The fact, however, that the use of silver and gold as our sole medium of exchange gives men control of the most essential things in our life, whom we never elected to that office and who at critical times have a personal interest to serve in opposition to that of the public welfare, is not the only evil connected with their use:
Silver and gold do not furnish us with constant standards of values. At various periods in the history of our civilization, gold and silver have been discovered in enormous quantities, and the effect of the discoveries and the putting of the gold and silver on the market has been and must be of a character to seriously affect the interests of all. When the amount of gold and silver in circulation is increased, prices go up, but wages do not correspondingly rise; and the wage-earner is unconsciously robbed. He goes on receiving the same amount in gold or silver for his work, but the purchasing power of the wage he receives diminishes. Again, when contraction takes place, as for example when silver was demonetized in 1893, a great wrong was done to the farmers who had borrowed money upon their farms; for by demonetizing silver, gold increased correspondingly in value and the farmer was called upon to pay his mortgages with money worth far more than it was prior to the demonetization of silver.
One thing, however, we want to bear in mind, that although farmers suffer by the demonetization of silver and wage-earners suffer by the demonetization of silver, and no change in the amount of silver and gold used as currency takes place without somebody suffering, the financiers and all those who handle money are in a position so to conduct their affairs as to profit by these changes. Meanwhile the rest of the community are in such a position that they have not the knowledge and even if they had the knowledge, would probably not have the ability, to do anything but lose by them.
The average citizen has no knowledge on these subjects whatever, and is therefore at the mercy of financial heretics. He was misled by the greenback craze in the 80's, by the silver craze in the 90's, and is subject to further delusions so long as coin remains the medium of exchange and coin is controlled by a few individuals whose only interest in it is to make out of it the largest fortune possible.
It must not be imagined that an attempt has been made to furnish anything like an exhaustive account of the opportunities which financiers have for profiting at the expense of the public. To do so would require a volume as large as this one devoted entirely to this subject.
For example, at this very time of writing,[129] the papers inform us that Mr. Morgan is hurrying back from Europe to settle the question whether a dividend is to be paid on the common stock of the United States Steel Company. It is known that Mr. Morgan received a very large block of this stock as his compensation for promoting the trust. If he still has enough of this stock to make the payment of a dividend of importance to him, or if he wants to sell at a high price, he will be naturally influenced by this motive to declare a dividend. If, on the other hand, he who best of all knows how prosperous the Company is, desires to purchase more of this stock at a low price, he will be tempted not to declare a dividend. The stock will fall and he will be able to make a large profit by purchasing.
In this manner directors are always able, if they choose, to make money on the declaration of doubtful dividends; and this can be done without its being possible to impute any blame to them, for a declaration of a dividend is always a matter of judgment. It is wise to put aside a certain part of the profits as a reserve to meet hard times, and just how much shall be put aside as a reserve and how much shall be paid out for dividends are matters on which it is very difficult for the best-intentioned men to agree. The directors, however, who control the company can make up their minds beforehand whether they will declare a dividend or not. If they propose to pass a dividend, they can sell as much as the market permits and buy back later at reduced prices. If they decide to declare a dividend, they can buy as much as the market permits and sell later at advanced prices.
Again, there seems to be no standard of morality amongst bankers as regards the profits they make. In the ordinary walks of life, a man is expected to be able to explain what the services are for which he receives any considerable sum of money. This, however, does not seem to be the case with bankers. In 1893, the United States Congress appointed a committee to investigate the rumor that over a million dollars had been remitted to J.P. Morgan & Company, Winslow Lanier & Company and J. & W. Seligman for the purpose of corrupting Congress. Messrs. Morgan, Lanier and Seligman were obliged to admit that a sum of $1,200,000 had been divided among them, "apparently for the use of their names and for nothing else." When asked if it had been remitted for the purpose of corrupting Congress, they denied it; when asked if they were still in possession of this sum, they admitted they were; when asked what the services were for which they had received this sum, they naïvely stated that they did not know.[130] Such an admission made by a lawyer would be ground for having him disbarred.
The very moral or immoral attitude that permits of bankers receiving enormous sums of money without being able to explain why these moneys were paid to them, pervades the whole financial atmosphere.
The directors of our large corporations corrupt our legislatures; they endow universities and pervert our education; they support the churches and prevent them from preaching the doctrines of Christ; they determine elections so as to secure legislators whom they can control. They are masters, not only of our whole system of production and distribution, but of our government and our laws. And this democracy which in theory is a government of the people, by the people, and for the people, turns out to be a government of the people, by financiers, for financiers.