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The Commoner.
VOLUME -6, NUMBER 5j
The "Rag Baby" Boom Among The Bank
Tho financial nolicv of this country, under
republican rule for the past forty years, has been
dictated by the Wall Street and banking interests,
and every measure, save tho national banking
law, has aimed at a contraction of the currency.
Tho retirement of millions of dollars of green
backs immediately after the war and the demon
etisation of silver in 1873 contracted the money
volume so suddenly and to such an extent, that the
'great panic of 1873 followed. When the people
asked for relief in 1872 by demanding the reissue
of tho greenbacks they were met with derisive
cries of "rag money," "debased currency," "irre
deemable paper money" and other catch phrases.
Again in 1S9G, when it was proposed to open tlie
mints to the. coinage of silver, the cry was raised
that it was a scheme to make money cheap; that
to increase the money purchasing power of com
modities, or decrease the commodity purchasing
power, of money, would disturb existing contracts,
rob widows and orphans, cut 8bvn tho wages of
workingmen, ruin foreign trade and bring on a
train of ruin, disaster and dishonor such as the
world had never seen. In both of these contests
the republican party sided with Wall Street and
against the people.
But when national banks asked for legislation
favorable to them, even though it meant an in
crease of national bank note currency, the repub
lican party ignored its former opposition to "rag
money" and gave them the desired legislation.
Now, with $2,744,500,000 in circulation as com
pared with $1,506,631,000 in 1896 an increase in
the per capita circulation from $21.10 in 1896
to $32.42 in 1906 Wall Street speculators and the
national banks demand an asset currency law
which will add at least $200,000,000 to the volume
of money. Thousands of republican voters and
a few of the republican leaders and editors evince
a disposition to balk at this proposition, realizing
that to fall in line for an asset currency law will
place them in an" awkward position a position
exactly opposite to that assumed by them and
their party in 1872 arid 1896. They fail to observe
that their record for consistency will be vulner
able to attack if they do not "give the national
banks what they want, as they always have doneT
T,nnieUR Mr I'r?' Schiff head of the'great
banking firm of Kuhn, Loeb & Co., made his
sensational address to the New York Chamber
?l ? .ramerc on January 4, 1906, and predicted
that unless there was some kind of an asset cur-' '
rency law passed soon we would have a panic
beside which former panics would seem insignifi
cant a great many republicans took it as a re
flection upon their party's financial management
and resented ft. In a. vigorous editorial denounc
ing Mr. Schiff, the St. Louis Globe-Democrat, in
its issue of February 10, 1906, said: '
"With the rapid and continuous increase
of the circulation- which is under way, sur
passing, as it does, the gain in population, it
seems a little absurd for Mr. Schiff and the
other inflationists to ask for more currency.
Wo have nearly as much now per capita as
, 1(QS f the PPults over demanded!
l I 8 increasinS faster than population
which is something they never asked for
Messrs. Peffer, Simpson, Allen, Butler and
their associates of 1896 were far more reason
able in their demands than are those New
York populists of 1906, who, on the money
iasuee,tare persistently crying out? oi
eurrS?ovhS,iCterlzS. thoSe who tlercand an asset
be oS LXuZJll?3'' an(1 class them
that those Jit f , t5e PoPrttatB" and assert
In MOO W? fnaVOred the free coinage of silver
manda" th tr m0re reasoble in their de
cency istheu;8B0tr0 fdVOcate an asst cu".
set currencv in his messacl fn001107 of an as"
nlne months later. meSSag0 to cnsress less than
After putting in good time for Hiii.f
abusing those who f.LL "?. ,L "llrt? years
the government in limited amJSuT
ca ing the advocates of such a policy "raff Zn'
ey" men, "repudiationists," and other choice T '
etfthif Wm imlGed be a blto mtoi Them Pto"
In tho I' owVVOrds " advocate "rag money"
In the shape of asset currency. With prices limn
hni8!" nW i,rom thG clieaSng of irony
how wll these erstwhile protectors of the widows
and orphans and workingmen square themselves
vocatos? TE? In th f.0le of asset currency ad
vocates? The prospective diet of "rag monov"
ove wi hSieoevmirk,e thG Globemogcmt012p
over with joy, but that paper will either have to
take the dose or stand convicted of political
heresy.
But what is there behind this campaign for
"rag money?" Nothing more nor less than tho
speculators of Wall Street and those who profit
by loaning them the speculative funds. Even
those who say an asset currency law is necessary
admit that there is too much money at certain
seasons of the year, and because there is a strin
gency at certain other seasons, they claim that
an emergency currency is necessary to relieve
the stringency, solely and only because the pres
ent volume is not "elastic" and does not "respond"
to the varying demands of trade. But why do
they not legislate to make the present volume
elastic' instead of trying the elasticity cure on
tho credit notes which they propose to authorize?
They could do this very easily by requiring na
tional banks to retire or deposit a certain per
centage of their present bond-secured circulation
when trade is slack and money becomes too plen
tiful. That such a law would not meet favor
with the bankers is conclusive proof that it is
.t.x eastic" currency they want so much as the
right to coin their credit into money with the
goyernment to guarantee its redemption.
Let us see what kind of an argument Presi
dent Roosevelt makes for an asset currency. In
his annual message to congress he said:
"Since your body adjourned there has
been a fluctuation in the interest on call
money from two per cent to thirty per cent; ,
and the fluctuation was even greater during
the preceding six months. Excessive
rates for call money in New York attract
money from the interior hanks into the specu
lative field; this depletes the fund that would
otherwise be available for commercial uses."
That is the case exactly; and in recommend
ing an-Jncreaso of currency he plays into the
hand of the speculators, for excessive rates for
call money will deplete the fund for commercial
purposes with an increased supply of money, as
excessive rates deplete the fund now. We have
00 per cent moro money now than in 1896, yet
the high rates for call money draws.it to New
York just the same, and further increases would
be absorbed in exactly the same way. But, they
say, we propose to tax the issues of asset notes
so that when they are not required in legitimate
trade the tax will automatically retire them. They
overlook the fact that legitimate trade can not
afford to pay excessive interests rates, while spec
ulators can and do pay as high as 125 per cent,
lhe highest tax proposed upon asset notes is
five per cent. Common sense will tell you that
legitimate trade has absolutely no chance of com
peting' with speculators in drawing out an issue
?.r?di ??s taxed five' PQr cent. The kind
of elasticity" which credit notes will give to
our currency will be the kind that stretches, out
and remains out.
There is one way, and only one, of keeping
money out of the hands of the speculators, and
tnat Is to make speculation impossible. As that
can not well be accomplished, the next best thing
Is to prohibit the loaning of money on call by '
national banks, as they are now prohibited from
loaning money on real estate security. But the
best and surest way of preventing excessive rates
of interest on call loans is to induce the state of
New York to place a limit upon the greed of the
money sharks who charge extortionate rates. In
his Jatest annual report Secretary Shaw said that
to ThJwn? ty thVnly cal1 money rcarket
"fln 5rorld' Tni astounding assertion must
command serious attention, and If there is no
sound reason why New York City should enlov
the distinction of having the only call monev
market in the world, shehouldbe deprived of
" ? !t, can not be denied-It is admitted by
President Roosevelt himself that this call
money market of New York City drains all the
loose money of the country to New York Tjnon
investigation it is found that there is no uSSt
Inii rate Tof interest that may e charged on
of &?; ,InT the f00t, notes under a compilation
on p r?- nJT8 .?nd statutes of Limitations"
mi page 7 of the New York World Almanac for
1905 may be found the following: iumanac Ior
"New York has by a recent law Ieffalirert
any rate of interest on call loans bf $5 000 m'
upward, on collateral security."
As the speculators would hardly ask for ti1Q
passage of such a law, it must be preXmed tS?
mow8
the foundation PUpon M SliYy6 2
ers
thievery is based. The money sharks had all
limits removed and then 'because their s, 1 , J
loanable funds became exhausted, they "now',!
congress to permit them- to increase the sunv
of loanable funds by authorizing them to Sn
their credit into money. If the state of Now
fare of the nation should not be permitted to l,o
jeopardized by it. President RoosTveit shou
ito VGry ieff0rt t? have hIs home state T
peal this law immediately. He favored a law
which would place a limit upon the greed of the
railroads and the packers; let him throw his in
fluence in favor of placing a limit upon the greed
of the Shyocks of Wall Street, and excessive
rates for call loans will cease. And when money
can not be loaned at excessive rates in New York
all money temporarily out of use will not bo
drawn there. This will tone down speculation
and leave money enough to transact the business
pf the country without resorting to "rag baby"
issues. B Bj y
r
FROM THE PEOPLE
A Subscriber, Bonanga, Colo.Did not the
Homestead strike occur under the McKinley-Jaw,
and was not thet cause a cut in wages. (Yes.)
Frank E. Parke, McCurtain, I. T. After hav
ing read your very able and impartial "Comment
on the Message," I am fully convinced that the
democratic party, of which I am a member, is
one of the biggest truths in the United States.
I have been carefully watching, reading and ap
preciating the doctrines of our party many years,
more especially since the light of liberty has
been admitted feebly by the "enabling act to
Oklahoma" and the cloud of carpetbagism has
begun to roll away and I find that we (you) are
putting out nearly all the planks for the republi
can party, unintentionally. It seems that could
we copyright our output,. the g. o. p. would drop
through its rotten old structure0 into oblivion
soon and disappear forever.
H. C. Johnson, Denver, Colo. If more cur
rency is needed, why not let 'the government issue
it instead of presenting millions of dollars to the
banks? If the common people wore to demand
more legal tender with the assets of the nation
behind the issue then would, not the banks and
the Wall Street interests, which are now seeking
to control the currency of the United States,
flood the country with, literature on the evils and
dangers of inflation? Are those who fight the
cause of the people to be forever "in the minority?
T. E. Moore, Lexington, Ky.In the states
where the secret ballot is in use: Require voter to
sign his ballot, or if he can not sign make his mark
in presence of officers of election; polls to be
kept open a greater length of time. There
should be room at the end of the ballot to sign
and seal to cover the name, preserving secrecy of
ballot. This would meet constitutional require
ments of secrecy and insure honest elections and
fair count in case of contest. Elections have
been corrupt in the past and will be in the
future if a remedy is not provided. Fine and
imprisonment for violation of election law should
be enforced. Oklahoma ought to reserve to her
lawmakers the power to regulate such a- safeguard.
John Crane, Logansport, Ind. -In your issue of
December 7, I read Secretary Taft's silly little
story of the "Little Brown Baby." It sounds
ZtilT fc me tel1 you thG true story of the
Little Brown Baby:" The man that went across
the street to settle a row, found, on entering the
house, a big bully kicking and beating a little
brown baby. "What has the brat done?" ho
Inquired of the bully. "Why," said the bully,
the impudent little cuss thinks that all men
were born free and equal and should be allowed
to choose their own form of government and
make their own laws, and I can not stand any
such heresy." "Why," said the man, "I never
??rd 25 such wicked folly; at least not since
1776. Say, Mr. B., let me kick him awhile; do
now, I will give you $20,000,000 if you will let
me kick him in the solar plexus. I bet I'll take
those foolish notions of independence-out of
him."
oVT.h,e deal was closed. Poor "Little Brown
Baby!" . - -- '".' J '" -'
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