That is what it really costs the money masters, the Invisible Empire of the U.S.A. and the Federal Reserve System—three-tenths of one per cent—for the practical control in perpetuity of the mightiest mass of liquid wealth ever massed on earth! Look at this in cold blood! Figure what it would mean to you if you could get the use of a petty $100,000 at three-tenths of one per cent interest! Then figure what it means to them to have the use of 20,000 times $100,000 at three-tenths of one per cent interest. Gives you an attack of vertigo, doesn't it?
Member banks and their stockholders and depositors furnish this titanic amount of practically $2,000,000,000 at three-tenths of one per cent interest and then member banks are graciously permitted to borrow from the Federal Reserve Systemtheir own moneyat rates varying fromsix to eighty-seven and one-half per cent per annum. Impossible, you say? Not even organized Federal Reserve banditry, not even Amalgamated Shylockery, would have the supernal gall to so sandbag productive industry?
Here are the figures taken from the records of the Federal Reserve Bank at Atlanta, from the records of the Federal Reserve Board at Washington and from the records of the Comptroller of the Currency at Washington. The Governor of the Federal Reserve Bank at Atlanta, the Governor of the Federal Reserve Board at Washington and the Comptroller of the Currency at Washington—each of them and all of them—are hereby challenged to refute or question their absolute correctness and authenticity.
In a small town in Alabama was struggling a small National Bank. Its capital was $25,000 and its surplus was $12,500. It was a compulsory customer of the Federal Reserve Super-Shylockery sucking blood at Atlanta, Georgia. Its money had been commandeered by law to buy stock in the Super-Shylockery. Its reserve deposits had been conscripted by law to feed pap to the same parasite. It served the cotton industry—the breath of industrial life in its territory. Its name is not given because identification might work it great harm—but the Federal Reserve Oligarchs know its identity. Don't you ever doubt it.
This little National Bank in Alabama was in the grip of the Federal Reserve Octopus. It had to move the cotton crop in its territory. Farmers, planters, merchants—and in short, all industry in its territory including its own salvation—depended on the moving and on the marketing of the cotton crop. It was "root hog or die" and this little bank rooted and was looted precisely in this wise: It had to borrow from the Federal Reserve Super-Shylockery at Atlanta. It had no other house of refuge. It had to borrow something over $100,000 from the Federal ReserveBank at Atlanta and for the week's period ending on July 31, 1920, it was charged and it paid as high asthirty-one per cent per annum interest! Two months later when its loan reached as high as $115,000 it was charged and it paid as high aseighty-seven and one-half per cent per annum interestto this subter-human super-Shylock. For the two weeks ending on September 30, 1920, it was borrowing an average of $115,211. Two weeks' interest at six per cent would have been $288, but the records show that this little bank paid the Federal Reserve Pawnbrokery at Atlanta for interest on that amount for that time $2,189—running all the way from six toeighty-seven and one-half per cent per annum! The actual average time for this loan for that two weeks' period was almost exactly at the rate offorty-five per cent per annum, or at the rate of $51,884 per year for the use of $115,211! In about nine months that loan of $115,211 at that rate would have eaten up the capital and surplus of that little Alabama National Bank. Was that banking or was it putrid pawnbrokery? Oughtn't the Federal Reserve Bank at Atlanta to put the three ball sign of pawnbrokery over its portals?
And yet you read subsidized headlines sprawled athwart the columns of a lick-spittle press about "Agricultural Interests Fostered by Federal Reserve Banks" and "Farmers Aided by Federal Reserve System" and messes of the like "bull" and"bunk" fed out by paid press agents and absorbed by a befooled people chained to such pawnbrokery! "Aided" by a sandbag! "Fostered" by pawnbrokery thuggery! It's enough to make a "kike" pawnbroker sob and moan at his soft-heartedness. It's enough to make Olomon Solomon Levi pull down his three balls and wail in the Synagogue!
Later on and for what real reason no one knows—except that it wasn't from soft-heartedness—a portion of the usurious loot was disgorged by the Atlanta Federal Reserve pawnbrokery. That isn't really interesting. What is really interesting is the super-supernal and subter-brutal gall to first extort it. Many a usurer when caught and cornered has disgorged loot—that's as old as usury. Jesse James' press agent could boast of as much. When grilled on this interesting subject the multi-initialed Governor Harding of the Federal Reserve Board chittered and chattered about "basic lines of credit" and "progressive rates of interest," but that doesn't chlorinate such sandbaggery. Any pawnbroker can mutter and mumble such phrases.
When a bank has to pay up toeighty-seven and a half per centinterest you can imagine what its customers must pay it.
And at the very time—during these very two weeks ending September 30, 1920—when this little Alabama National Bank right at the door of realproduction was being charged those Shylock rates for a paltry loan, banks in New York were getting as high as $100,000,000 handed out to them at fromfive to seven per cent. And yet you read about the Federal Reserve System "equalizing interest rates," "emancipating credit" and the like bunk! Why, it's enough to make Shylock and Pecksniff rend their cerements and jump from their graves and have another try at extortion and at applied hypocrisy. A difference ofeighty per cent per annumbetween New York City—where nothing but parasitism is grown—and Alabama—where real wealth of real cotton grows—is some difference, isn't it? And the eighty per cent difference coddles parasitism and penalizes production. This isn't the only sandbaggery of extortion perpetrated by the Federal Reserve oligarchy. But it's a pretty good example, isn't it?
Now take a look at the twelve regional pawnbrokeries for the year 1921 in the order of their pillagements. Here they are:
You would expect to find—from the facts set forth in the first part of this chapter—that the most conscienceless of these gentry, the Atlanta super-Shylockery, would show the hugest pile of pillage, and it does! On a paid in capital of $4,189,500, it vampired and blood-sucked out a net profit of $5,496,000, or 131.18 per cent. What the other vampires blood-sucked out you can read from the above table. You know the net earnings made by banks where you live. You know that a net earning of 12 per cent is a large one, but here—in a year of general disaster and of huge losses—you have an average net earning for these twelve vampires of production of 79.56 per cent or over six times the average net earnings of National Banks for a long term of years!
Ask yourself if this enormous net earning percentage, made out of commandeered capital and out of conscripted deposits, isn't outside the realm of banking and in the realm of unconscionable vampire pawnbrokery? Ask yourself—in a land where pawnbrokers are licensed and restricted to two to three per cent a month or 24 to 36 per cent per year—if 79.56 per cent per yeardoesn't brand such a system as outrageous Shylockery?
But that isn't the worst of it. Before making these net earnings this Federal Reserve System sandbagged out an "expense account" of $36,066,065, or an average of $3,005,083 for each regional pawnbrokery. The most reckless expense squandermaniac was the New York sandbaggery with an expense account of $8,167,780, and the most economical was the Minneapolis satrapy with an expense account of $1,325,867. In a succeeding chapter reference will be made to these expense orgies. But ask yourself if, in a year of commercial disasters and of enforced economies, such leviathan expenses aren't an outrage? Ask yourself if such squandermania—imposed upon the producers of real wealth—by bureaucratic pillagement isn't alone and in itself an alarm clock?
Here is a table showing the location, the capital and the piled up pillagements of these twelve regional pawnbrokeries:
Upon this capital (commandeered at a petty 6 per cent) and from its gigantic deposits (conscripted at no per cent) this super-vampire Federal Reserve System has in a few brief years—after paying stupendously extravagant expense accounts—piled up an accumulated pillage of $215,523,000. Do you know or do you know of anybody who does know—outside the magic circle of Hebraic pawnbrokery pillagement—of any such banking pillagement for the years 1914-1921, inclusive?
And incidentally these mazuma monarchs have $42,231,240 invested in the palatial emporiums where they ply their traffic and gild their pills of pillage—to which reference will later be made.
Why don't you find these facts elsewhere? Why have they been hidden from you? Why doesn't the "Independent Press"—about as "independent" as a shackled slave—blazon them forth? Why don't editors of "Fearless Magazines"—about as "fearless" as a galley slave at the oars—ring the tocsin of alarm? Learn why here and now. Because in plain Americanese, they haven't the"guts." These Federal Reserve money despots have the press of this land "buffaloed" and "hog-tied"—and "hog"-tied is particularly right too. Through their credit channels these Federal Reserve despots have a strangle hold on the banks and on the advertisers of the U.S.A. and the banks and the advertisers have a strangle hold on the press and there you are! Federal Reserve propaganda tinted and tainted with the extract of gold is published by the yard. But the real facts, the interesting details of pillage are all surrounded by Maxim silencers!
The next chapter will tell you of the Partiality of the Pillage.
CHAPTER VIII
THE PARTIALITY OF THE PILLAGE
dropcapsERE is the idea. For reasons best known to themselves Federal Reserve Oligarchs penalize production and favor parasitism. Who are really entitled to the largest loans from the huge storage or reservoir of Federal Reserve money? Why, the real producers of the real wealth, the agricultural interests in the U.S.A. Have they had it? They have not. Look at the figures—official, please remember—as of January 1, 1920, when the Federal Reserve "Drastic Deflation" Drama was beginning to be staged.
At this time the Federal Reserve Bank of Atlanta was lending to all its member banks in the States of Georgia, Florida, Alabama and parts of Louisiana, Tennessee and Mississippi a total of $88,000,000 and had "bought paper" to a total of $16,000,000—and that included some $10,000,000 which it was loaning to other Federal Reserve Banks, principally in the North for speculativeloans. Mark that down—$94,000,000 of loans covering that enormous area of production.
At this same time the Federal Reserve Bank of St. Louis was lending to all its member banks covering the greater part of Missouri, Arkansas and parts of Illinois, Indiana, Kentucky and Mississippi $80,000,000 and had $31,000,000 of bought paper—including $20,000,000 taken from other Federal Reserve Banks. Mark that down—$91,000,000 of loans in that area of production.
At this same time the Federal Reserve Bank of Kansas City was lending all its member banks in Kansas, Nebraska, parts of Missouri, Oklahoma, Wyoming and Colorado $88,000,000 and had $17,000,000 of bought paper. Mark that down—$105,000,000 of loans in that fertile area of production.
At this same time the Federal Reserve Bank of Dallas was lending to all its member banks in all of Texas, parts of Oklahoma, Louisiana, New Mexico and Arizona $57,000,000 and had $6,000,000 of bought paper. Mark that down—$63,000,000 of loans in that vast area.
At this very time, in January, 1920, one huge speculative bank in New York City was borrowing of the New York Federal Reserve Bank $130,000,000! This one New York Bank—catering to speculators, to money masters, to "corner" builders and to "high financiers," not even remotely connected with the real production ofreal wealth—was borrowing more money from the New York Federal Reserve Bank than the Federal Reserve Bank of Atlanta or of St. Louis or of Kansas City or of Dallas was lending to their member banks in their huge areas of real production of real wealth! And not only that, but at that very time the Federal Reserve Bank of New York was borrowing of other Federal Reserve Banks $100,000,000 to hurl into the New York maelstrom of speculation!
And not only that, but at that very time all the money which all the twelve Federal Reserve Banks in the U.S.A. were lending on agricultural and live stock paper to the 9,000 member banks in the 48 states of the U.S.A. amounted to the pitiful and piffling sum of but $51,068,000—not one-half of the amount borrowed by one speculative bank in New York from the New York Federal Reserve Bank. At that time agricultural interests, particularly in the South, and live stock interests all over the land were beseeching the Federal Reserve Oligarchy for money and beseeching in vain.
Take another look at the official figures for the month of November, 1920. At this time the real producers of real value—in the West and the Northwest and in the South and the Southwest—were gasping for money and credit. Bear in mind that their property, their production and their toil forms the real foundation for the vastsuperstructure of American wealth. Where you find a lily-fingered parasite lolling in a mahoganized eyrie of splendor and gambling with money—the tokens of production—you find a battalion of real producers in the great stretches of America toiling to produce real values. If there is to be any discrimination, if there is to be any partiality shown by the overlords of the Federal Reserve System, it ought to favor production of real wealth, and not parasitism gambling with its proceeds. When there was this drouth of credit and money where real wealth is made, how was the Federal Reserve System opening its irrigation gates of money? It shut them in production's face and opened them wide at parasitism's demands.
At this very time—in the middle of November, 1920—one speculative bank in New York borrowed $134,000,000 from the Federal Reserve Bank in New York, or $20,000,000 more than the Federal Reserve Bank of Kansas City was lending to the 1,091 member banks in the Tenth Federal Reserve District.
Another speculative bank in New York borrowed from the Federal Reserve Bank in New York $40,000,000 more than the Federal Reserve Bank in Minneapolis was lending to its 1,000 member banks in Minnesota, North Dakota, South Dakota, Montana and part of Wisconsin.
Another speculative bank in New York borrowed from the New York Federal Reserve Bank $30,000,000 more than the Federal Reserve Bank of Dallas was lending all its member banks in all its huge territory.
Another speculative bank in New York borrowed from the New York Federal Reserve Bank $20,000,000 more than the Federal Reserve Bank of Richmond was lending to all its member banks in the Fifth Federal Reserve District.
Massing these gigantic figures in another form, the fact is that at the time four speculative banks in New York were borrowing from the New York Federal Reserve Bank an average of $118,000,000 apiece—or practically as much money as the Federal Reserve Banks of St. Louis, Kansas City, Minneapolis, Dallas and Richmond were lending more than 4,000 member banks in 21 states comprising more than half the entire area of the United States!
If this isn't coddling parasitism and penalizing production, you find a name for it!
Millions by the hundreds for parasitical speculation, for the pounding down of prices in "short" markets in a "bear" campaign waged against real values and millions by the paltry tens only for the real producers of real wealth! If these actual figures don't batter down the "prop" of Federal Reserve propaganda about "furthering agricultural interests," nothing will. "Furthering agricultural interests" with a bludgeon! "Equalizing credits" with a meter of equality so stretched as to enwrap parasitism! If these actual figures don't convict Federal Reserve Oligarchy of the height of Pecksniffian hypocrisy it's convict-proof! Look over—and don't overlook—these figures. You can't consider them in cold blood without irresistibly concluding that Federal Reserve Oligarchy pampers parasitism, penalizes production and bestrews its gigantic resources by favoritism instead of by merit. It is obsessed by a squandermaniac prodigality for speculation and by a niggardly parsimony for real production of real wealth. It exalts the tokens of wealth and the jugglers of it far, far above its real producers. It reaches out almost limitless largess to the pinnacles of parasitism while practically starving the real makers of real wealth on whose shoulders parasitism gaily rides. It shovels out hundreds of millions for speculation and serves with an eye-dropper tens of millions for production. It's unfair, unjust, inequitable and Janus-faced. It mumbles and mutters and chitters and chatters and propagandizes about "equalizing credits" and "emancipating credit," while in truth and in fact it is grossly discriminating in its credits and instead of "emancipating" credit enchains it to the golden chariot of speculative splendors! That's what it really does and that's the true tale of its Partiality of Pillage.
CHAPTER IX
THE TRAGEDY OF DRASTIC DEFLATION
dropcapsOUR money masters, the Federal Reserve Board at Washington and the twelve tentacular Federal Reserve Banks in their regional satrapies, staged in 1920 the greatest financial debacle in human history. They were, and they are, as much your money masters, as was ever a slave-holder the master of his human chattel. Your labor and the produce of your labor—in whatever capacity you worked—were, and are today, as completely under their control as was ever the labor and the production of the labor of slavery before Lincoln's Emancipation Proclamation chiseled chains. So long as you exist in the U.S.A. and the Federal Reserve System exists, the lash of these money masters will writhe over your back and you must cringe under its sting. Make no mistake about that. No sceptered king nor bedizened kaiser ever wielded a tithe of the power which rests in the cunning brains and in the ruthless edicts of these money masters.
Here are the facts. Read first these quotations from their own lips and from their own pens which prove that these Federal Reserve oligarchs deliberately staged the greatest financial debacle in all human history. Nothing in human history approaches it for cold-blooded, wanton, ruthless slaughter of values.
"Credit must be brought under effective control."
"The Board (meaning the Federal Reserve Board) will not hesitate to use every statutory power to regulate currency and credits."
"Our present task therefore is to proceed with the deflation of credits as rapidly and as systematically as possible."
If for "deflation" you read "destruction" you get the real intent and the real meaning of these ichor-veined assassinators of real values. Don't let these word jugglers and these money jugglers confuse you with their lacquered language. When they say "inflation" what they really mean is increase of values and when they say "deflation" what they really mean is destruction of values.
The tragedy was staged in 1920—about fourteen months after the World War was closed—but it didn't get going good and strong until the summer and fall of 1920. After the summer had arrived, after grain and cotton were in the ground, after cattle and sheep were on the ranges, after merchants' stocks were on the shelves, after factories had run at full capacity and after all producers and merchandisers were hopelessly committed and couldn't retrace their footsteps, the lash fell. Or to change the figure the trap wasn't sprung until every foot was within its iron ring.
The first proof of a murder is the corpse and here are the corpses of murdered values just as they were struck down by the Federal Reserve bludgeon. Look at them.
Here you get from January, 1920, to August, 1921, when these value assassinations culminated, a corn debacle of 92 cents a bushel and a cotton debacle of 28 cents a pound. If you had known that this value assassination was en route and had "gone short" 1,000,000 bushels of corn you could have robbed the corn growers of this land of $920,000, couldn't you? And some "high financiers" did that very thing. If you had known that cotton was going to shrink at least 28 cents a pound and had "gone short" 10,000 bales (500 pounds to the bale) you could have robbed the cotton growers of this land of $1,400,000, couldn't you? And some high financiers did.
Take a look at some more value murders.
A destruction of $1.40 a bushel on wheat and of 74 cents a pound on wool ought to satisfy the most murderous destructionist of values, oughtn't it? You can make your own computations as to the millions coteries of "bears" could make—and doubtless did make—out of these value assassinations.
Have some more views of values on the toboggan.
When you grease the toboggan with $2.81 a barrel on oil and $7.16 a hundred on steers you can slide a good many millions of dollars into themaws of foresighted "short sellers," can't you?
This panorama of value murders could be continued for pages of tables. They all tell the same story. Granulated sugar dropped in the same time from .15 cents a pound to .05 cents a pound; copper ingots from .19 cents a pound to .11 cents a pound; cotton yarn from 72 cents a pound to 25 cents a pound; pig iron from $37.75 per ton to $18.20 per ton; hides from 40 cents a pound to 14 cents a pound and so on down the line.
These are the corpses strewn all along America's highways of production. What was the bludgeon which hit all these commodities on the head and drove them into the pit of loss? It was the persistent, wanton, ruthless and cold-blooded calling of loans and refusal of bank credits and contraction of currency by Federal Reserve oligarchy. They said they'd do it and they did it—aplenty. Here is the bludgeon, look at it.
Their total of all loans and discounts including "bought paper" in all of the twelve Federal Reserve Shylockeries stood around from $2,700,000,000 to $3,000,000,000 from January to October, 1920, when the bludgeon pounded hard. Here is the bludgeon. Look at it in action.
And from May 28, 1920, to January 25, 1922—when the slaughtered were piled the highest—the twelve Federal Reserve Shylockeries hammered and battered down their bank credits in the leviathan sum of $2,005,149,000, or from $2,938,031,000 to $932,000,000! And incidentally the circulation of Federal Reserve notes contracted in the same period by the stupendous sum of $923,020,000! So that from May 28, 1920, to January 25, 1922, the Federal Reserve oligarchy—at their will or at their whim or for hidden purposes—contracted bank credits and currency by the titanic total of $2,928,169,000, almost $3,000,000,000, almost 3,000 million dollars. That was the pile driver battering your values down into the mire of loss.
Take now a look at the financial corpses so slaughtered. Here they are. Look 'em over and don't overlook the hands that killed them.
In 1921 there were 19,625 business failures as compared with 6,451 in 1919, or an increase of 13,174—more than three for one. And the liabilities reached the stupendous total of $627,401,000, an increase of $514,000,000 over 1919, more than five for one. In the so-called panic year of 1907, the high tide of business failures, liabilities were only $197,000,000, as against $627,000,000 in 1921. Why, if 1907 was a "panic year," 1921 was a pandemic year!
And here is another destruction meter, absolutely infallible—the suicides. In the first six months of 1921 there were 4,527 men suicides, as against 1,810 for the same period in 1920; 1,982 women as against 961; 214 boys as against 88 and 293 girls as against 137—7,016 suicides for the first six months of 1921 as against 2,996 for the same period of 1920. The enormous increase in men suicides—over two and one-half for one—tells its own story. They came from all classes, bankers, merchants, farmers, laborers and professional men. None know how many of this enormous increase, the largest since statistics have been kept, were driven to desperation and to death from hunger, from unemployment, from the loss of life's toil or from the failure of enterprises in which they had spent their lives. No statistics can summarize human emotions, but they can tell and they do tell of the greatest holocaust of suicides ever ravaging this land—undoubtedly due to industrial tragedies staged by the cold blooded butchery of production. This much is certain. Never before in a given timein this land has there been such a holocaust of failures, of suicides and of unemployment. Never before in this land were such sacrifices laid on the twin altars of Moloch and of Mammon. And they precisely correspond in time with the Tragedy of Drastic Deflation!
During all this time and particularly beginning with the late summer and early fall of 1920, individuals, associations, committees and organizations representing farmers, planters, cattlemen, manufacturers, bankers and merchants—in short, representatives of all industries—were entreating and beseeching Governor Harding of the Federal Reserve Board and his associates to be more mild and more lenient and more reasonable in their drastic tragedy of destruction. They might as well have besought a cyclone or entreated a tornado or prayed to an earthquake. Cold-bloodedly, relentlessly and wantonly loans were called, extensions were refused, renewals were tabooed and bank credit put on the chopping block. The very people whose toil and whose labor and whose real wealth were building the magnificent palaces wherein these Shylockeries were housed and were paying the exorbitant salaries of these money despots were being ruined by their servants! The Federal Reserve System at that very time had a loaning ability of over $2,000,000,000 more than it then used and not only wouldn't use it, but contractedits loans by $2,005,149,000 and currency by over $932,000,000. Instead of aiding production, it throttled it. And instead of aiding the producers of commodities to carry them it forced producers to market them at most ruinous losses! Instead of dropping the curtain on this Tragedy of Drastic Destruction, it ran it to its close! It staged the greatest debacle of blasted credit, number of failures, magnitude of liabilities, suicides and unemployment ever witnessed in this land. It did it deliberately, ruthlessly and as per program too.
Go back over these figures, all taken from official records—all undenied and undeniable—and ask yourself if ever before in human history the industries and credit of a successful nation and successful in the greatest War ever waged, too, were so butchered? These figures indict and convict the Federal Reserve System, as it has been maladministered, as the arch betrayer of a people's trust. It indicts and convicts them as juggling with the symbols of value to the destruction of real values. No sane man can read this record, frozen into Government statistics, and defend the oligarchs who made it. It never was "deflation." That is just a sonorous euphemism to disguise sandbaggery. It was destruction to scores of thousands and to hundreds of thousands of the real producers of real wealth. Billions of dollars of real values were annihilated, not by the trendof the markets, but by artificial "bear" markets artificially created by the throttling of credit. You can't withdraw literally billions of credit and currency—almost three billions of them—the very life-blood of commerce from industry and have it thrive any more than you can tap a man's jugular vein and have him live! That's what really happened in this Tragedy of Drastic Destruction.
And upon whom did this Tragedy bear the hardest? Upon those least able to endure its fearful pressure—the farmers. Bear in mind that farming is not only the largest industry in the U.S.A., but it is the only absolutely basic industry—the keystone upon which rests the entire industrial superstructure.
Here is what this Tragedy of Drastic Deflation did to the farmer as measured for the years of 1919, 1920 and 1921.
In each of these years there was practically the same acreage under cultivation, 350,000,000 acres. In 1919, farm products were worth $39 per acre, in 1920, $26 per acre and in 1921, $16 per acre. Here is where the Federal Reserve credit crusher pulpified the finest—at the very foundation of all industry! The production of these basic farm products—the real foundation of all this FederalReserve splendor—was practically the same in volume for these three years, but the Federal Reserve credit crusher crushed it from $39 to $26 to $16 per acre measured by its purchasing value! That's the Tragedy of Drastic Deflation in its final analysis battering down the money value of America's basic industry almost two-thirds! But the profits of the Federal Reserve System—and its exorbitant expense account and its lavish salary rolls—kept off the toboggan down which slid all the others!
CHAPTER X
THE PALACES OF THE MONSTER
dropcapsEDERAL Reserve Oligarchy houses itself most palatially. There is nothing in Government annals or in corporate prodigality private or public to anywhere approximate the absolute squandermania of Federal Reserve obsession for luxurious quarters.
If you want in your city a Post Office Building, a Federal Court Building or a Custom House Building you must lobby and beseech and petition and "trade" and pull wires in Congress until you do—or don't—get it. But it's different with Federal Reserve satraps. By merely a Federal Reserve ukase or decree or resolution or order an Aladdin's Palace arises like magic—paid for by your money. No such squandermaniac obsession has ever before been seen in this country in prodigality of buildings, in luxuriance of equipment or in splendor of quarters. And not only that, but the speed with which enormous sums have been "charged off" from building accountsis absolutely appalling. Take a look at some of the items of this profligacy.
The Philadelphia Federal Reserve Bank bought a building for $600,000 and spent in "remodeling" it $1,099,638, making a total cost to September 30, 1921, of $1,699,638, and then "charged off" to "depreciation allowance" the enormous sum of $1,166,848! In other words, after spending $1,099,638 in "remodeling" its building it "charges off" for "depreciation" $1,166,848, or $67,210 more than it cost to "remodel" it! So that after spending $1,099,638 on "remodeling" the whole property is worth only $532,790, or $67,210 less than it cost before "remodeling." Either Philadelphia real estate depreciates with lightning-like rapidity or Federal Reserve judgment isn't worth a picayune or this huge "charge out" for "depreciation" is a mere camouflage or deception. Take your choice. It's either damphoolishness or incompetency's height of deception. And that's all you can make it.
The San Francisco Federal Reserve Bank spent originally in "original investment" for a building $520,785, spent $232,895 for "remodeling," spent $448,776 for "new building" operations, making a total cost to September 30, 1921, of $1,202,456 and then "charged off" for "depreciation allowance" $530,795, so that after spending $681,671 on "remodeling" and new buildings on an original purchase of $520,785, it emerges witha value of but $671,661! Or in other words, after spending $681,671 on a $520,785 purchase it claims the gross value to be but $671,661, or but $150,876 more than the original purchase! Or in other words, it got but $150,876 of value for an expenditure of $681,671! Does San Francisco real estate depreciate as fast as that, or are Federal Reserve business oligarchs futile wastrels, or is this method of accountancy just a camouflage? Figure it out for yourself.
The St. Louis Federal Reserve Bank made an "original investment" in building of $1,311,197, spent $560 on "remodeling" and "charged off" $685,000 for "depreciation allowance," emerging with a value of $626,575 for an expenditure of $1,311,757! Another case of swift shrinkage in value or wastrelcy in expenditure or camouflage in accountancy. Figure it to suit yourself.
The New York Federal Reserve Bank paid $4,797,882 for its site, spent up to September 30, 1921, $758,072 on building operations, making a total expenditure of $5,555,954 and immediately charged off to "depreciation" the enormous sum of $1,841,618! Did it pay too much for its site or does real estate in the heart of the greatest city on earth depreciate almost 40 per cent almost immediately after purchase? Figure it for yourself. Later on reference will be made to this New York oligarchical palace of splendor.
Up to September 30, 1921, Federal Reserve satrapists had spent $36,158,056 on its twelve building operations and had "charged off" as "depreciation allowance" the gigantic sum of $6,684,213! In other words, in a very few years, and in most cases practically at once, it depreciated its own building accounts by about eighteen per cent!
Incidentally up to the same date it had spent $3,212,349 on its Branch Bank buildings and had depreciated them by $346,369. In its Helena Branch it made an "original investment" of $15,000, blew in $161,438 on the purchase and then "charged off" for "depreciation allowance" $77,738 when it got through, or about 45 per cent on the whole transaction.
Up to September 30, 1921, Federal Reservists, including branch banks, had "reserved" $39,370,405 of your money in building operations and had them "depreciated" by the enormous sum of $7,030,582, or about 18 per cent, almost immediately. You are entitled to draw your own conclusions as to the necessity for these palaces, for the splendor of their equipment and for the real motive of so speedily "charging off" such enormous sums for "depreciation allowance." You are entitled to draw your own conclusions as to the wisdom of allowing a coterie of bureaucrats to spend such huge sums for their personal comfort or convenience or splendor unsupervised and unhindered.You are entitled to ponder on the proposition that these huge expenditures aren't obtained by legislation from Congress, but are made to suit the whim or ambition or convenience or extravagant ideas of an appointive body.
The New York Federal Reserve Bank in cost, in expenditure, in equipment, in splendors purely for the convenience of its occupants is intended to surpass any like building on earth. Its cost has been estimated at from $17,000,000 to $20,000,000. Its corner stone—amid speeches and plutocratic glorifications—was laid on May 31, 1922. The fees of architects and engineers alone amounted to the stupendous sum of $1,106,000. It is intended to house 5,000 employees—about 2,500 more than it now has.
Make right here some comparisons.
In the first week of May, 1922, the loans and discounts of the New York Federal Reserve Bank amounted to $89,956,248, and it must have a $17,000,000 building and equipment to handle its activities. On the same date the loans and discounts of the National City Bank of New York amounted to $506,840,494, and its bank buildings to but $6,060,000. On the same date the loans and discounts of the National Bank of Commerce of New York amounted to $259,165,930, and its bank building to but $4,000,000. Figure it for yourself. It makes some difference whose money is being spent, doesn't it? Private business is onething, and public business is another thing, when it comes to housing it, isn't it? Compare the volume of the loans of these banks, compare their building costs and draw your own conclusions.
In addition to veined marble and polished brass and in addition to a mass of luxurious equipment the New York Federal Reserve Bank has, or will have on completion, a beautiful auditorium, a gymnasium, a club room for men, a club room for women, and a restaurant.
It will doubtless gratify farmers on the prairies, workmen all over the land, merchants, and manufacturers and professional men to know that their toil, their efforts and their earnings are in effect being levied upon to provide this modern palace equipped with an auditorium, a gymnasium, two clubs and a restaurant.
It will doubtless gratify the stockholders in National Banks, whose money is commandeered to capitalize this leviathan, to know that their money, or its proceeds, or its earnings, is being used to erect and equip a veritable Temple of Mammon with all these attendant luxuries—which they themselves cannot afford in their places of business!
If you, who read these lines, could commandeer over a hundred millions of dollars for capital at 6 per cent and could conscript over $1,800,000,000 of deposits at no per cent you could transact your business in a palace in the heart of NewYork with an auditorium and club rooms and a gymnasium and a restaurant, couldn't you? But as you can't commandeer your neighbor's capital nor conscript for nothing the deposits of the public, you find yourselves compelled to work and to provide the wherewithal for those who can!
You can measure these lavish expenditures for buildings and equipments and luxuries by any known measure, by volume of business, or by like buildings for like purposes and it is as clear as day that these Federal Reserve Palaces are a monument of needless extravagance and of wanton wastage—pulled off by the ukase of enthroned bureaucracy spending "other people's money!" That's all you can make of the Monster's Palaces.
CHAPTER XI
THE MONSTER'S EXPENSES
dropcapsOU are going now to look over—and not overlook—the most stupendous, wasteful and exorbitant bank expense account ever entered on bank ledgers on this earth. You are going to look at the details of an expense account where the items run by millions, where expenses have no legal limit and where they are incurred, paid and audited without any supervisory authority. You are going to gaze at an expense account where the "sky is the limit."
Take first a look at the New York Federal Reserve Bank's expense account. That one is the most arrogant, wasteful and prodigal of all the twelve regional satrapies.
In 1917 the entire salary and wages account of the New York Federal Reserve Bank was $970,580 and their total loans and discounts were $399,078,000. Mark that down—salaries and wages of $970,580 and loans and discounts (which really measure the business of a bank) of $399,078,000, or $1 of expense to every $413 of loans and discounts.
On January 25, 1922, the salary and wages account of the New York Federal Reserve Bank was $4,988,703, with loans and discounts of $146,526,938, or $1 of expense to every $29 of loans and discounts!
Ask any practical banker, any administrative business man, any expert accountant or any efficient expert if it is possible to justify any such expense ratio. One to four hundred and thirteen in 1917 and one to twenty-nine in 1921—fourteen to one raise!
In 1917 there were 12 officers of that bank to administer loans of $399,078,000. In 1921 there were 40 officers of that bank to administer loans of $146,526,938. In other words, you get 28 more officers to administer a business shrunken down over sixty per cent! In other words, you get over a two hundred per cent increase in officers to administer a sixty per cent business shrinkage!
And now incidentally the pay of those 40 officers—administering a sixty per cent shrunken business—amounted to more money than the salaries of the President of the United States, the Vice President of the United States, half the United States Senate and the Governors of twelve American States besides! If that isn't bottomless bureaucratic greed expressed mathematically, you express it yourself!
Look further into the depths of this golden pool of New York Federal Reserve expense plunderbund. You are helping pay it and you are entitled to scrutinize the salary items. Take 'em as they come.
J. Crane entered the bank at a yearly salary of $1,080 as manager foreign department and now receives a yearly salary of $7,500, or an increase of 594 per cent.
A.J. Lins, manager at large, entered the bank at a yearly salary of $1,500 and now receives a yearly salary of $10,000 or an increase of 566 per cent.
John Raasch, manager supply department, entered the bank at a yearly salary of $1,000 and now receives a yearly salary of $6,000, or an increase of 500 per cent.
E.R. Kenzel, deputy governor, entered the bank at a yearly salary of $4,200 and now receives a yearly salary of $22,000, or an increase of 423 per cent.
A.W. Gilbart, controller of administrations, entered the bank at a yearly salary of $2,400 and now receives a yearly salary of $12,500, or an increase of 420 per cent.
L.R. Rounds, controller of accounts, entered the bank at a yearly salary of $2,400 and now receives a salary of $12,500, an increase of 420 per cent.
Chas. H. Coe, manager of the check department, entered the bank at a yearly salary of $1,500 and now receives a yearly salary of $7,200, an increase of 380 per cent.
W.B. Matteson entered the bank at a yearly salary of $2,400 and now receives $10,000, an increase of 316 per cent.
J.D. Higgins, controller of cash, entered the bank at a yearly salary of $3,000 and now receives a yearly salary of $12,000, an increase of 300 per cent.
S.S. Vansant, manager discount department, entered the bank at a yearly salary of $1,500 and now receives a yearly salary of $5,000, an increase of 233 per cent.
R.M. Gidney, controller at large, entered the bank at a yearly salary of $4,000 and now receives a yearly salary of $15,000, or an increase of 275 per cent.
I.W. Waters, manager personal service department, entered the bank at a yearly salary of $2,250 and now receives a yearly salary of $7,200, or an increase of 220 per cent.
James Rice, manager government bond department, entered the bank at a yearly salary of $1,800 and now receives a yearly salary of $5,500, or an increase of 205 per cent.
L.H. Hendricks entered the bank on a yearly salary of $6,000 and now receives a yearly salary of $18,000, or an increase of 200 per cent.
Incidentally Benjamin Strong, the governor of the New York Federal Reserve Bank, has had his salary increased from $30,000 per year to $50,000 per year—more than six times the pay of a United States Senator!
Ask any corporate manager, any practical banker, or any efficiency expert if they permit, or if they know of any such stupendous salary increases—increased and maintained in a time of general disaster and enforced economies. If this isn't strutting bureaucracy running amuck with public money, what is it?
Take now a look at the total expense account—which you are helping to pay—of the Federal Reserve System for the year 1921. It amounted to the stupendous sum of $36,066,065, or an average of $3,005,500 for each one of the twelve regional satrapies! You can't measure it—because there is nowhere on earth any other banking expense account by which to measure it! Like an Andean peak it towers aloft in solitary splendor. But you can look at some of the items. Here they are. The New York Federal Reserve Bank heads the list of extravagance with an expense account of $8,167,780, and the Minneapolis Federal Reserve Bank was the most modest—and not any too modest at that—with an expense account of $1,325,867. It cost you for bank officers' salaries $2,383,994, for clerk hire $15,201,393, for special officers and watchmen $789,879 and for"all other" $1,102,984. What that "all other" item of $1,102,984 really is, is deep buried in Federal Reserve archives. When you get through with bank officers, bank clerks, special officers and watchmen, you would think that included about all possible bank employees, but Federal Reserve ingenuity slips over $1,102,984 under the cloak of "all other!"
It cost you $7,750 for Federal Reserve Governors to "confer," $4,443 for Federal Reserve Agents to "confer" and $10,522 for the Federal Advisory Council—whatever that is—to "confer." "Conferences"—in bureaucracy—come high, don't they? And it cost you $168,556 to hold directors' meetings with 173 out of 254 of them living in the same town where the bank or its branch is located. Traveling expenses cost you $357,962—some travelers these Federal Reserve tourists are!
These bureaucratic "expenses" of a parasitical system hooked on to your banking system are stupendous, titanic, gigantic! They are indefensible—and undefended too—from any possible standpoint of efficiency, economy or necessity. Look them over in cold blood. Look over the stupendous salary raises—both in amounts and in percentages—in the New York Federal Reserve satrapy and compare them with any private business on earth. Private stockholders—not commandeered by law and not chained by act ofCongress—would drive out any such maladministration of extravagance. You know it.
Who is responsible—directly, morally and legally responsible—for this orgy of Federal Reserve extravagance absolutely unequaled in the history of the world or in the history of banking? Why, the Federal Reserve Board at Washington is responsible. What makes them responsible? Here is the exact language. Read it. "Any compensation that may be provided by Boards of Directors of Federal Reserve Banks for directors, officers or employees shall be subject to the approval of the Federal Reserve Board." That's plain, isn't it? If the Federal Reserve Board at Washington doesn't "approve" these huge compensations, they can not be paid. It is the Federal Reserve Board at Washington—and no other authority on earth—which is responsible for the greatest orgy of expense ever strapped on the backs of staggering business. It's their ukase, it's their decree, it's their order which registers these titanic expenses—every penny of which is wrung from American producers of wealth! And they are political appointees—not elected, but appointed. The Federal Reserve Board at Washington really wields a power greater than any sceptered monarch ever swayed. At their nod or at their beck every Federal Reserve employee holds his job, for if they don't "approve" his "compensation" he can'tattach his lips to the public teat with its golden flow of "compensation!" It's the Federal Reserve Board at Washington—unsupervised and with legally limitless power—which is responsible for this Federal Reserve expense orgy.
CHAPTER XII
WHAT THE MONSTER DOES WITH ITS LOOT
dropcapsHIS chapter is going to be like a tack—short but pointed. Federal Reserve apologists—on and off the floor of Congress—when driven into their last retreat always take their final stand and make their last play in the "franchise tax" stronghold. Their assertion is in effect that no matter what may be the abuses and sandbaggeries and extravagances of this system the "big money" gets back to the Government in the shape of the mythical "franchise tax." Here is where you get the facts precisely as they are. What became of the lootage of the Federal Reserve System for the year 1921 and what proportion of it did your Government get?
The gross takings of the Federal Reserve System—extracted from American production and industry—amounted to $122,864,605. That's what it euphoniously calls its "earnings." First there came out the gigantic expense account, of which you have already read, of $36,066,065, leaving $86,798,540, which the monster calls its "current net earnings." There is then added to this $360,856, which in previous years had been deducted for "depreciation on U.S. Bonds," which didn't finally "depreciate." There is also added $131,536 under an "all other" blanket—much favored in the Federal Reserve System vocabulary. You now have $87,290,932 "current net earnings." From this are deducted $1,251,675 for "depreciation allowance on bank premises;" $2,861,500 for "reserve for possible losses" which probably won't occur; $400,000 "reserve for self insurance"—whatever that is; $49,295 "reserve for depreciation on U.S. Bonds"—which probably won't depreciate now that they have been sandbagged out of the hands of the original purchasers; $641,237 sandbagged out under the favorite "all other" Federal Reserve blanket. Here are $5,203,707 gone out in mere bookkeeping entries with the real money which these entries represent still in Federal Reserve custody. This leaves $82,087,225. From this is deducted a petty $6,119,673 dividends paid on the capital commandeered. From this is deducted $15,993,086 to be added to the already swollen Federal Reserve Surplus Account. And there is left just $59,974,466 for the much touted franchise tax.
If you have followed these figures you have seen that in order to get a petty "franchise tax" of $59,974,466 into the hands of your Government, it cost you just exactly $62,890,139 to collect it—the precise difference between the Federal Reserve "earnings" and the amount paid into the Government. Ask yourself, is a tax of $59,974,466, which costs $62,896,139 to collect a "painless tax?" Is there any more painful tax levied on American industry? That's what this ballyhooed "franchise tax" amounted to in 1921 and all it amounted to—a tax of $59,974,466, which cost $62,890,139 to collect!
CHAPTER XIII
THE CAMOUFLAGE OF THE MONSTER
dropcapsON'T check your brains at the portals of the Federal Reserve "Bunking" System. That is what its touters and ballyhooers want you to do. Federal Reserve bureaucrats and its beneficiaries and its hirelings and an artfully subsidized press have really put the "prop" in propaganda.
They would have you believe—and literally hundreds of columns of inspired writings have been used to make you believe—that the Federal Reserve System is composed of twelve independent Federal Reserve Banks, each one especially devoted to fostering industry in its own regional territory.
Such is not the fact. The fact is that the Federal Reserve System is in truth a huge Central Bank, managed, manipulated, directed and operated from Washington by the Federal Reserve Board. There sits the spider and there the web is woven—spreading all over the U.S.A.—in which are enmeshed the victims.
You can read—if you want to waste your time—oodles of language about how the Boards of Directors of these twelve Federal Reserve Banks are seated in office and how part of them are elected by member banks and how part of them are appointed by the Federal Reserve Board. You can—if you want to waste more of your time—absorb messes of artfully worded verbiage about the duties of the Boards of Directors. But it's all "gammon and spinach," it's all artful camouflage.The real government of the Federal Reserve Banking System and of its twelve Federal Reserve Banks and branches is in the absolute dictatorial control of the Federal Reserve Board at Washington.It is all contained in one little joker of just thirty words. Here it is. Read it. "Any compensation that may be provided by Boards of Directors of Federal Reserve Banks for directors, officers or employees shall be subject to the approval of the Federal Reserve Board." In every one of the twelve Federal Banks every director, every Governor, every one of the Deputy Governors, Federal Reserve Agents, Cashiers, Assistant Cashiers, Controllers, Secretary, Counsel, Assistant Counsel, Clerks, Stenographers, Messengers and Watchmen—in short, the whole horde of Federal Reserve bureaucratic parasites—are subject to the approval of the Federal Reserve Board at Washington becausetheir compensation is subject to the approval of the Federal Reserve Board. Youknow that the hands that hold the money rule the enterprise. You know that approval or disapproval of compensation is in effect "hiring and firing." You know that "approval of compensation" is simply a euphonious bit of language or smoke screen behind which really sits an enthroned autocracy. No matter how many "conferences" are held between Governors of Federal Reserve Banks, between Federal Reserve Agents and with the Federal Advisory Council—"conferences" which during 1921 cost you $22,716—the Federal Reserve Board at Washington is the supreme and final dictator of the personnel and of the pay of its 10,313 employees and of its 231 officers. The Federal Reserve Board as to the compensation of this horde—and hence as to its personnel—is an absolute autocracy from whose order there is no appeal! It draws its expense account from a practically bottomless treasury without let, hindrance, supervision or veto! Kaiserdom and Czardom in their palmiest days drew from no such lake of liquid gold as draws the Federal Reserve Board at Washington. Set that down on your mental tablets and proceed to the next camouflage station.
Here it is. Federal Reserve propaganda—with a practical limitless expense account to further it—would have you believe that its favored coterie of 231 officials are top notch bankers. Take a look at this as it really is. The bankers whomyou know and with whom you do your business and to whom you entrust your money and from whom you borrow your money have taken their own money and the money of their associates and contributed the capital of their banks and put it at risk. They wager their own money that they are good bankers. They have initiative and confidence in their own ability and they prove that they have by putting up their own money before they ask you to entrust yours to their keeping. The officers of the Federal Reserve Banks don't put up a copper cent, a plugged nickel, or a thin dime of capital. The capital which they manipulate is commandeered by law for their use at a petty six per cent rate. They may charge—and they have charged—as high as eighty-seven per cent in one of their Shylockeries, but six per cent is all that those who furnish the capital can claim. In 1919 the Federal Reserve System sandbagged out of other people's money a profit of 110 per cent, in 1920 160 per cent and in 1921 79 per cent. In 1919 its stockholders received 104 per cent less than their capital really earned, in 1920 154 per cent less than their capital really earned, and in 1921 73 per cent less than their capital really earned. For the three years of 1919, 1920 and 1921 the average net profits of the Federal Reserve System were 116 per cent and the real owners of the capital were gypped legally—but none the less gypped—out of an average of 110per cent for each of those three years. Do you suppose that officers of any bank not legally so buttressed could "get away" with any such proposition? You know they couldn't—and hold their jobs. No body of stockholders in the U.S.A., unless legally chained, would endure a profit of 116 per cent and a dividend of but 6 per cent! And no bank officers in the U.S.A., unless legally permitted, would attempt to "put over" any such proposition. You know it. Peg that and proceed to the next proposition.