capitalist
Government could do for capitalist banks, this issue of notes on the security
of national bonds, a Labor Government and Labor party in Australia (in 1915)
rejected as absurd, as impossible of application for the benefit of a nation.
PAPER MONEY FOR LOANS.
The “Economist,” of October 10,
1914, said:—
“Funds wherewith to subscribe to the
War Loan can be obtained by pledging” investments for paper money”
This privilege was for the great
financial houses only. The Bank of England is a bank for banks, and not for the
general public. The average citizen could not lake his securities’ to the Bank
of England, draw notes, and with these notes subscribe to a new loan.
The “Investors’ Review,” of October
24, 1914, said:—
“Out of this great mass of credit,
created under Government guarantee, the means comes with which to subscribe to
national loans.”
The “Round Table,” of November,
1914, said:—
“The British Government has given
the private banks most generous aid. It has liquidated their bills and
securities by giving them credit on the Bank of England. Upon these credits
they tan draw, and with these credits contribute to the War Loan.”
The “Round Table” went on to say:—
“One can observe, therefore, the
curious process by which the Government lends its credit.”
And it might have added:—
“Yes! and
the curious process by which it borrows it back, with a perpetual blister of
interest upon the struggling masses.”
MORE PLUNDER.
But another plunder scheme was in
process of hatchment. Through all the early months of the war the great banks
and loan agencies were putting the screw on the public, refusing banking
facilities to men with undoubted securities, and compelling the general
public, in urgent need of currency, to sell their holdings on a falling market.
Thus, amongst others, vast millions
of British Consols, in which the thrifty had invested
their savings, fell into the hands of the market riggers.
The schemers knew that, because of
the thousands of millions of inevitable war debt, low priced Consols would not be redeemed in their time and generation.
They did not buy to hold for redemption. They bought to make Consols earn from the bleeding nation a higher rate of
interest.
FIRST WAR LOAN (1914).
The Financial Houses, having inside
knowledge of the conditions under which the £350,000,000 loan was to be
floated, got their corner on 2½ per cent. Consols.
They were forced below £60. At that price they were bought by the riggers. Then
they jumped to £65. At that price they were converted into 3½ per cent, war
loan, worth £66/13/4, with the right of conversion into higher-priced loans at
a later date. The clear profit on this deal was measured in millions.
A writer in the “Nation” said:—
“For a country that had no hope of
redeeming its loans for long years, it was a barefaced confidence trick, and
the Government was a fraudulent trustee of the public interests.”
SECOND WAR LOAN (1915).
Then came
the big float of ₤600,000,000 patriotic loan, at 4½ per cent. The
first loan performance was repeated.
There was the same withholding of
bank credits to the public, the same organised
depreciation of Consols, the same organised
purchase, the same inflation after possession, the same conversion after
possession into high-priced securities. The process of public robbery was repeated
on even a more gigantic scale than on the first loan.
The general public, who had not
already been gouged out of their Consols, could not
convert unless they possessed means to subscribe to the loan floats. They could
not pledge Consols for credit at the Bank of England.
This could only be got after they had sold to the spielers
in the ring. Bank of England facilities were for bankers and brokers only—not
for the general public.
The “Fortnightly Review,” August,
1915, said:—
“Advantage has been taken of the
opportunity for nimble stock exchange dealing by a class of men who do not think
it unpatriotic to utilise a great patriotic occasion
for their own sordid ends.”
Dealing with this second loan float,
the “Economist” (June 26, 1915) pointed out that the patriotic robbers had
added another 20 per cent, to the interest rate on Consols,
and that “holders of the 3½ per cent, loan will now receive interest at the
rate of £5/4/9 per cent.”
And for this crowd of harpies men
were rotting on battlefields.
In this case the previous loan bonds
were deposited in the Bank of England, and upon these deposited securities
credit was given to the extent of 95 per cent, of par value.
It was a paper cheque
currency based on bonds, and with this cheque
currency the subscriptions were made to the loan.
The “Financial News” reported that:—
“The Bank of England lent 95 per
cent, of face value against deposit of bonds.”
The “Quarterly Review” said:—
“The war loan bonds are made the
basis of the most easy borrowing from the Bank of
England.”
With currency based on previous war
bonds the financiers contributed to the 600 million loan.
Oswald Stoll, in his book, “The
People’s Credit,” said:—
“Three banks and two insurance
companies answered for ₤100,000,000. They were able to invest such an
amount because the Government had backed them by the credit of the whole
people. Saved from bankruptcy, they were permitted to place a tax of millions
per annum upon the nation that had saved them.”
“The ‘Times’ History of the War”
(page 251, vol. 7), says that the joint stock banks (saved from ruin
a few months previously by the paper currency of the nation) subscribed over ₤200,000,000
to this June loan.
And upon this currency, issued by
the nation, they draw interest in perpetuity.
And, as the war went on and the rate
of interest rose, so were all previous loans raised to the higher price, as a
premium and a bonus to the Loan Floating Profiteers.
FINANC1NG 1916.
After the exhaustion of the proceeds
of the second loan, the war was financed by the banking houses to the extent of
nearly 1000 millions, on short dated loans—Treasury Bills and Exchequer Bonds.
For these the Government paid interest up to six per cent.
The “English Review” (March, 1917),
in an article entitled, “Lesson of the War Loan,” said:—
“Mr. McKenna was merely a puppet of
the Bankers. He did whatever he was told.”
THIRD WAR LOAN (1917).
Then came
the “Equality of Sacrifice” Government, under Lloyd George.
From this “Equality of Sacrifice”
Government came the “Great Victory Loan” of 1917—₤1,000,000,000.
Under this all previous financial
swindles were outclassed and eclipsed. All previous 2½, 3½, 4½
per cent. loans were converted into 5 per
cents.
The holders were under no obligation
to subscribe to the new loan. They simply gave notice of their intention to
convert at 5 per cent.
For every £100 of second loan they
got £105/5/3on the third loan, so the actual interest was 5¼ per cent.
Conversion (apart from new money)
covered the first and second loans, and reached close up, to 1000 millions.
“Stead’s Review” said: “That means
the Government will have to pay stockholders £10,000,000 more a year additional
blood money—upon old loans.”
BACK TO SLAVERY.
Thus the schemes of the plunderers
grew. Every day some new device. Take useless German bills to the Bank of
England, get credit, draw notes, invest the notes in British bonds, deposit the
bonds in the Bank of England, draw 95 per cent currency, make this the basis
upon which to issue fresh supplies of credit, and grant additional loans to the
Government. Transfer loans at 2½, 3½, 4½, 5½, into 6 and 7 per cent, as the war
goes on. Get richer and richer. Pile up the burden of the people’s bondage.
That’s High Finance.
Never had the Lords of High Finance
gathered such a harvest. Their loot surpassed in its immensity the greatest
scheme ever evolved from the cutest group of Yankee grafters. Never in the
wildest dreams of avarice did they imagine that they could get a British
Government to function so heartily, extensively and exclusively in their interests.
With them, as with the German Junkers, the toast was “To the Day,” and their day,
the day of speculative opportunity, was while the nation bled on battlefields.
The Dawning Slavery
“A tremendously powerful financial oligarchy is developing in the
shadow of the war, the like of which has never been known in the world before—possessing more wealth, more power, more control over
the destinies of the human race than any class or caste ever possessed. Beside
this oligarchy, the old Roman Senate and the Venetian Council of Ten fade into
insignificance. After the war the attitude of this oligarchy towards the
workers will be ruthless and terrible.”
T. Quelch,
in “London Justice,”
The great financiers are
running every Government—irrespective of party
labels. In every country they devise “ways and means”; they “advise,” and
Governments are their executors. In every land, under every party, the shackles
of the most degrading slavery are being rapidly forged. In every land the leechery of the bondholders becomes an increasing drain on
the vitality of the people. “What use,” said Chaumette,
“is a constitution to a nation of skeletons?” And what, use is democratic
power, when its only result is the elevation of men who complacently walk in
the footsteps of their predecessors, aping the manners, using the language, and
pursuing the methods of the men they have derided, denounced, supplanted, and
slavishly imitated? Thus we are faced with the fact that the ruling political
party in every land is a mere instrument of the Money Bag, devising for Money
Bag interests a national currency to be lent back at usury to the nation that
created and sustained it. Such are the Morals of Robbery and the ethics of the
political jugglers.
Great Britain is now
(1917) spending ₤3,000,000,000 per annum on the war. Yet the more the
banks lend the stronger grow their resources. They can lend ten, fifty, a
hundred times the amount of gold in their vaults, and yet the gold remains—the only limit on “loans” is the capacity of the
people to carry the load of interest.
The currency created by
the nation for the salvation of the banks is loaned back to the nation at
perpetual and ever duplicated interest.
The “Round Table,” in
its article on “How Wars Are Financed” (June, 1915), said:—
“There
must be sufficient time between the instalments of loans
to allow the proceeds of the first to be expended by the Government, to pass into
the hands of private persons and to filter back to the banks before the next instalment is called. If this condition be fulfilled, the nation go on fighting for ever, as far as finance is
concerned. In other words, if these conditions be fulfilled, the banks can go
on lending for ever.”
Thus currency goes out
in wages to soldiers and makers of requisites of war passing along the channels
of trade back to the banks for the next instalment.
Thus the circle is complete. To the onlookers, there is a never-ending
procession of cash. It is financial legerdemain. By it nations are deluded,
defrauded and enslaved. Thus thousands of millions are loaned, yet as much
remains in the vaults of the great banks as before the first penny was floated.
With every new war loan the “rate of interest,” the rate of blackmail, upon the
struggling nationalities, is increased.
Thus in 1917 all
previous 2½, 3½, 4½ Per cent, blood loans were convertible into 5 per cents, to
all subscribers to the “Great Victory” Loan Float—ever rising patriotism of the
Parasites.
AFTER THE WAR.
The war over, and the
people under the burden of millions of interest, profits flow once more into
the channels of industry at the higher rates of interest created by the war.
Out of the war will come
for ever annual dividends in the shape of interest upon the money invested in blood. For this the people must toil.
Out of the war will
emerge two classes—Bondholders and slaves to the Bondholders.
Lord Inchcape,
President of the National Provincial Bank of Great Britain and London director
of the Australian Sugar Shipping and Banking Combine, known as the Burns, Philp Company, said: —
“The
heavy taxation in which
England must recover herself
in the markets appropriated by neutral nations, by nations upon whose
industries sit no war burden. Whatever goes to the bondholders,
must come out of the flesh and blood of the workpeople. So
“The standard of life
must be reduced,”
The arms of Britain,
France and Russia may be as triumphant as those of Rome in the days
of its greatest glory—yet the workmen of all the combatant nations will emerge
from the war steeped in such awful poverty, such abject slaves of Mammon, that
they will wish they were dead.
All who come out of the
war alive must be bled dry that interest mongering vampires within the nation
may extract from the products of toil hundreds of millions per annum.
Lloyd George, speaking
in the House of Commons (May 12, 1915) said: —
“Distress, Misery, and
Wretchedness always follow a great war.”
The English financial journal,
“The Economist,” commenting on the Lloyd George speech, said:—
“The standard of life
must be reduced.”
In Australia interest
and other charges, arising out of the war will increase the burden of taxation
fourfold.
Productive and
distributive costs will be augmented, prices will rise to the level of the
increased costs, purchasing power will be
correspondingly diminished. The returned soldiery, thrown suddenly upon a
depressed and dislocated labor market, will engender amongst the wage-earners
an agonising struggle for existence.
“Distress, misery, and
wretchedness always follow a great war.”
Awful is the price the
workers must pay, so that Shylock may get his bloody “shentage.”
He will draw blood from sweating brows and hungry mothers all the days that God
gives them life. This war weakens the workers and strengthens the Money Bags.
This war means misery for the toiler, and “much monish” for the bondholder.
This war makes the
living worker a slave, and fills the treasury of Shylock to overflowing.
Workingmen! You shall
eat less—have poorer food—shabbier clothes—scantier furniture—fewer
pleasures—and know more hardships than ever you knew in all your days and
generation.
You want to know “Why?”
Is it not plain? If
every year Shylock is to draw hundreds of millions more in interest from his
investments on wasted lives and bloody slaughter, you who remain alive must
slave for it and pay for it? All your days shall be “made bitter with hard
bondage.” That is your future, workingmen. That is what they mean when they say
“the standard of life must be reduced.”
The workers come back
from the war doomed to toil and pay annual tribute, not to a foreign conqueror,
but to a small exclusive moneyed clique within the nation—the Kings of the
Kingdom of Shylock.
These are the “conquerors”—these
“Lords of Finance.” Beneath their yoke must men of all the nations tread.
“The hapless producer of
wealth goes forth into a night illuminated by no star—he travels in a desert
where the ever retreating mirage makes his disappointment a thousandfold
more keen.
The Profiteers’ Programme
“The banking system as it now stands is a disgrace to civilised
communities. It places in the hands of a small committee, the Bankers’
Association, a power greater than that of Government—without its responsibility to the country.”
Gilmour Brown, Victorian State Commission on Banking, 1895.
TORYISM.
In 1893, during the
Australian banks’ smash, the Governments of the various States rushed eagerly
to the assistance of the afflicted corporations.
In
In Victoria the
Government guaranteed the private note issues.
The “Argus” urged the
Government to go further. It said (May 16, 1893) that the Government should
issue notes upon the security, of deposit receipts. In its issue of June 9 it
stated that banks should be allowed Government notes to meet liabilities. It
buttressed its arguments with the statement that the Bank of England issued ₤16,000,000
in notes outside any gold basis.
When the Federal Labor
party came into power in 1910, the Government, under Mr. Fisher, introduced
the Australian Notes Bill, This was an application to
all
But the adoption of the
Queensland Tory expedient of ‘93—the expedient whereby
legal tender currency, is given to private banks for the temporary use of gold
that flows through the channels of trade back to the banks—that was no part of
the Labor programme. It could not be, it cannot
be, else between Tory policy and Labor policy there is no difference.
The only justification
was that of emergency—the emergency existed
The Labor Party of 1910 was confronted with an empty Treasury and it half a
million deficit. It needed to raise money quickly. Instead of interest it paid
the price to the banks in a Government guaranteed note, legal tender for all
their obligations.
LABORISM.
The emergency measure
was good, provided it was a measure to give the Labor party time to put its
declared banking and currency principles into operation.
But those principles
were put in the dustbin.
The note issue scheme,
as devised by the Queensland Tories in ‘93 was put into force as the accepted permanent
policy of the Australian Labor Party.
I said (June 23, 1910) :—
“The
issue of notes by the National Government to the Associated Banks of Australia
is neither a step forward nor a decent substitute for the sixth item of the programme of our party; it is a side-step and a subterfuge.
It will not diminish the power of monopoly, but strengthen it. It will put
behind the private banks a credit they do not now possess. It will rid them of
their obligation of note redemption, and place it upon the Government. It will
make the notes legal tender for the Associated Banks, but not for the
National Government—the Government must redeem in gold. It is a device
acceptable to the Money Power, but for Democracy it is a deception.”
For that statement I was
denounced as a “disgruntled member of the party,” and was told that “Labor
outside is confident that the Government will fearlessly do its duty if their
supporters inside will permit them.”
The Labor movement let
its principles go by the board, and to-day is paying the penalty.
The clearly understood
basic principles of the Labor movement are those of public ownership.
Those principles applied
to banking, imply a system of public ownership superseding all private traffic
in the instruments of exchange.
The programme
distinctly declares that the Commonwealth Bank, amongst other functions, shall
exercise the functions of issue and reserve.
Without those powers it
is an emasculated institution. It is not the reservoir of the
national gold supplies. It is not the tap from which flows legal
currency available to all upon conditions common to all. It is not the Bank of
the Nation, endowed with supreme powers. It possesses no more power than any
ordinary trading bank.
It is a mere addition to
the list of banks enrolled beneath the peculent banner
of the Associated Banks. It is as much a part of the Capitalist System of
Exchange as any private institution in the land.
STATE CAPITALISM.
I stated in 1910, and I
re-state the fact now, that the banking corporations in every country are
favorable to a national note issue. In every country where they exercise influence
they get the Government to issue notes, not upon gold, but upon bonds, bills
and other securities.
The banks thus shift the
onus of redemption from themselves to the Government, secure for themselves a
legal tender currency, and the mass of gold previously non-productive in their vaults
is made available for export and profit. For a gold-producing country
exportation is always profitable.
The transformation in the
methods and mechanism of exchange, like the transformation in the methods and
mechanism of production, constitutes an economic revolution. The
development of the cheque system has made the old “non-legal”
lender notes of the individual banks obsolete. They are no longer a speculative
utility.
The banking world seeks
a new base, and it gets it in Government guaranteed notes—instruments of
redemption for all their obligations.
Under this new
system—seen in Japan, Germany, France, and America—gold ceases for internal
currency. It is held for international traffic only. This economic progression
should be a Nation’s Benefit, not a Burglar’s Kit.
In every country where
financial capitalism wields political power, and where its dynastic dominion is
apparently assured, it has established for this end a “Central” Bank,
designated in many countries a “National” Bank, operated, in some cases, by the
Government; functioning, in every case as an instrument of State Aid to private
banks; re-discounting the bills of private banks for their gain and their
salvation.
BANKING COMMISSION.
In 1895 we had the
Victorian State Commission on Banking. There was a Bankers’ Conference to
consider proposals to be put before the Commission. There were preliminary
suggestions, but the eighth clause stated that if notes issued by the
Government to the banks under the preliminaries were not sufficient, then the
banks were to get notes upon a deposit of 20 per cent, gold and 80 per cent.
Government securities. Their ninth clause stated that, when gold and Government
securities were exhausted, the Government should be empowered to issue to the
banks Government guaranteed legal tender notes upon the security of ordinary
trade bills.
Mr. Gyles
Turner, on behalf of the Bankers’ Conference, told the Commission that:—
“Paper money issued by
the community on good security is as sound as the Bank of England.”
Mr. Turner did not mean
that the Government should issue currency to every citizen who had good
security. He meant issued to the banks—the banks would do the lending.
Amongst those who
appeared before the Commission was Mr. Gilmour Brown. He had been a bank
manager for 22½ years Apart from the statement that appears as a text to this
article, he told the Commission that:—
“A small irresponsible
body reigns over the whole community, pays its own debts how and when it likes,
while it makes all its debtors’ obligations payable at call.
“They (the Bankers’
Association) levy direct taxes on the enterprise, industry and production of
the community greater by far than that levied by the Government. They control
our reserves, our rate of interest, our credit, and possess a more absolute
jurisdiction over out livelihood, our savings, our
monetary future, than the Government.”
Hon. N. Levi: “It is a
trades union.”
Gilmour Brown: “It is
a currency monopoly—a corner in credit.” Gilmour Brown, amongst other things,
told the Commission that the Bankers’ Association was a close corporation
bound together by the cohesive power of plunder.
Things have changed
since then. Later on we had it on the authority of Labor Treasurers that the
banking corporations were patriotic institutions deserving the undying thanks
of the community. These glowing testimonials were got without influence,
solicitation or reward.
RUSSELL FRENCH.
Ten years after the
Commission of 1895 Russell French, general manager of the Bank of New South Wales,
put forward in the “Insurance and banking Record” proposals for a Federal Bank
of Issue (April, 1905).
This “Central” was to issue
legal tender notes to other banks.
There was to be no
deposited security. Without security the banks were to get notes equivalent to
40 per cent, of their capital
If a bank failed, the
Government was to have first lien on the assets.
If a bank wanted notes in
excess of 40 per cent., then, and then only, was security to be deposited.
These securities were to
be such as the Commissioners might approve—bonds, bills, deeds, etc.
Not an ounce of gold was
to be supplied by the banks to the issuing institution. Banks were to pay out
notes—estimated profits 3½ per cent. Of these profits the banks were to
allocate 2 per cent to meet expenses of the Federal bank of Issue.
For these privileges the
banks would consent to the Federal Bank issuing to the Government a volume of
notes equal to that drawn by the private corporations, but the Government was
to provide a gold cover of 40 per cent.
Against the total mass
of issues to banks and Government there was to be a gold base of 20 per cent. If
the Government did not avail itself of the privilege to draw notes, then
against the notes issued to the private banks there would be not one ounce
of gold.
PRIVILEGED MONOPOLY.
Thus, with the bankers
in Australia, as with those in America, England and elsewhere, gold is a non-essential,
and legal tender notes of the nation are excellent and desirable, so long as
issued under terms and conditions that treat the banking corporations as a
privileged class. Even a National Bank of Issue is a favored institute of the
corporations, provided it be made a fortress for the defence of the great monopolies.
Once again we see that
the value of an institution is to be measured, not by its name, but by getting
to see in whose interest it functions. State Aid to Capitalism is too often
imposed upon us in the name of Labor and the Common Good.
The Australian
Money Trust
“Control of banks, trust companies and insurances by a small group of
Financiers means their ability to lend a large part of those funds to
industries in which they are interested. They appropriate an ever-increasing
proportion of the products of industry. They dominate the economic situation,
and become more powerful than the nominal rulers.”
Louis Brandeir, “The People’s Money.”
Australia is a country in bondage, nor merely to the
foreign bondholder, but to a small local group financially powerful, and every
day becoming richer and richer and more powerful.
These men control the
great industries. They are behind every pool, scheme, ring, compact and
combine. They control the banking system of the continent, and all the
depository agencies of the people.
They control the
insurances and investments of the people.
They control the market
upon which are bought and sold the securities in which a large part of savings
banks’ deposits are invested.
The savings banks are
collecting agencies for the peculative “Money Power.”
All liquid savings of
the people flow in rivulets to the reservoirs of the private banks.
The States of Victoria,
South Australia, and Tasmania constitute an economic unity. The economic centre
is Melbourne.
The Metal Gang constitute the Economic Junta ruling these three States. Their
names are:—W. L. Baillieu, H. C. Darling, Harvey
Patterson, F. C. Hughes, James Harvey, M. C. E. Muecke,
Ed, Miller, Frank Snow, Kelso King, R. G. Casey, W. M. Jamieson, Edward Fanning,
J. L. Wharton, Bowes Kelly, H. H. Schlapp (of Knox, Schlapp and Co.), and D. E. McBryde.
These men control the
lead, tin, silver and copper output of the mines at Broken Hill, Mount Lyell, Cobar, Cloncurry,
Chillagoe, Moonta Wallaroo and Mount Morgan; control Tasmanian copper,
Pioneer tin and all smelting and refinery works in connection with the metallic
products of this continent.
These men, either
directly or through their associates and business dependents control every bank
that has its headquarters in Melbourne, and nine tenths of the Life, Fire, Loan
and Trustee agencies of the three Southern states. They dominate, in
conjunction with the Sydney section, every loan deposited in Australia, and every
institution that operates a loan.
These men, through their
interlocking system of directorates, are the Brewery Combine, Timber Combine, Dunlops, Amalgamated Zinc, Dalgety’s,
Goldsbrough Mort’s, Emu Rails, Electrolytic Smelting,
Elder Shenton, Elder’s Metal and scores of others.
The control by this
group over the banking, insurance and mercantile loan agencies of the Southern
States is every day drawing nearer to unlimited and unrestricted monarchy.
This
group, in conjunction with the
They control savings,
insurances, investments and industrial capital in the States of Victoria, South
Australia and Tasmania to the extent of some ₤200,000,000.
They are the economic
masters of those three States.
The States of New South
Wales and Queensland constitute an economic unity.
The economic centre is
Sydney.
Sugar and Gas
Monopolists constitute the Economic Junta ruling those two States.
Their names are : James
Burns, Robert Philp, Adam and James Forsyth, J. T.
Walker, J. R. Fairfax of the Burns, Philp
Combination; Levy, Cohen, Moses and Myles, of the Sydney Gaslight Monopoly; W.
C. Watt, Knox, Kater, Mackellar, Binnie,
Buckland, Cowley, Black and Onslow Thompson of the Sugar Squeeze.
These men control the
250 branches of the Bank of New South Wales, the 200 branches pf the Commercial
Banking Company of Sydney, the A.B.C. Bank, the Bank of North Queensland, the
A.M.P., and nine-tenths of the Life, Fire, Trustees and Loan Agencies that
operate in the two States of New South Wales and Queensland.
These men, by their
control of a long chain of banks, insurance and mercantile loan agencies, are
masters of the whole economic life of the people. They control savings,
insurances, investments and industrial capital of over ₤200,000,000 in
those two States,
The Sugar and Gas Gang
of the two Northern States, and the Metal gang in Melbourne, stand in the same
relation to the democracy of Australia as Standard Oil, the Beef Trust and the
Steel Trust stand to the people of America.
No nation can be really
free where such a financial oligarchy controls the savings and investments of
the people.
Yet it was to these
mining magnates and market-riggers, to these, manipulators of banks and
insurances, to these dear friends of Beer, Sondheimer
and Aaron Hirsch, that a Government of Labor in 1915 went to for “advice.”
It was to these men that
the Labor Government of 1915 went for ideas on how to save the nation.
Salvation through the
pawnshop.
And when you have
mortgaged your soul, and assigned your offspring to bondage, you are asked to
console yourself with the reflection that you have stimulated in the pawnbroker
“the most lofty sentiments of patriotism.”
At £4/14/4 per
cent.—patriotism.
Plus a remission of
taxation equal to another ten shillings per cent., making £5/4/4 per cent.
That’s patriotism.—mit interest.
It was a Labor policy so
“patriotic,” so “national,” that the “Argus” in its issue of July 16, 1915,
gave it its sweetest blessing. It said:—
“The fact that the
Federal Treasurer (Mr. Fisher) has conferred with the leading bankers, and
others versed in financial operations, is a guarantee of sound finance.”
That’s “sound finance”—because
it was born of the “advice” of the bitterest enemies of Labor and of everything
for which the Labor movement stands.
Why not go to land
monopolists for advice on a land policy? Why not go to the slum landlord for
advice on housing?
Why not consult sweaters
on sweating, pickpockets on honesty, prostitutes on purity—and establish codes
of virtue, honesty and decent standards of life, according to their ideas and
their “advice”.
THE MARKET RIGGERS.
Yet to men who traffic
in money, as sweaters in sweat, and monopolists in monopoly, the Labor
Government of 1915 went for advice on how to finance a continent; on their “advice”
the Labor Party acted.
You could understand
these things being done by a gang of Tories.
But, what the Labor
Government did financially was exactly what W. L. Baillieu,
Bowes Kelly, John Grice, Harvey Patterson, Ed. Miller, Jim Harvey and the rest
would have done if they were in power.
They had no need to be in
power. The Labor government of 1915 acted on their advice.
The Unseen Grip
“They are a financial absolutism. They levy direct taxes on the
enterprise, Industry and production of the community. They control our
reserves, our rate of Interest, our credit, and possess more absolute
jurisdiction over our livelihood, our savings, our monetary future, than the
Government.”
Gilmour Brown, Victorian
Banking Commission, 1895.
FINANCING A WAR.
When a Government—no
matter where placed or how labelled—is permeated by capitalist
conceptions of finance, the first thing it does is to call into its councils
the representatives of the Stock Exchanges and the Banks. The second tiling it
does is to act in the manner directed by those whose advice it seeks.
A political party is to
be gauged not by its name, but by getting to know in whose interests it functions.
In Great Britain, when
the war cloud burst, the administrators of the capitalist State hastily called
into its councils the representatives of the great, banks and Stock Exchanges.
In Australia the Government
did ditto.
The representatives of
the Australian banks and the presidents of the Stock Exchanges of
Sydney, Melbourne, and Adelaide were called together to draw up a financial
policy for the people.
The bankers and brokers
were constituted a behind-the-curtain government.
From that date, the
financial conduct of the Commonwealth has been in accordance with the advice,
directions and interests of the Stock Exchange presidents and bank controllers
of Australia.
And for those services “the
people of Australia,” in the words of Andrew Fisher, “are under an undying debt
of gratitude.”—(London, March 2, 1916.)
The Labor Manifesto of 1910
had referred to private controlled banking as one of the frauds by which
Capitalism bleeds the people.
Yet, in 1914, it was to these
bleeders—not to Labor principles—that a Labor Government turned for light and
guidance.
And the doped organisations made no protest.
The new Government—the
real Government—the Government of Brokers and Bankers—laid down the law.
It acted in anticipation
of a loss of public confidence, of a run on the banks, on the collapse of the
banking system similar to Great Britain. It assumed the liability to borrow
either abroad or at home. It did not foresee the almost immediate collapse of
German sea power, but it did anticipate a difficulty in getting away our
surplus produce. It assumed, as a consequence, “a serious outflow of gold,” in
addition to the internal drainage arising from a loss of public confidence.
Upon these anticipations
and assumptions the Brokers and Bankers drew up the scheme.
SELF-PRESERVATION.
The scheme provided for
the Banks, States and Commonwealth. It became an endorsed document, an
agreement between the banks, the brokers and the Commonwealth.
It was as under:—
1st. The Banks.
Banks were to get a
supply of notes to meet their own obligations, on the basis of three notes to
one of gold. Where they had only one million of gold to meet calls they were to
be provided with three millions of national guaranteed notes, legal tender settlement
for all their debts and obligations.
The “Economist,”
commenting on the position in Australia, said (Oct. 10, 1914):—
“There
is to be a sufficiency of paper money to advance to the private-banks such
paper money as they may require. The banks welcome the scheme as one calculated
to relieve any pressure on their resources. It makes it easier for the stronger
banks, as it relieves them of the responsibility of coming to the support of
their weaker brethren.”
Thus the sustaining
power of the banking corporations in Australia, as desired by their own
representatives, was to be not gold, but the credit, the guarantee, of the Australian
Nation through its Government.
Finally, all
Commonwealth Notes held by the Banks were to be redeemed in gold at the end of
the war. On the other hand, any indebtedness of the Banks to the Government was
not to be paid until twelve months after the war. In this case no
mention of gold payment.
For these concessions to
the Banks, the Bankers and Brokers made gracious concessions to the States and
Commonwealth.
2nd. Commonwealth to
issue notes to States on the basis of four notes to one of deposited gold. As
the States could only get gold from the Banks, one-fourth of such notes to go
to Banks for gold deposited in the Treasury, and the
other three-fourths as credit to the States.
3rd. Commonwealth to be
permitted to issue legal tender notes to meet military expenditure. For
expenditure in England, where Commonwealth Notes were not currency,
Commonwealth to borrow on the London. The intimation that the Credit of the
Nation stood behind the Banks that legal tender currency of the Nation would
be, if necessary, issued in liquidation of the called-up obligations of the
banking corporations, was sufficient for the public. There was no lack of
confidence, no run, no collapse and the Commonwealth Notes, drawn by some of
the Banks in accordance with the scheme, in anticipation of a run, were not
needed.
THE RESERVE.
The notes issued by the
Government for industrial wages and soldiers’ pay filtered through the channels
of trade to the reservoirs of the Banks. The cheques
paid by the Government to contractors and suppliers went to the Banks, who
presented for collection at the Commonwealth Bank, and drew more notes. Thus
the “legal tender reserves” of the Banks began to grow.
THE RATIO.
In proportion as the
stocks of legal tender currency accumulated in the bank vaults, so did the
old-time necessity of maintaining a ratio of gold to liabilities diminish. Commonwealth Notes performed the function. They
were legal tender. They met all obligations. They acted for the Banks as if
they were “gold in reserve,” and upon this basis—upon the paper notes of the
Nation—the Banks erected an additional superstructure of credit for loans and
profiteering.
Thus it came about that
the original scheme—the scheme whereby the credit of the Government, and the
Nation behind it, was pledged to uphold the credit of the private
corporations—was no longer needed. The Bankers no longer feared runs and
collapses. They no longer needed protection and preservation. The national
instruments, “the instruments by which credit could be sustained,” had
become their property—a vast accumulation in the vaults of the financiers.
Henceforth they wanted interest-bearing loans floatable on the notes previously
issued by the Government.
Thus, on the “advice” of
the Bankers and Brokers, the “men whose services we should, never forget,” the
original scheme—the agreement between Bankers, Brokers and Government—was, bit
by bit, nullified, modified, and varied, until nothing of the original
remained.
THE RING.
Thus, under the Money
Ring in Australia, as under Pierpont Morgan in America, and the Rothschilds in England, the currency no longer rested on
gold, but on the guaranteed notes of the Nation. These were to the bankers as “gold
in reserve.” As such they were used. Upon these as a basis they piled their credits
and financed loans to the people at ever-rising interest-
The Labor party
Manifesto of September, 1914—the manifesto William M. Hughes claimed
to-have drawn up, contained these words:—
“The Labor party,
THROUGH ITS NOTE ISSUE, had created the very instruments by which credit could
be sustained and the wheels of industry kept moving.”
That being so, what need
was there for the Commonwealth to borrow from, and pay interest to,
institutions and persons whose credit was not only inferior to the Commonwealth,
but whose credit was so sustained by the instruments which the Labor Party had
created?
That question was put to
Andrew Fisher in the National Parliament. It was not answered. It never has
been answered.
The entire production
and exchange of wealth is controlled by a few men who control the banks and
money of this continent. They are the Metal Gang and Sugar Trust Gang rolled
into one.
Their exclusive dominion
over the trade and savings of the people is inimical to the national interests.
It is the Black Hand on all the productive agencies of the land; its power
should be broken.
State Aid to
Robbery
“The issue of national currency, instead of being utilised
for the benefit of the Nation, has been made an instrument of profit for the
financial corporations, irrespective of the effect on the general national position.”
Edsall, in “The Coming Scrap
of Paper.”
The war largely
increased the note issue in every country. Nevertheless, notes constitute only
a fractional portion of the currency. Even before the war the governor of the
Bank of England told the U.S. Monetary Commission:—
“Our currency, except
for small change, is in the form of bank credits, transferable by means of cheques.” Government notes, whether in England or other warring
nationalities, are to the Banks “as good as gold.” They constitute the “reserves”
of the Banks, as if they were actual gold. The “Economist,” of July 10, 1915
said:—“The greater part of this extra paper currency
is held by the Banks as additional “liquid assets,” and on the strength of
these extra reserves they have extended their loans and discounts.”
Notes issued by the
Government—not gold—had become the basis of all War
Loans.
The London “Economist”
(October 10, 1914), said:—
“War Loans are facilitated
by placing abundant supply of paper money at the disposal of the Banks.”
THE ENDLESS CHAIN.
The Government in
England, like the Government in Australia, came on the market for loans payable
in instalments. The notes must be given to complete the
circle. They go out to pay the soldiers, to feed families, to pay the Armament
Trust for guns and ammunition. They out in wages, in payment of goods. They
circulate through all the channels of trade back to the
reservoir of the great Banks, ready for the next instalment
or the next loan. Then out they go again—the same circle, an endless chain, the
self-same notes performing an ever similar duty, piling up an ever enlarging
debt, eternal tax for the people, eternal tribute to the cormorants.
In Australia, the
expanding loans, cheque currency and profits of the private
banks are not based upon or derived from their diminishing ratio of gold. They
are based upon and derived from the notes created, issued and guaranteed by the
Australian Nation. Upon these notes the vast superstructure of private
banking credit in Australia mainly rests, and upon the basis of these notes the
financial corporations can proceed to finance the Australian Government—at
interest—for ever and for ever.
At the end of March, 1917,
the notes issued from the Treasury totaled ₤47,303,000
This meant an increased
issue since the war of ₤37,450,000.
Of this increase ₤23,000,000
consisted of notes of £1000 denomination.
These ₤1000 notes
are not, and never were, in circulation. They are merely I.O.U.’s
given by the Government to the private Bankers—to the Bankers as good as gold
for all loan float operations.
In addition, the Banks
hold notes of smaller denominations to the extent of £9,000,000—total holdings,
£32,000,000.
As War Loans were raised
in instalments—not more than 30 per cent, at one
time—the Banks had sufficient Government notes to finance every loan.
Whatever notes went out
came back through the channels of trade ready for the next instalment.
When the Banks finance
loan alter loan, until the war is at an end, the banks will still hold the
notes, and these notes can only be redeemed by an issue to the Banks of
interest-bearing bonds.
By this subterranean
method the Commonwealth notes were made the incubators of national
impoverishment. With every “loan” float they went out buccaneering, and came
back to the harborage of the Banks, towing in their rear another pile of
interest gouged from the vitals of industry. These piratical voyages were
repeated again and again.
And for this financial
fakery, and because it is the accepted fakery of our time and country, and
because we had not the courage to break with it, the Nation is looted of
millions.
At the end of two years
of war (June, 1916), the Banks, after paying £4,000,000 in dividends, and
placing large amounts to various reserves, held in addition increased undivided
assets to the extent of over fourteen millions.
Surplus of Assets over
Liabilities, June, 1916.. .. .. ₤19,330,000
Surplus of Assets over
Liabilities, June, 1914.. .. .. ..₤5,071,000
Increase.. .. .. .. ... .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..
.. .. ..₤14,259,000
And, if you ask why one
section should give its life, another be perpetually taxed, and another not
only free of tax, but draw perpetual bloody interest from the toil of the
survivors, you are told you do not understand, that you are a crank, an
erratic, a “luny,” that the loan loot is “popular”—“democratic”—subscribed
to by all classes—old maids, widows, etc., etc.
These be
brought in to give an air of generosity to robbery. Everybody can come along,
but the few big vultures will tear off more in one bite than a million flies.
And we went to vultures
for advice. Good business—for the vultures.
The financial editor of the
“Herald” (August 9, 1915), worked out the value of the
War Loan to big investors as worth ₤5/10/- per cent. He worked out the
bonus (given to bondholders in excess of interest) as equal to an annuity of
4/2 per cent.—the exemption from State Income Tax at 4/- in the ₤ on £2000
as worth 4/6 per cent., and exemption from the Federal Income Tax at 2/6 in
the £ as equal to a gift of 11/3 per cent.
Note the process of a
loan. It must be popular. Everyone must subscribe. Many have credits in
the Bank. The credits are not in gold, nor in notes. They are figures in a
book. There is a patriotic response. Cheques are sent
in. Credits are transferred from the names of many to the name of one—the
Government. Should the Government demand redemption, it will get its own
notes.
If people have not a
credit balance for bond-buying purposes, the Banks will provide them with
one—on security.
If people have credits loaned to the Banks on “fixed
deposit” for one year, or two, at 3 or 3½ per cent., reloaned
by the Banks at 5 or 6 per cent., the Banks will permit the fixed depositor to
draw cheques against credits which the
Banks have already loaned.
Every facility must be
given to enable every good patriot to come in and “Win the War” with his savings.
Later on the
Stock-jobbing Section will knock the bottom out of these securities. They will
buy at ₤50 what is now sold at ₤100. By this process they will
transform 4½ per cent, into 9 per cent., and when the market is pumped
up they will sell at ₤100 what they bought at ₤50. The
financiers fake the market, and scoop the cream of the people’s thrift.
They float higher and
higher on “the instruments the Government has created.”
And the Nation sinks
deeper and deeper into the mire of debt.
So trammelled,
so shackled—with this burden of usury on all its production—does Australia face
the future.
A Nation’s Credit
“Capitalism has adopted a paper currency in the form of cheques, and these to-day are redeemable, not in gold, but
in the paper notes of the Nation.”
Edsall, in “The Coming- Scrap of
Paper.”
The Labor party elected
in 1914 had got as far as it was prepared to go.
The political leaders,
steeped in Imperialism and softened by nose-rubbing with gentry of social and
financial distinction, had become Liberals in action.
They were not prepared
to put into operation even those items of the-Labor programme
that came within the scope of the Constitution.
And the political
chiefs, substituting their own inclinations for the principles of the Labor
movement, followed the lines mapped out by every reactionary Government in the
world at war.
When the War Loan of
1913 was under discussion in the House of Representatives it was proposed as
an alternative to the scheme of perpetual annual robbery :—
“That Bonds be deposited
in the Commonwealth Bank, and that the Bank place the Commonwealth Government in
credit to the value of the Bonds deposited—less cost of administration.”
This gave the
Commonwealth Bank security for currency issued. Blood money, in the shape of
interest, would be avoided.
Australian industries
and Australian workmen would be saved from the annual indemnity to Shylock.
All that would remain
would be the net cost of the war.
This cost could be
spread over 30 or 40 years by annual repayments to the Bank in gradual
redemption.
The currency would be a cheque currency, and the further issue of notes would be
unnecessary.
Note issues would not
exceed the needs of circulation; the balance would be Bank credits.
Bonds in the Commonwealth
Bank would enable the Governor to deal with existing Commonwealth notes in the most
effective and economical manner.
BONDS AND NOTES.
When “money” was “plentiful”
and seeking investment, bonds could be sold at the higher price. When money was
“short” and security-holders anxious to realise,
bonds could be bought at the lower price.
The Bonds would only
carry interest during the period and to the extent that they were held by the
public, and even that cost would be minimised, if not
obliterated, by the profits made at the buying and selling ends.
Thus, not only would
there be a financial advantage to the Bank and to the Nation, but the public
convenience would be served, the market steadied, and note depreciation made
impossible.
Thus, the Commonwealth Bank
would be what a great national Bank should be—the supreme Bank—the Bank to
which all others are subordinate—the regulator and controller of
currency—the agent of national benefit and not of private gain.
Only three men voted for
this proposition. The other Representatives stood solid for the measure that
meant a never-ending annual indemnity to the bondholders, a never-ending tax
upon industry, a never-ending pressing down of the means of life for the men who
toil.
Labor and Liberal were
welded together in the holy bonds of political and financial matrimony.
Both factions were
dominated by the Capitalist conception of Finance. It was akin to two parties, apparently
opposed, having identical ideas on the blessing of land monopoly.
MASSEY GREENE.
The man who put up a
solid argument against the proposition was Massey Greene, from Richmond
(N.S.W.).
He admitted, in reply to
a query from J. H. Catts, that the proposition was
sound if there was one great nationally constituted banking system.
But he went on to say
that we were faced with existing facts, and he alleged that, under the
conditions with which we were confronted, the emission from the Commonwealth
Bank of a cheque currency, based on
Commonwealth Bonds, would be unworkable and end in disaster.
He said: “The bonds will
be deposited, the credit will be given, the Government will draw cheques on the Commonwealth Bank, the persons to whom they
will be given will deposit them to their credit in private banks, the private
banks (through the clearing house) will present the cheques,
the Commonwealth Bank will be unable to pay, it will go insolvent, and the end will
be disaster.”
The answer is:—
All that the
Commonwealth Government, needed to do was to place the Private banks in the same relationship to the Commonwealth Bank as
are the private banks in
THE WILL AND THE WAY.
The relationship is set
forth in the reports of the U.S.A. Monetary Commission. It is stated in the
words of Sir Walter Cunliffe, Governor of the Bank of
England, in his evidence before the Commission, It is as follows:–
“Private banks holding drafts on the Bank of England must present
such drafts direct to the Bank of England to be paid to the credit of
their account in the Bank of
Every private bank in
England is compelled to accept whatever is owing to it by the Bank of England “in
the shape of a deposit receipt on the debtor institution.
Every private bank can
settle its adverse balance with other banks by a transfer of its credit in the Bank
of England, but in the Bank of England the credit remains.
The liability of the Bank
of England to other banks is diminished by its holdings of cheques
and drafts on other Banks. But the Bank of England can draw off gold and Bank
of England notes from other Banks by presenting such cheques
and drafts for payment. Thus gold hoarding by other Banks can be made impossible,
the supremacy of the Bank of England over other Banks is rendered absolute, and
the power of private Banks to cripple, trammel, or make insolvent the Bank of
the Nation is made impossible.
In England this practice
has been evolved, and is applied by Bankers for Bankers, for their mutual
protection, to prevent one private Bank getting to the Central Bank to the
detriment and undoing of other Banks.
That which
capitalist-controlled Banks can do for mutual protection, a Bank of the Nation
can do for national advantage.
In every country the
Central Bank, no matter by whom owned, exists as an
essential part of the capitalist structure. It is the agency by which State aid
and national credit is secured for private institutions whenever required.
In Australia, the
Commonwealth Bank is a mere addition to the private banking system. It should
be made the great Central Bank. All others, so long as they exist, should be
subsidiary to it. It should be the Bank of the Nation in fact as in name. It
should be a financial fortress for national advantage. In this direction the
National Parliament has unlimited powers.
For sixty years the
American Treasury issued currency to capitalists Banks upon the security of
deposited Bonds.
The original Enabling Act
(February, 1863) used these words:—
Act to provide a national
currency, secured by a pledge of United States stocks and bonds.
The U.S. notes on bonds
were issued for the benefit of the Banks. In Australia we could have
done it for the benefit of the nation.
The German Reichsbank has for years advanced currency on Government
bonds and private securities. In France it is the accepted that a Bank is
merely the holder of securities pledged for the return circulating medium.
In France deposited
securities arc the basis upon which notes are issued by the National Bank. If
notes are not wanted cheques are drawn and credits
transferred.
THE U.S.M.C.
The United States Monetary
Commission of 1910, reporting to the American Government the result of its
investigations, said upon this point: —
“Bank notes on the continent
of Europe are issued mainly against discounted bills. Notes so issued mean
elasticity based on the changing demands of commerce and trade.”
The essence of a sound
currency is that every note issued shall be based upon deposited securities,
upon bills that represent products, deeds that represent property, and bonds
that represent the taxable wealth of the community.
Under the existing
system the owners of capital—of the loom, the mill, the plough, of the
instruments of production in all their variety, and of wealth in all its forms have
to pay interest to private traffickers for a currency that represents nothing
beyond the deposited security.
MONEY TRUST GOSPEL.
The Bankers of the world
no longer believe that a national currency, sound and solvent, need be
convertible into gold, or that it can be so converted. They only want the
public to believe it. They only want Governments to trade in their interest on
the general superstition. They know full well that a currency convertible into
all the commodities that gold will buy is good currency and sound money.
The Bankers know that an
adequate currency backed by gold alone is impossible. They know that the solid
assets of the nation constitute an adequate backing for any medium of exchange
largely in excess of any that could be required for national or private
commercial purposes.
“Capitalism has adopted
a paper currency in the form of cheques, and these
to-day are redeemable, not in gold, but in the paper notes of the nation.”
This system should be
administered for national advantage, not private gain.
When the nation controls
the monetary system it controls every industrial monopoly in the land.
The Capitalist Arsenal
“The structure of modern capitalism throws an ever-increasing power into
the hands of men who operate the monetary machine.”
John A. Hobson, “Evolution
of Capitalism.”
“The principles which it is necessary for the Nation to courageously
apply are used every day by the capitalist bankers for private gain.”
Oswald Stoll, “The People’s
Credit.”
In all the principal
countries the great financiers have instituted central depositories for gold.
In many countries the “Central” is named after the country of its location—Bank
of France, Bank of England, etc. In some cases the “Central” is a private
corporation controlled by the directors of allied interests, or it is a private
corporation controlled by the Government, or it is both owned and controlled by
the Government. But, no matter how owned or controlled, in every country, the “Central”
exists as a buttress to the private banking system. Behind the system, behind
the “Central,” stands the capitalist dominated State, ever ready at the word of
command to furnish State aid, pledge the “credit of the nation,” and issue
additional currency manipulated by the capitalist controllers of the system.
Gold has disappeared as
an internal currency. It is no longer money. It is a stored product—stored for
international traffic.
Baron Brencard told the American Monetary Commission that the
Bank of France is the Bank of Gold Reserve for all companies and corporations
throughout the Republic, and “the” gold of France is mobilised,
ever ready for international economic service.”
Lord Swaytheling
told the Commission that the difference between the Bank of France and the Bank
of England was that the former could pay out silver instead of gold, could
refuse gold for export, or export heavily, and extend the note, issue for
internal purposes, and by these means directly control
international financial and economic relations.
GERMANY.
The Germans had a
Monetary Commission in 1908. Von Wangenheim, President
of the Bund der Landwirte, said :—
“Geheimrat
Reisser declares that he is as much opposed to the
individualist system as he is to the system of State Socialism. Very well! Between
those two systems there is the possibility of public ownership in the means of
exchange with maintenance of the private ownership of the means of production.”
The German Imperial Act
of June, 1909, brought the Reichsbank, the “Central”
Bank of Germany into line with those of France and Belgium.
The Commission reported
that as a consequence of the powers conferred upon the Reichsbank,
all gold flows to the Reichsbank, and added :—
“It holds the gold
reserves, out of which at all times foreign obligations can be settled.”
Since 1909 great changes
have taken place in the policy, powers, and prerogatives of the Reichsbank—the “Central” Bank of Germany. The desire to
supplant Britain in the markets of the world led to the adoption of methods
that in other countries would be designated “revolutionary.” The Reichsbank acts as “Central” for existing private Bankers,
but private Banks are prohibited from establishing new branches. The Reichsbank has 500 branches, and in many provinces is the
only giver of credit in important spheres of economic life—retail trade and
agriculture. The Reichsbank advances currency notes
on houses and other forms of immovable property. Where the credit is desired
for extension, the charge is nominal—no more than sufficient to cover bank
expenses. The Reichsbank advances currency to the
Government on a deposit of bonds.
The Reichsbank
issues currency for bills on London and elsewhere. This makes it the almost
exclusive holder of credit in foreign States, and gives it a dominant power
over the character and quantity of its imports.
JAPAN.
The National Bank of
Japan is established on similar lines. It is the Japanese Gold Store. Gold does
not go into circulation. Against general exports the Bank issues Bank credits.
It buys foreign bills and takes the power of collection in foreign capitals.
The “Age” of July 25, 1916, reported:—
Japan’s gold hoard
continues to increase. The latest total is £56,000,000. Of that sum, only ₤17,000,000
is kept in Japan. About £27,000,000 is deposited with Bankers in London, and ₤10,000,000
in New York,
Thus Japan places its
gold reserves” wherever they will be of the greatest economic service. By these
means it builds up credits in the countries of its principal operations. By
these means it enables the importer of the raw material of Japanese industries
to purchase on the favorable terms that such credits permit, and on the other
hand it refuses credit in foreign countries, or grants it only on terms that
amount to prohibition, to all importers who would import into Japan products
and manufactures regarded as inimical to the internal economic development of
that country.
This is a proof of how
an internal paper currency permits gold to be put to its best economic use. It
is made an instrument of credit in the buying market, instead of rust in local storage.
It is a service that should be a profit to the nation that has made it possible—not
an advantage for purely predatory interests.
Thus we see how
Financial Capitalism dominates all the industrial operations of the nation. The
Japanese method is the German method, and is now under recent developments the
Yankee method.
It was because of this
industrial mastery by Financial Magnates that Wagenheim
told the German Monetary Commission that the public ownership of the
instruments of exchange was a national need and that: —
The banking system
should not be treated from the standpoint of private economics. It is growing
further and further out of the sphere of legal regulations. A Bank to-day is
not merely a business—it is a public office.
Marquis Katsura (Finance Minister for Japan) told the American
Monetary Commission:—
Without a National (a “Central”)
Bank authorised to emit currency, to control the gold
resources and collect foreign bills, national finance and the economic system
cannot be consistently developed.
But when the Financiers
and their political agents speak of a National Bank, the most they mean is a
great “Central” to function in the exclusive interests of the Financiers. When
they speak of an “economic system consistently developed” they mean the
development of a system in which the financial magnates are the Unseen Caesars
and Czars.
AMERICA.
The American Money Trust
in 1913 engrafted the latest developments in finance on to their own system.
They have their twelve regional “Centrals.” The New York “Central” is the
principal “Central,” and within its grasp is mobilised
the gold supplies of the United States—mobilised for
the international economic conflict.
The object of gold mobilisation by the financial capitalists of America is
identical with that of Germany and Japan—to secure immediate favorable credits
in any country desired
The American Monetary
Commission justified this policy on the following grounds:—
The chief medium of
exchange in civilised countries is the cheque.
For counter change and
wages either gold or notes must go into circulation.
Gold in circulation
renders effective mobilisation impossible.
Gold mobilisation
is imperative if America is to hold her own in the international trade
struggle.
Therefore gold must come
out of circulation and be replaced by a note currency.
Thus in America, as in
Japan, Germany and France, gold has been withdrawn from internal circulation,
not as a war measure, but as an essential economic process.
In all those countries
gold passes to the “Central,” and against it nothing is issued except a credit
in the books of the “Central.”
To the extent of that
credit, the “Central” settles the foreign obligations of the individual Bank, or its obligations to other Banks.
In not one of those
countries does the “Central” issue notes against a
deposit of gold.
If the individual Bank desires
note currency it deposits bonds, deeds, commercial bills or other
acceptable securities.
In October, 1915, Alexander
Noyes, writing in the “Yale Review” on “The Economic Aftermath,” said:
“Equipped as American
finance now is with an elastic and a scientific
currency
Australia is making no
preparation for the “economic aftermath.” It could if it would, have a banking
system, an elastic and a scientific currency owned and
controlled by the Nation, for the salvation of the Nation.
National Currency
“The evolution of the means of exchange which we are witnessing is
leading us to a system of mere clearing of balances.”
U.S. Monetary
Commission, Document 494.
“A national currency—a currency controlled by the Nation, and not by
private corporations—is the most powerful agent a civilised
country can possess; both for the stability of its internal affairs and for the
equitable and guarded conduct of its international trade.”
Edsall, in “The Coming; Scrap of
Paper.”
On March 16, 1916, Mr. Dennison
Miller, Governor of the Commonwealth Bank, stated in the New Zealand “Evening
Post” that—
“Banking has its own
language, not understood by the people, and not intended to be understood by
them.”
Mr. Frank Hirst, editor
of the “Economist,” told the American Monetary Commission (document 579) that
the Bankers not only mystified the public, but obfuscated themselves with
obsolete terms.
Sir Edward Holden, of
the London and Midland Banking Company—one of the men selected by the British
Government in 1915 to negotiate the 500 million dollars loan in New
York—lectured before the Bankers’ Institute of Liverpool (December 18, 1907).
He said:—
Banking is little more
than a matter of bookkeeping—the transfer of credit from one person to the
other.
Securities create
credits on the books.
Currency is credit in
circulation. Currency is money. Money consists mainly of cheques.
Notes are only a fraction of the currency.
Money is redeemed every
time it is exchanged for commodities or services. It is finally redeemed when
it returns to the issuer in payment of services.
These admissions were
made, and these facts made public in order to buttress the end in view. Sir Edward
Holden stood for the private cheque currency of the private
Banks, backed, sustained, and redeemed by legal tender notes of the Nation
issued to the Banks for securities deposited. Sir Edward Holden argued, as
Pierpont Morgan has argued in America, that legal lender notes issued to the
Banks on the basis of securities, is sound money. It is. And a national
currency-issued from a National Bank upon deposited securities for national
purposes, or the development of the national resources, is not only equally
sound, but is an imperative national necessity.
In 1913 Sir Edward
Holden urged the appointment of a Royal Commission to devise means whereby the
Bank of England may be empowered to issue to subsidiary banks legal tender
paper money guaranteed by a deposit of securities.”
On February 7, 1914, in
a circular letter to the London press, Sir Edward Holden urged that:—
“the
backing of such an issue should be bills of exchange, such as are dealt in by
bankers every day.”
When the war broke out
(August, 1914), all pretence of a gold basis disappeared, and the scheme
described in previous chapters was put into operation. In principle it was
identical with that outlined by Sir Edward Holden.
THE GOLD FAKE.
Sir Robert Giffen, the author of “Financial Essays,” said:—
“As long as the
attention is rivetted on, not the real currency
paper, but upon its assumed basis—gold—correct conclusions upon currency
questions are impossible.”
The writer on “Currency”
in the “Encyclopedia Britannica,” said: —
“The idea of the
intrinsic value of money is discarded by all persons conversant with the
working of the modern mechanism of exchange.”
Professor Atkinson is
reported in the “Sydney Morning Herald” (Aug. n, 1914), as saying: —
“It is a fallacy as
common as it is vicious to assume that the world’s credit is based upon gold.” The London “Economist”
(May 22, 1915) said:—
“Cash at Call” is a
fallacy, and the outbreak of war proved it.” In short, the investment of gold,
with an economic halo, is one of the tricks by which Financial Capitalism
deludes and exploits the people.
THEORY v. PRACTICE.
Sir Felix Schuster, president
of the Smith s and Union bank of London said:–
“The theory of banking
is one thing – the practice is quite another. Banking has evolved far beyond
the theory on which it is supposed to be conducted.”
And in a speech,
reported in the “Banking Record” (September 21, 1914), he said:–
“The currency of a
country is supplied by cheques instead of, as the
Bank Act intended, by Bank of England notes.”
The financial writer, McLeod, says:—
“Cheques
are currency in the same way as notes.”
Hartley Withers, in his
book on “War and Lombard Street, said:–
“Modern currency is the ‘cheque’ which can be multiplied to an extent which is only
limited by the security which customers may be able to provide.”
Frederick Temple, in “Interest,
Gold and Banking,” says:—
“The growth of the cheque system has had the effect of transforming the
character of banking.”
Oswald Stoll, in “The
People’s Credit,” says:—
“Modern currency takes
the form of cheques, with Government notes for wages
and small change.”
The £1 Note is the unit
of general circulation.
A paper currency is
to-day an economic necessity. It exists. We cannot do without it. It is issued
by private Banks. Its convertibility into gold is a fiction. Yet upon that
fiction the Banks trade, charge interest, and declare their annual dividends.
Modern money is not capital, not property. It is a convenient circulating
representative of wealth in all its forms. When the manufacturer, the owner of
capital, goes to the Bank for money, he mortgages his capital, and pays interest
for a circulating representation of his own properly.
SECURITY AND CREDIT.
The “Round Table,” in
its article on “Lombard Street in War,” says:—
“The amount
of securities deposited in British Banks are worth over £1,000,000,000.
Against these securities cheques are drawn. Behind
these cheques there is not one ounce of gold—the
only security is the security deposited by the drawer of the cheque.”
In Australia the amount
of securities deposited in the Banks is worth £140,000,000. Against these
securities cheques are drawn. In addition to floating
mortgages upon the gold in their possession, the Bankers have issued—at
interest—rights to draw cheques upon the Banks to the
extent of over £100,000,000 Behind these cheques there is not one ounce of gold—the only security is
the security deposited by the drawer of the cheque
“LOANS” are given by
means of credits.
Credits are given in the
books of the Banks to those who deposit.
Cheques are the paper
instrumentalities by which credits are transferred and wealth monetised. Every transaction is a transfer of claim on
deposited security.
Notes are cheques of fixed denomination guaranteed by Government,
used for wages and counter purposes.
That’s Modern Banking.
Modern Credit is based
on the assets, fixed and liquid, of the whole nation.
Value of total assets in
Australia is over ₤1,000,000,000.
The Commonwealth Bank
can, and should, issue currency upon the securities of private citizens and
upon the bonds and securities that, represent the
taxing power of the Nation over all the wealth of the Australian continent.
THE MONOPOLY.
The Private Banking
Monopoly is the greatest monopoly on this continent. It is the fortress and
buttress and financial arsenal of every industrial and commercial ring, trust,
combine and price-raising conspiracy on this continent.
It should not be
permitted to exist.
It possesses the power
to give or withhold credit. It can withhold or withdraw credit from men whose
securities are beyond question. It exercises autocratic control over the products
and properties of the people of a continent. It is the “Unseen Power.” It
should be dethroned. Its powers, prerogatives and perquisites should be the
exclusive privilege of the organised Nation, acting
through the agency of its own instrumentality—the Bank of the Nation.
The Red Feast
Aye,
fight,
And
spill your steaming entrails on the field;
Serve
well in death the men you served in life,
So
that to them the war a profit yield.
In
peace.. to your toil,
In war.. to the teeth of death.
So
will they smite your blind eyes till you see,
And
lash your naked backs until you know
That
wasted blood can never make you free
From
utter thraldom to the common foe.
Then
you will find
That
workers’ interests, world-wide, are the same,
And ONE
the ENEMY they must resist:
National Redemption
“The battles of the nations (sometimes followed by the battles of the
national armies) are to-day fought on the financial field of the great credit
banks. Such vital processes, which may be decisive of the existence or
non-existence of the State, and of the distinctive civilisation
of its people, ought not to be committed to the dividend interest of private
banks.”
Von Wangenheim,
German Monetary Commission, 1908.
“A National Bank, supreme over, and ultimately absorbing, all private
institutions, represents the most powerful bulwark for our credit, the security
of our people, and the resources of our country.”
M. R. Comtesse, Swiss Minister for Finance.
“A National Bank, if it is to be a truly ‘national’ institution, must
control credit or fail in its duty.”
Document 494, U.S. Monetary
Commission.
FRANCE AFTER SEDAN.
The Franco-Prussian War
of 1870-71 was short and sharp. But it laid waste a large part of French
territory and crippled her industries. Apart from ordinary war costs and
diminished revenues, France was loaded with a ₤200,000,000 indemnity to
the German conqueror. Defeated and disgusted, France swept out the Third
Napoleon and established the Third Republic. On a higher plane she re-enacted
the financial and economic principles of the Revolution of ‘89.
From the Bank of France
there was issued a paper currency, during first year after the war, of
£65,000,000—the next year another ₤65,000,000. Money was lent to the
peasants to rebuild their homes, retill the soil, restock
their farms—to manufacturers to rebuild and restart the destroyed factories—to
returned soldiers to start new enterprises or re-establish the old. The disbanded
army of destruction became an army of production, poured forth from field and
factory and mine-prosperity returned.
Against the exportable surplus
products of her people, France issued an internal currency, and took the right of
collection in foreign States. Direct export to Germany totalled
₤47,000,000. The Bank of France collected and paid off the indemnity to
that extent. Exports; to England ₤27,000,000, invested in bills in
Germany (or short-dated German loans raised in London), remitted to Germany,
had been paid to the last penny. The balance was ₤26,000,000 of French
gold shipped across the border, replaced by paper currency for internal use.
By September, 1873, the
indemnity to Germany had been paid to the last penny. By that means the annual
interest of many millions was saved, and the debt was transformed from a
foreign to a local one. Thereafter that which otherwise would have gone abroad
in interest was used in redemption of obligations to her own people.
AUSTRALIA.
The basic policy of a
reconstructed
Only by the removal of
this annual suckage of interest from its industries
can Australia hope to ultimately, recover from its existing condition of
financial serfage.
The Commonwealth Bank
must be made the Supreme Bank, the Great Central, to which all Private Banks,
while permitted to exist, shall remain subordinate. This Supreme Bank must be
the only operator in foreign bills. International financial operations must be
exclusively in its hands.
Against general exports
this Bank, made in reality a “Bank of the Nation,” must issue internal credits,
drawable and transferable in cheques
or notes.
It must lake the
exclusive power of collection in foreign States, and build
up an Australian National Credit in the capitals of its principal operations.
Thus it will be in the
position to dominate the character and quantity of its imports, and occupy the
most favored position in dealing with the financial obligations of State and
Nation.
BANK OF ISSUE.
The Commonwealth Bank,
if it is to properly perform its national and economic functions must be a “Bank
of Issue.” “Issue” will consist of book credits transferable by cheque, or drawable in “notes.” “A
Bank is the holder of security pledged for the return of a credit medium,” drawn
and used.
The Government, like the
individual, must deposit securities for credit furnished and currency supplied.
Bills that represent
products, deeds that represent property, bonds that represent the taxable wealth
of a country, constitute a sound base for a sound currency.
The bank of a Nation
must advance a currency to Nation, States, and subordinate Governments upon
deposited bonds—to the commercial community on its trading bills,
and to the industrials on homes, farms and factories.
The consolidation of
debts and the securement of one Australian operator
on the English market should be deemed imperative.
To that end the
Commonwealth should refuse to renew the subsidy to the States, except upon
conditions.
It should condition that
the States be financed from or through the Commonwealth Bank,
that the States withdraw as borrowers from oversea markets, so that the
sole negotiator with
A “Bank of Issue” is the
sixth declaration of the Labor party’s programme.
The Labor Government
under Fisher declared in the Bank Act (8th clause) that the Bank should not be
a Bank of Issue.
Thus the programme was flouted, and the utility of the Bank
diminished.
BANK OF RESERVE.
The Labor Platform
declares that the Commonwealth Bank shall be the “Bank of Reserve”—the
storeroom of the Nation’s gold.
The traffic in gold and
the exportation of gold should not be left in private hands—the days of private
traffickers should end.
There should be an immediate
abandonment of free trade in gold.
The mobilisation
of gold for international purposes is an economic necessity.
Mobilisation should be the exclusive
privilege of the Commonwealth Bank. It should be the only buyer, the only
exporter.
Mobilised for action, the gold
stocks of Australia would be placed wherever they were of greatest economic
service.
That which the financial
magnates of America, Japan and other countries have established for their own
protection, should be established in Australia for the service of industry and
the progress of the Nation.
The Commonwealth Bank
would operate State and National securities at home and abroad, and become the
most important factor in the settlement of international balances.
The Commonwealth Bank
would become the Financial Arsenal of the Nation. It would be the agency
whereby all foreign interest-bearing obligations would be transferred into internal
non-interest-bearing obligations, interest abroad
would become redemption of principle within
“Only on those lines can
National Finance and the economic system be consistently
developed.”
National Instrumentalities
No party can long be credited with sincerity if it condemns the trusts
with words only, and then permits the trusts to employ the telephonic,
telegraphic and postal instrumentalities of the nation in the carrying out of
their nefarious plans.
W. J. Bryan, April 30, 1906.
There is ample power within
the Commonwealth Constitution to deprive monopolies and combines of their power
to exploit.
There is ample power to
make them serve the Common Good.
There should be a
Commonwealth Licence Law.
Every company and
combine engaged in inter-State trade should be required to take out a
Commonwealth licence.
The right to carry on inter-State
or oversea trade should be conditioned by compliance with the terms of the licence.
The licence
should carry the right, of public fixation of prices, public inspection of
accounts, prohibition of valued stocks, of hidden reserves, of excessive
profits, or discrimination between purchasers.
The law under which the licence is issued should prohibit the use of any
Commonwealth instrumentality—telegraphic, telephonic or postal—by any company
or combine engaged in inter-State traffic attempting to trade without a licence or in contravention of the terms of the said licence.
The Commonwealth
exercises this power against lotteries and against proscribed persons or firms
alleged to be engaged in selling or trading in material or information alleged
to be inimical to the moral or physical well-being of the citizens of the
Commonwealth.
What the Commonwealth
cannot do by direct legislation it does by the use of its instrumentalities.
The Commonwealth not
only exercises this power against lotteries and gamblers, and traders in
noxious matter, but it extends the refusal of services to all persons and firms
declared to be acting as agents, or aiders and
abettors to the firms or persons alleged to be acting in a manner detrimental
to the public interests. The Commonwealth refuses to pass through its Customs
the products of any firm upon which it lays its ban. It can interdict all goods
Government, or its appointed authority, declares to be manufactured, transmitted
or sold under conditions injurious to the public. The Nation exercises its
right to grant the use of its services to those who comply with its conditions.
The Commonwealth can
exercise its powers and use its instrumentalities as much against monopolies
and combines as it can against lotteries and traffickers in noxious matter.
Moreover, all private
banks are directly subject to Commonwealth law, to its dictates and its
penalties. The Commonwealth has unlimited power to penalise
any bank that, after notice, grants banking facilities to any monopoly or
combine declared to be acting without a licence or in
contravention of its licence.
With a complete nationalised banking system the public control of the
industries and transport monopolies would be absolute without the use of other
instrumentalities. Without banking facilities their predatory practices would
come to an abrupt end.. By the use of the licence system and its control over banking, the
Commonwealth can compel every monopoly and combine to seek the law, secure its licence, and conform to its directions.
FROM
MANIFESTO
Issued by
Russian Council
of Workmen and Soldiers to the Workers of all countries
(May, 1917:
The Imperialists of
all countries are everywhere victorious. The war has given them, and is giving
them, fantastic profits, is gathering in their hands enormous capitals, and is endowing them with unheard-of
power over labour and over the very lives of the workmen. For this reason the workers of all countries are defeated
and are
making on
the altar of Imperialism
numberless sacrifices
in life, health,
well-being and liberty.
_______________________________________
PART II
Historic Note
Currencies
“The days are long past when notes were anything more then the
fractional part of the paper currency of a state.”
Paul Warburg, Monetary
Commission, USA.
The evolution in the
mechanism of exchange is as great as the evolution in the methods of aerial
flight and submarine navigation.
There was a time when
notes were the only proper currency, but the banks have evolved a currency of
their own in the shape of cheques.
At the period of the
most of the much quoted note currencies, cheques were
unknown. They did not come into much use in the United States until after the
civil war.
Notes are more used on
the continent of Europe than in England, simply because they are more popular.
The Governor of the Bank
of England told the Monetary Commission that the reason so few notes were used
in England as compared with the continental countries was because cheques were more widely used.
Notes in the past were
the entire paper currency.
To-day they are only a
fractional part of the currency.
If all arguments against
past note issues were sound and correct, they would have no application to
present day conditions. Civilisation is the reflex of
the triumph of progress over past errors.
PRE-REVOLUTIONARY
CURRENCY
Amongst the quoted
examples of currency failure is the case of the early colonists of America. Those
people led a very primitive existence. They had to struggle against warlike
tribes. Banking methods were crude. They were crude everywhere. Gold was
scarce. A medium of circulation had to be secured. The system varied in
different colonies. In some colonies there was failure – in others, unqualified
success.
The colonies of New
York, New Jersey and Pennsylvania were on a paper currency. Their credit stood
undiminished. Pennsylvania currency was based on deeds, bills and warehouse
receipts. It enjoyed the highest degree of prosperity on a paper currency.
In 1773 the British
Government prohibited a paper currency in the colonies. This suppression was
one of the causes of the revolution that broke out in 1775.
CURRENCY OF THE AMERICAN
WAR OF INDEPENDENCE.
Fought under the greatest
difficulties. The so-called Congress was not a Government. It had no
Constitution, no assets, no taxing power. It issued a
currency to carry on the fight. The ultimate redemption of that currency
depended on-the issues of war. The currency served the purpose. It fed and
clothed and armed the soldiery. The struggle for independent was successful.
Every penny of the paper currency was honored by the American Government.
EARLY UNITED STATES
CURRENCY.
Some States established
State-owned banks. Some were failures, some were successful. The State Bank of
South Carolina, established in 1812 lasted 58 years, and went out of existence
because of the Federal note tax of 10 per cent.
For the most part
banking was conducted by private corporations, with right of unlimited issue of
their own notes. Many of them had no capital, and repeatedly went insolvent.
There were 1700 private banking companies, and the notes were poor in make up
and easily counterfeited. The money of these banks got known as “Wild Cat,” “Red
Dog,” and “Stump Tail” money.
It was against the
unrestrained paper issues of these banks that Daniel Webster (1837) made his
much quoted statement about the evils of paper money.
It was in September of
that year (1837) when J. C. Calhoun and Webster were raising
in Congress the question of the United States Bank Charter vetoed by President Andrew
Jackson—that Calhoun made the following statement in the presence of men
conversant with contemporaneous facts:
Never in normal times, never
when received for all debts, dues and obligations to the Government; never when
associated with a bank kept free from the manipulators of institutions
hostile to its existence has a paper currency depreciated. That
statement went uncontradicted.
In that same debate
Daniel Webster said:
I have ever been the
enemy of those banks that force their own paper money into circulation.
John C. Calhoun
described the system in existence thus:
The right of making
money, an attribute of sovereign power, a sacred and important right, is
exercised by private banks, not responsible to any power whatever for their
issue of paper. Yet this chaotic private system is quoted nearly a hundred
years as a proof of the failure of a nationalised
currency.
THE ASSIGNATS OF THE FRENCH
REVOLUTION.
When France rose against
monarchy and proclaimed her First Republic, the nations of Europe fell upon her
like wolves. Gold disappeared—a paper currency had to be created. The notes
were based upon the forfeited estates of the nobility and of the religious
houses. Those notes bought food and clothes and arms for the soldiery of
France, sustained them in
[sentence missing]
helped them to defend the
Republic and defy the world. With that money the soldiers brought land from the
Government, bought material for home making, and laid the foundations of the
power of France.
The Assignats
were first issued in 1790. England kept factories turning out counterfeits, as
she did during the American revolt. In 1796, when the Assignats
were replaced by Mandats, there was a counterfeit
circulation to the extent of £600,000,000. Yet the industries of France
expanded, her soldiers conquered, her mothers gave birth to children more
rapidly than the battlefield could devour them. Every paper note was redeemed
in land or products. The long Napoleonic war did not
add one penny to the interest burden of the people of
ENGLAND AND PAPER MONEY.
1694. — Bank of England
started.
1696. — Bank failed.
1697. — Bank re-started.
1698. — Co-operative
Banks started.
1708. — Co-operative Banks
suppressed.
1715. — John Coleman Bank issued notes on security at 3 per cent.—principal
repayable
at 5 per cent, per annum.
1741. — John Coleman
Bank suppressed.
1793. — War against
French Republic commenced.
1797.—
Bank of England suspended gold payments. Bank of England
notes increased under Government guarantee from 9 to 27 millions.
Doubleday, in his “Financial
History of England” (page 137), says that the Pitt Government lent several
millions of this paper currency on goods or personal security, the whole of
which was faithfully repaid.
There being no law
against private note issues, the private banks increased their notes from 7 to
50 millions.
These notes
depreciated—Government guaranteed notes did not.
Allison, in his “History
of Europe,” says that the non-interest bearing irredeemable notes issued under
Government guarantee, receivable in Government revenues, remained at par with
gold, and that the purchasing power the Government guaranteed notes was twice
that of notes issued from the joint stock and proprietary banks.
England was on a paper
money basis for 24 years (1797-1821), and on this basis she conducted 18 years
of war.
GREENBACKS (AMERICAN
CIVIL WAR.)
War declared April, 1861.
Federal Government unable to borrow either in America or Europe
December, 1861, private
banks suspended gold payments but enormously increased their note issues.
December, 1861, Government
issues ₤12,000,000 “Demand Notes.” They were receivable for all debts due
and obligations due to or from the Government. These notes remained at
par value during the whole period of their existence.
First issue of United
States Notes (Greenbacks), March 1862 Banking opposition in the Senate
refused to permit Bill to pass unless interest pre-war loans was made payable
in gold. To meet this the Government had to collect
import duties in gold. Merchants with greenbacks had to deliver to bank at
depreciated value to get gold to pay the Government for duties. The Government
gave it back to the banks as interest. On third issue further restrictions
imposed on paying power of greenbacks. Value further declined. Depreciation was
the result of a conspiracy on the part of the financiers. Yet greenbacks kept
the armies of the North in the field, fed, clothed and armed the soldiery. When
the war was over the Government accepted greenbacks as full payment for all
debts, dues and obligations, and they at once went to a
parity with gold. The total issue of greenbacks amounted to ₤90,000,000,
of which ₤70,000,000 are yet in circulation. They are no more legally
redeemable in gold to-day than when first authorised.
The original Act has never been cancelled or amended. The United States used a
paper money base for 17 years (1862 to 1879), and on that base conducted years
of war.
FRENCH PAPER CURRENCY OF
1871.
This issue was so
successful that it is never mentioned by the critics of a national currency.
Their objection is not to a paper currency. It is an objection to a paper
currency nationally controlled. It is a defence of
the existing private control of currency.
Details of this issue
are given on page 66.
AUSTRIA-HUNGARY.
Since 1866
Austria-Hungary has had a legal tender paper which does not profess to be
redeemable in any particular commodity. It carries a promise on its face that
the Government will receive the paper for all taxes and debts due to it, and as
such it circulates. It has not fallen in value. (See Mulhall’s
“Dictionary of Prices.”)
PRIVATE NOTE ISSUES.
“Age,”
COMMONWEALTH NOTES.
Commonwealth notes are
not redeemable at any bank, private or public: nor are
they, since the war, even redeemable at the Commonwealth Treasury. The notes
now in existence are in excess of the total gold supply of the country, and,
relative to population, are three times in excess of the greenback issues of
the American Civil War.
War Values
In times of war private
property that is liable to be destroyed by the enemy, and public securities
resting for redemption on the existence of a Government liable to be swept
away, will both diminish in value in ‘portion to the proximity of the danger,
and will recover value in proportion as the danger retreats.
As the enemy takes on
the role of invader, so all fixed irremovable forms of wealth, public or
private, begin to depreciate, while gold, jewellery
and other easily removable forms of wealth rise in value. When England feared the
Napoleonic invasion gold rose to ₤5/15/- per ounce. On the day of
Waterloo it was ₤4/13/6. After the victory it receded to the Mint price
of ₤3/17/10½.
In wartime gold is a
deserter. It is the first to get out of the war zone. It is the first to seek
neutral territory or a dug-out. It can only be kept in the firing line by the
strong arm of the Government, and then seeks devious ways of escape. European
statisticians estimate that when war broke out in 1914 over 100 millions of
gold went into hiding. All countries in times of national stress are driven to
resort to paper currency. The crime is in the fact that banking corporations
are permitted to turn national issues into instruments of public robbery and
bondage. In several war periods, as in England during the Napoleonic war and in
America during the first two years of the Civil War of the sixties, the
unrestricted note issues of the private banks were far in excess of any issued
by the Government.
Standard of Value
“VALUE, like hate, love,
esteem and ambition, is a pure abstraction. It is vague, indefinable and
indeterminate. It is an attribute of the mind. It is not a substance. It cannot
be fixed, or measured or standardised.”
“Value, being the
accidental varying relationship of one article to another, no single article
can be a standard.”—Professor Bowen.
“A standard of value is
impossible in the very nature of things. If a quantity of gold were placed
beside a number of other things, no human sense could discern their value.”—McLeod.
Writers who have
abandoned the ‘standard of value’ theory still cling to the term, ‘measure of
value’. Value is an ever-varying relationship, and therefore cannot be
measured. —Walker.
Values are ideal and can
only be expressed in terms of numbers.
“‘One dollar’ or one pound’
is the unit of calculation or comparison. It is a number.”—Kitson.
See Hong Kong currency,
under heading “Asiatic Exchanges.”
Money Trust Armies
In every country there is a powerful group of capitalists, firmly
entrenched in society, well served by politicians and journalists, whose
business it is to exploit the jealousies of nations and practice the alchemy
which transmutes hatred into gold.
Diplomacy is the tool of the vast aggregations of capital in oil trusts,
steel trusts and money trusts. Where-ever combinations of capital are competing
the reactions are exhibited in the relations of their Governments. For the
service of the rival monsters the working classes are regimented in conscript
armies—armies and fleets are the
material arguments behind financial diplomacy.
Finance is the arbiter of war and peace, the master of despotisms, the unseen power in democracies.
Brailsford, in “War of Steel and
Gold.”
Unscrupulous speculators see pilfering opportunities in their country’s
trouble. They wish for war as the piratical wrecker on his rocky shore wishes
for fogs or hurricanes.
—General W. T. Sherman.
Foreign Exchange
The words, “foreign exchange,” form one of those meaningless phrases
which have filtered down to us through the dust of antiquity.
W. F. Spalding”,
Associate of the Institute of Bankers, in his book, “Foreign Exchange in Theory
and in Practice.”
Merchants import goods
and pay the banker to pay the foreigner, merchants
export goods and sell their collecting orders to the banker.
The banker is the money
merchant. He buys from the exporter his right to collect foreign money, and
sells to the importer a promise to pay his debts abroad in return for cash
here.
The banker’s charge to
the importer is the “Rate of Exchange.”
“UNFAVORABLE” EXCHANGE.
When a country imports more
than it exports, the balance is said to be “unfavorable.”
It means that the banker
has contracted to pay more debts in a foreign capital than he has orders to
collect on the money of that capital.
He is short of credit in
that capital.
Foreign credit can only
be secured by the exportation of products—wheat, wool, metals, manufactures—or
by foreign borrowing. The banker, short of credit abroad, stimulates exports by
paying the exporter a higher price for his bills. Thus the exporter gets the
invoiced price of his bills, plus the premium granted by the banker.
The banker loads this
premium on to the importer, by increasing the charge for the settlement of the
importer’s foreign debt.
The importer is in the
position of a man who has to pay more for his goods.
Thus “unfavorable
exchange” means unfavorable to the importer.
FAVORABLE EXCHANGE.
When a country exports
more than it imports, the balance is said to be “favorable.”
It means that the banker
has more to collect in the foreign capital than he has debts to pay in that
capital.
He has an excess supply
of credit in that capital. He will, therefore, give the exporter a lower price
for his bill to collect. The banker wants no more oversea funds—he has plenty.
In theory, he will settle the importer’s foreign debt for a smaller fee.
Spalding, in his “Foreign
Exchanges,” says it is only in theory that “favorable exchange” means favorable
to anybody but the banker. He states:—
“In theory the importer gets the advantage
of the cheaper rate at which the exporter sold his bill. In practice a
proportion or the whole of the premium goes to the banker.”
But, whether the
importer or banker gets the benefit, it is designated “favorable.”
“Favorable” means
unfavorable to the exporter. He may get ₤99/10/- for £100 due in the
foreign market.
“Unfavorable” means favorable to the
exporter. He may get ₤100/10/- for ₤100 due in the foreign market.
The terms “favorable” or “unfavorable” are only used in their relation to the
importer. The market has no distinctive jargon for the reverse action on the
exporter.
FOREIGN EXCHANGES ON LONDON.
(Cabled each day to London from Foreign Capitals.)
|
|
Price July 16, |
Price May 17, |
|
Par Values. |
1914. |
1917. |
|
Paris — Francs and
cents to ₤1= 25.22. . .... |