CHAPTER I
THE MAGIC WORLD OF FINANCE
Though this is the twentieth century and enlightenment is supposed to prevail throughout this broad land of ours, the majority of people still regard the world of finance as the world of magic. Within the fairy realm of finance the laws of nature apparently are suspended, and, overnight, wonders are worked. The ordinary mortal, wise in all other walks of life, sees the man who yesterday stood beside him at the plough or at the bench emerging from the mysterious portals bearing the fruits of the endeavors of a hundred or a thousand lives, although a moment ago he passed through them with nothing. Who can deny the magic that thus demonstrates its power, or fail to accord veneration to the magicians that work such marvels? No wonder the ordinary mortal feels that he has no license to enter the world of finance save on his knees, hat in hand, bearing tribute to the divinities enthroned within this enchanted territory.
It is my purpose to do away with this extraordinary deception and to show it up as one of the artifices with which tricksters, since the beginning of the world, have imposed upon the people. There should be nothing in finance that any man or woman of ordinary intelligence and experience cannot understand, and I purpose to explain here the machinery of the "System" so that every one will exactly understand it from headlight to rear-end lantern. Many intelligent people have no clear idea of what a certificate of stock or a bond really is, and the words "money," "stock-exchange," and "finance" are mere terms which they glibly use without knowledge of their meaning.
It is not difficult to understand the grocery or the dry-goods business. Standard articles of well-known form are sold by weight or measure over the counters for fair prices. The patrons of such businesses insist on knowing what they are buying—what they are to get in exchange for the money which is the fruit of their labor, and then, after they have been told, and they trade, they require that the goods be as described or they will know why not. The average American would consider it a huge joke should his grocer undertake to induce him to buy one hundred times more sugar than he could use, on the ground that he might find in the sugar bags when he reached home gold and diamonds. But would he not wrathfully seek the police if, after opening his sugar bag, for which he had paid $1, he found it contained only 50 cents' worth of sugar? He would tell you if you met him at this stage: "You can bet that chap on the corner cannot get away with any such trick as that—not in America. He might in Zanzibar or in the kingdom of the Sultan of Sulu, but I will show him he cannot rob Americans in these enlightened times." The grocer would be hustled to jail without a "by your leave," and thenceforward his name would be a by-word among all honest tradesmen.
And so it goes in every business but finance—finance, the most important of all, the business into which is merged all other businesses, the business of taking and preserving the results of all other businesses, of all other human endeavor. Over our land to-day are big, able Americans, long-headed and experienced, adept at a jack-knife swap or a horse trade—industrious farmers, hard-handed miners, shrewd manufacturers, each in his own line a good business man, yet these sturdy traders, whom the "gold-brick" artist or the "green-goods" practitioner would never dream of tackling, come weekly into Wall Street, or into such branch shops as exist in every community on the continent, and are done out of their savings like the veriest "come-ons." Humbly they take, in return for the gold earned with the sweat of their brows, a piece of paper of a given value which they return later and exchange for half the amount the paper cost them originally. In the space between purchase and sale fifty per cent. of their investment has disappeared—has been filched away, but yet they have no resentment. They evince none of the feelings of the man whose pocket has been picked or whose till has been robbed. On the contrary, their sentiment is of admiration for the banker, the broker, the financier through whose agency their money has been lost.
Take, for instance, the prosperous tanner who goes to his banker with $100,000, the fruit of ten years' success, and exchanges this sum for 1,000 shares of Steel Preferred. Now, if he were to examine this security with half the thought or investigation he gives to a $500 car-load of bark, he would learn that there was not 20 cents on the dollar of real value behind it. In six months the eminent tanner is again at the banker's offering for sale his thousand shares of steel. In the meantime it has declined in value and he has to part with it for $50,000. But he does not complain; indeed, he bows his way out of the palatial office of the great man and is full of sincere thanks when the banker promises to let him know the next good thing on the market. Suppose our tanner had purchased ten cars of tan bark and found that each car-load was short ten per cent. Would he not at once go to his attorney and exclaim emphatically that he would spend thousands rather than let the scoundrel who had tricked him get away with his swag?
Suppose our grocer waxing rich invests his funds in the Sugar trust. He thinks he knows all there is to be known about sugar. The business of the trust is to make the sweet commodity and sell it to the people. No mystery or magic, surely, about this simple pursuit. Yet when our grocer invests his savings, the sugar stock is many dollars more valuable than when, scared into selling by fluctuations which he cannot see any reason for, he tries to get back his investment. So many times have investors been milked of their savings by this one trust during the past twenty years that in the coffers of its creators and jugglers are hundreds of millions of money that once belonged to the people for which they have received absolutely nothing in return.
Both the tanner and the grocer must know, when they look up and down Wall Street at the great office buildings which tower into the sky on either side of the street, that these are huge hives of expensive bees who, from New Year's to New Year's, do not produce a dollar. They should realize that the hundreds of millions spent each year for the expense of running the "System's" game, and the millions which the game-makers flaunt in their faces, must have been derived from such as they—the men who produce.
It is the phenomenon of the age that millions of people throughout this great country of ours come of their own free will to the shearing pens of the "System" each year, voluntarily chloroform themselves, so that the "System" may go through their pockets, and then depart peacefully home to dig and delve for more money that they may have the debasing operation repeated on them twelve months later.