G.G. McGeer
The Conquest of Poverty
CHAPTER IV.
Signs of Emancipation
During the last seventy years, any suggestion that money and credit could and should be submitted to a banking organization answerable to the nation and the people under the stewardship of public service has been ridiculed and swept aside with the same finality that an intelligent people would offer to a proposal that the government should manage the weather. Gold was established as a god. Bankers and financiers were established as the high priests in a religion that worshipped usury as a sacred rite.
Monetary reformers were jeered at as heretics and sneered at as the stupid emulators of an impractical Christ. They were treated contumaciously by the sons of Judas who still roam the earth to plague the peace of man. Press, church leaders and subservient politicians joined in the general conspiracy to lead humanity in the worship of false gods. Leaders in every walk of life were willing to sacrifice everything to men now known to be wolves in sheep’s clothing who were coldly preparing and planning the sacrifice of our civilization and our faith in God on the altar of unpayable debt.
Here and there individuals saw the danger, but, like Arthur Kitson, they warned and pleaded in vain. When the late Woodrow Wilson in 1911 publicly declared :
“The great monopoly of this country is the money monopoly. So long as that exists, our old variety and freedom and individual energy of development are out of the question. The growth of the nation and all our activities are in the hands of a few men who, by reason of their own limitations chill, check and destroy genuine economic freedom.”
He was merely a voice crying in the wilderness. This fact he learned to his heart-breaking sorrow when the Federal Reserve legislation which he pro posed as a great reform was perverted by Congress and Senate at the instigation of German and ether foreign financiers into a law of privilege that gave to American bankers the English monetary system and the power to exploit, debauch and bankrupt the richest nation on earth, a power that has been exercised to the very limit of its unspeakable and greedy possibilities.
Senator Elihu Root opposed the Federal Reserve system. In one of the most remarkable demonstrations of constructive oratory that ever fell from the lips of a statesman anxiously desirous of serving the best interests of the people of his own time and of future generations, he condemned the Federal Reserve Bill. Among the many truths he uttered was the following :
“This Bill (the Federal Reserve Act) proposes to put in pawn the credit of the United States. We are setting our steps in the pathway that brought Rome to its fall.”
In 1929 Senator Carter Glass, who was one of the sponsors of the bankers’ Federal Reserve Bill, twitted the great Senator Root by saying :
“None of the disasters prophesied by Root has yet broken upon the country.”
Unfortunately Carter Glass cannot repeat that statement now, for in the five years that have elapsed since he wrote his public confession of willing, though possibly unconscious, service to the Money Power, entitled “An Adventure in Constructive Finance”, every boast made by Glass has proven unwarranted and every disaster that Root prophesied has come to pass.
In 1912 following the Pujo money investigation, which was so ably counselled by Samuel Untermeyer of New Fork City, Louis D. Brandeis, then a practising attorney and now an associate justice upon the Supreme Court Bench of the United States, wrote his book, “Other People’s Money”, in which he sounded the same note that had been offered by Arthur Kitson in 1894, by saying :
“We must break the money trust or the money trust will break us.”
These pre-war advocates of monetary reform suffered the fate of all pioneer reformers. They were forced, like Cassandra of old, to watch disaster come despite their warnings simply because the people preferred to accept false promises of gain rather than words of wisdom uttered by wise and unselfish men.
When the crash came in 1929 everyone was assured that the bankers had the situation well in hand. A temporary depression was acknowledged. The public was informed that it was necessary to permit the bankers to effect certain unknown but practical adjustments in the monetary machine so that an even greater period of prosperity could be ushered in. Blindly believing in the leadership of bankers and financiers, the public waited in patience until confidence in the bankers gave way to open suspicion.
During the last five years a complete change in the attitude of every one towards money and the monetary system has taken place. In no class, group or individual was the change of attitude so complete and outstanding as that which appears when the utterances of ex-President Hoover made in 1928 are contrasted with his public addresses of 1932. In 1928 Mr. Hoover publicly declared :
“We in America to-day are nearer to the final triumph over poverty than ever before in the history of any land. ... We have not yet reached the goal, but given a chance to go forward with the policies of the last eight years, we shall soon, with the help of God, be in sight of the day when poverty shall be banished from this nation.”
There is no reason to doubt Mr. Hoover’s sincerity or his conscientious belief in the truth and practical possibility of his optimistic anticipation at that time.
Later on when trouble came, Mr. Hoover worked as no individual had ever worked before to avert disaster, and he failed because the task imposed upon him as President of the nation of maintaining prosperity was impossible under the bankers’ control and mismanagement of the nation’s monetary wealth. By 1932 Mr. Hoover, more than any other individual, was in a position to speak with the voice of authority based upon a knowledge of the actual facts. Then Mr. Hoover, notwithstanding that the private money system had always, under the Republican party, enjoyed the protection of a sacred institution, courageously acknowledged its failure through abuse, of privilege. Mr. Hoover was aware of the facts because the evils of the private money system had been brought over the doorstep of the White House and right into the President’s office.
According to Mr. Theodore G. Joslin, Mr. Hoover’s secretary, Mr. Hoover was compelled to work through June 27th and 28th, 1932, a Saturday and a Sunday, without rest, to avoid the tragedy of “the worst financial panic in history”. Mr. Joslin, in “Hoover Off the Record”, tells the public that upon those dates the difficulties of the Chicago bank of which General Dawes was the head were such that “confidential advices indicated that it might start a nation-wide panic” Mr. Joslin says that the enquiry following developed—
“That the Dawes bank had 122,000 depositors. The average saving deposit was only $140.00. In the banks threatened (if the Dawes bank was allowed to go under) there were 20,000,000 depositors who were unaware of their danger. They were in their homes, concerned with their own affairs and blindly indifferent to the insecurity of the banks that were the custodians of their money wealth.”
Mr. Joslin cryptically points out :
“That time and again on that Saturday and Sunday newspaper men called me up to know what the President was doing. The Lord save me. I told them he was resting. What else could I say ? Had I told the truth I would have ruined the banks from the Atlantic to the Pacific.”
It was no doubt the knowledge of this pitiful insecurity of the so-called “sound money system” which came to President Hoover at that time that induced him during the campaign of 1932 to promise banking reform in this unrestrained and caustic declaration :
“I stated that this depression has exposed many weaknesses in our economic system. It has shown much wrong-doing. There has been exploitation and abuse of financial power. These weaknesses must be corrected and that wrong-doing must be punished.
“The American people must have protection from insecure banking through a stronger system. They must be relieved from conditions which permit the credit machinery of the country to be made available without adequate check for wholesale speculation in securities, with its ruinous consequences to millions of our citizens and to national recovery. This the Federal Reserve system has proved incapable of doing. I recommend to the Congress the sane reform of our banking laws.”
This note of warning and promise of reform coming from the head of the Republican party indicated the possibility of a new deal for humanity in the administration of money and credit. It was not sufficient, however, to ward off the defeat of Mr. Hoover which was inevitable. Mr. Roosevelt was elected despite his promises to retain the gold standard and the private money system. However, necessity forced monetary reform into the forefront and made it the outstanding and most conspicuous issue at the moment of the new President’s inauguration.
On the 4th March, 1933, the banking structure of the United States collapsed and, to avoid a colossal panic in a chaos of bank failures, the entire American banking system was suspended. On this day President Roosevelt, the first President, as such since Abraham Lincoln, to seriously question the sovereignty of Money Power, offered to the people a scathing public denunciation of the private money system. Launching the New Deal programme, he declared :
“Nature still offers her bounty, and human efforts have multiplied it. Plenty is at our doorstep but a generous use of it languishes in the very sight of the supply. Primarily this is because the rulers of the exchange of mankind’s goods have failed through their own incompetence. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.
“Stripped of the lure of profit by which to induce our people to follow their false leadership, they have proposed only the lending of more money.
“They have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self seekers. They have no vision and where there is no vision the people perish.
“The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths.”
Now the importance of President Roosevelt’s statement is not only in what was said, but in the fact that it is an acknowledgement on the part of the leader of the Democratic party that synchronizes with the acknowledgement of the leader of the Republican party that the private money system has failed, not merely because of bad management, but primarily because of abuse of privilege. In spite of the fact that Hoover and Roosevelt have condemned the private money system, Money Power still rules in the Land of Liberty.
The subtle and sinister nature of the influence that the private money system wields is evidenced by the continuation of its domination over Roosevelt’s “New Deal” administration. Notwithstanding Roosevelt’s scathing indictment of Money Power, he has pursued a policy of borrowing at interest and has persistently refused to acknowledge and assert the power of government to create and issue money. Guided by the demands of the clamorous voices of orthodox finance, the Roosevelt administration has been enveigled into the adoption of policies under which the financial situation in the United States has grown steadily worse instead of better. Unless Roosevelt establishes a national banking system, his “New Deal” policy will continue to head into the dawn of nothing until it crashes in a tail-spin of economic confusion.
Repeating parrot-like the bankers’ jargonistic clap-trap about “honest dollars” and “sound money”, the leaders of the New Deal have refused to recognize that the nation is under-currencied and overburdened with unpayable debt. The New Deal has gone on blindly, borrowing dishonest credit dollars when it could have relieved the situation by issuing honest national dollars. Notwithstanding its enormous gold reserves, the New Deal government has intensified the shortage of money that existed when Roosevelt took office.
Under all the circumstances, the record of monetary facts presented by the Federal Reserve Bulletin of July, 1934, is amazing, for it is exactly contrary to what the public should have expected from the statements made by the President in his inaugural address. A nation, bankrupt for want of currency in March of 1933, finds itself at the end of a year more seriously under-currencied than ever. Here are the facts as the Federal Reserve Bulletin presents them :
MONEY IN CIRCULATION IN THE UNITED STATES
(In millions of dollars)
March, 1933 March, 1934
(1) Money issued by the gov-
ernment, legal tender cash 1,801 1,274, a decrease of 527
(2) Money issued by the
bankers .................. 4,517 4,118, a decrease of 399
Total .................... 6,318 5,392, total decrease 926
N.B.—
(1) Consists of gold coin, gold certificates,
standard silver dollars, silver certificates,
treasury notes of 1890, subsidiary silver,
minor coin, United States notes (greenbacks),
(2) Consists of Federal Reserve notes, Federal bank notes
and National bank notes.
The decrease of legal tender money and bank note circulation in the first year of the Roosevelt administration by $926,000,000 offers unanswerable proof that the destruction of the power of the nation to issue money is continuing. The money shortage, acute in 1933, has been accentuated by the withdrawal of gold and gold certificates from circulation and it is not likely that the issue of silver certificates will make up the loss of medium of exchange thus brought about. Up to now, the silver policy of the administration remains nothing but mere “political eyewash”.
It would appear from this record that while President Roosevelt is sound upon his personal attitude to the private money system, he is forced by some circumstances to follow out policies that are inconsistent with his own ideas. His difficulty, no doubt, is that of every other political leader. He knows that the private money system is wrong, but he is not in a position to set up a national monetary system that he is confident will work. The generous support, however, that an overwhelming majority of the American people has extended to his courageous leadership, should go a long way in convincing him that public opinion will support him in the establishment of a national banking organization that will serve the monetary and credit needs of the nation and the people. The recent appointment of Marriner Eccles, who learned his banking in the State of Utah, as Governor of the Federal Reserve Bank and the proposed $4,800,000,000 recovery programme indicate that Roosevelt is going to make his promises good.
The support Roosevelt has received is by no means confined to the people of the United States. His programme is supported throughout the British Empire not only by the British people but by leaders who recognize that Roosevelt’s recovery programme is of international and world significance.
Lloyd George, observing that Roosevelt’s war on high finance is thrilling a dark and troubled world with hope, added these words of commendation to the Roosevelt attack :
“The intrepidity with which he is fighting against the machinations of the established and arrogant priesthood of the golden calf is being watched with a thrill of admiration by those who, all the world over, have been suffering from its thraldom. If he wins he will have rendered a service to mankind which will exceed that of Lincoln when he abolished a more limited slavery.
“But his task is even more formidable, for the hierarchy he has challenged is powerful and its janissaries in all lands are federated in a well knit, well-drilled and well-equipped brotherhood in arms. They play into each other’s hands—they fight each other’s battles. If they fail, they will share each other’s ruin—if they succeed, they will divide the loot among themselves.
“In London and in Paris they are unassailably entrenched. To adopt the Scriptural quotation, ‘Judas is their law giver. Industry is their wash-pot and over successive ministries have they cast their shoe’.
“The President has resolved that this verse shall no longer apply to American governments and American producers.”
And I would like to add my prayer that the good God above may guide him in the great work he has in hand.
Lloyd George’s voice was not the only one that thrilled at the courage and new leadership which President Roosevelt was offering.
In similar vein, the Chamber of Commerce of the City of London has denounced the private money system as an outworn institution that hindered, rather than assisted, the production and distribution of goods. In its official publication, “The London Chamber of Commerce Journal”, in July, 1933, it said :
“That the conventions of the international gold standard system are so fundamentally opposed to modern social and economic conditions that no government could, even if it wished, give effect to them, must be evident to anyone who is prepared to recognize that he is living in the twentieth and not in the nineteenth century.
“Economic theories, wrongly described as ‘laws’, upon which the gold standard system is based, do not even recognize the existence of two of the biggest factors in the economic life of today, namely, the mechanization of agriculture, industry and transport, with displaced human labour, and the power which that mechanization has given to backward races with a low standard of living to undercut and so destroy the standard of living of the more advanced nations. The international gold standard system is an anachronism in the twentieth century; it can never again function, but as its high priests still hold sway over the nations and regard it as sacrilegious even to discuss alternative systems, there appears nothing for it but to await the further inevitable collapse of the structure built upon it.”
Dealing with the failure of the World Economic Conference, in the same issue, it said :
“Having evaded recognition of the root cause of the trouble which, as has been consistently stated by the London Chamber of Commerce for the last eighteen months, is a vicious monetary system, the Conference will now concentrate upon trying to mitigate effects, but the problems of tariffs, exchange restrictions and quotas cannot be solved until the monetary system has been reformed, nor can prices be raised and stabilized under the existing monetary system.”
Again in October, 1933, this eminent body of the British Empire returned to the attack stating: “As the Chamber has consistently stated for nearly a year and a half, the root cause of international fear and hostility is to be found in the international and national monetary systems. Internationally, the nations must have active ‘favourable’ balances in order to gain the disposition of gold or gold currencies. Those who are successful in this struggle are able either to take gold from those nations with ‘unfavourable’ balances, or to compel them to borrow the difference and so get more hopelessly into debt. Instead of trading for goods and services to their mutual advantage, the nations are compelled, under the system, to fight tooth and claw for ‘favourable’ balances — i.e., gold — under penalty of finding themselves in the degrading and miserable position of being in pawn to their successful competitors.
“There is no escaping the logical conclusion that either we evolve a new system under which nations trade for goods and services to their mutual advantage, or western civilization must collapse. The London Chamber of Commerce, nearly eighteen months ago, put forward a scheme which would render pointless the lowering of general price levels with a view to undercutting. A nation which exported goods and services would either have to take payment in goods and services from some other nation (although not necessarily the one to which it sent its export) or it would merely be making a present. State-subsidized exports would become purposeless. Tariffs, in so far as they excluded imports, would to that extent preclude exports. Exchanges would be immutably fixed, eliminating the speculator, and the fear of the moneylender would be removed.
“It is quite evident that if Germany’s export trade continues to diminish, the time will come when the external value of the mark will be, once more, in danger. Germany has no intention of going through uncontrolled internal inflation twice in one generation, and having regard to the trend of German thought in the last few years, it would not be surprising if she then declared all external trade to be a State monopoly. She would sell her goods abroad as Germany, just as Russia does; she would acquire pounds, dollars, francs, etc., for those sales, and with them would buy her necessary imports. There would be no exchange rate for the mark, just as there is no exchange rate for the rouble. Germany’s industry could then be put to work at 100 per cent. of capacity, and the surplus production thrown on to the markets of the world at the price it would fetch. Japanese and Russian undercutting would be mere child’s play compared with what could be done in this way by industrial Germany.”
In January, 1934, this great institution, representative of the outstanding business organizations of the British Empire, witnessed to the wisdom of the laws of God written by the ancient Hebrew writers more than 3,000 years ago, by declaring in the leading article of its official publication of that date entitled “Goodwill or Usury”:
“Humanity can have peace and goodwill, but it cannot have peace and usury.”
In February, 1934, this Chamber openly advocated the establishment of the “commodity dollar”, and said :
“It should be obvious to the British people by now that paper money which cannot be converted into gold, and bank money which has no physical existence whatever, even in the form of paper, will buy just as many goods, and is therefore just as valuable, as money which is convertible into gold. Since September, 1931, the money of this nation has been inconvertible, consisting solely of paper pounds and book entries, and yet one of these pound units will buy more goods now than it did before September, 1931.
“The absurdity of the whole gold standard theory will be realized when it is seen that merely by passing a law announcing that the American dollar contained half as much gold as before, the United States stock of monetary gold would, by a stroke of the pen, be increased from 4¼ to 8½ billion dollars. If, at the same time, no additional paper or credit dollars were issued—and they need not be—the value of the dollar in terms of American goods and services would remain exactly the same as before. If more dollars were issued, it would be this, and not their lessened gold content, which would raise prices. The United States legislature could, by progressively reducing the amount of gold alleged to be in each dollar, make a weekly present to the nation of many billion dollars’ worth of gold, until the moment arrived when, in an excess of enthusiasm, they passed a law announcing that the dollar contained no gold at all. Whereupon the gold would merely be worth what it would fetch as a commodity in the open market—some quite trifling percentage of its bloated legal value.”
Here we see the point of view of commerce and industry joining with Lloyd George, supporting the conclusions of Hoover and Roosevelt in the United States. This universal condemnation of banker rule has spread further even than that. Recently the Right Honourable W.L. MacKenzie King, speaking as the leader of the Liberal Opposition in the Canadian House of Commons, declared that “Liberalism stands for the sovereignty of the Canadian Parliament in the matter of Canadian money and credit”. Opposing the legislation under which the Bank of Canada (a bankers’ central bank modelled after the Bank of England) was being established in the Dominion in 1934 as a mere branch of the Bank of England, Mr. King, as leader of the Canadian Liberal party, joined the growing army of monetary reformers by offering this practical contribution to the discussion :
“Once a nation parts with the control of its currency and credit it matters not who makes the nation’s laws.
“Usury once in control will wreck any nation.
“Until the control of the issue of currency and credit is restored to government and recognized as its most conspicuous and sacred responsibility, all talk of the sovereignty of Parliament and of Democracy is idle and futile.”
In support of Mr. King, the Honourable J.L. Ralston, a distinguished Canadian statesman, effectively summarized the true position by stating :
“The control of credit and currency is the biggest and most important public utility in the activities of the nation. The central bank is a public utility and the citizens should not relinquish control of its administration.
“I am not one who necessarily champions public ownership at all times and in a11 places, but there are certain things that should be under public ownership or public control and certainly the very first and most important of these is the institution which controls, which guides, which directs the whale economic life of the nation.”
Political leaders and business men are not alone in this crusade. In the United States Father Charles E. Coughlin, starting in a small way in a suburb of Detroit, has rallied to his support in a demand for the establishment of a national banking system the greatest army of followers that any individual cleric has ever had in the history of ecclesiastical service. In Great Britain the Archbishop of York and the Dean of Canterbury are performing a similar work to that of Father Coughlin in the United States, and are receiving from the public an equally generous support.
The following extract from an address delivered recently in Great Britain by the Dean of Canterbury indicates that Church leaders are not failing the high responsibility of their calling :
“The ‘pernicious results of the private money monopoly’ were on the one hand, poverty amidst plenty, and on the other hand insatiable demands for expanding foreign markets (upon which toll can be levied) as the price for permission to consume a fragment of what could be produced at home. The one result caused revolt towards a Communist dictatorship with a repressive reaction towards Fascism; the other, a ruthless leadership in the face of shrinking foreign markets.
“To save English liberty three things are necessary. First, to regain the sovereign right of creating and controlling our own money. Secondly, to create money in the interest of industry, and make it as costless and subordinate to industry as railway tickets are to railway economy. Thirdly, to cause money tickets to reach the pockets of the whole consuming public in equitable quantities and adequate ways; so that the public as consumer has access to the things he needs and can produce.
“None of these things obtain today. First, we do not create our own money. Private companies, with the so-called Bank of England at their head, create over 90 per cent. of English money. They create it ‘out of the blue’ and levy perpetual toll for doing so. Banks create and destroy our money—I refer you to the Report of the Government’s Macmillan Commission—and he who creates money and flings it on the market or withdraws it again controls prices and fixes wages; he wields sovereign powers. His Holiness Pope Pius XI. rightly recognizes this when he says in words more drastic than I now utter, ‘Control of financial policy is the very life-blood of the entire economic body.’
“Secondly, industry is the slave of money interests. The quantity of goods produced is regulated by the quantity of money available, not the quantity of money by the quantity of goods. We restrict production to an artifically restricted market.
“Finance ceases to reflect reality. Money should, in fact, be as costless and subordinate to industry as tickets to a railway. What read railway company would dispatch empty carriages while passengers clamoured at the barriers for seats, and say the tickets have run out and the printers refuse a fresh issue. What railway indeed would allow, as we do, a private firm to traffic in its tickets at all ?
“Thirdly, money tickets do not reach the pockets of consumers; ‘shortage of purchasing power’ is the phrase. We as consumers cannot get what as producers we can make. Financial barriers hinder us. Finance no longer enables ‘A’ (say the Kent farmer), who makes what ‘B’ (say the Oldham weaver) wants and wants what ‘B’ makes, to supply each other’s needs.
“Obviously, and demonstrably, the rate at which money tickets are produced in factories, by wages, salaries, and dividends, and put into our pockets as consumers, is slower than the rate at which prices are generated in those same factories: thus, the National Bureau of Research estimates that in 1918 American industry paid out forty-five and a half billion dollars of money available to purchase consumers’ goods, and in the same year produced consumers’ goods to the value of sixty billion dollars. ...
“We must put purchasing power directly into the pockets of consumers, as a national dividend and a national discount. Obvious reasons of vested interest prevent the third course today. Banks can only levy toll if money goes to producers and through them to consumers.
“Yet the third remedy is reasonable; for to base maintenance on wages is precarious when machines progressively displace men. It is physically possible; witness our totally unimplemented riches. It is just; for the basis of our untold wealth, residing in the machines which harness solar power, and the science which multiplies our riches, are a communal heritage. They are not the perquisite of any one man or group of men, nor the perquisite of wage or profit earners. ...
“There, then, is the alternative which may save us. Shall we have it? Shall we create, control and distribute reasonably and justly our own money, and set the wheels of industry revolving for the benefit of all? Or, shall we endure starvation, see markets narrowing, see foreign trade shrinking, obey the call to tighten our belts, to buckle swords to our side, and at last fling our liberties away and cast ourselves at the feet of a dictator?”
The British-Israel movement is sweeping the British Empire with its demand for a Christian administration on the part of government and the elimination of the evil of usury from the social system. The Oxford Group movement, which is another powerful influence in the religious and moral renaissance that must come, is demanding that governments as well as individuals accept the laws of God as the guide for public as well as private morals and ethics.
Leaders in church, state and business are coming to know that the private money system, by placing the value of money above the value of human needs, has lost sight of the necessity of maintaining the going concern value of the real wealth that money was invented to create and distribute. All are agreed that there is no over-production measured in terms of intelligent human needs. All are agreed that if the people in every land could afford to purchase that which they would like to use in the way of goods that are now available or that are easily realizable, a shortage of almost everything would develop over night and unemployment in every field of endeavour would be unknown.
In addition to the expressions of enlightened and courageous leadership that I have pointed out, there are other facts that will compel us to destroy the power of the private money monopoly to use the nation’s right to issue money and credit or the stock-in-trade of the business of usury. Of these factors the competition of Russia and Japan is the most important.
Russia and Japan
In Russia and in Japan national governments have taken over the administration of national currency and credit. Vast programmes of public enterprise, including colossal preparation for war, are being maintained through an effective administration of currency and credit under the direct control of governmental authority. These nations are using their governments’ power to create and issue money to finance international trade and preparation for war. Sane leaders in Christian nations are recognizing that under a private money system they cannot compete with nations which establish a national administration of currency and credit.
The necessity for a new deal in the issue and circulation of the medium of exchange is rapidly coming to the place where no government, no matter what its feelings may be, can longer refuse to accept and put into practice the statements of the Right Honourable W.L. Mackenzie King, who summarized in a sentence the cause and remedy of the world’s present economic tragedy by saying :
“Until the control of the issue of currency and credit is restored to government and recognized as its most conspicuous and sacred responsibility, all talk of the sovereignty of Parliament and of Democracy is idle and futile.”
Would Roosevelt save Democracy as the priceless boon of American liberty by restoring to the people normal prosperity and rational progress, he cannot escape the adoption of similar ideas to those expressed by the leader of Liberalism in the Dominion of Canada.
No one can say that President Roosevelt has lacked in either courage or action. He has accomplished much when one compares the situation in the United States to-day with what it was when he took charge of the affairs of the nation. On the other hand, when one compares the situation today in the United States with what it should he, Roosevelt’s successes are far from gratifying. His failure to achieve complete success is due solely to the fact that no government under the private money system can finance the programme of reconstruction that the New Deal must undertake if it is to restore and maintain prosperity.
Inadequate Remedies
The expansion of the Credit Corporation into the Reconstruction Finance Corporation and the extension of unparalleled governmental assistance in the aid of bankrupt bankers, railways, agriculturalists, states and cities; the creation of farm and home loan banks; the resort to moratoriums and contributions in aid of housing; the promotion of unemployment relief through the expansion of public works and social services; the repudiation of the payment in gold due on foreign obligations; the inflation of gold from $20.00 to $35.00 an ounce; the withdrawal of gold and gold certificates from circulation; the abandonment of the convertibility of paper currency into gold; the purchase of gold with inconvertible credit and paper currency; the attempt to induce foreign nations to purchase deflated American currency with gold; the attempted development of planned economy and the regulation of prices by the destruction of food and the development of codified business standards and the innumerable other matters that have been undertaken in the name of the National Industrial Recovery Act; the repeal of the prohibition laws; the depreciation of the dollar in the realm of international trade; the elimination of child labour; the shortening of the hours of the labour day; the revaluation of silver and the issue of silver certificates; the partial recognition of the Soviet and the proposed establishment of a Soviet trade bank have failed and will continue to fail the government in its attempt to restore prosperity to the American people. This failure is due to the fact that under the present monetary system the government cannot, and the private bankers will not, finance progress.
As the third year of the New Deal for the “forgotten man” proceeds along its way of hope and experimentation, the futility of every effort made is proving to be a vindication of Brandeis’ conclusion that “we must break the money trust or the money trust will break us”.
This is coming to be the dominant idea among the foremost of Roosevelt’s unselfish supporters. Along with many others who have tried to assist the administration in every way possible, the late Senator Bronson Cutting of New Mexico, one of the most brilliant of the younger statesmen in the Republic, in friendly criticism, has pointed out that the failure of the New Deal is inevitable because, as he said :
“The announced objective of the present administration is to introduce national planning in order to adjust consumption with production. With private control of credit such a realization is utterly impossible.”
And Senator Cutting threatened that if the administration did not introduce a Bill establishing a national banking system he would undertake that responsibility himself.
Here, then, we have leaders in the political, ecclesiastical and commercial world uniting in a demand for the overthrow of the sovereignty of Money Power. It is in the unanimity of opinion that now exists that reformers should find their greatest consolation. But mere agreement that the monetary system must be overthrown is not sufficient. Before monetary reform can come, agreement upon the method through which it must be brought about must still be established. While there is, on the part of all those whom I have quoted and a legion of others, a demand for reform, little has yet been said about a constructive programme under which the reforms, universally recognized as both desirable and necessary, may be converted into practical administrative political action.
Now upon the proposition that monetary reform is both desirable and necessary to avoid destitution among the people and impotency on the part of the government, there is unanimity of affirmative opinion on the part of an overwhelming majority of the people of every nation. As yet, however, the details of the reform and the method of putting them into operation remain to be crystallized into a concrete plan of action. Leaders everywhere are denouncing the private money system, but it will persist until agreement upon another system of monetary management is developed.
Once we are agreed that our fundamental difficulty is one of finance, we should have no difficulty in readily perceiving that technological achievement, education, mass production, international trading, methods and practices, over-spending, and a host of other important factors too lengthy to enumerate, have nothing whatever to do with the root cause of our economic troubles. The root cause is the same today as it was 3,000, 2,000 and 70 years ago.
Our civilization has never adopted an effective means of financing permanent progress. That is not because effective systems for the financing of progress have not been devised. It is simply because Money Power persisted in managing the medium of exchange as a creative opportunity for private monopoly and prevented government from exercising its power to create and manage money as a means of assisting in the creation and distribution of wealth.
The biblical plan of monetary management nn a non-usury basis has always been before us. Lincoln, among many others, guided by that plan, worked out a monetary system which, partially applied, served the American people during the Civil War, and would have been effective in serving the needs of the people of the United States in Lincoln’s time and those of the succeeding generations had it been fully adopted.
Lincoln Had a Plan
An examination of the records which disclose the struggle that was waged between Democracy under the leadership of Lincoln and Money Power under the leadership of international bankers shows very clearly that Lincoln fully appreciated the creative power that government possessed in its right to create, issue and circulate money.
Lincoln worked out a national currency system. He recognized that whatever else had to be done, which is admittedly a very great deal, the first step in any plan to establish permanent progress is the creation of a sane monetary system under which an adequate supply of the medium of exchange can be sustained in effective circulation. He acknowledged and dealt definitely with the problems of circulation. He fully appreciated and suggested practical safeguards against the dangers of inflation. Recognizing the shortage of gold that existed in his own time and the inevitable intensification of that shortage with the coming years, he studied out and recommended to Congress all the essentials of a sane and sound system of managed national currency and public credit. His plan was not adopted, but it is available for adoption now. It contemplated the financing of progress by maintaining in active circulation that volume of effective medium of exchange which is essential to serve the needs of the people and to provide a life of ordered progress and peace in an age of plenty.
In my humble opinion, no modern or ancient book on economics, outside of the Bible, contains anything like the practical wisdom that is to be found in the recorded addresses and messages to Congress which Lincoln left as a priceless heritage to posterity.
A study of Lincoln’s record discloses that the great emancipator blazed the trail which Roosevelt must follow and expand if he is to lead the people of his day and generation out of the bondage of interest-bearing debt.
Let us come, then, to a consideration of the ideas that Lincoln formed and the background of actual experience upon which they were developed. Here, I believe, we will find the practical remedy anticipated by Lincoln which will not only cure our basic social and economic maladies, but which will make it possible for us to complete the conquest of poverty.
We will see as we study Lincoln the Economist that he had an infinitely better monetary background than any President since his time, including the second Roosevelt. Lincoln did not fall into the error of so many reformers who believe that the road to the conquest of poverty may be found through a re-distribution of existing wealth. He recognized the need for the creation and distribution of more wealth. He saw that the government, by creating money and putting it into circulation, would help both the creation and distribution of wealth. He was the last political leader in the United States to have held that conclusion. After his assassination the oligarchy of Money Power took control and the power of government to create money became the privilege of private profit-seeking monopolists.
It was there that the American nation took the wrong road, following the policy which had been established in Great Britain in 1844. It was the road that led to war, boom and depression crises, and the universal collapse of the banking and economic structures which commenced in 1929.
I think that by studying Lincoln’s struggle with the money changers we can secure a knowledge that clearly indicates the necessity for restoring to the government of the people the power and the responsibility of administering by stewards, responsible to the people, the currency and credit wealth of the nation for the people. When that is done true Democracy under Christian guidance may be established as an effective system of constitutional self government.