Nequa; or, The Problem of the Ages

by Alcanoan O. Grigsby; Mary P. Lowe

"Such in brief, was the complicated, cumbersome and unscientific system of exchanging, or distributing wealth, which existed under the old civilization. The means of production being fixed by natural law were the same then as now. Wealth always was and must always continue to be, the product of human labor and skill applied to natural resources, facilitated by such mechanical contrivances and business methods as human skill may devise. But the system of distribution being entirely under human control is continually changing as affected by human impulses, whether they be selfish, as in the olden time, or altruistic as they are now.

"We now exchange a product for a product of equal value, for the convenience and benefit of all, without any charge except for the necessary labor expended in the production and distribution. But under the old civilization the product was first exchanged for money and the money was then exchanged with some one else for the product that was wanted in return. As a method of exchanging one value for another, this was a very awkward and unscientific process, but in and of itself it was not necessarily unjust and oppressive; yet the system such as it was, could be used by the greedy few who controlled the financial and commercial affairs of the country, for the purpose of exacting such exorbitant tribute from the many as would, and did, condemn the millions to poverty. The few, with their superior business sagacity took advantage of this semi-barbarous idea of a perpetual money token which was supposed to contain within itself an actual value, equal to the values which it was used to exchange, and they organized banking as the chief factor in the mechanism of exchange among themselves, which in its operations also gave them control of the perpetual money tokens which the people must have to carry on their ordinary business transactions with each other.

"These shrewd financiers had no use for money except to pay balances, and at the time of the end, ninety-seven per cent. of the great business transactions of the country were carried on by means of organised credit through banks and clearing houses. This system of minimising the use of legal money through banking methods, as a matter of course left a large surplus in the hands of the great operators, which was loaned to the people, who in their unorganised condition were compelled to pay cash. These loans bore various rates of interest, but always much above the average increase of wealth, and very often so exorbitant that the states for very shame's sake were compelled to establish certain arbitrary rates beyond which the money lender dare not go.

"It will be seen at a glance that this system of transacting the business of the country on a cash basis by the people and by organized credit through banks by large operators who controlled finance and commerce could not fail to give to the latter an enormous advantage in the aggregate business of the country. The great masses of wealth producers naturally became a debtor class. As all wealth was the product of their labor, they must necessarily create the means of paying all indebtedness, interest and principal. Hence they constituted the interest paying masses while the comparatively small number of large operators constituted a powerful creditor class who were continually receiving interest, and hence always had money to loan or invest in such a manner as to be able to receive more interest. And the larger the interest-charge against the people, the more they needed money and the more inclined they were to borrow. Cities and towns often voted a bonded debt upon themselves for improvements, for the express purpose of providing employment for the workers, so that business might derive some temporary advantage by having the wages expended in their midst. The great masses of the people did not realize that a part of the same dollars they borrowed most go back to the lender to pay interest, and that the consequent deficiency in the means of payment could only be met by transferring to the creditor a portion of the wealth created by their labor equal to the interest. And the larger the aggregate indebtedness in proportion to the volume of money available for debt paying purposes, the larger must be the deficiency to be met out of their savings, or what should have been their net income from the exercise of their producing power.

"But the interest on loans, public and private was only a small fraction of the burden of usury imposed upon the wealth producing masses. All the large industrial, financial and commercial enterprises of the country were on a debt-creating basis. Stock companies owned the railroads of the country; the streetcars, waterworks, gasworks and electric light and power plants of the cities; all the great manufacturing, mining and commercial enterprises; the steamship lines, and even vast bonanza farms and stock ranches. All these interests were operated with a view to paying dividends on the stock in addition to the operating expenses, and were therefore equivalent to a perpetual interest bearing debt, the principal of which never could be paid.

"This constructive indebtedness was intended to be perpetual, and its volume was not limited to the actual cost of the various enterprises that were incorporated. The railroads, for instance, sold stock to many times the cost of the roads, or as it was called, 'watered their stock,' and then they ordinarily bonded the roads for vast sums besides. These bonded debts however, were very often created for the purpose of bankrupting the companies for the enrichment of an 'inside ring.' This process was known as 'freezing out the stockholders,' and by thus reducing capitalization it was not necessary for the roads to exact so much tribute from their patrons in order to pay dividends. Other corporate enterprises also 'watered' their stock, and some of them got such a hold upon the people that they continued to pay exorbitant dividends on their fictitious valuation until they were absorbed into the larger combination of the whole people.

"At the close of the Transition Period the volume of interest bearing indebtedness and dividend earning investments was estimated at fifty thousand millions, and the average cost to the people six per cent. per annum, or an aggregate of three thousand millions every year to be taken out of the wealth produced by the people. The bulk of these obligations, public, corporate and private was held by the great banking institutions which had been established by the corporation and trust magnates, who practically owned the lands and all the machinery of production and distribution. They owned not only the indebtedness against the people but they controlled the medium by which it must be paid, and on their demand under the law, this medium of final payment was gold.

"As this great creditor class was the principal employer of labor and controlled both the buying and selling of products which the people must have for the purposes of consumption, thus fixing both the income and the expenses of the producer, it was not difficult to collect their tribute. A pro rata of the great annual charge of interest, dividends and profits against the people was collected from the producer in the shape of a discount on what he had to sell, whether it was his labor or its products. The remainder was charged up to consumption and constituted a part of the price that was paid for every article that was purchased. The cost to the consumer of every commodity purchased, consisted of five distinct elements: First, interest on the money supposed to be invested in its production and distribution; Second, rent upon all the buildings in which it had been stored, which would include cars or vessels used in transportation; Third, profit to all who had handled the product; Fourth, its pro rata of taxation and Fifth, the wages paid to the labor expended in its production, transportation, superintendence and distribution. This fifth element in the cost was all that went to useful labor, while the other elements went to the great financial, industrial and commercial combines which held the masses of the people in their grasp.

"Of course under the operation of this system, where both the income and the expenses of the producer were determined by this great creditor class for its own selfish purposes, it is not strange that the condition of the average toiler was one of poverty, nor is it strange that a widespread spirit of unrest, and often of angry and violent discontent threatened the peace of society and the perpetuity of established institutions and a stable government. But to us, it does indeed look strange that the brawny millions whose strong arms and undaunted courage had conquered the untamed forces of nature and made the wilderness a fit dwelling place for a refined and cultured people, could have been bound, hand and foot, by such a gossamer thread as the puny power of a few owners of gold. But when we take into consideration the fundamental truth that mind controls matter, and that the few who were at the top had cultivated brains while the many who were at the bottom had only cultivated muscles, the mystery is solved. The toiling masses had no conception of their power, and on their plane of intelligence were utterly unable to hold their own against the wily schemes of the more intelligent few.