Democratic Sentinel, Volume 1, Number 47, Rensselaer, Jasper County, 4 January 1878 — THE “NATIONAL” BANKS. [ARTICLE]

THE “NATIONAL” BANKS.

A Five Hundred Million Robbery—Every Tear the Rankins Subsidies Continue, Thirty Millions will be Taken from the People—Hon. Stephen D. Dillaye’s Third Open Letter to the Secretary of the Treasury. Hoc. John Sherman, Secretary of the United States Treasury: Dear Sib: It is generally understood that you are in favor of continuing the present system of national banks, and of withdrawing the greenback circulation, so that, practically, our entire circulating medium shall be based on specific United States bonds. Being utterly opposed to this mode of securing the bills issued, I beg your attention to the reasons which lead me to this opposition. National banks were authorized and established at a time when rebellion was not alone rampant —when it boasted that it had the support of English capitalists and foreign enemies—to the spirit of our institutions to an extent rendering their armies formidable and their sympathizers sanguine, and when every man at the North who did not openly and conspicuously declare his allegiance to the Government was regarded as an enemy. Mr. Chase was ambitions, therefore, to enlist capital in all parts of the loyal States to sustain and strengthen his position. To do this as rapidly as possible, every appliance was used, and every inducement was offered in the power of the Government to bestow. An exact statement of these inducements must be enumerated to show the profit the capitalist was to enjoy and the power the banka were to possess. Up to January 1, 1866, the amount of notes issued was *298,588,419. This may not be absolutely accurate, but it is practically so. The sum did not vary materially till 1872, when they increased to *328,465,431; and January 1,1875, to *354.128,250.

Having thus seen the amount of currency, add to this 10 per cent, and we get the amount of bonds issued to the banks as the security of of the bill-holder, making an aggregate of *389,530,477. The first great inducement to the capitalist then was the price for which the purchaser had to pay for his bonds. In 1862 the price varied from 60 to 70 cents on the dollar. From 1862 to the Ist of January, 1865, gold went up. In January, 1864, its price was 155 ; April 15, 178 ; June 15, 197 ; June 29, 235 to 250. So that the average cost was about 55 to 60, running down some time as low as 42. The bank bondholder then for this investment did not pay to exceed 55 cents on the dollar, and got from his Government bonds at par varying from 6 per cent, to 7 3-10, nearly doubling his money on the start. This was the first great inducement to make his investment. The second was nearly as potent The banks, for each dollar represented by their bonds, were delivered 90 per cent- in bills, which they were permitted to lend on bankers’ discount rates, and which was equivalent to 8 per cent, additional interest, thus securing directly to bankers an equivalent of about 17 per cent, interest. The banks were also entitled to receive deposits, and discount on them. The amouut of the deposits average about *600,000,000, or more than once and a half the amount of their bonds, and gave the bankers a profit of at least 6 per cent, net, and increasing their annual earnings to not less than twenty-three per cent. As a small offset to this profit, each bank was required to hold a percentage of bonds as security to depositors, and the amouut of the bonds so held amonnted to abont *44,600,000, making the gross amonnt of bonds held by the banks directly *434,136,475. Another advantage given to the banks was that all the bonds they held were exempt from taxation; but as the banks are subject, by another provision of the law, to taxation on their deposits one-half of 1 per cent., and 1 per cent, on their average circulation, and one-half of 1 per cent, upon the average amount of th6ir capital not invested in United States stocks, the banks have made combined and strenuous efforts to get rid of this tax as onerous. I shall take occasion to show the relation these taxes hear to their net profits as compared with other investments and property. The banks, as a further advantage, were made the fiscal agents of the Government to sell the bonds of the United States, and from this employment made a considerable gain, until the Secretary of the Treasury established the syndicate system of negotiating bonds, I have thus stated the manifold advantages and unheard-of privileges bestowed upon national banks as an inducement for capital and capitalists to invest their money and influence in support of the Government. The National Bank act was a war measure, and was, perhaps, justified by the exigencies of the times, and the absolute demands of the treasury to meet the enormous expenses of the war. The reason which may have justified the privileges and immunities of the national bank system has long since ceased. They are to-day a burden and a tax upon the people it is impossible to justify; and sound policy demands that the offensive features of the system shall be at once abrogated. Let me now call your attention to the influence they are exercising as a premium for their exclusiveness, their arrogance, and their dictation.

They are more sovereign in their control, more arrogant in their management, and more dictatorial in shaping the money market than any combination which ever undertook, through the finances to mould the policy of the Government. But this, you may say, is mere declamation. Let us look at facts, about which no man is better informed than yourself. The whole banking interest of the national hanks is a unit. It is controlled by one system of laws. It has formed itself into an association regulated by minute conditions, carefully prepared by-laws ; a fund only limited by the demands made upon it. It has hut one aim, GAIN; hut one purpose, PROFIT. JTo secure this its regulation flows from the great arterial center into every vein of our financial system. Its code of laws, like those of the trade-unions, seek to cover the policy of that absolute power which is capable of reaching every element of legislative influence it can sway or which corruption can buy. Whatever measure it seeks to control in State legislation it controls ; whatever it seeks to accomplish at Washington it prepares in advance. There is not a Congressman so weak as to be accessible to flattery or bribery that is not flattered or bribed to their purpose. If the member be beyond direct approach, he is measured and surrounded by those seductive blandishments their agents so well understand. Every member goes to Washington with some pet measure of his district, or some interest he is committed to and ambitious to press, and in nine cases out of ten that measure will not become a law unless its advocate pledges himself to the demands of the bank monopoly. Its motto is, “ Eternal Vigilance.” Its agents are sleepless and indefatigable; and once in motion it sucks in its victim as certainly as the devil-fish draws its object into its death embrace. Today the prominent object is the abrogation of the taxes imposed on its circulation, its deposits, and that part of its capital not invested in U. 8. stocks. And there is not a member who has not been appealed to, coaxed or threatened to the last verge of human ingenuity. It was through the leaders of this interest that you were subjugated to their purpose into that recommendation for fixing the period for making specie payment the law of the land. You knew, or you were inexcusably ignorant, the ruin the same kind of a movement in England in 1817 brought upon the people, the industry, and every material interest in Great Britain. You knew that every effort to force specie payment in that country, and in this, had ended in losses sufficient to appall every trade and annihilate every enterprise. You knew, too, that the people at large did not demand the measure ; that no one but bankers and dealers in the funds could be benefited by it, and yet you not only recommended it, but you have urged it by every appliance the treasury could command. You have taken into vour confidence such Hessians as Jay Gould and his gambling cohorts; and the American people, from one end of the land to the other, are humiliated and disgraced by the infamous association. Yes, sir, the nation looks back to the position you occupied in the Senate of the United States when the legal-tender clause was the subject of debate, and when every interest in the land but that which was represented by the opinionated and self-wise dogma that the Government had no authority to issue bills of credit and make them a legal tender, but your good sense and patriotic devotion to the Union and to its power cf self-preservation, led you then to fully and distinctly uphold the principle and the law. You then said “ that this currency would become the life-blood of the whole business of the country,” and so it did. Again, when the same money-power attacked the reliability and safety of this currency as the most worthless secupity a nation could of-

fer, and declared it bat the remote promise, at some undefined time, without basis, responsibility or value, produced by steam by the hundreds of millions, and more valueless than the French assignat or the Continental currency, to pay some undefined person; you nobly defended it as based on the best and highest security a nation could create, and declared every man an enemy to the Government who questioned its value; and the whole people echoed your praise and commended your statesmanship. But when the $2,000,000,000 of capital, controlled and manipulated by the national banks, demanded specie payment to kill off the greenback, and make those banks the sole medium of currency, you either ignored the past, and repudiated your own former reasoning, or you were subjugated to a line of policy as heartless as uncalled for, and as ruinous as that which Sir Giles Overraach proposed to Lori Lovell as a bait to win his matrimonial alliance, who was ready

To ruin The country to supply his riotous waste; and you, sir, to pander to the alliance yon would form between the bond-bolding and gold-controlling capitalists of this and other lands, do you not say in substance to these usurers: Point out any man’s land In all the shire, and say they lie convenient And useful to your lordship, and once more I say aloud, they are yours. But I may ask, as Lord Lovell did of Overreach, Are you not frightened with the imprecations And curses of whole States, made wretched By your sinister practices ? It will not answer for you to use the bold defiance of Sir Giles when he replies : Yes, as rocks are When foamy billows split themselves against Their flinty ribs. For the American people are no longer either slaves to party or to ignorance. They will tolerate no tampering with their interests. You may to-day swell in the consciousness that yon are at the head of the most powerful department in the Government; but dare to defy the people, and they will hold yon in a public contempt no time can soften, and no party can relax. You have been bold in attempting to retrieve the misfortunes and frauds of Republican insolence. You thought to do it by a financial finesse. The banks have not only urged with all the power, all the learning, and all the skill a vast combination of influential wealth could devise, but they have subsidized the whole metropolitan press, retained and feed the best legal and reasoning talent of the land, and secured the whole Bohemian aid of the country, to write down the greenbacks and write up the national bank currency. They have hesitated to employ the pen of Mr. McOonlloch, who was the chief instrument in forcing contraction and demand for specie payment, who in long articles has devoted the best reasoning he could command as the representative of foreign capital to fasten this infamous banking system upon us for all time—this system whioh makes the taxable inhabitants of the land mere payers of tribute, bounty and exacted plunder into the vaults of these burdensome and privileged marauders on the public treasury. The people of Ohio have just repulsed the outrage by a vote sustaining this proposition : “ That we denounce as an outrage upon the rights of the people the enactment of the Republican measure demonetizing silver, and demand the passage of a law which shall restore silver to its monetary power.” And you understand its meaning. Dare yon, sir, or dare the banks to-day, venture to justify the longer payment of interest on more than $450,000,000 of United States bonds to secure their currency to the billholder, when by withdrawing that currency according to the law, and the spirit of the law, yon can take up the bonds and issue in their place the currency of the nation—the currency which is secured the same as the bonds are secured ; the currency which, like the notes of the Bank of England, has the support, the confidence and the security of all the property, all the people, all the honor, and all the duration and integrity of the American people, as the Bank of England has the support of England? Let the banks continue banking as many as may choose to do so, using the greenback, and nothing but the greenback, for their circulation, and thus take from the overburdened people more than $30,000,600 of annual tribute paid to keep up the pampering privileges of these now oligarchic money-changers. The people do not understand how they are duped, bled and blistered to fill the pockets of rich bankers without the pretense of a benefit or the shadow of a consideration. How long, sir, do you propose to favor, by bounty, the rich at the expense of the po:;r ? How long will you sanction the infamous proposition of the bell-weather banker, Mr. Coe, who told the Committee on Finances that the bankers had concluded to put the screws on circulation until they reduced the price of labor to a level with European pauper dependents ? Yon had better pause, the bankers had better beware, for there is a time .coming, and it is near at hand, when 40,000,000 of people are going to repudiate the demands of the national banks. Let us see how it looks on paper :

:The People of the United States • To The National Banks, Dr.: •To Annual Bounty from") • June 1, 1876, to June | 1, 1877, to till the pock- j (#30,000,000. j ets of the rich, taken ' r • by taxation from the I ; poor, without a pre- | f ; tence of consideration.J ;

That is, the people pay these banks an anual bounty more than it cost to carry on the whole Government of the United States for any three years of Washington’s administration —more than any two years of Jefferson’s, including every expense of the Government. Indeed more than it cost to carry on any and every expense of the United States in times of peace down to 1840. And this $30,000,000 is, every dollar of it, an out-and-out gratuity. We have thus taken from the bard earnings of the taxpayers, to give the banks, in twelve years the enormous sum of $360,000,000, which with the interest amounts up to $511,400,000.00! The people are tired of it, it is galling. Tho Democratic platform in Ohio contained these declarations ; “ That we favor the retention of greenback currency as the best paper money we have ever had, and declare against any further contraction. “We favor the issue by the general Government alone of all circulating medium, whether paper or metallic, to be always of equal tender.” And the people have voted. And, notwithstanding that all the Bourbon and Shylock elements in the great majority of the State platforms of both parties declare in favor of specie payments, through the moneyed and political influence of the national banks, yet the people are as a unit in favor of the greenback. You would force specie payment. I would have it result, so far as any human being wanted specie (except to overthrow and oppress his neighbor, and to export to affect the money market), exchangeable as a natural consequence flowing from the fact that there was no forced and imperative demand for it, snch as now makes it command a premium; as you well know, nearly $1,000,000 is daily required to answer purposes the greenback will not answer, simply, as I have before shown, because the Government repudiates its own money. Repeal this infamous insult to American credit. Do as England has always done, receive your own bills for your own dnes, and gold will be as abundant as there. There will be no demand for it. Then, as in England during the whole period of the suspension of the Bank of England, we can do as they did, when the bank uniformly gave gold for its bills in any and every ordinary transaction, till the Government made its payment, just as yon are attempting to do, imperative at the cost of hundreds of millions and universal commercial ruin. No, sir; the people will not submit to it; they will not submit to it, because it is an outrage upon their rights. It is a class law to favor a class. It is stealing from the people to pamper the luxuries of the rich. Not only this, but these banks, in instances not a few, have aided and abetted rich men to evade and escape the payment of their taxes. This has been the style of doing it: A favored depositor or stockholder at the time the list of taxpayers was made out would go to his bank and propose to buy United States bonds equal to the amount he was assessed. The bank would charge the applicant with the amount of bonds he required, on its books, not delivering a bond or receiving a dollar, simply wrapping around them the name of the man. The depositor or stockholder would then swear off his taxes on the pretense that all bis personal estate was in United States bonds. The tax would then be cancelled. As soon thereafter as safety would permit, the bonds were sold back to the bank, the account and the Government cheated. One of the suolime advocates of the specie-payment swindle is the Hon. David A. Wells, a kind of walking embodiment of figures—the author of ‘ ‘ Robinson Crusoe’s Money,’ a pamphlet redolent with 14b wisdom, blowups, balderdash, &ndj old lady's

treacle, on the hard-money theory, such M the banking association preach and pay for. Don’t fail reading it; it is a fair statement of a specie maniaist estimate of our national credit and national imbecility. The bankers have employed him to become the teacher of the people, and commencing with the wisdom ofSancho Rauza at the ABC of finance his pamphlet is wonderfully wise—or otherwise. But I have already protracted this letter greatly beyond the limits I intended. Yet I must call your attention to one answer the banks ever give to the universal oomplaint against the continued contraction of tbo currency. They say they have a plethora of currency; that they cannot lend it. A bolder or a meaner lie never disgusted the commercial and industrial world. From the commencement pf the crisis of 1873, the banks have everywherein the United States put on the high shirt collar, the “ I-am-the-State ” dictation ; they have out down discounts, stopped accommodation, except to shaving brokers, heartless usurers, and to men who could deposit United States securities as collaterals. The business man of small means, however honest, responsible and careful in his business, could not and cannot borrow a dollar. No manufacturer, no trader, no mechanic can borrow a dollar without piling up securities beyond tho means of ordinary capital. A sneaking note-broker who will divide his profits, and the millionaire gamblers of Wall street can borrow ; honest men cannot. The fact is notorious, and these banks, thus manipulating the correnoy and pushing the cry or specie payment, have brought the country to where it is—millions of men without employment, hundreds of thousands of American and foreign laborers withont bread riots, strikers, and the last and worst of all, the press and the pulpit under the spur and under the pay of the Banking Association, have come to declare as the climax of the effort of mankind to elevate man, that our laborers have to give up the ghost of a hope and accept the fate and the pay of tho pauperized dependent of Europe. Is this the result of our civilization ? Is this the triumph of Republican rule? One word as to bank taxation. I have heretofore, in an article widely circulated and largely quoted, shown that the net profits of the national banks had averaged, after paying immense salaries to favorites, every loss, and every expense, inoluding taxes, 9% per oent. on the nominal capital, equal to 16 per oent. on the money invested. That besides paying this enormous profit that they nave set aside and accumulated $134,407,695.00 as a surplus fund, or more than 50 per oent. on the capital invested. The bankers in 1876 paid on circulation, $3,091,795.76; on deposits, $3,505,129.64 ; on capital, $632,396.16making the gross sum of $7,229,221.56. The sum is large, but every dollar of it w r as practically on profits. Every dollar of it is paid before a dividend is declared. It is but a drop in comparison with their enormous gains. It is not one-quarter of the sum the banks yearly draw from the people as a bounty. If the banks don’t like it, their remedy is easy—“return your circulation.” Ofesar was accustomed to say: “With money I will get men, and, with men, money.” The banks have been acting on this principle ; but the days of Tweed and Tweedy legislation, it is hoped, are past. At all events, the man or men who dare to keep up the crusade against greenbacks and national credit; who dare to appear as the supporters of the $30,000,000 bounty, and the advocate of withdrawing greenbacks to give place to national bank currency, will find no political or moral support w’ith the honest or intelligent men of the nation. Such privileges as these banks now enjoy are the rank weeds necessity may have tolerated ; but if the taxpayers do not cut them down, sajing, “ Why cumbereth thou the earth?” they are fit subjects to become .the dupes and slaves of a banking monopoly which would subjugate the people to its will and the country to its control. Respectfully yours, Stephen D. Dillaye. Trenton, N. J.