People's Pilot, Volume 3, Number 34, Rensselaer, Jasper County, 9 February 1894 — FINANCIAL CYCLONES. [ARTICLE]

FINANCIAL CYCLONES.

Wnat Legislation Has Done to Degrade Silver and Produce Panics Now Let Legislation Devise Some Remedy. Now that legislation has demonetized silver which had been used as money since Abraham’s time—doubling the uses of gold without the possibility of doubling the quantity of gold—a readjustment of money has become imperative. The gradual contraction of money for several years, without considering the increased demands of growing population, only needed this silver demonetization to cause a stagnation of production, by further narrowing the instrument of exchange. In a country unsurpassed in resources more than 5,000,000 of people are now unwillingly forced into idleness, and the demoralization and misery growing out of idleness, while numbers in all directions are compelled to depend upon charity. Five millions of people in idleness, averaging for labor only SI.OO per day, is $1,500,000,000 per annum of wasted labor, and when to this is added the manufacturing, transporting, and’the thousand other sources of loss through prostrated industry, it is no exaggeration to sum up the entire annual loss at not less than the national debt, at its highest figure since the war. Legislation having disorganized money, the evil can only be remedied through legislation. Law early fixed the value of money in England by proclamation.” Later law decreed the pound sterling to be equal to a pound of silver. Legislation gradually reduced the silver of the pound sterling to its present twenty silver shillings or less than one-fifth of a pound of silver.

By the law of 1792 the Spanish silver dollar was made our standard dollar and 100 copper cents represented its equivalent The copper in our penny h’as been reduced by law to less than onethird of its original weight, but still 100 of them represent the dollar. To-day a powerful organization of banks jealously guard all the avenues of finance in order to reduce the volume of actual money to the narrowest limit, so that bank credit—this confidence, this wind money —may fill up the deficiency, and draw the largest possible interest by the sale of bank credit. With less than $500,000,000 capital, the banks have reared a structure of $2,500,000,000 in bank credit, and draw annually thereby not less than $150,000,000 in interest from the industries of the people. Becoming panic-stricken over the expansion of credits whicf, they themselves have unduly encouraged, they then for self-protection abruptly contract the sale of credit, thus imperiling or causing the collapse of all commercial values. Here is the real starting point of financial tornadoes and panics. These cyclones begin with the lawful power exercised by the banks to build up or destroy at pleasure the value of business by an arbitrary control of ’the medium of exchange. whether it be of actual money or of bank credit. Is not this power too vast and far reaching in its effects to be entrusted in a direction where self interest may bias and warp the judgment? The New York chamber of commerce lately stated through its president that it had sent to 4,430 banks, copies of its resolutions requesting their “influence” to repeal the silver act. Admitting the fair intentions of the chamber to advance what they conceived to be the best interest of the country, is it difficult to imagine how the “influence” of well organized money institutions, acting in concert, may be made to subvert the liberties of the people by effecting adverse legislation for their own interest? As pernicious as it is found to be, the power that is at times successfully exerted by banks to “influence” legislation, is not the most direful calamity that has fastened itself upon the system. Behind all this lurks an evil, transcendently more potent in balefulness. It is the supreme power arbitrarily exercised by banks to limit, at their pleasure, the entire production and consumption of the nation. By first maneuvering through legislation to limit actual money to a small volume and then by withholding largely their own bank credit confidence money, they bring the country periodically to the verge of destruction. It is thus that they shrivel and dry up useful enterprises by deliberately causing periodical contractions.—Charles M. DuPuy, in National View.