People's Pilot, Volume 5, Number 48, Rensselaer, Jasper County, 4 June 1896 — BANKER AND FARMER [ARTICLE]

BANKER AND FARMER

E. GERRY BROWN MAKES A SPLENDID ILLUSTRATION How's Rustic Old Hayseed Put a National Banker in a Hole —Farmers All Understand the Great Money Question, and Will Vote Accordingly. “Mr. Banker,” said a farmer, “will you answer me some questions?” ‘‘Certainly I will,” answered the banker. “We have a league in New York whose mission it is to reward or pay editors to print our ideas on ‘sound money;’ but go ahead with your questions.” “What is a national banknote, for which we sell our labor?” asked the farmer. "A national bank-note is a promise of a national bank to pay the amount named on the face of the note,” answered the banker. “Pay what—gold?” asked the farmer. “Oh, no; lawful money,” answered the banker. “That gives you an option of paying it in silver. Do you pay out silver?” asked the farmer. “Mostly silver, silver certificates, notes of other banks, etc.,” answered the banker. “But, Mr. Banker, if you have the option and pay it in silver, why do you claim that, if the government has the option it should pay in gold?” asked the farmer. “Because we are on a gold basis; and if government paid out silver, confidence would be affected, and gold would go to a premium,” said the banker. “Then, if we are on a gold basis,” said the farmer, “why don’t you pay vour notes in gold?” “Because,” answered the banker, “the law gives me the privilege of paying lawful money and we educate the people who want gold to demand gold of rhe government for that lawful money, and that relieves the banks of the burden of providing the gold for the gold basis.” "Then, what we get for our labor is a paper promise of a bank?” asked the farmer.

“Oh, but it is good—good all over the country,” said the banker. “What makes it good,” asked a laborer. “It is secured by United States bonds," said the banker. “For every |9OO we issue in our bank notes, we deposit a |I,OOO bond in Washington. The law furnishes us with S9OO in banknotes for every thousand dollar bond there deposited.” “And the bond is< the property of the bank and the government is responsible for its safe-keeping, and its return to you,” asked the farmer. “Yes,” answered the banker. “You buy a bond with SI,OOO. and then get S9OO, that is good currency as that which you gave for the bond?” “Ye-yes,” hesitated the banker. “What is a bond?” asked the farmer. “A bond—a United States bond?” asked the banker. “Why, every one knows what a United States bond is. It is a promise of all the people that the holder of the bond shall receive interest until the bond is matured, and the principal name£ in the bond at maturity.” “Then you draw interest on the bond?” asked the laborer. “Yes,” said the banker. “And,” continued the farmer, “you get back S9OO out of the SI,OOO you paid for the bond. Then isn’t it true that you are drawing interest on the full bond, when, in reality, all that you have loaned the people is ten per cent of that bond?” “That’s not the way we state it,” said the banker. “No,” interjected the editor, “you don’t state it in that way, but it is an exact statement of the privilege you enjoy at the expense of the wealth-pro-ducers, the bread-winners, the widows and orphans included. Tell him also that you are exempt from paying interest on the bond or the notes.”* “I haven’t finished asking questions,” said the farmer. “Go on,” said the banker, with a “tired” look at the editor. “I want to ask how you get your bank-notes into circulation?” continued thejarmer. “We discount notes; that is, for instance, a retailer who buys goods and hasn’t the money to pay for them gives his note, his promise to'pay at a certain date. The manufacturer who sells him the goods indorses the note —writes his name on the back of it—and then he brings it to our bank. We deduct the interest—discount it. and take the discount in advance —and the balance we loan him, and enter it on the depositbook of the one for whom we discount it. When he draws a check we can give him in payment our bank notes.” “Then,” questioned the farmer, "ybu draw interest on the bond at Washington and interest on the notes of your bank; isn’t it double interest for part of your money?” “Well, we don’t state *t that way,” slowly answered the banker. ‘No,” remarked the editor, “it is not stated that way; they are too busy educating the people on honest money.” “It appears to me,” remarked the farmer, “that bank-notes are a promise to pay on which the bank draws interest. The retailer pays interest on what he owes, and the bank receives interest on tfrhat it o« f es.” ‘That’s it,” chuckled the editor. “The bank is living on the Interest of what it owes, and growing rich at tEe expense of the people who vote for the gold-basis that gives the bank this special privilege. This enables the banks to educate.you up to a gold basis at your expense. They have the ‘special privilege’ of furnishing you with ‘sound monex.’ There’s so much wind in It that can make it sound like a bassdrum/” “Special privilege,” exclaimed the

banker, "why, any five men can take advantage of the National Banking Act It’s no special privilege.” “Of course they can,” replied the editor; “and I wonder that/there are so many tramps doing nothing, when they could have such an easy job, if, in ‘blocks of five,’ they should associate themselves and organize a bank. All they need is >5,000 or >IOO,OOO capital. Certainly every American citizen has the chance to run a business. For instance: The Chemical National Bank of New York, capital >300,000. Surplus, seven million. Par value of stock, >100; market value, forty-three hundred —forty-three times as much as its par. No note circulation. Deposits thirty million, and its profit is from the credit based on about one-quarter this sum. In addition to the seven million profit represented by the surplus' its dividends have beep one hundred and fifty per cent per annum and in addition to that one hundred per cent is carried to surplus. ‘Our business comes from confidence,’ said the president in his testimony.”

“Dear me,” said the minister, "I have listened to all about a national bank and the money power and the system doesn’t appear to be just right. It is a debt based on a debt; and we are doing business on the basis of our debts. To have money we must keqp in debt, and pay interest on the debt forever, that we may have the evidence of a debt with which to exchange wealth. It is interest on a dollar, aqd another interest on something not earned, which is based on that dollar and called national bank credit. Why, a dollar printed on every fifty cents’ worth of silver, seems to me, is a better dollar than a promise to pay a dollar which has only twenty cents guaranty in its possession that we shall finally promise, if we get anything. More promises to pay- than there is money to redeem the promises! Dear me! The president of our national bank has donated the chapel in which I try to lead men to fear God; but I fear that the money-changers have so burdened them with supporting themselves and the banking system, that they do not come to church so often as they might if they were emancipated from this bondage. Man’s body is God’s temple, and the money-changers must be driven out. I must have a sermon on “You’ll get fired if you do,” whispered a rude voice in the rear of the room; but the minister did not hear It. These figures are the testimony of the president of the bank to a congressional committee, 1894.

E. GERRY BROWN.