Ever since the special session of Congress, beginning on the 7th of August, 1893, the national banks of New York City continuously bent all their energies toward depleting the gold reserve of the Treasury and forcing an issue of bonds.
Without the active co-operation of these associated banks, it would have been impossible for the gold speculators to have obtained the greenbacks and treasury notes to present to the Treasurer for obtaining the gold for exportation to Europe. As the national banks of New York City persevered in the policy of hoarding up all greenbacks and treasury notes, that found their way over their counters in the ordinary transactions of business, the means of exhausting the gold reserve were practically unlimited. In fact, more gold was actually shipped abroad than was needed in Europe. It was asserted by unquestioned authority, that these banks exported tens of millions of gold to Europe, and that it was returned without the packages containing it ever having been opened; and that this policy was carried on by the banks, with the avowed intention of compelling Congress to fund the greenbacks and treasury notes into bonds.
[440]ß
One of the reasons stated by the President in his message of August 8, 1893, was, that the purchasing clause of the Sherman law must be repealed, as the only remedy to check the exportation of gold. This was the sum and substance of all the arguments, advanced in both Houses of Congress, by those who urged the repeal of the Sherman law.
These reasons and arguments were the merest subterfuges of those public men who were determined, at all hazards, to manacle the American people to a single standard of gold, and to make all business pay toll at the counters of national banks.
As heretofore stated, the gold gamblers persevered in draining the Treasury of its gold during the time that the repeal bill was pending in Congress, a policy which was upheld by the subsidized press. Every withdrawal of gold was given prominence, in these journals, as a means of frightening the timid.
As shown by a report of the Comptroller of the Currency, the national banks of New York City, on the 2d of October, 1894, held gold coin to the amount of $175,000,000, in addition to legal tender notes or greenbacks to the amount of $185,000,000. On the 19th of December, of the same year, the bank holdings of legal tenders had decreased to $119,513,000.
These figures demonstrate that, while the banks held $175,000,000 in gold, they had used their legal tender notes, or greenbacks, in looting the gold reserve to obtain gold to buy these bonds.
In speaking of this course of the bankers in thus forcing an issue of bonds, the New York World editorially said:
[441]ß
" Nevertheless these banks are hoarding gold in large quantities, at a time when to do so is to subject the Government to heavy and needless expense.
"Thus the clearing house banks of New York alone, hold over $81,000,000 in gold for which they have no use, "
In referring to the immense holdings of gold by the New York banks, the World further said:
"If they should turn it into the Treasury and take greenbacks instead, they would be in every respect as well equipped as now to meet their obligations, while the Government would not have to issue another $100,000,000 of bonds, which it will cost the country $220,000,000 to pay, principal and interest.
"Are they seriously expecting gold to go to a premium?
"Or are they and the banks all over the country in a tacit "combine" to compel repeated bond issues for their speculative profit? These banks ought to answer these questions. "
On the following day, the World, in speaking of the answers of the New York bankers to this accusation, editorially said:
"They have no obligations payable in gold.
Although the World was an advocate of the gold standard, yet it did not hesitate to censure the banks of New York City for their traitorous attempts to cripple the United States. With renewed energy, the banks persevered in their attack upon the gold reserve, and from the 17th day of January, 1895, to February 13th,
[442]ß
they drew gold out of the Treasury to the amount of $38,262,540. In a single day, January 25th, they drew Out $7,156,046, although at that time these identical banks held a stock of gold exceeding $100,000,000.
The influential journal of Commerce, charged that the New York banks, owing to their combined policy to cripple the Government, had purposely caused a needless and artificial scarcity of gold to the amount Of $503,000,000.
"2. Because, within the same period, the banks have withheld gold from customs, payments which, under their former usage, would have given the Treasury a gold income amounting to two hundred and seventy-three millions.
"3. Because, within the last thirty-one month,;, the Treasury has suffered from this policy of the banks a direct and indirect artificial gold depletion of five hundred and three millions.
"Here, in a nutshell, is the explanation of the condition of the Treasury and of the causes compelling its virtually needless loans."
On the other hand, the New York Times, with its accustomed loyalty to the money power, urged these banks to coerce Congress to do their bidding. It said:-
"But we close, as we began, with the unqualified statement that Congress will not do this-that it will not do anything, unless it be forced to action by the overwhelming pressure of public opinion. It is sheer folly to rely on anything else. This force organized,
[443]ß
directed, and concentrated upon Congress, as it was in the spring of 1891, when the free coinage bill was killed, as it was in 1893, when the repeal bill was enacted, will do the work. Nothing else will."
Since the repeal of the purchasing clause of the Sherman law up to this time, gold to the amount Of $172,000,000 was withdrawn from the Treasury, despite the fact that President Cleveland, in his message of August 8, 1893, gravely declared that the repeal of the purchasing clause of the Sherman law would stop the depletion of the gold reserve.
On the 17th day of January, 1894, the Secretary of the Treasury invited bids for the sale of bonds to strengthen the gold reserve. The amount offered was fifty millions for sale, and delivery was to be made February 3d.
At the time of this sale of bonds, the banks of New York City held many millions of gold, but, instead of using their holdings to pay for these bonds, they presented treasury notes, and drew out of the Treasury $20,211, 000 in gold to take up these bonds.
Therefore, while these banks were demanding issues of bonds to maintain the public credit; they utilized this very issue as a means to further deplete the Treasury of its gold.
The Secretary claimed that, under the provisions of the Resumption Act, he had full authority to issue bonds for the redemption of the greenbacks. The gold reserve, thus expanded beyond the one hundred million dollar mark, was again attacked by these conspirators with the evident purpose of forcing gold to a premium, and to compel an additional issue of bonds.
[444]ß
To pay for these new bonds, immense quantities of gold were again withdrawn from the Treasury. United States Senator Gray, a gold standard champion, admitted this fact in a speech in which he stated that, from December 1, 1894, to February 13, 1895, $80,785,000 was exchanged for treasury notes, of which only $36,852,389 was exported.
As a matter of fact, a large amount of this was hoarded for future purchases of bonds.
On December 5th the reserve bad been expanded to $111,142,021, and immediately this gold reserve, thus freshly built up by this second sale of bonds, was again attacked by the New York bankers, by exchanging greenbacks for gold at the sub-treasury in New York City.
In the beginning of February, 1895, the withdrawal of gold became greater than ever before known, and the banks openly avowed their intentions to force a third issue of bonds. Meanwhile, it was rumored in Wall street, that the Secretary of the Treasury had secretly negotiated a sale of bonds to Messrs. Belmont and Morgan.
In speaking of both of these facts, the New York Press, of February 7th, said:--
"Gold To Buy Bonds-Wall Street Ready To Rob
Treasurer Peter To Pay Paul.
"Fully $700,000 in gold coin was withdrawn from the sub-treasury yesterday. While this is not a large
[445]ß
amount as compared with other days, it is significant and suggestive. It means nothing more or less than that the banks and trust companies in the city are preparing to take up a considerable portion of the prospective bond issue.
"But it is more than likely that the banks will get even with the Government after all. The quiet gold hoarding that is going on just now means that this money is to be used to buy the new bonds, and after they are once obtained, it will be a comparatively easy matter for the purchasers to replenish their vaults and safes, with practically the same coin again by means of legal tenders. In short, it is only another instance of Peter being robbed to pay Paul.
On February 8, 1895, the Secretary of the Treasury negotiated a secret contract with two great banking houses of London, England, for the sale of $62,000,000 Of 4 per cent. thirty-year bonds.
[446]ß
"Witnesseth: Whereas it is provided by the Revised Statutes of the United States (section 3,700) that the Secretary of the Treasury may purchase coin with any of the bonds or notes of the United States authorized by law, at such rates and upon such terms as he may deem most advantageous to the public interests, and the Secretary of the Treasury now deems that an emergency exists in which the public interests require that, as hereinafter provided, coin shall be purchased with the bonds of the United States, of the description hereinafter mentioned, authorized to be issued tinder the act entitled `An act to provide for the resumption of specie payments, approved January 14th, 1875, being bonds of the United States described in an act of Congress approved July 14th, 1870, entitled `An act to authorize the refunding of the national debt.'
"Now, therefore, the said parties of the second part hereby agree to sell and deliver to the United States 3,500,000 ounces of standard gold coin of the United States, at the rate of $17.80441 per ounce, payable in United States 4 per cent. thirty-year coupon or registered bonds, said bonds to be dated February 1, 1895, and payable at the pleasure of the United States after thirty years from date, issued tinder the acts of Congress Of July 14, 1870, January 20, 1871 and January 14, 1875, bearing interest at the rate of 4 per cent. per annum, payable quarterly.
"First, Such purchase and sale of gold coin being made on the following conditions:
"1. At least one half of all coin deliverable hercin under shall be obtained in and shipped from Europe, but the shipments shall not be required to exceed 300,000 ounces per month, unless the parties of the second part shall consent thereto.
"2. All deliveries shall be made at any of the subtreasuries or at any other legal depository of the United States.
" 3. All gold coins delivered, shall be received on the basis Of 25.8 grains of standard gold per dollar, if within limit of tolerance.
[447]ß
"4. Bonds delivered under this contract are to be delivered free of accrued interest, which is to be assumed and paid by the parties of the second part at the time of their delivery to them.
"Second, Should the Secretary of the Treasury desire to offer or sell any bonds of the United States, on or before the 1st (day of October, 1895, he shall first offer the same to the parties of the second part; but thereafter he shall be free from every such obligation to the parties of the second part.
"Third, The Secretary of the Treasury hereby reserves the right, within ten days from the date hereof, in case he shall receive authority from Congress therefor, to substitute any bonds of the United States, bearing 3 per cent. interest, of which the-principal and interest shall be specifically payable in United States gold coin of the present weight and fineness for the bonds herein alluded to; such 3 per cent. bonds to be accepted by the parties of the second part at par, i. e., at $18.60465 per ounce of standard gold.
"Fourth, No bonds shall be delivered to the parties of the second part, or either of them, except in payment for coin from time to time received hereunder; whereupon the Secretary of the Treasury of the United States shall and will deliver the bonds as herein provided, at such places as shall be designated by the parties of the second part Any expense of delivery out of the United States, shall be assumed and paid by the parties of the second part.
"Fifth, In consideration of the purchase of such coin, the parties of the second part, and their associates hereunder, assume and will bear all the expense and inevitable loss of bringing gold from Europe hereunder; and, as far as lies in their power, will exert all financial influence and will make all legitimate efforts to protect the Treasury of the United States against withdrawals of gold pending the complete performance of this contract.
[448]ß
August Belmont & CO.,
On behalf of Messrs. N. M. Rothschild & Son,
London, and themselves. .
J. P. MORGAN & CO.,
On behalf of Messrs. J. S. Morgan & Co., London,
and themselves.
Attest:
Francis Lynde Stetson."
A construction of this contract discloses the following remarkable facts: First, that two American banking companies of New York City represented two great banking houses of London, England, and Secretary Carlisle presumably the United States. Second, the gold coin so purchased should be paid into the Treasury at the rate of 300,000 ounces per month, except these foreign firms should agree to make larger monthly payments, One half of this gold was to be obtained in Europe. Third, the Secretary of the Treasury bound himself not to offer or sell ally bonds of the United States to any other parties, on or before the 1st day of October, 1895, without first offering all such bonds to this foreign syndicate. This placed the Government at the absolute mercy of alien bankers, and was a most cowardly surrender of the interests of the people to a foreign gold trust. Fourth, the Secretary of the Treasury reserved the right to substitute bonds
[449]ß
specifically payable in United States gold coin, provided Congress should confer authority upon him to make such substitution. The purpose of this clause in the contract was, should Congress consent thereto, to issue bonds specifically payable in gold coin, and thus commit the country to an issue of gold bonds. Therefore, should the United States issue an obligation specifically payable in gold, this example would be followed by every creditor, and every mortgage, bond, note, or other security or evidence of debt, would become a gold obligation, and the nation and its citizens would be bound hand and foot, and delivered over to the tender mercies of the national banking money power and the international gold trust.
Is there an international gold trust? Clause five of paragraph four of this contract is an explicit acknowledgment on the part of the United States, that there is such an institution. That clause is as follows: "In consideration of the purchase of such coin, the parties of the second part, and their associates hereunder, assume and will bear all the expense and inevitable loss of bringing gold from Europe hereunder; and as far as lies in their power, will exert all financial influence, and will make all legitimate efforts to protect the Treasury of the United States against the withdrawals of gold, pending the complete performance of this contract.
Think of it! This great nation having resources far exceeding the whole of those of Europe, with a population of seventy millions of energetic people, ascertaining that its Secretary of the Treasury had bought the protection of a foreign bond syndicate!
29
[450]ß
In speaking of this transaction, the New York Tribune asserted that this syndicate could control the money of the world. It said:
"No plan that did not provide for getting gold from Europe, and that did not also provide a means to check shipments of gold to Europe, could give the Treasury one dollar of permanent relief. This undertaking to change the whole course of exchange, must necessarily be expensive, but the syndicate can do it, and the Treasury is accordingly benefited."
As a result thus far of President Cleveland's warfare upon silver, we find that this high public officer, who wanted the purchasing clause repealed to check the withdrawal of gold from the Treasury, made an unconditional surrender to the international gold trust. He sought to buy its protection.
The bonds so issued under this secret contract were sold at a premium of only four and one-half cents on the dollar. At that time, the same class of bonds having but twelve years to run, sold at a premium of ten and one-half cents. In the meantime, it was rumored that the administration had entered into a secret negotiation with this syndicate, and on the 8th of February, 1895, President Cleveland transmitted this contract to Congress, accompanied by a message, in which be requested permission of Congress to substitute a 3 per cent. gold bond in lieu of the bonds so sold to this syndicate. Immediately upon the appearance of this message in the House, Mr. Wilson, of West Virginia, reported a joint resolution authorizing the Secretary of the Treasury to issue gold bonds to the amount of
[451]ß
$65,116,275. At the same time, a similar bill was introduced in the Senate by Mr. Vilas, of Wisconsin.
During the debate on these measures, it was pointed out by the silver advocates that the 4 per cent. bonds sold to this syndicate were worth $1.19½, although they had been sold at $1.04½, netting the syndicate a profit of not less than $10,000,000 by this transaction. It was also charged that the administration had sold these bonds to the banking houses of Rothschild and Morgan at this low figure, with the express purpose of depreciating the national credit with a view of forcing an issue of gold bonds.
The attempt to force the Wilson resolution through the House failed by the decisive vote of 167 nays to 120 yeas.
The absurd pretense put forth by President Cleveland and his adherents, that the national credit must be strengthened by substituting the term gold, for that of coin in its obligations, was fully exposed by subsequent events.
Ten days after the issue of the original bonds, nearly thirty millions of them were sent to London to be sold by the syndicate. In twenty-two minutes after these bonds were placed on the market, the subscriptions for them amounted to ten times the sum total of the bonds.
To-day, these bonds that were thus disposed of by this nefarious contract to a foreign syndicate at $1.04 1/2, are now worth $1. 29 1/2--being an advance of twenty-five cents on the dollar!
Again the bold attempt of President Cleveland to fasten the gold standard on the country ignominiously failed.
munication of the bond contract, House bill 8,705 was brought forward in the House of Representatives. This measure proposed to authorize the Secretary of the Treasury to issue $500,000,000 of bonds to maintain a sufficient gold reserve, and to redeem and retire United States notes.
These repeated attempts of the administration, and its satellites in Congress, to burden the people with an enormous bonded indebtedness, is one of the most remarkable phenomena in all history. It seemed that the whole energy of President Cleveland was directed with an eye single to loading down the country with a vast perpetual debt, even though it would ruin the party which had honored him so frequently., He unscrupulously used the immense patronage of his office to force his measures through Congress, but beyond securing the repealing of the purchasing clause, he failed in every instance to coerce Congress into submission to his will. He likewise failed in this proposed bond measure, for, on a motion to engross the bill and pass it to a third reading, it was defeated by a vote of 162 nays to 135 yeas.
In a few months after the secret bond contract with the Morgan Rothschild syndicate, the attack upon the gold reserve began anew, as the bank of England bid $4.91 for gold, being equivalent to a premium of one per cent on the dollar. Whenever the bank of England desired to increase As stock of gold, A raised the price at its counter, and this policy attracted gold from all over the world. The usual exchange value of a British sovereign in gold is $4.86, therefore, by raising the price to $4.91, it gave notice to all the world that it was offering a premium for gold.
[453]ß
In August, 1895, while the rate of exchange stood at $4.91, the New York bankers raided the reserve to obtain gold to ship to London for this premium. In that month, $15,000,000 was withdrawn from the Treasury and exported to that country. In the following month, the high rate of exchange still continued, and the gold gamblers of Wall street drew $16,000,000 out of the Treasury for exportation. This process still continued, and, in the meantime, the administration opened negotiations with the banking house of J. P. Morgan & Co., for the disposal of $200,000,000 of thirty-year 4 per cent, bonds at private sale,
This brazen attempt of the administration to again sell bonds at private sale to this syndicate, at a figure away below the market price, brought forth such a storm of indignation and protest that even President Cleveland quailed before it.
Therefore, on January 6, 1896, Secretary Carlisle issued a circular, inviting proposals for the sale Of 4 percent. thirty-year bonds. The bids received for this proposed series of bonds aggregated $568,259,850--- than five times the amount of the bonds offered.
The Morgan syndicate offered to take the whole issue at $1.1069. This bid was six per cent. higher than the syndicate would have paid at private sale, had it been consummated. It was a little over six per cent. more than the syndicate paid for the issue of the $62,000,000 of February 8, 1895. There were 780 bids at prices higher than that offered by the Morgan syndicate.
It will be borne in mind that this bid of the syndicate for these bonds, at an advance of six per cent. over that of the same Morgan-Rothschild syndicate for the issue of February 8, 1895, Was for coin bonds of the same
[454]ß
kind as this latter issue. The fact that this syndicate was willing to pay several million dollars more for the same class of bonds, as those negotiated tinder the secret contract of February 8th, is evidence that the objections of President Cleveland to coin bonds, rested upon the flimsiest pretense.
It must be remembered that this increased price was offered many months after Congress refused to authorize the Secretary of the Treasury to issue bonds specifically payable in gold coin, and that the Matthews resolution adopted by Congress, January 25, 1878, declaring that the bonds of the United States could be legally paid in standard silver dollars Of 412 1/2 grains, was unrepealed, and was in full force and effect as declaratory of the financial policy of the United States.
The continued efforts of President Cleveland to retire the greenbacks and treasury notes, and to issue bonds in lieu thereof, seemed to have taken possession of his mind with a zeal approaching that of mania.
His determined attitude on these public questions, exercised great influence upon the opinions of many Democratic members of Congress. Hence, many of the leaders of that party, who, prior to 1892, were the most consistent advocates of free coinage of silver, suddenly changed their positions upon these important questions, and did the bidding of President Cleveland, in his attempt to fasten a gold standard and a national banking system upon the people, with a zeal that was remarkable. Many of these Congressmen were defeated in the election of 1894, and President Cleveland manifested his fatherly care for his new-born prote'ge's by appointing them to Federal offices; judgeships,
[455]ß
postmasterships, and various other appointments, were handed around to these apostates to Jeffersonian principles, as a reward for their treachery to the people, and their fidelity to that man who had sought to disrupt that great and historic party, which had taken him from obscurity and elevated him to the highest positions in the gift of the people.
Tile total amount of bonds issued during his administration was $262,000,000.
In the meantime, Secretary Carlisle announced that he would redeem silver dollars in gold, should it become necessary to maintain the parity of the metals. The scheme of the national banking money power was now consummated, as far as it lay in the power of the Secretary, inasmuch as he evidenced a purpose to treat more than 500,000,000 standard silver dollars as mere credit money, redeemable in gold. This paved the way for a demand of the national banks, that the Government issue sufficient bonds to take up and retire this Silver money from circulation.
While President Cleveland was "working in Congress" by means of his patronage, the money power was working through its various associations and through the press to train the people to accept the absurd principle, that the question of money did not fall within the province of laws and legislation, but that its solution rested solely with commerce-that is the banking power.
In a letter written by George S. Coe, President of the American Exchange National Bank, one of the most powerful in the country, to Jos'e F. De Navarro, the former exhibited his supreme contempt for the powers of Congress. The closing sentences of this letter, dated April 10, 1893, are as follows:
[456]ß
"Commerce is larger than governments and will certainly prevail over them all. When once this conviction prevails, we shall all be surprised to see how easily natural laws will conquer local prejudice and legislation.
This writer who made his wealth and secured his fame out of the law-making power of the Government, now spurns that constitutional authority, as inferior to the unlimited greed of that class of which he is a shining light.
In a speech delivered before the Chicago Bankers' Club, April 7, 1895, William C. Cornwall, a leading banker of Buffalo, said:
"On this silver question the American people are beginning to discard the old delusion that law can regulate the value of coin."
This was the gist of the specious argument of the gold standard press and national banking power throughout the country.
The money power became so elated at its success in having silver stricken down, that it grew so bold as to threaten the political future of any public man who did not align himself with that interest. It was abject submission or political death.
In the speech of Banker Cornwall, April 7, 1895, from which we have quoted, he said:
"The politician, high or low, who to day turns from the straight course of sound money and the gold stan-
[457]ß
dard, stabs dead once for all every chance of political success, especially if he wants to be President."
This bold threat was greeted with the tumultuous cheers of the bankers before whom this speech was delivered. The gold standard press indorsed these sentiments of the money power.
During the remainder of the Cleveland administration, the President was wholly unable to carry any of his financial projects through Congress. He became a leader without a party. Even the Republicans, whose financial policies he had so strenuously endeavored to force upon the Democracy, seized upon every opportunity to severely denounce his management of public affairs, despite the fact that their notable leaders had warmly defended his course in repeatedly issuing bonds to maintain the "parity of the metals."
Outside of the clique of national bank presidents, trust magnates, stock speculators, bond syndicates, and sycophantic office holders, the President had no following worthy of the name of party.
The facts detailed in the foregoing pages exhibit the wonderful prescience and the consummate plans of the national banking money power, as follows:
I. It secured the partial demonetization of government legal tender currency in 1862-3;
2. The payment of interest upon a vast bonded debt in coin, and, therefore, it obtained absolute control of the gold of the country;
3. The establishment of national banks to issue paper money, which could only be put into circulation by building tip a creditor and a debtor class;
4. The control of the entire volume of money in the country, as a means of securing possession of the great railway properties, and to organize those mighty trusts which now monopolize all production and distribution
[458]ß
5. The demonetization of silver as a means of holding the West and South in subjection to its will;
6. The consolidation of all great moneyed corporations, with the view of subjecting the productive energies of the nation to its domination;
7. It has joined hands with the money power of England in as efforts to control Federal legislation;
8. It had, time and again, used its immense power to thwart the will of the people as expressed through Congress;
9. It has asserted a superiority above all law and the Constitution, and has declared that its fiat is more powerful than the authority of this nation;
10. It has robbed the Government of its highest sovereign power-that of issuing and controlling the medium of exchange.
THE REMEDY.
1. The restoration to the Government of the power of issuing and coining money.
2. The permanent destruction of the national banking system.
3. The application of the principles of Jefferson to the administration of government.
"Oh, beware my fellow-citizens, of stock jobbers or banking associations who have an interest as distinct from that of the community, as that of drones from that of bees. Oh, beware, ye legislators, how you create a moneyed aristocracy, as dangerous to government as Pretorian bands in Rome, or Janissaries in Turkey. Let me repeat that: I behold this country as the asylum of the afflicted, the sanctuary of the oppressed, oil which the eyes of philanthropists are everywhere fixed with affection and anxiety. Moral feelings, common interests, and general principles unite as a band of brothers. Whatever appertains to the general welfare should emanate from the general Government. This
[459]ß
is the spirit of our Constitution-this is the central axis upon which the Union must revolve, and any important deviation must make all return to chaos. If I am assailed for this interference I shall reply, Homo sum et nihil humani a me alienum puto. "----Thomas Jefferson.