Financial security

“ Social Security Financing Acts shall lay down the general conditions for the financial equilibrium thereof, and taking into account forecasted revenue, shall determine expenditure targets in the conditions and with the reservations provided for by an Institutional Act. ”

“ The paradigm for combating terrorism now involves the application of all elements of our national power and influence. Not only do we employ military power, we use diplomatic, financial, intelligence, and law enforcement activities to protect the Homeland and extend our defenses, disrupt terrorist operations, and deprive our enemies of what they need to operate and survive. ”

“ Broadly speaking, for such investment, a security is required which will combine perfect safety of principal and interest, a good rate of income, ready convertibility into cash, and unyielding stability of market price. The necessity for insistence upon these requirements in the investment of a business surplus will appear upon a moment's reflection. Safety is required in all forms of investment, but is particularly important in the handling of business funds; a good rate of income is always desirable ”

“ He may have no assets whatever beyond the amount of his deposits, nor may his guarantors; the bank relies simply on the character of the three, and the two securities rely on the character of their principal; and the remarkable fact is, that the security has been found sufficient, that the interest of the men in the institutions and the fear of the opinion of their fellows has produced a display of honesty and punctuality such as perhaps is not to be found in the history of any other banking institutions. ”

“ But a public bank, which is to support public credit, and, upon particular emergencies, to advance to government the whole produce of a tax, to the amount, perhaps, of several millions, a year or two before it comes in, requires a greater capital than can easily be collected into any private copartnery.
The trade of insurance gives great security to the fortunes of private people, and, by dividing among a great many that loss which would ruin an individual, makes it fall light and easy upon the whole society. ”

“ To promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘‘too big to fail’’, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes. ”

“ Both in investment of savings and in life-insurance, one should make sure that the institution or organization to which he intrusts his money is on a sound business basis. All speculative schemes should be strictly avoided. Any company or form of investment that offers to give back more than you put into it, plus a fair rate of interest on the money, is not a fit place for a man to trust the savings on which the future of himself and his family depends. Security, absolute security, not profits and dividends, is what one should demand of the institution to which he trusts his savings. ”

“ Every business man knows better than that. Nearly $150,000,000 of 4 per cent. bonds have, within two years, been sold. They are scattered all over the country, especially the West; and who owns them? Mostly small people, who consider the Government funds a better depository for their savings than the savings banks, and who thus invested in small amounts, from $50 upward. You honest farmer or laboring man, who put your little surplus into a Government security, are you aware that you have sunk down to the level of the bloated bloodsuckers, who fatten upon the sweat of the people? ”

“ In this we have had assistance from many bankers and businessmen, most of whom recognize the past evils in the banking system, in the sale of securities, in the deliberate encouragement of stock gambling, in the sale of unsound mortgages and in many other ways in which the public lost billions of dollars. They saw that without changes in the policies and methods of investment there could be no recovery of public confidence in the security of savings. ”

“ The Department of the Treasury is also acting to restore confidence in a key element of America's financial system by offering Government insurance for money market mutual funds. For every dollar you have invested in an insured fund, you'll be able to take a dollar out. ”

“ On the other hand, there has been a rapid accretion of funds, in some instances to the amount of many millions of dollars. The characteristics of a good company are security and assurance at cost. It should sell, not policies merely, but assurance; and it should not make a profit for the capitalist out of the widow and orphan. ”

“ The method, therefore, in common use, and the only one which has been found effective by financiers, is to create a demand for the security, encourage speculation, establish an active market, and dispose of stock on the market as necessity demands whenever financing is required. ”

“ But, you will ask, how can money be procured or increased fast and without trouble in a country where there is no commercial enterprise, where labour is interfered with, where capital cannot have a free outlet or investment? An opening has to be found in illicit ways of procuring wealth, and the most common form adopted is the loan of money at high interest on ample security. ”

“ One who invests his money in a business of a somewhat hazardous character is very properly held to have the right to a larger return without legislative interference, than can be obtained from an investment in Government Bonds or other perfectly safe security. ”

“ That the surplus profits would not be paid out and distributed, but would be held in the business, subordinated to the claims of the original investment, and so very materially adding to the security thereof. ”

“ For instance, the banks here advance money freely upon growing crops, wool on the sheep's back, and other similar securities that would hardly be considered as legitimate collateral in America. The usual rate of interest to borrowers upon what is considered fair security, is never less than ten per cent,—twelve and fifteen per cent being most common. ”

“ III.17 It is interesting to observe that the formation of the great modern "trusts" has given a considerable impetus to deposit currency; for the securities of large corporations are more easily used as "collateral security" for bank loans than the stocks and bonds of small corporations or than partnership rights. ”

“ With the third method a permanent increase is secured in the capital funds available for use in the business. Financial policy, governed by the needs of the business and its markets, will always dictate the method to be used for extinguishing or contracting a debt. ”

“ 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. ”

“ Domestically, we have hardened our financial systems against terrorist abuse by promulgating effective regulations, requiring financial institutions to report suspicious transactions, and building effective public/private partnerships. ”

“ By such a system the security of the investment would be much increased, and the foreign investor would have the assurance that his money was safe, even if the business in which it had been invested may have ceased to exist. ”

“ Another question of very great importance is that of the establishment of our currency and banking system on a better basis, which I commented upon in my inaugural address in the following words:
Our financial system needs some revision; our money is all good now, but its value must not further be threatened. It should all be put upon an enduring basis, not subject to easy attack, nor its stability to doubt or dispute. The several forms of our paper money offer, in my judgment, a constant embarrassment to the Government and imperil a safe balance in the Treasury. ”

“ It should insist that our finance and currency concern not alone the large traders, merchants and bankers of our land, but that they are intimately and every day related to the well-being of our people in all conditions of life, and that, therefore, if any adjustments are necessary they should be made in such manner as shall certainly [32] maintain the soundness of our people’s earnings and the security of their savings. ”

“ Qu. Whether, as our current domestic credit grew, industry would not grow likewise; and if industry, our manufactures; and if these, our foreign credit?
255. Qu. Whether by degrees, as business and people multiplied, more bills may not be issued, without augmenting the capital stock, provided still, that they are issued on good security; which further issuing of new bills, not to be without consent of Parliament?
256. Qu. Whether such bank would not be secure? Whether the profits accruing to the pubic would not be very considerable? ”

“ When the Federal Reserve steps in as a lender of last resort, which it's had to do repeatedly since this financial crisis began, it's providing an insurance policy underwritten by the American taxpayer. ”

“ Civilized nations that have reached the stationary economic state, on this account much prefer the greater security and the absence of care which accompany non-personal credit.534 In estimating the ability of the debtor to meet his promise, we must take into account, especially, the disposable character of his resources; otherwise it would be impossible to understand [pg 270] why the merchant may so frequently obtain a loan on his stock equal to its whole value, while the owner of land can place it as security only to the extent of half its value. ”

“ In our time, to invest such a surplus, at something more than 3 per cent., on the best security that has ever been known in the world, is the work of a few minutes. But in the seventeenth century, a lawyer, a physician, a retired merchant, who had saved some thousands, and who wished to place them safely and profitably, was often greatly embarrassed. ”

“ 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. ”

“ That sounds magnificently, and you may think, well, if this country has forty or fifty thousand millions' worth of property, and all that property is mortgaged as security for the value of this fiat money, why should not this security be good enough for a couple of thousand millions of fiat money? ”

“ Our economy depends on a financial system in which everyone competes on a level playing field, and everyone is held to the same rules – whether you’re a big bank, a small business owner, or a family looking to buy a house or open a credit card. And as we saw, without sound oversight and common-sense protections for consumers, the whole economy is put in jeopardy. ”

“ The remuneration which is obtained in any country for mere abstinence, is measured by the current rate of interest on the best security; such security as precludes any appreciable chance of losing the principal. What a person expects to gain, who superintends the employment of his own capital, is always more, and generally much more, than this. The rate of profit greatly exceeds the rate of interest. The surplus is partly compensation for risk. By lending his capital, on unexceptionable security, he runs little or no risk. ”

“ The more perfect the security, the greater will be the effective strength of the desire of accumulation. Where property is less safe, or the vicissitudes ruinous to fortunes are more frequent and severe, fewer persons will save at all, and of those who do, many will require the inducement of a higher rate of profit on capital, to make them prefer a doubtful future to the temptation of present enjoyment. ”

“ When banks lend on collateral security of corporation stocks to the buyers of those stocks, they are, in effect, financing the corporation itself. [483] Industries differ widely in the extent to which they depend on the money market for their finances. The difference depends often less on the nature of the industry than on the type of the industrial organization. An individual farmer cannot get the bulk of his credit that way! ”

“ One of those principles is what the President and the Secretary spoke about today, which was how do the American people feel confident in a financial system where they become -- through extraordinary assistance -- a lender to a bank in order to stay healthy in this financial system. ”

“ The measure, being approved by the National Government, had the desired effect of freeing to a great degree the financial world from its parasites of industrial malefactors, and to some extent established again the stability and integrity of honorable financiers, in the meanwhile safeguarding foolish persons from being fleeced out of their savings. ”

“ We must also work with the same sense of urgency to stabilize and repair the financial system we all depend on. That means using our full arsenal of tools to get credit flowing again to families and business, while restoring confidence in our markets. ”

“ Banking is not the only financial operation in which government interferes. In the case of insurance companies, benefit societies, limited liability corporations, partnerships, trusts, insolvencies, and hundreds of other ways government is continually interfering. ”

“ The wealth of the country, although it is security for your fiat money, cannot be handled in that way. You may think it best to present your fiat money to the Secretary of the Treasury who must be presumed to be a sound fiat man, and knows what the mortgage on the wealth of the country means. ”