“HUGH McCULLOCH hamstrung the whole nation. His management of the finances, while it enriched him and made him a great London banker, has cost the American people more than the war did.” These words were uttered by Hon. William D. Kelley, and they are true as gospel. They would be equally true if the name of John Sherman were substituted for that of Hugh McCulloch.
That the constant aim and object of the manipulators of our financial legislation since the war has been to contract the currency and to burden the people with interest-bearing debt, thereby enriching the usurers and impoverishing the producing classes, is evidenced in the following brief summary of the eight principal enactments affecting money which passed Congress since 1861:
1. The Exception Clause. (Feb. 25, 1862.) In 1861 and 1862 demand treasury notes to the amount of $60,000,000 were issued by the government and made legal-tender money for all debts, public and private—equal to coin. Wall Street could not gamble in legal-tender paper money; so, as soon as the legal-tender act passed the House and was sent to the Senate, the Shylocks placed on the greenback what is known as the “exception clause”—“Except duties on imports and interest on the public debt.” This practically demonetized the United States treasury note, and cost the producing classes millions of dollars. The greenback “went down,” or, more correctly speaking, gold “went up,” until $1 in paper money was valued at only 37 cents when compared[compared] with gold. John Sherman said: “We purposely depreciated the greenback, to get sale for our bonds.” He was willing to destroy the people’s money to appease the greed of gold gamblers at home and abroad.
2. The National Bank Act. (Feb. 25, 1863.) This scheme was introduced in the Senate and advocated by John Sherman in the interest of bondholders and capitalists, just one year after legal-tender notes were authorized by law, and before sufficient time had been given to test their utility. The express object was to have the bank notes supersede the legal-tender notes, after the investment of legal tenders in bonds.
“I look upon the national bank, as now recognized by law,” says Myers in his “Money, Its History and Functions,” “as one of the most gigantic schemes for robbing the people ever devised by man. I cannot conceive of a single reason for perpetuating the system one day beyond the time required to settle its affairs. The national banks of this country have cost the people, in thirty years of their existence, over $6,000,000,000. The credit which the banker sells at from 7 to 15 per cent. costs him only 1 per cent. on actual circulation; hence it is virtually a present to him. He draws interest on this credit; on what he himself owes. His note is not money, nor is it in any sense a legal tender between man and man. It is simply a ‘promise to pay.’ The banker lends his credit, with which he has supplied himself by gift from the government, and the borrower pledges his wealth; the banker being far more secure than the holder of the banker’s paper. The banker takes pay for something he does not furnish; for the capital (wealth) is furnished by the borrower. So the banker gets something for nothing, and the borrower pays for that which he never receives.”
Banks are run on the deposits, rather than on any capital the banker himself may have. The patrons of the bank furnish the capital, and also the security. The banker lends other people’s money to other people; on this he draws interest; he conducts his business on your money and his credit, which you furnish him.
Now, if the government can afford to let the banker have credit at 1 per cent. on actual circulation, why can’t the treasury supply all the people with legal-tender money at the same rate? Why not issue the money direct to the people and then pay interest into the United States treasury, instead of into the coffers of corporate institutions? National banks are expensive luxuries which we don’t need. So let the people unite in demanding their abolition at once, and then institute in their stead United States banks, sub-treasuries if you please, backed by all the people, and hence absolutely safe. This would make a government for the people, instead of for the corporations. Let us do business on the credit of the people—on the credit of the government; not, as we are now doing, on the credit of banks and bankers.
3. The Funding Act. (April 12, 1866.) Commonly called contraction. This law authorized the Secretary of the Treasury to retire the legal-tender notes by investing them in 6 per cent. bonds. Contraction continued until some $1,500,000,000 were destroyed, and a corresponding amount of 6 per cent. bonds issued. The treasury notes, or legal tenders, were nearly all non-interest-bearing. This reduction of the currency was an outrage upon the people. The volume should have been increased to keep pace with an increasing population. But Shylock must have interest.
4. The Credit-Strengthening Act. (March 18, 1869.) This law provided that the legal-tender treasury notes be paid in coin, as also all interest-bearing obligations of the government. Prior to the passage of this law public obligations had been payable in the lawful money of the country; the greenback was lawful money, redeemable the same as gold and silver coin, except duties on imports and interest on the public debt. The credit of the nation was good, and needed no strengthening. The war was over, and the country was prosperous and the people contented. Why, then, add another burden?
5. An Act Refunding the Public Debt. (July 14, 1870.) This act authorized the issue and sale of $1,500,000,000 United States bonds, to refund 5-20 bonds and make them conform to the law of 1860. To fund means to put public obligations[obligations] into stocks and securities, making them interest-bearing.