Frenzied finance and the despotism of dollars: The systemic architecture of financial plunder

“ The crime of Amalgamated and its immediate consequences are before my readers. I have fulfilled the promise made in my foreword to expose to the people of America the manner in which they have been plundered and the methods by which the "System" habitually cheats them out of their savings. Robbery conducted on so gigantic a scale as I have pictured must necessarily simulate the natural processes of finance, and to understand the deep devices of the schemers requires a knowledge of banking and commercial practices which the average man has no chance to attain. ”

“ But when the aggregate of the money put in jeopardy by the four classes of institutions I name—national banks, savings-banks, trusts, and insurance companies—runs into billions and is lost, the loss must fall on the people, because the only other ones involved are the managers and controllers of these institutions, who always see to it that when the losses which would wreck the bank are actually made, they, the managers and controllers, have no deposits and none of the stock. ”

“ The people, accustomed to invest their money in the legitimate securities of the country, had time and again lost hundreds of millions without dreaming that they had been as ruthlessly robbed as though held up at a pistol-point by a highwayman. They imagined that the great capitalists whose names were emblazoned in the [512] press throughout the land, and who managed the banks and trust companies and insurance corporations to which their savings were intrusted, were noble and public-spirited gentlemen of the highest moral principles and of absolute integrity. ”

“ In fact, the "System" has cunningly possessed itself of the financial mechanism of the country and is running it, not for the object for which the machine was devised, but for the benefit and personal profit of its votaries, and so the vast correlated organization of banks, trust companies, and insurance corporations which were brought into being for the safe handling of the people's savings has become an agency for transferring these savings to the control of unscrupulous manipulators, who take liberal toll of every dollar that passes through their hands. ”

“ In the course of my task I shall describe such parts of the general financial structure as will place my readers, especially those unfamiliar with its more complicated conditions, in a mental state to comprehend the methods by which the savings they think are safely guarded in the banks, trust and insurance companies, are so manipulated by the votaries of frenzied finance as to be in constant jeopardy. ”

“ The insurance companies use the billions the people have placed with them to buy or create banks and trust companies, the stocks of which are a large part of their assets. They then use these banks and trust companies, which exist because of the people's savings, in stock gambling enterprises, speculations as unsafe and as frenzied as those of the wildest plunger of Wall Street. I will give one illustration:
The New York Life Insurance Company's directors and managers created the New York Security and Trust Company. $1,000,000 capital; $500,000 surplus—in all, $1,500,000. ”

“ The positions of managers and manipulators of these huge hoards of the people's money have become the greatest financial prizes of the day. New and ingenious methods of graft have been devised in connection with them. The vast revenues of the insurance companies have become the "System's" most potent instrument in working its will in the stock world. ”

“ It would be as easy to convince the masses that their playing-cards are all wrong and that the ace is really of lower value than the two-spot as it is to awaken them to the terrors of the conditions that are confronting them; to compel them to realize that a despotism of dollars is being organized among them; that the cherished institutions of generations are the instruments by which a few daring schemers are concentrating into their own hands the money of the nation, and that this concentration can have no other result than the abject slavery of the American people. ”

“ At no time in the history of the United States has the power of dollars been as great as now. Freedom and equity are controlled by dollars. The laws which should preserve and enforce all rights are made and enforced by dollars. It is possible to-day, with dollars, to "steer" the selection of the candidates of both the great parties for the highest office in our republic, that of President of the United States. ”

“ This week's work is only the beginning of a demonstration that the secrecy of the frenzied finance system—under the cover of which the savings of the people gathered into banks, trust institutions, and insurance companies, have been used by the Standard Oil crowd to rob the people through the stock-market—cannot succeed against publicity. The people only need light to save themselves. ”

“ The so-called "blue sky" legislation is a well meaning, if partly futile, attempt to meet an existing evil in connection with the sale of corporate securities. We shall find later that five elements are necessary to constitute the action of fraud or deceit: (1) a false representation of a material fact; (2) made with knowledge of its falsity; (3) with intent that it be acted upon; (4) that it be acted upon; (5) damage follows. The courts have almost universally held that a mere statement of opinion does not give rise to a cause of action for fraud, whereas a mistatement of fact does. ”

“ Fraud is deception; it is inducing the other party to believe something which is not true, and, by inducing him to believe that, influencing his action. The ordinary way in which fraud is manifested is by misrepresentations. A purchase or sale of stock or of goods may be induced by fraud. A loan may be obtained from a bank by fraud, that is, by misrepresentation of material facts which influence the other side to act. ”

“ Honest mistake is not fraud. Incorrect is not the same as false. You must find that he represented the quantity different from what he knew or believed to be true, with the fraudulent intent. Also, that the plaintiff was thus induced to make the purchase. That is, that the plaintiff would not have made the purchase if the defendant had not represented it to be one hundred and thirty acres. Inquire as to these several points. Fraud is not presumed, but must be proved.
The jury returned a verdict for the defendant. ”

“ To entitle the plaintiff to a recovery upon that ground, the defendant must have made some representation upon the subject that he did not believe to be true. The plaintiff claims, and his evidence tended to prove, that the defendant did make such a representation by stating the quantity of land as a matter within his own knowledge, when, in fact, as the defendant concedes, it was a matter upon which he had only a belief. We think it very clear that a party may be guilty of fraud by stating his belief as knowledge. ”

“ But when a promise is made with no intention of performance, and for the very purpose of accomplishing a fraud, it is a most apt and effectual means to that end, and the victim has a remedy by action or defence. Such are cases of concealed insolvency and purchases of goods with no intention to pay for them. ”

“ Thousands, moreover, who are too proud to beg, find themselves either starving or in sadly straitened circumstances, with nothing but a pittance left them of their former little comforts. This is a specimen of the work done by the brigand of Finance.
Of course there are reforms urgently needed in the very organisation of the Stock Exchange; and reforms needed with regard to the conditions under which public companies may be launched. Why should men be allowed to ask the public to subscribe millions of money for the purchase of properties which are literally valueless? ”

“ Why did the men who worked this scheme to steal the moral support of the big trust company go to so great pains to get it? Because fake investment operators have found it profitable to take every precaution to give the color of legality to their acts, they have found it profitable to hire shrewd legal pilots to tell them just how far they may go in a given direction without running upon the reefs of the United States postoffice's "fraud order" or upon the rocks of a "conspiracy" prosecution. ”

“ It is mistake to suppose that in stating the facts which constitute a fraud, where relief is sought in a bill in equity, all the evidence which may be adduced to prove that fraud must be recited in the bill. It is sufficient if the main facts or incidents which constitute the fraud against which relief is desired shall be fairly stated, so as to put the defendant upon his guard, and apprise him of what answer may be required of him. ”

“ Honest men in forming a corporation make publicly known the character and worth of the properties or enterprises they are organizing, what they have cost, what their profits are, and what may reasonably be expected by investors. The tricksters and the "System," with whom incorporation is generally but the first step in a conspiracy for plunder, surround the proceeding with an air of mystery and refuse information usually with: "We do our business quietly and in silence, and those who do not like our ways may keep out of this scheme." ”

“ In the first place, a misrepresentation, to be actionable, must be a material one, or no action will lie. In the second place, in an action for deceit no recovery can be had unless the plaintiff himself exercised ordinary prudence to guard against the deception and fraud practised upon him, unless he has been thrown off his guard by the other party. ”

“ Of all fiduciary institutions, life insurance should be the most sacred. Its chief function is to care for the widow, the orphan, and the helpless. The millions of revenue paid annually into the life-insurance companies of this country represent the blood and tears and sweat of millions of Americans who thus provide for the care of their dear ones for the time when death shall have put an end to their own income-earning abilities. The administrator of a trust so solemn and exalted should devote himself to its safeguarding as a priest dedicates himself to the service of his [472] Maker. ”

“ The Insurance Commissioner had the honor of addressing the insurance committee of the General Court relative to the control of life-insurance companies by other corporations or by syndicates. For some years it has seemed to impartial observers who are conversant with life-insurance matters, and have also seen the eager quest by promoters for funds to finance all kinds of enterprises, and the determined struggle to grasp every opportunity for speculation, that there would be no cause for wonder if covetous glances should be turned toward the massive accumulations of life-insurance companies. ”

“ When I began to discuss in Everybody's Magazine the subject of the three great life-insurance companies, I stated that there is actually nothing between the two million-odd policy-holders and the possibility of their being robbed of the billions of dollars of their accumulated savings but the devotion and the honesty of the men who are in control of these institutions. ”

“ Under the pretence that it is necessary to enable life-insurance companies to carry out their contracts, two million policy-holders are annually tricked into contributing from their savings sums which not only insure the performance of these contracts but enable the officers and trustees—mere servants of the policy-holders—to maintain the most gigantic stock-gambling machine the world has ever known. ”

“ Instead of employing the vast power and the immense wealth intrusted to you to conserve the interests of your policy-holders, you have made yourself a part of the cruel robbing machine which the "System" has created to deprive the American people of their savings. Under the pretence of seeking profitable investment, your [478] corporation has been perverted into a vast stock-gambling agency. You have filled the high places in your corporation with your own children and relatives and their relatives, and conferred on them great salaries out of which they have grown rich. ”

“ Each has piled up an immense surplus which has been used through allied trust companies for stock juggling; each has paid extravagant commissions to agents; the funds of each have been managed to afford to high officials plentiful opportunities of graft; each has its real estate, fire insurance, low rent and loan favor graft; in each will be found the same type of syndicates as President Alexander and Vice-President Hyde used for their personal enrichment in the Equitable. ”

“ Infinitely more depraved than the sneak thief is the high-placed functionary, presiding over a great institution built up out of the savings of millions of people, paid an immense salary for his important services, trusted with vast funds because of his reputation for integrity and business sagacity—who yet uses his splendid place to line his own pocket. ”

“ On the honor and responsibility of men who in the past five years have "saved" out of salaries of $20,000 to $100,000, private fortunes of millions, you must absolutely rely for the safety of the billions of dollars of your savings. The future of the helpless beings whom your hard daily labors provide with a livelihood is in the hands of men who admit having expended $100,000 of your money to provide a lordly and regal entertainment for a set of extravagantly paid agents and solicitors who, spurred on by prodigal inducements, have piled up huge amounts of new business on the company's books. ”

“ Any alliance between life insurance and this modern speculative frenzy cannot be too deeply deprecated, nor too strongly reprobated. Every true friend of honest life insurance among insurance journals will demand that this great business, of all businesses, must be kept free from the contagion of corruption that has shamed finance, is covering commerce with a blighting mildew, and threatens our whole land with disaster as well as dishonor. ”

“ Through false representations and specious pledges and the credit of the names of "Standard Oil" and the National City Bank, thousands of people were beguiled into investing their savings in this Amalgamated Copper Company. Because of the promise of great gains other thousands mortgaged their homes, appropriated their wives' savings, even their employers' funds, and embarked in this fair-seeming enterprise. The greatest bank in America aided and abetted the conspiracy by the loan of its funds to lure the victims deeper into the toils. ”

“ The fact is, that the owners of savings not finding, in adequate quantities, their usual kind of investments, rush into anything that promises speciously, and when they find that these specious investments can be disposed of at a high profit, they rush into them more and more. ”

“ The desire for sudden wealth is strong in all parts of our American community. Men want money, and women too, for a score of reasons—some good, some bad—and the stock-market is the magical place where miracles occur and dollars multiply themselves overnight. The agent for all the cupidity of the world is the stock-broker, and he sees life from a strange angle. ”

“ Other establishments had begun to give way; every day there were fresh collapses. One after another the banks went down, with the sudden crash of bits of walls left standing after a fire. In silent dismay folks listened to these repeated falls, and asked where the ruin would stop. But what struck Madame Caroline to the heart was not so much the downfall of the bankers, the companies, the men and things of finance, all destroyed and swept away in the tempest, as the ruin of the many poor people, shareholders, and even speculators, whom she had known and loved, and who were among the victims. ”

“ One sees two men, drunk with their success, gouging and tearing at each other's hearts in Wall Street, and sees their gouging and tearing bring about a panic which takes from the people in an hour over a billion dollars and drives scores to suicide, murder, and defalcation—the two men continuing meanwhile as ornamental pillars of society instead of wearing prison stripes. ”

“ I do know that one of the most colossal impositions ever perpetrated on the whole people of any nation is that formula which the "System" has so insidiously instilled into the minds of the American people during the last century, to wit: that they must do nothing which might disturb the "System" in its use at two to four per cent. per annum of all the people's savings, deposited in banks and trust companies throughout the country; that if they do, there will be a Wall Street panic, and thereby all the people will be made to suffer great hardships. ”

“ Do you not know that the result of the people's selling their stocks and bonds in concert would be a great drop in their price, and that the people's raiding the banks and trust companies of their deposits would also bring about a tremendous drop in the price of stocks and bonds; that the only ones who can possibly benefit are the [542] bears who sell short; that these bears have no legitimate standing in the business world, and should have none, and that in the broadest sense of the term they are not honest men? ”

“ On certain days the public is sold their stock, bond, and insurance policy certificates. Upon other days they look for their savings and profits. On the contrary, they learn that their savings have decreased in value or have been wiped out, and that there never was any chance of profit. My critics will say that such a comparison cannot hold, for in the lottery nothing was dealt in but gambling tickets, whereas the stock or bond certificate represents an ownership in [204] the material things of the country. This is the fallacy the "System" spends millions every year to foster and disseminate. ”

“ On the surface there is nothing to suggest that a set of vampires have captured the high places of finance and are sucking away the life-blood of the nation. Our banks and trust companies all present a fair exterior and apparently are the same safe and honorable institutions they were before the canker fastened on them. Only its votaries know what the "System" is, and their way is the way of silence and darkness. A tie, stronger and more effective than the oath of the Mafia, binds them to its service, and woe be to him who dares divulge its methods. ”

“ On the contrary, I know that if the people do what is necessary to shake off the "System's" strangling grip upon their savings, the "System" will suffer death, and everlasting profit and advantage will accrue to the nation. Though it be necessary for the people to withdraw from the banks and trust and insurance companies their billions of savings, and even though such withdrawal must cause a temporary business crash and the failure of many of the financial institutions of the country, the sacrifice would be many thousand times compensated for by the benefits that would follow in its train. ”