Financial ruin

“ The crash brought on ruin by closing weak banks, building and loan companies, and financial houses. It wiped out the savings of millions of people through bankruptcies and foreclosures of an unprecedented panic. The result was a large world wide depression which lasted for years.
"And when you, the public, had finished throwing over securities at the bottom of market prices, who purchased them? Why, those who originally sold them to you.
"Not content to rig the stock markets, they also trade and [Pg 92] corner in futures of your most staple commodities. ”

“ To the man of business this percentage in many cases constitutes the difference between success and failure. Thus a shrinkage in the volume of money is the prolific source of bankruptcy and ruin. It is the canker that, unperceived and unsuspected, is eating out the prosperity of our people. By reason of the almost universal inattention to the nature and functions of money this evil is permitted, unobserved, to work widespread ruin and disaster. ”

“ Unscrupulous men, versed in all the dark ways of the financial world, found their opportunity in those palmy days, and, purchasing and amalgamating, converted prosperous private firms into unwieldy and over-capitalised public companies. In the thick of all this juggling with millions, and snatching of commissions and vendors’ profits, the bubble burst, and an honourable and highly prosperous industry was wrecked, and became a bye-word and a reproach all the world over. ”

“ Having their vast corporate stock and bond interest to protect, being engaged in constructing railroads, having created large debts upon their roads by reckless and dishonest watering of stock and loose issuing of bonds, they seek to compel all commercial and industrial pursuits to pay tribute to them, and they accomplish this object by controlling the currency of the country. A financial system that can be controlled by one interest, or in the interest of one class of men, is bad. ”

“ I desire to go on record right here in declaring that all financial institutions which in any way are engaged in taking from the people the money that is their surplus earnings or their capital, for the ostensible purpose of safeguarding it, or putting it in use for them, or exchanging it for stocks, bonds, policies, or other paper evidences of worth, are a part of the machinery for the plundering of the people. ”

“ The conquerors aimed at the wealthy men, and carried them off first, while the poor of the land escaped. Or it may be meant of a general decay of trade, which was a preface and introduction to the general destruction of the land. It is the token of a declining state when great dealers are cut down, and great bankers are cut off and become bankrupts, who cannot fall alone, but with themselves ruin many. ”

“ In the case, however, in which the plans are excessive, extravagant, and ill-devised, and where the capital is carelessly and recklessly managed, the only consequence must be a wide sweep of financial disaster. Then, if the bankrupts are voters, and the institutions of civil government are those of a democratic republic, a general indebtedness comes to appear like the worst of political and social diseases. ”

“ So grave were the financial disturbances that several of the States were swept from their honest moorings by the cheap money craze, and irresponsible banks were created almost without limit or restraint, all of which brought speedy and fearful disaster to the people. ”

“ The fifth, that it beats down the price of land; for the employment of money is chiefly either merchandizing or purchasing; and usury waylays both. The sixth, that it doth dull and damp all industries, improvements, and new inventions, wherein money would be stirring, if it were not for this slug. The last, that it is the canker and ruin of many men's estates; which in process of time breeds a public poverty. ”

“ You have closed mills instead of opening them, thrown out of work thousands, lowered the price paid for raw material, bringing ruin to its producers, increased the price charged for your products to the ruin of the consumer, and saddled millions of fictitious debts on the backs of their children yet unborn. ”

“ How much infected meat would it take to do the harm, the damage to the American people that resulted from the panic of 1907? And yet, if we had had a wise, national financial and banking system, we need never have passed through that harrowing, wasting panic that resulted in destroying property values into the billions; in the death of thousands of the people directly and indirectly; in the ruined health of tens of thousands more; in the non-employment of hundreds of thousands ”

“ As the direct result of this kind of financial legerdemain, which converted the debt-paying medium of the country into an interest-bearing debt, the wages of labor and the prices of products steadily declined, business enterprises were wound up in bankruptcy at the rate of more than one thousand per month and millions of workmen were forced into idleness and thronged the highways in all parts of the country, demoralized, degraded and becoming a sure menace to civilization. ”

“ The immediate consequences of a superabundance of money, are a rise of prices, an alteration in the conditions of contracts, and a consequent injury to commercial credit.
Its ulterior consequences are, a still stronger shock to commercial credit, the extensive ruin of individuals, and an excessive contraction of the currency, yet more injurious than its excessive expansion. ”

“ From the moment this aristocracy has determined on a policy, as, for example the “Bank Act” or monometallism, resistance by producers becomes most difficult. Being debtors, producers are destroyed when credit is withdrawn, and, at the first signs of insubordination, the bankers draw in their gold, contract their loans, and precipitate a panic. Then, to escape immediate ruin, the debtor yields. ”

“ So the leaven of the law works its way through all society. The payments cannot be made out of these reduced means, the loss of the credit follows the loss of the money; the means of exchange, employment, and consumption are destroyed, and the world looks with amazement on the consummation of your work—the wealthiest nation in the world withering up under the blight of a universal insolvency; an abundance of all things beyond compute, and a misery and want beyond relief. ”

“ Business establishments, manufactories, mercantile houses, unable to get the money for meeting their obligations, will by the hundreds succumb to their embarrassments and tumble down like a row of bricks. Others will cautiously restrict their operations to the narrowest possible limit, and wage-earners by the thousands will lose their employment and be turned into the street.
No class of society will be spared the destructive consequences. Every frightened creditor, pressed by his own creditors, and apprehensive of a growing loss by every day's delay, will eagerly pounce upon his debtors. ”

“ But who is there foolish enough to expect that general business enterprise and real prosperity can revive so long as the danger of a great monetary revulsion, with all its concomitants of repudiation and bankruptcy, hangs over us like a dark storm-cloud? ”

“ Such fall of prices has destroyed the profits of legitimate industry, injuring the producer for the benefit of the non-producer, increasing the burden of the debtor, swelling the gains of the creditor, paralyzing the productive energies of the American people, relegating to idleness vast numbers of willing workers, sending the shadows of despair into the home of the honest toiler, filling the land with tramps and paupers, and building up colossal fortunes at the money centres. ”

“ See what we will do for you."
"Yes, it's free trade," bawled one newspaper.
"It's nefarious England," snarled another.
"It's the greed of Wall Street, the crime against silver, the burden of the mortgage," vociferated a third.
"It's 'hard times,'" the meek sighed, and furbished up last year's clothes, and cut the butcher's bill.
"Yes, it's 'hard times,' a time of psychological depression and distrust," softly said the rich man. "A good time to invest my savings profitably. Real estate is low; bonds and mortgages are as cheap as dirt. ”

“ The inability of the debtor class to meet their obligations increases the risk of business investments, and the accumulation of money in the hands of the financial class depriving the channels of commerce of the needed medium of exchange, a stagnation of business will ensue, which readily accounts for the accumulation of all kinds of products in the hands of the producers and for the consequent dearth of employment. ”

“ But, however large the direct loss to the debtors and to the country by reason of falling prices, the losses that are indirect are of infinitely greater magnitude, and stand out like a great mountain of wrong superimposed upon the most deserving class in the community, whose interests it should be the paramount duty of Government to protect, a wrong more calamitous in its consequences than any of the multitudinous wrongs which a shrinking volume of money inflicts upon society. ”

“ But men with perfectly real physical wealth in their storehouses, which they could not themselves use, were also in practical bankruptcy because of their commercial debts most prudently incurred. The natural exchange of their own goods for goods which they or their creditors might use was obstructed by the utter discredit of paper money, and by the almost complete disappearance of gold and silver. ”

“ It was said, and said truly, that they undermined, impoverished, and destroyed all with whom they came in contact. “They can ruin men silently,” says a writer of the period, with great vehemence; “undermine and impoverish, fiddle them out of their money, by the [Pg 11] strange, unheard-of engines of interest, discount, transfers, tallies, debentures, shares, projects, and the devil and all of figures and hard names.”
Every thing which could inflate the hopes of the schemer was brought into operation by the brokers. If shares were dull, they jobbed in the funds, or tried exchequer bills ”

“ Huge bankruptcies, that startle a country like the earthquakes, and are more fatal, fraudulent assignments, engulfment of the savings of the poor, expansions and collapses of the currency, the crash of banks, the depreciation of Government securities, prey on the savings of self-denial, and trouble with their depredations the first nourishment of infancy and the last sands of life, and fill with inmates the churchyards and lunatic asylums. But the sharper and speculator thrives and fattens. ”

“ In a few weeks, money, except for depreciated paper, vanished into vaults, into holes, into the walls of houses, into ten million hiding-places. Money vanished, and at its disappearance trade and industry came to an end. The economic world staggered and fell dead. ”

“ We spent much of our time in the sub-treasury and bank vaults watching new shades vainly clutching at the money stacks with their pale fingers.
“The insane strife of the hordes of mortals to see who can die beside the biggest gold pile has always been considered a rich joke in the spirit world, for when they come among us they are unable to bring any of it with them. The accumulation in the sub-treasury is very convenient for them to gloat over and it continues their worldly illusions perfectly. ”

“ A great part of the current coin in the kingdom was locked up in the houses or banks of a few stockjobbers and speculators.
But the scarcity of gold and silver was felt, people's eyes were opened, and the bubble burst, but not until half of the national debt had been paid off by this swindling transaction.
The nation was furious. A panic spread among all classes; the bank had no money with which to redeem its notes; the shares fell almost to nothing; and universal bankruptcy took place. Those who, a few days before, fancied themselves rich, now found themselves poor. ”

“ It means ruin of all dealers whose debts are twice their business capital, though one-third less than their actual property. It means the fall of all agricultural production without any great reduction of taxes. What prudent man would dare to build a house, a railroad, a factory, or a barn with this certain fact before him? ”

“ Or you can favor it—and thereby favor, instead of prosperity and progress, bankruptcy for the owners, spiritual bankruptcy for its supporters, and, worse than all, a wide-spread business depression, which will force capital elsewhere, slow down and stop the wheels of industry, drive the storekeepers out of business, and drag your own wives and families into want, poverty, ultimate degradation and death.
"The smoke from those mining settlements and furnace stacks upon the mountain above our iron city is the symbol of life—life for all of us. ”

“ The serious injury of this system in a country may well be a greater disaster than the destruction of physical items. Let unscrupulous men—or misguided men—bring about a legal repudiation of debts, and the disaster may be greater than the destruction of a city by an earthquake. That creditors have been robbed is a minor matter, but that credit has been shaken, so that men will fear to lend again or to sell except for cash, may well mean industrial paralysis. ”

“ But it was a crisis that began in our financial system. Large banks engaged in reckless financial speculation without regard for the consequences – and without tough oversight. Financial firms invented and sold complicated financial products to escape scrutiny and conceal enormous risks. And there were some who engaged in the rampant exploitation of consumers to turn a quick profit no matter who was hurt in the process. ”

“ For this reason, and also because the capitalists referred to are subject to many financial worries, assume great responsibilities, run the risk of incurring serious losses of one kind or another, including business failure and bankruptcy, it is only just that they should receive a reasonable recompense for their share in the production of the goods. ”