Driving Out the Money Changers

Charles E. Coughlin

" From The Ashes We Shall Rise Again "

I

The name of Lexington has traveled with the shot that was “heard round the world.”  So with Gettysburg whose mere pronouncement is universally associated with the death of slavery and the rebirth of a new liberty.

Therefore, I do not hesitate today to speak to this national audience of the City of Detroit.

Formerly its history was identified only with a garrison and trading post founded by Cadillac.  In later years its development from a peaceful river port into a throbbing beehive of automotive industry was linked with the names of giant industrialists—the Fords, the Fishers and their contemporaries.

But tomorrow children shall be taught to tell upon the rosary of time the new history that is ours today.

Detroit has become the birthplace of a financial dream.

It has taken a place in the pages of history alongside Lexington and Gettysburg.

II

In brief, my friends, the hopes and aspirations of all honest citizens have been achieved.  The first battle against the money changers has been won !  Our Republic is young.  For one hundred years or more while it was developing in thew and sinew ;  while it was transforming forests into cities, pasturelands into golden fields and deserts into gardens, there grew up within it as elsewhere a group of men whose god was gold and whose creed was greed.

They were devotees of the neo-paganism ;  acolytes in the sanctuary of materialism ;  and prophets of narrow individualism—individualism which was devoid of responsibilities ;  individualism which was totally divorced from both social justice and Christian charity.

By no means do I include within their unhallowed ranks the honest banker, the pioneer banker who fought shoulder to shoulder with his townsmen in their struggles against adversity.  Rather do I point only to the lineal descendents of Judas Iscariot who year after year contented themselves with selling their fellow citizens for the equivalent of thirty pieces of silver.

“The first battle has been won”, said I ?  But the war has not ended.  It has but begun.

In all likelihood before the flag of peace finally will be unfurled Cleveland and Pittsburgh, Chicago and Kansas City, Los Angeles and Boston, New York and New Orleans—these will be names emblazoned upon the escutcheon of time.  These, too, will be battlegrounds consecrated with the blood of victory—the courageous blood, shed, if necessary, in driving the money changers from the temple of this land of ours—!

My friends resident throughout this nation, let me report to you what occurred at Detroit so that you may profit both by our wounds and learn from our struggle in the contest which most certainly shall be yours tomorrow.

III

As you well understand the financial structure of the United States of America became so weakened and undermined that on the day after President Roosevelt’s inauguration he found it necessary to suspend all banking operations.

It was a structure which reminded one of a building whose foundations had crumbled ;  whose supports had rotted.  Fearing its immediate crash the Government roped it off, stationed guards before its entrances and nailed the danger sign over its doorways.

The Morgans, the Kuhn-Loebs, the gamblers of Wall Street had been well assisted by the Mitchells, the Harrimans and their lieutenants in crime throughout the nation.

All semblance of honesty and of justice had been abandoned by this group—a group which had dedicated itself to the manipulation of the industrialist’s factory, to the confiscation of the farmer’s home and to the degradation of the toiler’s lot.

Modern banking had degenerated into a crap game where the dice, too often, were loaded ;  a crap game played by the unscrupulous expert with other people’s money.

Other people’s money !

Sleek haired bandits attired as slick as an undertaker and wearing a white carnation in their lapels, were officiating at your financial funeral as they ushered you to the wicket for the deposit of your hard earned wages.

Wages to be piled into substantial savings only to be looted by the oily-tongued bond salesman !

Had you been gifted with prevision when this salesman had bowed his way from your presence—your money in his wallet and his Wall Street paper in yours, commonly known as wall paper—you might have seen the crepe of destruction hanging on your door ;  you might have heard the winds of wailing poverty whistling through it as your requiem was sounded.

Did the Government of the United States come to your rescue with a warning ?  Not at all !

Where was the flaunted freedom of the press which in bold type and with sickening repetition gave its support through the financial columns of purchased propaganda while America and its citizens were being ravaged by this plague of ghouls—sepulchral ghouls who, cared little for God’s justice and less for man’s happiness ?

Like the criminals of the Middle Ages who claimed sanctuary and immunity in the Church of God, the banker, the professional looter, found safety and defence in the silence of the modern newspaper.

Neither by an act of God, neither by plague or famine, neither by tornado nor by hurricane, was man deprived of his share of a bounteous nature.  If unemployment has been multiplied, if poverty has increased, if the heart of the world has been pierced by the sword of suffering, whom do we blame for the catastrophe which has overfallen us ?

Men, wicked men !  Men who cast aside the mantle of virtue.  “Away with Prudence, Justice, Fortitude and Temperance !” cried they.  “Welcome the seven deadly sins !  Come Pride, Covetousness and Lust !  Come Anger, Gluttony and Revenge !  Welcome Sloth, the vice which cares naught for one’s eternal salvation !”

Welcome again the sins that cry to heaven for vengeance—defrauding the laborer of his wages and robbing the widow and the orphan !

Oh, men, you dreamed you dwelt in marble halls.  You forgot, however, that the wages of sin is death.

One by one your marble halls of finance which had been built upon the quicksands of sin began first to topple and then to fall.

All the prostituted propaganda of public pronouncements was unable to save them.

“The rain fell, the floods came, and the winds blew, and they beat upon that house, and it fell, and great was the fall thereof,” (Matt. 7:27)—the rain of your man-made poverty, the flood of bitter, human tears and the wind of passion and of discontent.  Such was the prelude to the collapse of our financial structure.  So were the words of the prophetic Christ once more realized by a patient, suffering people.

Then came days of meditation, of investigation and of analysis.

What was the chagrin of the people, my friends, as they discovered beneath the ruins of the house the pagan philosophy which had recently been engendered from the unmoral minds of those banker men ?  Had we not been taught that if and when a bank failed, the stockholders in such an institution were legally obligated to pay a double liability assessment for the protection of those who had placed both faith in them and money in their vaults ?

Was it not generally understood that wherever a bank failure occurred the owners of a bank must first suffer before a depositor shall lose a penny ?  That was the law of the land.

But contrary to the spirit of that law, thousands of banking institutions preferred to practice the sin of injustice by forcing the people, the depositors—the scrubwoman, the laborer, the farmer and the policeman—to suffer first, thereby protecting the grafting, grasping, greedy banker.

In no sense am I criticizing the honest stockholder, the brave stockholder who is willing to bear his burden and share his responsibility.

This criticism is meant for the welcher, the coward, the lily-livered selfseeker who always plays to win, who never dares to lose, cost what it may !  Was not that the thought originally behind the operations of the Reconstruction Finance Corporation as the public Federal money of the United States, raised by taxation of the people at large, was poured into those ratholes of banks to keep alive the exploitation ;  to save the cringing stockholder ?

“Let the depositor suffer !  Hands off the sacrosanct stockholder !”  What though our statute books clearly and specifically state that whosoever buys bank stock does so with the understanding of accepting the responsibility of bank failure ?

The law has been perverted.

All liabilities of wealthy, inside stockholders, all responsibilities and all justice to the innocent depositors have been hopelessly confused, entangled and enmeshed by the unmoral creation of so-called holding companies, which made it possible to cheat the widow, to rob the orphan and to depress the poor, while they enabled the artful dodgers of high finance to escape the law.

For the preservation of the sanctified white carnation the American people had been tricked.

In this struggle, therefore, to gain our financial freedom and to re-establish the liberty of our laws, is it not plain, my friends, that on one side stand the regimented forces of bankers and stockholders entrenched behind the walls of holding companies ?  On the other, the determined hosts of mulcted depositors ?

Keep that point in mind as I describe for you the battle of the bankers waged at Detroit, Michigan—a battle fought on the one side with the weapons of the highwayman, with the logic of lies, under the captaincy of a commissioner of police supported by an unseen general who sat in the sanctum of an editorial room while the puppets of his press played upon the gullibility of an unsuspecting public.

And on the other side were the industrialists who had made Detroit, the vast majority of its soul free merchants, its hundreds of thousands of small depositors—men and women of every class who anxiously awaited some definite word from the columns of their newspaper ;  men and women who asked only for the bread of truth but to whom was handed the buncombe and stone of falsehoods.

IV

And now for the story of Detroit in particular.

Here we had two presumably great group banking institutions known commonly as the First National Bank and as the Guardian Group.

Approximately six weeks ago these banks along with every other bank in the State of Michigan were closed by our Governor’s proclamation.  This was the beginning of the so-called national bank holiday.

Governor Comstock took this step because it was said that one unit of the Guardian Group was in a weakened condition.  The citizens were assured that the First National Bank was perfectly solvent, securely sound.

Sound banks !  So subtly was this lie established throughout the City of Detroit that according to testimony certain branch bank managers of this institution ran to the telephone on the morning of February 14th ;  called up clients who had more or less large deposits, and assured them that the First National Bank could pay at that moment 80 cents on the dollar, adding that it would require only a few days to pay the remaining 20 cents.

Affidavits for this statement from duped depositors are in my possession.  But what were the real facts at the moment while this lying telephone propaganda was being practiced ?

On December 31, 1932, the cash and Government securities of the First National Bank amounted to approximately $108-million.  This means that it could have paid only 25½ cents on the dollar.

On February 11, 1933, the cash and Government Bonds of this same bank amounted to but $45-milllion.  This means that it was 12½ per cent liquid when depositors were being told that it was 80 per cent liquid.

In thirty-five banking days previous to the bank holiday approximately $63-million of “inside information money” had leaked out of this bank either through the front door or the back door.  If this withdrawal figure is not correct it is because of protected, and deceitful bookkeeping.

If the naked truth were known these two banks were not only rotten.  They had already decayed beyond repair.

Secretary of the Treasury, Mr. William Woodin, confirms this statement in a public utterance made March 25th when he says :

“Candor compels me to say that losses in both of these banks extend far beyond their capital structures, and neither of them can be permitted to carry on as sound banks.”

To emphasize this point let me go on record in stating that even in November, 1932, the banking situation in Detroit had become so decadent and obnoxious, according to national bank examiners, that the great First National Bank of this City in order to escape having its charter recalled began to peddle out their bad paper, their bad accounts to their affiliates and trust company which became nothing more than dumping pots and ash piles for the refuse created by mismanagement.

You plain people of America wonder what wrecked the banks.  Well, let me tell you in brief its sordid story.

First, the Government officials who have seized the books of these banks can detail for you a long litany of loans made by the banking officials to their affiliates.  Loans oftentimes which had little or no security to back them up.  Loans made to men who dodged their responsibility to the depositors by hiding behind the legal but immoral holding company similar to the one of which E.D. Stair is president.

These loans, as we know, were beyond all proportion.  The officers who procured these loans were taking the small depositors money to pay for their comfortable homes, their motor cars, their gambling upon the stock market, their living in ease and in luxury on other people’s money.  They contented themselves by saying :  “My stock in the bank is hidden in the holding company.  I can escape paying the double liability.  Why should I not profit by the dumb-bell money although my security does not warrant this borrowing ?”

Secondly, false financial statements helped to wreck the banks—false in the sense that the statements, despite the ravages of the depression, still counted real estate and dead loans not at the present, adjusted values but at 1929 values.

Thirdly, branch banking and real estate mortgage loans wrecked the banks.  On February 25, 1927, under the Mellon regime the Government then permitted banks to invest your money and my money in real estate mortgages.  Mortgages which permitted the dishonest builder and the rabid speculator in apartment houses and in real estate subdivisions to squander the depositor’s money while he drives by in his motor car and watches the cows march home to be milked on the pavement twenty miles from civilization.

So the crap game of frenzied finance went its unholy way here and there and everywhere, pampering the speculator, skyrocketing prices and caring little for the inevitable day of reckoning.

Thus, on the records of the First National Bank are manifested loans procured from outside.  They had to run out and borrow to save it from failing months ago.  But despite the necessity of borrowing money, despite the findings of the bank examiners, despite the inevitable finger of failure which was already stretching out to indict them, this bank still kept milking the money from the people and practicing its deception by showing upon the public statements profit of $310-thousand for two months’ operations, the worst two months in the history of the organization, as it was proceeding on its joy ride from the mad house of speculation to the morgue of failure.  But in the meantime the old rule still obtained that the banker and the stock holder must win at any price.  The depositor must pay !

That is why the holding company was established.  An honest banker needs no holding company.  Its very existence is an indication of hidden practices.

Then came the collapse.

Followed six hectic weeks of conference, of debate, of conniving.  Six weeks devoted to chiseling the public.  Six weeks which ended up not only with a zero for accomplishment but with hundreds of millions of dollars of commercial, of industrial and of laboring loss to the City of Detroit.

Then the Reconstruction Finance Corporation was asked by these bankers for a loan.  It was petitioned to step into the morgue and lift from the cold, gray slab a corpse that was already stinking in the nostrils of a nation.  It was asked to perform a miracle with your money and my money in order to save the precious hides of those who had dissipated the depositor’s money.

But it was time to bury the remains.  The best informed people in the City knew it.  The bank examiners knew it, and the Government knew it.  Therefore, it was decided by the United States Government to establish a new bank in Detroit and, if necessary, to let the law take its course as far as the stockholders, the mismanagers and the officers of the old banks were concerned.

Here was news of a most important character.  The United States Government decided not to make a loan to this new bank but to purchase every penny of its preferred stock—$12,500,000 worth of it—to purchase it, mind you.  The General Motors Corporation, the Chrysler Corporation and the Ford Motor Corporation—organizations which had given impetus to the growth of this fair city were invited to purchase $12,500,000 worth of the common stock.

As a result the General Motors Corporation made the total investment of the common stock with the understanding—the written, pledged, contracted understanding—that every penny of its stock was for sale to the old depositors of the defunct banks, penny for penny that had been paid for it, not a penny’s profit.

At last the dream of the centuries had been realized.  A Government controlled bank had been called into existence.  This was glad news to the citizens and sad news to the bankers.

“But this governmental program must not be realized,” said the white carnation bankers.  “It means our exposure.  It means our ruin.”

Then began a program of villification.

The slogan of “Save the old banks !” was spoken from rostrum, from loud speaker and emblazoned in captions in the press.

“Pity the poor depositors !” was the cry that was also hypocritically raised.  As a matter of fact what they meant to say was “Save the stockholder and pity the chiselers !”

To spread their propaganda there appeared in the columns of “The Detroit Free Press” scurrilous articles indirectly attacking the Government for venturing to establish a new bank in the City of Detroit—this new institution “of the people, by the people and for the people.”

“The old racket must continue !” said the exploiters.

On Monday, March 20th, we read on the front page an editorial in “The Detroit Free Press” which in part is as follows :

“Federal Bank Examiners now in charge of these banks at Detroit make no attempt to conceal the fact that banks have opened in the United States that were in worse condition than those of Detroit.  They have been assisted by the United States Government. . . . .

“Detroit, carrying the burden of the depression, was denied assistance at Washington, and despite denials and counter-denials those best informed still believe that politics played an important part in precipitating the banking holiday in Michigan.  This fact remains, that communities which were not nearly as badly hit as was Detroit, were extended the helping hand by the Reconstruction Finance Corporation.

“No other conclusion can be reached by persons who will take the trouble to wade through the reports of the Federal Reserve System and of the Comptroller’s office.”

This is the thought expressed by “The Detroit Free Press” a rabid, partisan paper.  A paper published by the President of the Detroit Bankers Company ; a paper that was wedded to the past with its exploitation ;  a paper religiously opposed to the “new deal”.

This statement is a sample of the vicious misinterpretation that was designed to obstruct the driving out of the money changers from the temple of this country.  It is absolutely untrue according to the statement of Secretary of the Treasury, Mr. Woodin, and his associates who have the real information at hand and who report to the nation that “losses in both of these banks extend far beyond their capital structures.”

It is in keeping with the misrepresentations made by “The Detroit Free Press” of a telephone interview which a news reporter had with Bishop Gallagher and in which he was misquoted by him.

What a cheap insinuation had been uttered by this paper here and in many other instances during these six weeks of camouflage and of deceit.  At one time trying to outwit the public by their half-baked truths.  At another taking a cheap gutter-born sling at the President of the United States who promised the people of this country a “new deal”.

Here was an example of professional obstructionism, of editorial wrenchslinging under the patronage of a gentleman who not only publishes a newspaper but is also the president of the Detroit Bankers Company, the holding company, the hide-out company, to which belong the First National Bank of Detroit, the Detroit Trust Company, the First Detroit Company, the First National Bank Building Company, the Detroit Banker Safe Deposit Company and eight other independent banks of the group scattered in the neighborhood of Detroit, the total resources of which amounted to approximately $560-million.  No wonder he had an ax to grind !  I repeat it, it was the huge hide-out company behind whose walls it was possible for the buccaneers to divide their loot and to defy apprehension.

This same gentleman, Mr. E.D. Stair, the publisher of “The Detroit Free Press,” in the columns of which were carried misstatements, purposeful extravagances, vicious insinuations, to prevent the Government controlled bank from opening its doors and serving the people of Detroit !  Mark him well !

Working hand in hand with him was Commissioner James Watkins who rules over the destinies of the police department of Detroit.  His specialty was radio addresses.  Appearing before the public as seemingly representing the policemen and the small depositors—and representing nobody—he waxed eloquent in his condemnation of the Government Plan and in his pleadings to establish an annex to the morgue where the corpse which he was defending was already decomposed.

The small depositor who bore allegiance to him did not know that this self-appointed leader owned 165 shares of the First National Bank stock.  The small depositor did not know that 1,477 shares were likewise owned in Mr. Watkins’ immediate family, making a total of 1,642 shares or $32,840 that he and his immediate family as stockholders were obligated by law to pay upon the double assessment for the protection of the small depositor.

Nor did the small depositor of the City of Detroit realize that this same Commissioner James Watkins has total obligations of $170,390.00, to be exact, to the Detroit banks with only approximately $1,200.00 on deposit against it.  How easy are the misinformed and deceived public taken into camp by those who have an ax to grind and a hide to save.

Mr. Watkins, skilled attorney that he is, well knew that in the event of the establishment of this Government controlled bank he would be forced to pay back some of the other people’s money upon which he had lived as well as meet the $32,840.00 liability towards the small depositor which he was endeavoring to escape.

Ladies and gentlemen, those who, for the most part, have defended the corpse that is now buried will be found to be seeking the flesh pots of Egypt.

For twenty years or more the people of this nation have been suffering from the slavery of Mellonism.  Its policy was to protect the white carnation.  Its program was occupied with gambling with other people’s money, with building up a false confidence that has come crashing down upon them.  Its vehicles of propaganda oftentimes were the mouths of Government officials and sometimes the columns of news journals similar to the old lady of Fort Street, “The Detroit Free Press.”

“Save the stockholders !”

“Let the depositors pay on the line,” although 60-thousand families in Detroit are eating the dole bread of poverty at the table of the Lord.

Meanwhile, “Revive the old banks.  Revive the crookedness, protect the undersecured borrower, pamper the speculator, bequeath to your children the financial sorrows which you have experienced—above all, sustain the holding company, the den of forty thieves, the hide-out, the blind pig financial institution where shady transactions are perpetrated and where are printed the depositors’ passports to doom.”

Thus the battle was waged.

The defenders of the old system played upon the minds of the small depositors by telling them that if the United States plan of Government controlled banks were adopted, our finances would fall into the hands of “outsiders,” of Wall Street.  The business man was approached with the threat that his industry, his holdings would be ruthlessly liquidated.

How false and misleading !

The Government plan as established last Friday and which will continue here in Detroit is no “outside” plan, as I said.

Briefly the plan is this :  There will be 100 per cent stock issued on this new bank.

Fifty per cent, may I repeat, of it shall be preferred stock.  Every penny of which shall be owned by the Government—$12,500,000.00

Fifty per cent of the total stock shall be common stock.  For the time being it will be owned by the General Motors Corporation—$12,500,000—but with the understanding that you and I and every citizen of Detroit who has been a depositor has the right to buy it and own it.

Moreover, a Government representative shall sit on the board of directors of this new people’s bank.

This is no “outside” plan, no Wall Street plan, no big interest commercial plan.

To quote from an editorial in yesterday’s “Detroit Times” we read :

“And as for fanciful claims that the new bank is sort of a carpet-bagging institution, a stranger in town, as it were, payroll and tax records of Detroit are the best evidence.  General Motors, which is a partner in the bank with the government, pays almost $2,000,000 in taxes yearly to Detroit and approximately 55 percent of the entire pay roll of the huge organization is disbursed within the State of Michigan.”

Is that an outside bank ?

The editorial continues :

“As for fear that some New York or Chicago or other influence may buy over the bank stock and with it control of the new institution, Washington officials point out that the government in the first place does not intend to sell any of its preferred stock until after there is a general recovery, and that when this time comes the stock will be offered first to Detroit.

“So, as far as Washington is concerned, Detroit’s bank emergency is cleared up.  A new bank is functioning and Uncle Sam will do his best, over a period of time, to get depositors dollar for dollar out of the defunct institutions.  The pity of it is that the big banks were allowed to get into the state that the government finds them.”

Thus, my friends, Detroit has won the battle.  We had courage to confront the enemy in his stronghold.  Despite his wealth, his influence, his newspapers ;  despite his perversion of truth, his duplicity, his hypocrisy, we have won the honor in our fair City of seeing the birthday of the first Government controlled bank in our modern history—a bank of the people and for the people—a bank whose stockholders and officers hide behind no blind pig holding company—a bank that has opened its doors with the assurance of guaranteed deposits—guaranteed by the presence of the Government ;  guaranteed by the cooperation of the depositors.

Meanwhile, “plenty of things are being gossiped about and discussed daily in financial circles to furnish ammunition for an enterprising survey of the wrecked banks to find out all about what happened to them.

“The United States Government should bring out all the facts for the public to see.  I f bad loans and ‘unhealthy’ deals were made with depositors’ money, the people ought to be told.

“And steps should be taken to see that the same or similar things do not happen again.”

And now, my friends in Detroit, the latest word is the simple slander that Father Coughlin has been purchased—“I am now on the side of the big interests !”

For seven years I have been and now am on the side of the biggest interest in this democracy, the interest of the people.

On the side of those 60-thousand families on the welfare while the Watkinses and the Stairs fight the battle for those with unsecured loans, undersecured loans, officers loans, wholly out of proportion to any credit they were entitled to.

Every penny of this is the people’s money the small depositor’s money, the small business man’s money, swept away in this banking debacle.  $2,800,000 of Reconstruction Finance Corporation money given to Mayor Murphy to feed the poor—that went into the rathole with the rest of it.

Big interest—yes clearing away the money and banking obstacle that presently controls the life blood of the people.

My interest is in the big interest—yes, I tried to be a voice, almost alone, crying in an economic wilderness—crying :  “Prepare ye the way of the Lord ;  make straight His path !”

“Every valley shall be filled, every mountain and hill shall be brought low”—every valley of economic injustice, every mountain of corrupted graft.  Do you know the circumstances which decided the choice of a motto for the City of Detroit ?

It was in the year of 1805.  A hot, sultry afternoon in the middle of July had parched the lawns and dried up the fields.

A farmer was observed driving a team of huge horses.  Behind them was a wagon loaded with hay.  The farmer was smoking.  Suddenly his load of hay was ablaze !

The wind was rising from the northwest.  Soon the neighboring frame houses were on fire.

Despite the frantic fight of the citizens to extinguish the flames, 2,500 houses—every home in Detroit—had been destroyed.

As the sun was sinking in a flame of crimson, the villagers were on their knees, pleading with God to give them courage.

“Let us hope for better days.  We shall arise from our ashes,” spoke an old French padre.

My friends, from the ashes of the financial structure which has been destroyed ;  from the ashes resulting from the activities of the wicked banker, the banker who set his torch of greed to the edifice of our prosperity, Detroit and America shall both rise again.  Better days are to come !