Chapter X
Some Examples Of Pyramiding Of Profits
There are six interlocking groups in the United States, which make it possible for them to continually and systematically rob the people of their wages and products. They're creatures of bankers who dominate them. They are named in order of their sinister power:
1. The 14,537 banks who have the absolute power of life and death over every human vocation, business and institution in the United States—an octopus with myriads of tentacles, with innumerable suckers fastened to every human activity;
2. Holding companies who water all public service corporation stock, dictate their practices and policies, and suck their earnings so dry that there is nothing left out of which to pay decent salaries and wages;
3. Stock and Commodity Brokers, headed by the New York Stock Exchange, Chicago Wheat Pit, and New Orleans Cotton Market, with hundreds of branches, where thousands of men and women gamble on the finances of industries and their products, while a few men manipulate the prices of every product of farm, ranch, forest, mine and factory, fixing and fluctuating the prices so that the producers in every line of human endeavour are robbed of a just price for their products;
4. Stock-issuing corporations, led by United Steel in iron, Standard Oil in petroleum, General Electric in power and light, General Motors in automotives, Bell Telephone and Western Union in communication, and many others who dominate every industry and
5. Insurance Companies barnacled on lives and properties of the people of the Nation.
6. Oil and gas. These six groups of interlocking industries, headed, dominated by the bankers of America control and dominate every firm, business and individual of the 171 million population from the cradle to the grave, enriching a few, pauperising many many millions who have less than a bare living. In each group control narrows down to a half dozen men, and only three men dominate banking: J.P. Morgan and the Rockefellers of New York and A.P. Giannini of San Francisco. And that narrows the 14,537 banks down to just three: Morgan's City National, Rockefeller's Chase National, and Giannini's Bank of America (Italy).
Let me give you a couple of examples:
A Dallas Texan, R.L. Thornton, who grew up on an Ellis county farm "where he picked a lot of cotton and a little learning," as a modest (?) one-bank banker; and a San Francisco Californian, A.P. Giannini who spent his boyhood on a produce wagon, gaining much business knowledge and little schooling, as an example of the stock-floating chain-bank bankers.
On October 24, 1916, during World War I, just before the United States entered the War I, R.L. Thornton, a penniless salesman, borrowed $20,000 and opened in an old restaurant a new Dallas bank. Twenty-seven years later, he moved his Mercantile National Bank with $184 million resources into its 30-story $5 million building ten blocks up the same street, November 15, 1943, during the crucial years of World War II, when everyone was urged to cancel improvements and to devote 100% of his time and resources to winning the War. Those $184 million resources are not all the chickens the $20,000 nest eggs hatched.
Many times the gains listed as "bank resources," went into purchase of property in the name of officers and stockholders, and in companies financed by the bank. Can you calmly ponder that accumulation of wealth in just 27 years — $20,000 into $184,000,000 goes 9,200 times original $20 thousand investment, just a bare 920,000% increase in three decades! and not want to aye, resolve to stop it? Maybe you want to be a banker. Well, how are you going to get a charter? R.L. and his crowd were busy telling us dumb Joe Doaks that we ought not to miss the wonderful "savings bond" investment — "why you just pay $18 for this bond which will be worth $25 in just ten short years." Why that is a poor man's investment, Joe. Just be reasonable and appreciative. Why, boy, that's a chance in a lifetime! a real chance to put your little money to earning money in a big way? Why, that's 70c. a year your little $18.00 will earn. Just do a little figuring, Joe. There it is. Over 3%. To be correct to four decimals, it is 3.8888% per year!
Of course Bob and his buddies were raking in just a mere 30,666% profit a year. But, my boy, they are big fellows. Why, Jodie, they rule the United States, but if you Joe, just must have $18 to run down to Lufkin to pa's burial, and if you will get one of their good depositors to sign a $25 note to be paid in 30 days, they hand you the $18. Of course that is paying them interest at the rate of 133-1/3% a year in advance!
On October 17, 1904, in a San Francisco old waterfront saloon building, A. Giannini opened up the Bank of Italy with $10,000 of his own money plus $140,000 his Italian buddies put up. In one year it had $1 million in resources and six months later it had increased to $1,900,000. Then the earthquake, but five years later it had reached $11 million with six branches. Then in 1913 he bought, 400 miles away, Los Angeles Park Bank with $6 million assets. ("Buying and merging banks is easy," said Giannini. "People don't understand that as soon as you buy a bank you have cash and assets, and as soon as you take over you get your money back."
He simply paid by handing each stockholder a deposit slip which created new bank deposits. He never touched a dollar of his $11 million assets, and after adding the Park Bank $6 million the Bank of Italy's assets were $17 million. By 1919, at end of World War I, the Bank of Italy's assets had climbed to $150 million, just a measly 100,000% profit on his original $150,000 in 15 years!
That's too slow for produce boy, Giannini "Big Bull of the West." So he added to straight commercial banking-financing corporations, selling his own and, other corporation securities, and handling investments. By 1927 he had $200 million assets. His stock-selling machinery could float $50 million to $100 million new stock issue overnight. A $100 share in 1919, after many dividends and a split up, reached a value of $1,700 in 1928. Said Giannini "I made $80 million profit for my stockholders in one year, $90 million the next." A linotype operator bought 100 shares in 1921 for $20,000, found them worth $150,000 in 1928, a 750% increase. He retired. A young bank teller found his earnings to be in 1928 $1,500,000.
Then Morgan began to sell Bank of Italy short, and the linotype operator went back to his machine and the millionaire teller took his old bank window back. Giannini fled to Italy, trying remote control; then to Austrian health resort. He resigned his American official bank connections, asked that they send him $791,000 he claimed under an old compensation agreement. They refused to pay. That so angers Giannini that he forgot his polyneuritis, and slips back to America in September, 1931, and gave battle. He got back complete control. He was 61. With New Deal largesses, followed by World War II profits, which trebled his now Bank of America assets, and in 1946, at the age of 77, Giannini the son of a poor Italian immigrant and fruit vender, stood at top of the Biggest Bank in the world, with its assets" $6 billion, passing its two Wall Street rivals, Morgan's City National and Rockefeller's Chase National by a hot half billion! His Bank of America today, 1945, with its 500 branches sprawling over California's 780-mile length (written in 1948 — the banks have continued to multiply) carrying 40% of all bank deposits in California and spilling over into Oregon, Washington, Idaho, Nevada and New Mexico has made Giannini not only the biggest banker in the world, but the most sinister man in the world. "Giannini has so much power," one California banking authority said, "that he could start a depression throughout the entire West simply by going conservative — that is, calling in their loans and investing in U.S. Bonds."
In 1929, just before the October 24, 1929, crash, he declared to a Senate Banking Committee, "I would make branch banking nationwide and worldwide. It is coming, gentlemen, and there is nothing you can do about it." But in less than a year, his Bank of Italy stock hit $62.50. He hurriedly drew out $2,400,000 and slipped away to Italy to be near Mussolini his personal friend, whom he admired. He was showing true banker-spirit — fight until routed, then grab all in sight and run for cover. After the war, he rushed back to make good his threat of nationwide branch banking. Now he and Morgan and Rockefeller, and branch bankers, are working together to establish worldwide banking, before the cataclysmic crash. Giannini and all other bankers know it's almost on us. If Bretton Woods worldwide banking plan goes over, it will be full 100 years of private banking crimes, because control will be so remote that the people of a nation will be helpless, and the world peoples are so diverse in thought and reaction it will be impossible to arouse them to concerted action, I fear.
Do you want this to stop? Then turn to Congressional elections. Congress is to blame for every economic crime committed in America since the first Congress, assembled in 1789. The Constitution specifically delegated to Congress the power to create and control our nation's money (Art. I, section 1), and as specifically denied the power to all others (Art. I, section 10).
We have given an example of the one-bank banker, and a chain-bank banker. Both used same methods.
The usual commercial banking and financing, securities and investments, and their big money was in the last three. There is another type — all small banks are wholly commercial, and restricted to minor loans, purchase of minor securities. If banks were restricted to straight commercial loans and minor rediscounts, their power to do injury would be greatly reduced. But even then the fact that all of them lend credit instead of cash — that is, all of them create new bank deposits each time they make a loan or an investment, or buy a security, the practice of private banking would be intolerable, because (1) the creation of money through loans makes debt the basis of money when certainly production should be basis of all money, (2) their method of creating money keeps the volume in circulation constantly fluctuating, so that the price of everything man sells or buys is constantly fluctuating, and a most casual economic study convinces one that prices should be constant and uniform.
The proof that the volume of money and not supply of goods affects prices is found in prices of land which always skyrocket with inflation of the volume of money, and no one knows the truth and danger of that fact better than the banker. Over and over he has played the game; made money plentiful by making many loans; and with high commodity prices, men buy farms, ranches, businesses and homes at high prices, making small down-payments with the little money they have, giving many vendors lien notes for balance. The bankers generously buy your notes with new money they create, inflating volume of money still more, sending prices still higher, until their intended harvests are ripe; then they quit making loans and call in loans, taking money out of circulation. Prices drop. Farms, and homes bought on 30c. cotton, $2.00 corn, and $1.20 an hour wages, can't payout on 10c. cotton, 65c. corn, and 30c. wages. So the bankers start their harvesting machinery. And that's the third reason why private banking must go.
No group of men should be permitted to exercise such baleful power. As in 1929 Panic, thousands will hold on to their inflated shares too long and faced with poverty will suicide, while millions will suffer years of privation and want. Not so with all inner circles of banking — the stock market manipulators and their inner circles, the holding companies and their inner circles, the stock-floating corporations and their inner circles, and insurance companies and their inner circles and a few smart individuals—they are unloading their corporation stocks and bonds quietly and in small quantities, so as not to attract attention, and are buying tangible assets—farms, mines, houses, small debt-free businesses.
That started a high land-price spiral. When the rank and file discover what these inner-circle folk are doing, they will rush their holdings on the market. It will be too late for them.
A few columnists are hinting at the truth we have been shouting for years that too much money makes high prices. Below we quote one of them.
"European governments today. . . decree that regardless of how much they have debased (by creating too much) their currency, prices in terms of those currencies must not rise. . . . They are united in the cry that there is a money shortage, implying that it can only be cured by further big loans from America. Our own government accepts this "dollar shortage"' explanation. Yet there are more outstanding dollars today than ever before. Between June of 1939 and June of 1947, total demand deposits and cash outside of banks increased from $33,360,000,000 to $108,500,000,000. This huge outpouring of dollars is the basic cause of the rise of prices in this period. There is more than three times as much money as before bidding for existing American goods. We, too in short, have debauched our currency. But government officials, instead of recognizing this inflation as the result of (Congress) their own (stupidity) policies (in turning over to private banks the power to create and control money), blame the businessmen. They start monopoly investigations and prosecutions which are thinly disguised attempts to put the blame for prices on business," (and keep the people from laying the blame on the bankers where it belongs). Parenthetic words are mine. The Author.
Why don't all educated men bring their combined mental powers to the task of smoking the bankers out?
Why didn't Hazlitt once mention the banker's sole responsibility for "debauching our money"? Why did the SEC, controlled by Morgan, fight so hard to keep Giannini's banks from reopening after all closed in 1933, only to have FDR and his new Deal advisers to give him the green light?
Were Roosevelt and all of his many advisors wholly unaware of the banks' blame for the 1929 Panic and the complete breakdown of our economy? If they knew, why did FDR not recommend to Congress that it outlaw private banking, restore to itself the creation and control of money, and deny all banks permission to reopen? My son, Mark Adams, who was in Washington employed by the Government from 1935 until he volunteered in 1942 for Navy service, says they erred in this as in every other instance, in feeling they could outsmart the old regimers playing ,their own game, but the Morgan-Rockefeller-Giannini-duPont cabal, the riders of the four horses of the Apocalypse, War, Famine, Pestilence and Death, made monkeys of FDR and all his Don Quixotes. Mark relates this incident:
"It was in the late thirties when best elements of the New Deal were already fighting a desperate battle against well-heeled attackers from the corporation fold. I attended a dinner over a little restaurant a few blocks from the capitol, where the Young Turks in Congress met once a week to talk over current problems. Sen. Bob La Follette talked about taxes, how to keep corporations from dodging their share of the tax burden, how to keep them from shifting the load onto the poor. A smaller group of us afterward drove out to the home of Jim LeCron, who was then Assistant Secretary of Agriculture to Henry Wallace. We talked more about why the New Deal was failing, trying to discover where the plain, producing and serving people were being held down, what mistakes we had made, and how we might do a better job tomorrow.
There were five of us: Jim LeCron, our host; Maury Maverick of San Antonio, whom I admired for his courage and energy as the common-man's advocate in Congress; Carl Sandburg, the poet-historian and biographer of Abe Lincoln and staunch supporter of all that was good in New Deal; Bob Montgomery, economist from University of Texas, who has a rare gift for stating economic conclusions in terms of the plain people's common sense, and me, a youngster sitting in a corner and listening with both ears — and they're good ears — like a buck private who has turned up at a meeting of the Joint Chiefs of Staff. They talked of particulars for a while and the outlook on the current efforts wasn't bright.
"They then began discussion of why the good parts of the New Deal were stymied so often and the bad parts like RFC got special green lights. We knew we were losing the fight for the hard working plain common people—losing ground, foot by foot, and why? What had been the turning point?
"The administration could have done anything it wanted to in March, 1933. The people would have backed up President Roosevelt and Congress on any step they saw fit to take. The trouble seemed to be that no one in authority or close enough to be heard, seemed to know what the source of the trouble was. What had been the New Deal's fatal mistake? Was it they saw hunger and distress and took up corporation tactics and methods and applied them in effort to succor the underprivileged, hoping to arrive at the right solution by the trial and error way? How had greed and evil somehow preserved themselves?
"The answer was unanimous. The great mistake was made in March, 1933 — when President Roosevelt, after total crash of private banking, let them reopen as private banks again and return to the evil practices that had led to crash after crash in sickening cycles for 150 years, each move more destructive than its predecessor, resulting in the 1929-1935 Panic, leaving every American on his knees!
"I remember that. The good parts of the New Deal were failing and hard pressed in 1938 because the banks had been left in the hands of private bankers in 1933. The mobilization and production for war got under way with painful slowness in 1941 because the control of credit and money was left in the hands of greedy vicious private bankers in 1933.
Too late, it was all too clear! Wherever we found greed and oppression on the march, found people suffering, when we dug into the background we found the evils and oppressions stemming from bankers every time. Banks had been granted by Congress absolute control of credit and money, a grant of power over civilization which ultimately controlled all — damned near all! And as long as private greed-groups hold that power, as long as three men like Giannini, Morgan and Rockefeller can dominate a nation of 141 million people, (written in 1948) the plain working people will be kept on their knees and painful poverty and defeat will stalk 135 million of us. That was the considered opinion of the best informed and the most courageous men I know. That's a summation of what they had learned through bitter defeats while fighting in the people's cause. And I remembered — just in case.
"It is a lesson for all to remember. If ever again the common people rise up as in 1932, and set about a righting conditions" as they tried to do in 1933, the first step is for Congress to resume its own constitutional power to create and control our money, and to rescind all banking laws. If a power to 'lift UP or cast DOWN' all the people is to be held by any group, that group must be the people's own duly chosen Congressmen, which was so wisely couched in the Constitution by our founding fathers.
"That was the sum of a sincere and informed post mortem on the New Deal — the clearest I ever heard, and I remember it. And you would do well to remember it, too. And to ponder it! And to act," concluded Mark Adams.
The bank picture and a story appeared in Dallas News, October 13, 1946. R.L. Thornton, president of bank, was born in a half dugout, graduated from the Corn, Cotton and Mule University. He opened a Private bank on $20,000 borrowed capital, at 704 Main Street, Dallas, in 1916. He took in $12,000 deposits the first day. Thirty years later his bank, The National Mercantile Bank & Trust Company, moved into its own 30-story building, which was built during the war when the rest of us could not build a home, at a cost of $5 million. He had climbed 30 stories in thirty years, his assets climbed from $20,000 to $184,000,000 — a gain of 920,000 percent, or an annual growth of 30,666 percent profit a year. And that did not include the millions drained off by means of bond sales, stock sales, dividends, etc., which went into ranches, oilfields, beautiful homes, which did not register as "assets of the bank", and other millions went to pay the expenses of their "in-the-family white trash", who have beaten trails to the four corners of the earth Yellowstone Park, tables at Monte Carlo gondolas in Venice, pyramids of Egypt, hot sands of Miami — all places where international white trash swarm and lounge with billions of American "credit dollars" steaming from their fingers.
That story is typical. That is a niche in the "House Banking Built," which Josiah Stamp said OUGHT to be torn down.
The man and woman who live without turning their hands to honest toil, who live by their wits, are creatures of banking, their lives of non-toil made possible by these bankers "creating" debt dollars which would buy the products of those who must toil to live.