People's Pilot, Volume 5, Number 22, Rensselaer, Jasper County, 21 November 1895 — A VERY WEAK EFFORT [ARTICLE]

A VERY WEAK EFFORT

HARTER COMES TO THE DEFENSE OF THE BANKS. Says He Can See No Evidence that the Bankers of the Country Are Striking for the Retirement of the Greenbacks. Michael D. Harter, member of the last congress, joins issue with the Voice. Our editorial, Aug. 15, on the proposed retirement of greenbacks, has called forth a vigorous letter from him. We are glad of it, for Mr. Harter may be taken as a sort of authorized defender of the views held by the national bankers. He was, if we are not mistaken, one of the invited speakers before the convention of national bankers last year. We publish his letter in full as follows: Editor of the Voice: I can see no evidence that the bankers of the country are, as the article you mail me says, “striking” for the retirement of the greenbacks. I wish they were. That we can ever have a perfectly sound currency, or a permanently good business condition, so long as the government insists upon doing a banking business (involving, as it does, the keeping of a proper gold reserve), I do not think possible. The quicker, therefore, the government confines itself to its proper and limited duties the better. The banks should supply the capital and the currency for the business of the country, and the government should have nothing to do with the volume of our money except to coin or stamp the gold and silver we use, and thus certify to its ■weight and purity. It is incredible that all the thinking people will not before long awake to this fact. Why the United States should be so far in the rear of Canada and Europe in such matters is hard to account for. That so large a number of its people should be anxious to tread in the unhappy steps of Argentina is most surprising, and that the free silver element among us should insist upon our adopting a system which even the negro government of San Domingo abandoned in 1894, after a long trial of it, is one of the disgraceful and disheartening signs of the times. That the greenback circulation should be retired at the earliest date compatible with the convenience of the business public is so true that it ought not to have to be urged so often. Undoubtedly the entire currency question should be referred by congress to a nonpartisan commission to report a complete plan for putting our currency, •both coin and paper, upon a basis where volume will be automatically adjusted, and under which the measuring power of all our money will be as constant and unquestioned as that of England. Until this is done we shall suffer in our domestic trade and in our foreign com-

merce. me country neeas a rntie common-sense currency tonic—a doctor would perhaps say an alterative —and the press of the country can not do the people a greater service than advocating a civilized and enlightened treatment of this question. Respectfully, Michael D. Harter. Philadelphia, Pa., Sept. 15,1895. This is straightforward and to the point. It brings us at once to the main issue in the currency controversy of the near future, namely, Shall the government or the banks issue “the currency of the business of the country.” and control its volume? The argument that .“the government should go out of the banking business” is the most plausible and the most dangerous one we have to meet, and must be satisfactorily answered. Before attempting an answer, let us get tjhe whole case for the banks before us. Mr. Harter has laid stress upon the currency system of Europe, and especially England. Let another accredited exponent of the banking views tell us what that system is. Horace White does this in a very able editorial in the Evening Post, September 20, on “An Automatic Gold Reserve.” Mr. Harter also refers to “a basis where volume will be automatically adjusted.” What is this “automatic” system? Here is Mr. White’s description of it as it works in European countries: “Now, let us see what happens when there is a demand for gold export, in England for example. If it is an unusual demand, the bank raises the rate of discount If it has been lending at 3 per cent previously, it will now raise the rate to 4 per cent. This has a twofold consequence. It causes a certain proportion of the bank’s borrowers to pay up. All those to whom money is not worth 4 per cent will pay their maturing bills and not borrow again. These payments are the equivalent of gold to the bank, as they must be resolvable into gold at the mint price, which is at the rate of £3 17s. 10%d. per ounce. The rise in the rate of discount is also an inducement to foreigners to send money to London for investment, and this checks the export movement. If the export continues, nevertheless, the bank raises the rate of discount another peg, say to 5 per cent. This causes another lot of borrowers to pay up, and attracts more money from abroad, and has a still further effect, which is really the most important of all. As it forces borrowers to pay 5 per cent who were formerly paying only 3, it compels some of them to sell their goods at lower; prices, and this leads to an increased exportation of goods, which thus take the place of gold in the country’s foreign trade. As there Is no assignable limit to these three operations, all proceeding from the rise in the rateof discount, it is plain that it is adequate to check the exportation of gold in every ease, and that it is automatic in the

sense mat me government nas notning whatever to do with it. It is needless to say that the same course would be pursued here if the government were restricted, as formerly, to the monetary function of merely certifying the weight and fineness of coins.” Now we have the whole case before us as stated by Horace "JVhite and Mr. Harter. What do we find? That the "automatic” feature of the banking system is not automatic at all. It is so only “in the sense that the government has nothing whatever to do with it.” But it is evident from the above that it does not adjust itself, but is adjusted by the bankers. It is like those fake automatons in museums where some one out of sight manipulates all the movements. Notice well the statements made by Horace White: “If it (demand for gold for export) is an unusual demand the bank raises the rate of discount.” “If the export continues, nevertheless, the bank raises the rate of discount another peg, say to 5 per cent This causes another lot of borrowers to pay up,” etc. “As It (the bank) forces borrowers to pay 5 per cent who were formerly paying only 3, it compels some of them to sell their goods at lower prices,” etc. There you have the heart of the system, and, as “there is no assignable limit to these three operations”—momentous words! —it may be clearly seen that the whole business world is at the mercy of “the bank,” that is to say, of the bankers, under any such system. They can regulate not only the rates of interest on money, but the prices of commodities, and compel merchants and manufacturers to sell or go to the wall. It is inconceivable to us how any man whose pulse beats in harmony with the mighty democratic movements of the last century, in whom the spirit of 1776 ever asserts itself, can, after one full and fair look upon such a system, restrain himself from a passionate and unreserved detestation of it It means enslavement, nothing less —enslavement of the manufacturer, of the merchant, of the wage-earner, of the producer in every rank. Even the mon archs of Europe are rapidly coming under the control of the money lords, and. can take hardly a single important step until they have gained the consent of such men as the Rothschilds. Now, we don’t like the troubles we are having with our currency system any more than Mr. Harter does. We don’t, for that matter, relish a resort either to San Domingo’s discarded system or to Argentina’s. We are not advocating either one or the other. But we do believe that, of all the systems of finance ever invented, the one lovingly described above by Horace White, and desired by Mr. Harter, is most fraught with ultimate disaster to human hopes and human destiny, and that

tne retirement or me greenuacMJs, demanded by the late convention of national bankers, is a critical step in that direction. Note this from the weekly circular sent out a few days ago by A. H. Clapp & Co., bankers and brokers of this city: “Madam Rumor ■claims strong evidence exists indicating the bond syndicate, who are reported to have made $10,000,000 out of the government, have been using their wits and power to depress wheat, while buying many millions of bnshels, expecting to ship the same and make exchanges and eventually create a boom in wheat.” That refers to nothing but rumor, but the fact that such a rumor obtains circulation by shrewd bankers indicates what possibilities are before us, if the control of the currency of the future is to be handed over to the bankers. —New York Voice, October 3.

Congressman Howard of Alabama has been for some time busy gathering a mass of evidence in support of his movement for the impeachment of President Cleveland. While it seems doubtful that the president has been deliberately criminal—yet he has certainly acted as a tool of the capitalists. Possibly the evidence may prove that he is a criminal instead of a fool. Anyway, he has been guilty of “errors” that would justify an Investigation, and we hope the whole roost of cuckoos will get a good shaking up. Mr. Howard is a populist of good judgment and plenty of courage, and would not likely insist on investigation without good evidence to back up his charges. Direct legislation will knock out the lobby svstem.