Chapter VIII
The Hand of the Banker Tracing a Sordid Scroll
In 1942, a young father of 32, volunteered for naval duty in World War II, and served until V-J Day in 1945, serving the last 18 months of the War in the thick of Japan's, Kamikaze type of warfare, having his ship hit by a suicide plane, then watching the crew turn the hose on, washing the blood and bits of the Jap from the shattered deck. He rose from raw recruit to rank of Lieutenant Commander. He had spent the previous seven years in government service in Washington. He reached home in October 1945. He spent a few days in Marshall with his wife and daughter. He had no property, no established business, no credit, and little money. He did not want to go back to Washington, although he had been offered $6,000 a year job, if he would return. He had promised himself while hourly facing mutilation on the Pacific, that if he returned from this carnage, he would build the dream of his boyhood and youth, a print shop, patterned on the Roycrofters of East Aurora N.Y., and that he would build near the University of Texas. So he came to Austin to look the possibilities over.
In 1932, a man in his 40's who had made a start in the oil game in Ranger oil boom, went to East Texas field. He was worth about $100,000. He installed a small refinery. He was one of the lucky few. He survived the efforts of the major oil companies, aided and abetted by the Governor of Texas, the Texas Rangers, the Attorney General of Texas, the Comptroller of Texas, the Oil and Gas Commission of Texas, the city banks of Texas, the banks of Cleveland, San Francisco St. Louis, Chicago and New York, every little bribed constable of Texas, the National Guard (officered by employees of the majors) of Texas, District Courts of Texas, legions of smart lawyers in Texas, in Washington and in New York — to kill the small oil operators and small refineries in the oilfields of East Texas. Not because he was a good fighter, but because the major oil companies chose him, along with a few more small operators, to survive.
One afternoon, a Standard Oil Company official walked into this oil man's little office in an old cottage on his refinery grounds, and said: "We don't want to kill all the little refineries. The public would shout monopoly. So we must have a few to play against that cry. We have killed most of them but there are still too many. Why don't you buy one of them?"
This oil man asked, "What would I use for money?" "We'll honour your draft."
"Well, I have a $30,000 note due tomorrow at the First National Bank in Dallas. When you came in I was wondering where I would get enough money to pay it off."
The Standard official walked to the door, called to his Secretary who left the big polished Cadillac, and with a brief case under his arm, entered the little oil office. In fifteen minutes the small oil man had a $30,000 draft on the Chase National Bank, New York. The little oil man had arrived. He had been accepted by the majors. A few weeks later an issue of his little company's stock appeared on the New York Stock Market. Yep. It had been bought in the "open market" by the Reserve Authorities. The little oil man was entering the big oil man's sphere. He walked into the First National Bank of Dallas a little jauntier than he had with the $30,000, and deposited to his account the million-dollar cheque the Reserve authorities had given him. He returned to his little office. He began to buy producing wells. He began buying leases and drilling. His refinery grew. He was growing BIGGER. Oil money poured in and he began buying ranches and farms-safe investments, 14,000-acre ranch here, 500 acre farm there.
The war came. He said conscription is right. A man should be compelled to fight for his country! His black gold flowed in bigger and ever BIGGER STREAMS, piling up bigger and ever BIGGER profits. He bought more and more real estate. He felt grateful.
With millions of oil money coming in his desire for real estate outran the stream of oil money. Real estate began to double and double again in the sales price. Others were making their thousands and millions. A feeling that money was hot sent everybody scurrying about for a "safe investment," and only real estate seemed safe. He found banks would lend big money, in the hundreds of thousands at two percent, on good revenue-bearing property, on long-time note, secured only by deed of trust on the property. He found he could buy interest in a big hotel for $650,000. The banker said, "OK." He filled in a note and a deed of trust, the millionaire signed them and handed them back to the banker, and the banker gave him a deposit slip for $650,000. He handed cheque to seller of hotel. No cash was touched. No existing deposits were touched. The banker and the borrower actually created $650,000. Only six figures were written on the bank's books. The banker handed a clerk a carbon deposit slip and he entered $650,000 to the credit of the oil man. The recipient of the cheque deposited it and a clerk credited his account $650,000 and in turn debited the oil man's account $650,000. And the total bank deposits were increased $650,000!
The veteran found he must build a cottage first. This rich oil man is his friend. He turned to him, and he readily endorsed the veteran's loan at the bank.
One had made millions out of the War, while the other came out of the War poorer, with three of the best years of his life lost. Both stood before a banker for a loan.
Both had rendered service to their nation in time of stress. One had been rewarded in many goods. The other had only an honourable discharge. So it seems that when weighed on even a banker's balances the beam would be perfectly horizontal, maybe tilted a little in recognition of the veteran's necessity as well as his active service in arms.
But a banker is a banker. He let the oil man who did not need a hotel have $650,000 at 2%, with many years to pay it back, if ever! He let the veteran have $3,000 at 6% to build a home, and $2,500 at 6% to buy an offset press, with the oil man's endorsement of the loan, yet the bankers demanded that the veteran pay in full in 18 months!
But that is not the end of the long criminal trail the banker opened up. Loans were not made with the bank's surplus, or undivided profits, or stock holders' funds. Nor was a single dollar of the depositors loaned. The $650,000 was actually created and added to the banker's total deposits, to go out and compete with every depositor's dollar, lowering every dollar's purchasing power. If there were $6,500,000 on deposit in the bank it reduces the purchasing power 10 percent. Dollars are like spuds: the more there are, the less they are worth. And all the 14,567 banks are making loans, so the ratio for the country as a whole is approximately the same.
But the trail of crime does not end there. The sellers of the hotel buy ranches, farms, other real estate. All know we have too much money, that it's getting cheaper every day. They're seeking safe investment. Land always offers the safest of all. Knowing the money is cheap. Knowing another 1929 to 1935 is certain, only the finale will be different. Probably multiplied billions of bank deposits, including theirs, will be wiped out. The farmer sells. Finds he can't buy as good farm for twice the price. He joins the houseless howling mobs in towns and cities, worrying as high prices eat away his life's savings.
But that's not the end of this cruel, selfish crime trail. Those hotel owners are not the sort who will till the soil, feed the stock. They remain in town, hire men (usually) to build good fences, padlock the gate and flee to the hills that their rotten hides may be cooled. While the poor man who would till the soil and slop the hogs can not buy the high-priced land, and ever hope to pay for it, and feed his family.
Cheap, inflated money robs farmers of their farms, the producers of their goods, the workers of their food and clothing, the aged of their pensions, crying babes of their bottle of milk.
But bankers, gamblers and dealers in the miseries of men, take the land, corner the products of labour, and weld about the ankles of the toiling sweating, producing masses, of even the babies shackles of bondage for another 100 years.
Said Congressman Wright Patman, on December 1 , 1943, "One of these days the people of this country are going to rise up in their wrath and compel the change of such an idiotic system that compels our own people to pay tribute to a few who have nothing invested and run no risk, in order to conduct the affairs of our Government, and especially our national defence program. If some person attempts to show how the credit of the Nation is being farmed out free to "14,567" privately owned commercial banks he could be (is) quickly silenced by a whispering campaign that he is a monetary nut, a crackpot, or a greenbacker who wants to flood the country with printing-press money. Then a few references to continental currency, fiat money, and German inflation, and the opposition is dead."
The Dallas News and other corporation owned and controlled papers, journals and magazines were saying those very things about Patman, because he was fighting for non-interesting bearing War Bonds, and even the Chairman R.L. Doughton of the Ways and Means (meaning-ways and means to rob the people) Committee, objecting to Patman's saying:
"I'm opposed to the United States Government, which possesses the sovereign and exclusive authority to create and control money, paying private bankers for its own money. These private bankers do not lend their own money to the Government; they lend only the Government's money to the Government, and collect an interest charge on it annually."
If the Government were not paying any interest on this money the Government is borrowing, how would you get the banks to lend the money? They say, "It is the money of our depositors, we are responsible for it, and if we don't get anything for the use of it, we will not buy the bonds."
Doughton knew that he was: repeating an age-old lie bankers whine to every person to whom they don't want to lend money, and truly all such misinformed men should be kicked out of Congress.
At the same hearing Patman said:
"The total capital stock in the 14,567 commercial banks (national, state and private) amounts to only $3,500,000,000, and surplus and undivided profits to $5 billion more, and the total capital stock of 12 Reserve banks is only $150,000,000.
Said:
To fool the people, 'The right of selling bonds directly to the Reserve Banks by the Treasury is authorized by the Second War Act, enacted March 27, 1942, is limited to $5 billion. However, it does not prevent Reserve Banks buying $100,000,000,000 or $200,000,000,000 through the open Market Committee in N.Y.' "
And Patman should have added; it matters not to whom the Treasury of the United States turns over the Government bonds, they find their way to some bank, and when they do bankers CREATE NEW DEPOSITS TO PAY for them, which increases the Nation's aggregate deposits: so why quibble over which bank gets them first?
Patman continued:
"Why should we burden the people with a 300-billion dollar debt, when we know they will never be able to pay more than just the interest on it? That means a perpetual debt of $300 billion! That means that any inflation that we have in that $300 billion will remain indefinitely. Should you save the interest, $6 billion a year, the interest would pay the $300 billion off in only 50 years."
And he might have added: Inasmuch as the $300 billion was a direct gift from the Government to the banks, they should be willing to hold them for a 50 year instalment cash-payment settlement.
Patman continued:
"It was reported, January, 1943, that the 20 largest banks in the United States, twelve of them in New York City, held Government bonds at the end of 1942 to the amount of $16,407,197,000. The people will pay them between 300 and 400 million dollars interest a year. The National Government is sovereign because it has no government over it. It has the power to create its own credit upon which no interest should be paid. The Government should not, can not constitutionally, farm that great and sovereign function of all sovereign governments out to subject governments, much less to private corporations, not even banks."
To bring it close to home: suppose Farmer Jones got gold coin for all his products — corn, wheat, cotton, tobacco potatoes, hay, fruits, vegetables, eggs, poultry, milk, butter, beef, cattle, pork, hogs and other products and livestock grown and raised on his big farm and ranch, and when he bought any farm or ranch products he could CREATE NEW MONEY — just hand to the seller IOUs, on and on, for years, and never had to pay a single IOU, and he used them to buy fine clothes, fine cars, fine horses and richest of feed for them and food for himself and family, fine residences, more and more fine farms and ranches, and on finding he could buy all his neighbours' products of their farms and ranches with his IOUs, and resell them for double what he paid for them and get gold, he quit farming and ranching, rented them to tenants, moved to the city, entered politics, corrupted the Congress, hiring it to outlaw all other IOUs and make his legal tender, and soon he owned the whole nation.
You are a dairyman. You must buy or raise your cows, buy or raise your food, build barns and milk houses, hire men to tend the cows. You and they rise at 3:00 o'clock in the morning to milk them, that you may have milk to sell. But suppose you sold the cows, fired the helpers, and bought a thousand milk cans, and you could reach out and shake an empty, closed 'can and it would instantly be full of milk. How long would it take you to get rich? "The banker CREATES the BANK DEPOSITS by a flick of the pen to purchase $60,000,000,000 interest-bearing U.S.. Bonds" (in 1942), says Cong. Patman. Then why should not the dairyman CREATE MILK by a "flick of the milk pail?"
Can you now see what the authority to CREATE and CONTROL money means? Means to bankers in riches, in power? Means to the producers, workers, in poverty, in helpless servility?
The First World War put the bankers in sight of ownership of America. So they began to look around for other safe investments. They had stolen the people's farms, ranches, homes, industries, goods and tools of production. They now wanted a mortgage on their souls. The Government through its unlimited taxing power could take a man's, last dollar from, him. They decided that U.S. Bonds would give them a mortgage on the souls of men. So in 1917, hiding behind the First World War, the bankers set out to accomplish that end. The first debt limitation bill, written by bankers, passed as written, passed Congress as the first Liberty Bond Act in 1917. It authorized the issuance of $7,538,945,400 in Bonds. The following tells the story:
Authorized Sept. 1917 $ 7,538,945,400 Increased Apr. 1918 to 12,000,000,000 " July 1918 to 20,000,000,000 " Mar. 1931 to 28,000,000,000 " May 1938 to 30,000,000,000 " July 1939 to 45,000,000,000 " Feb. 1941 to 65,000,000,000 " Jan. 1958 to 280,000,000,000
Then Pearl Harbour. Limit jumped in March 28, 1941 to. . . $125,000,000,000. The sky was the limit. The bankers stopped the little fellows who had been pouring tiny millions into gopher holes — raking leaves in never-visited parks, lining with stones the ravines running through the bankers' large blocks sprawling over vacant portions of thousands of towns, building parks in out of the way places, killing stock and ploughing under cotton while millions were naked and hungry, sleeping on thin, knotted mattresses, — that was spending money too slow. They would never push Uncle Sam $100 billion in debt with cheap New Deal spenders.
They rounded up the Frasers, the Kaisers, the Fords, the Durants, the Du Ponts, the Hughes, the Garrsons, the Mays — the big contractors, the bigger the better, the crookeder they were the more contracts they got.
The bankers said to them through the soft-voiced High Priest of Banking, Barney Baruch, "To hell with the cost. We are in clover again. We are in war. Jobs will multiply. Money will triple. Sirs, the sky will be the limit. We will build unneeded plants, remote from raw materials. The most costly way will be most pleasing to us. We will spend $15 million on a magnesium plant in the village of Austin, Texas, which will never turn a wheel; a $60 million iron furnace in the potato fields of East Texas, and its furnace shall never glow. We will hire all the crackpots we can find to think up crazy schemes to waste money. Go, go out to spend, pad your expense accounts, never forgetting the cost-plus formula" — and the poltroon Congressmen hung on the "elder statesman" Barney Baruch's words, doing his bidding, as he ordered them again and again, as the War lingered, to raise the debt (bond) limit. And the limit was pushed to $300,000,000,000!
Look, you spineless Americans who bear the burden without trying to do something about it — look at the following figures taken from the Report of the Treasurer of the United States, issued Oct. 1, 1946, giving the highest war debt, on Feb. 28, 1946.
TOTAL: $279,764,369,348.28
(More than physical value, in 1932 dollar, of continental United States.)
Through private loans, banks had run private debt over $500 billion, and the public debt — school, municipal, county, district, state, and national — all owed to banks, amounted to more than $500 billion. So on February 28, 1946, the 141 million American people owed the 14,567 banks a $1,000 billion — a stupendous sum, $1 trillion, which fastens upon every man and woman, every boy and girl, every child a debt of over $7,000. (Written in 1948.)
Recalling the Panic of 1893 which bankers planned and carried out that they might through mortgage foreclosures "own three-fourths of the farms east and west of the Mississippi" as typical of their schemes to steal the farms and other real estate of the Nation, and leave "the people tenants as in England!" you will understand that it required just a few years of 20th century to complete their total rape of the Nation. So they turned to U.S. Bonds — see them grow in billions:
1917 — $1 billion; 1919 — $26 billion; 1940 — $42 billion; 1941 — $54 billion - pre-Pearl Harbor; 1946 — $276 billion; 1958 — $280 billion.
And Wars I & II did the JOB! Completed title to 171 million souls!
"BUT, STILL I DON'T BELIEVE BANKERS TRANSFER PRINCIPAL TO THEIR PROFIT ACCOUNTS,"
you say. Well, sir, you mean you do not want to believe that you and 171 millions of Americans would let them get away with such gigantic fraud, as Stamp branded banking. As college graduates, even with your Ph.D. degree, you have heretofore glibly and unashamedly said, "I do not know anything about money," feeling your admission would waterproof you against being classed as a "crackpot or money nut," and now, as the whole horrible truth begins to seep into your mistreated and mistaught minds, you rush for the sand dunes so that you may stick your silly manhandled heads in the sand. You don't believe because you have been taught that bankers made all that's good possible, and you fear you might starve if you lost your master. He may be a fraud, you admit to yourself, but maybe his fraud, you reason, keeps you. Well, brother, it does — keeps you in bondage.
You say, "Of course, they take title to real estate, livestock, implements, crops and actual property they foreclose on, but admitting the banker CREATES the bank deposits he lends the borrower at the time he makes the loan, when the loan is paid the banker writes off the principal and takes credit for the interest only, which decreases the total deposits the same amount the loan increased them. He wouldn't need to keep the principal because he can create money at anytime he wants it."
Let me emphasize a fact:
Every Dollar a Banker Creates Ultimately Buys for Him a Big Dollar's Worth of Something!
When a borrower pays off a note he gets his note which reduces bank's assets. To keep bank deposit books balanced he debits the borrower's account the amount of the payment, which "tends" to cancel that amount of bank deposits out, so his bank deposit books nicely balance; but bankers, as all good (?) business men do keep two sets of books and over in the little black books the bankers write down the bank deposits which were "tending" to cancel out. They are not "bank deposits": they are "undivided profits" and are out of circulation, and will remain out until stockholders meet and vote them into surplus fund (still out of circulation), or set them over in bank's building fund (still out of circulation until spent) or declare a dividend which puts them back in circulation as bank deposits subject to cheque to the personal accounts of the stockholders. They write cheques and the deposits are back in John Q. Public's hands, where they stay, being shifted from the buyer's account to the seller's account. They have served the bankers, adding the principal plus the interest less the cost of doing business to their wealth. The bankers have lost control of them: and the only way they have of getting hold of them again is to sell their securities, principally Government Bonds. When they bought the securities they created New Bank Deposits, they gave seller a deposit slip and a cheque book for the bonds, but when they sold the securities, the buyer handed them his cheque which was an order instructing the banker to transfer from the bond buyer's account to the banker's black book the price of the bond, and old deposits for the second time were out of circulation and the property of the banker, but ready to return at the nod of the stockholders as before. The only way to "cancel out bank deposits" the bankers use is to "bust certain banks," and let the depositors lose, not the bankers.
"But that would be fraud," you say. Yep, I say it's fraud, and so did Sir Josiah Stamp. Remember? So did Jefferson, and Lincoln, and Wilson, and Roosevelt, too late. Why Jesus called them thieves !
But still too stiff-necked to admit that you are a slave to them because you are too lazy to think it through, or too much of a coward to stand up and face their jibes and reprisal? So you splutter, "Why, if they did that they would soon own the earth." Yep, you are right. "They do" said Sir Josiah. He also said that you could take their title to the earth away from them but let them continue to create and control credit and money and they would soon hold title again. Remember?
Another thought: if bankers carefully cancelled out the principal of every repaid loan, what would such honesty lead them to do when they foreclosed on a farm or cattle? Would they send notice to depositors, saying in part, "Sir: We loaned your money to Joe Doak and he failed to pay it back so we had to foreclose. But due to our safe and sound blanking practices you will not lose anything. Sir, you will gain many dollars. The farm is worth three times what Doak owed us. We sold the farm for a very good price and after deducting interest and costs, we are crediting your account with $159.23, your money we loaned Joe plus your percentage of the profits." No while bankers for hundreds of years have been lying: "We lend our depositors' money," no depositor ever received a notice like that, but millions have gone to get their deposits only to find bank closed — all deposits lost.
Of course the bankers try to keep John Q. Public ignorant of their practices. Of course lazy, long-suffering, gullible John Q. Public has been told over and over and over and over for hundreds of years that the banker is the leading citizen of the community, that John Q. always before making a business deal, buy securities, or make an investment, "should see his banker." So damn fool John Q. steps, out of the way and grins when the banker passes with a "howdy, John."
Private control of credit and money has made all the peoples of the earth abject slaves of the bankers. The millions of people of India of the Bahamas, of the tropical island, of Egypt, of Palestine, aye sir, of the British Islands, have been brought under bondage by Josiah's bank, and systematically robbed, plundered, and starved.
A few years ago I was chequeing my banking information and I asked the head teacher of "banking" in one of our largest Commercial Colleges a number of questions covering the creation and control of money, and the shifting of accounts, and he looked completely astounded. He seemed to be searching my face for marks of sanity. Had a crackpot gotten into his office? I waited. I won. He took a deep breath and said, "I don't know. I was taught banking in our best schools and have been teaching banking for years. I thought I knew all the answers. Come back two weeks from today and we will discuss your questions." I had type-written the questions in the form of declarations. He pulled them out of his desk, and said : "I must answer yes to every question and these facts should be taught in every school to every student but, I would be fired if I taught them here."
"To sin by silence when they know they ought to protest makes cowards of men." — Abraham Lincoln.