The Kingdom of Shylock-2
State Aid to Robbery
“The issue of national currency, instead of being utilised for the benefit of the Nation, has been made an instrument of profit for the financial corporations, irrespective of the effect on the general national posi tion.”
Edsall, in “The Coming Scrap of Paper.”
The war largely increased the note issue in every country. Neverthe less, notes constitute only a fractional portion of the currency. Even before the war the governor of the Bank of England told the U.S. Monetary Commission:—
“Our currency, except for small change, is in the form of bank credits, transferable by means of cheques.” Government notes, whether in England or other warring nationalities, are to the Banks “as good as gold.” They constitute the “reserves” of the Banks, as if they were actual gold. The “Economist,” of July 10, 1915 said:—“The greater part of this extra paper currency is held by the Banks as additional “liquid assets,” and on the strength of these extra reserves they have extended their loans and discounts.”
Notes issued by the Government—not gold—had become the basis of all War Loans.
The London “Economist” (October 10, 1914), said:—
“War Loans are facilitated by placing abundant supply of paper money at the disposal of the Banks.”
THE ENDLESS CHAIN.
The Government in England, like the Government in Australia, came on the market for loans payable in instalments. The notes must be given to complete the circle. They go out to pay the soldiers, to feed families, to pay the Armament Trust for guns and ammunition. They out in wages, in payment of goods. They circulate through all the channels of trade back to the reservoir of the great Banks, ready for the next instalment or the next loan. Then out they go again—the same circle, an endless chain, the self-same notes performing an ever similar duty, piling up an ever enlarging debt, eternal tax for the people, eternal tribute to the cormorants.
In Australia, the expanding loans, cheque currency and profits of the private banks are not based upon or derived from their diminishing ratio of gold. They are based upon and derived from the notes created, issued and guaranteed by the Australian Nation. Upon these notes the vast superstructure of private banking credit in Australia mainly rests, and upon the basis of these notes the financial corporations can proceed to finance the Australian Government—at interest—for ever and for ever.
At the end of March, 1917, the notes issued from the Treasury totaled ₤47,303,000
This meant an increased issue since the war of ₤37,450,000.
Of this increase ₤23,000,000 consisted of notes of £1000 denomination.
These ₤1000 notes are not, and never were, in circulation. They are merely I.O.U.’s given by the Government to the private Bankers—to the Bankers as good as gold for all loan float operations.
In addition, the Banks hold notes of smaller denominations to the extent of £9,000,000—total holdings, £32,000,000.
As War Loans were raised in instalments—not more than 30 per cent, at one time—the Banks had sufficient Government notes to finance every loan.
Whatever notes went out came back through the channels of trade ready for the next instalment.
When the Banks finance loan alter loan, until the war is at an end, the banks will still hold the notes, and these notes can only be redeemed by an issue to the Banks of interest-bearing bonds.
By this subterranean method the Commonwealth notes were made the incubators of national impoverishment. With every “loan” float they went out buccaneering, and came back to the harborage of the Banks, towing in their rear another pile of interest gouged from the vitals of industry. These piratical voyages were repeated again and again.
And for this financial fakery, and because it is the accepted fakery of our time and country, and because we had not the courage to break with it, the Nation is looted of millions.
At the end of two years of war (June, 1916), the Banks, after paying £4,000,000 in dividends, and placing large amounts to various reserves, held in addition increased undivided assets to the extent of over fourteen millions.
Surplus of Assets over Liabilities, June, 1916.. .. .. ₤19,330,000
Surplus of Assets over Liabilities, June, 1914.. .. .. ..₤5,071,000
Increase.. .. .. .. ... .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. .. ..₤14,259,000
And, if you ask why one section should give its life, another be per petually taxed, and another not only free of tax, but draw perpetual bloody interest from the toil of the survivors, you are told you do not understand, that you are a crank, an erratic, a “luny,” that the loan loot is “popular”—“democratic”—subscribed to by all classes—old maids, widows, etc., etc.
These be brought in to give an air of generosity to robbery. Everybody can come along, but the few big vultures will tear off more in one bite than a million flies.
And we went to vultures for advice. Good business—for the vultures.
The financial editor of the “Herald” (August 9, 1915), worked out the value of the War Loan to big investors as worth ₤5/10/- per cent. He worked out the bonus (given to bondholders in excess of interest) as equal to an annuity of 4/2 per cent.—the exemption from State Income Tax at 4/- in the ₤ on £2000 as worth 4/6 per cent., and exemption from the Federal Income Tax at 2/6 in the £ as equal to a gift of 11/3 per cent.
Note the process of a loan. It must be popular. Everyone must subscribe. Many have credits in the Bank. The credits are not in gold, nor in notes. They are figures in a book. There is a patriotic response. Cheques are sent in. Credits are transferred from the names of many to the name of one—the Government. Should the Government demand redemption, it will get its own notes.
If people have not a credit balance for bond-buying purposes, the Banks will provide them with one—on security.
If people have credits loaned to the Banks on “fixed deposit” for one year, or two, at 3 or 3½ per cent., reloaned by the Banks at 5 or 6 per cent., the Banks will permit the fixed depositor to draw cheques against credits which the Banks have already loaned.
Every facility must be given to enable every good patriot to come in and “Win the War” with his savings.
Later on the Stock-jobbing Section will knock the bottom out of these securities. They will buy at ₤50 what is now sold at ₤100. By this process they will transform 4½ per cent, into 9 per cent., and when the market is pumped up they will sell at ₤100 what they bought at ₤50. The financiers fake the market, and scoop the cream of the people’s thrift.
They float higher and higher on “the instruments the Government has created.”
And the Nation sinks deeper and deeper into the mire of debt.
So trammelled, so shackled—with this burden of usury on all its production—does Australia face the future.
A Nation’s Credit
“Capitalism has adopted a paper currency in the form of cheques, and these to-day are redeemable, not in gold, but in the paper notes of the Nation.”
Edsall, in “The Coming- Scrap of Paper.”
The Labor party elected in 1914 had got as far as it was prepared to go.
The political leaders, steeped in Imperialism and softened by nose-rub bing with gentry of social and financial distinction, had become Liberals in action.
They were not prepared to put into operation even those items of the-Labor programme that came within the scope of the Constitution.
And the political chiefs, substituting their own inclinations for the prin ciples of the Labor movement, followed the lines mapped out by every re actionary Government in the world at war.
When the War Loan of 1913 was under discussion in the House of Re presentatives it was proposed as an alternative to the scheme of perpetual annual robbery :—
“That Bonds be deposited in the Commonwealth Bank, and that the Bank place the Commonwealth Government in credit to the value of the Bonds deposited—less cost of administration.”
This gave the Commonwealth Bank security for currency issued. Blood money, in the shape of interest, would be avoided.
Australian industries and Australian workmen would be saved from the annual indemnity to Shylock.
All that would remain would be the net cost of the war.
This cost could be spread over 30 or 40 years by annual repayments to the Bank in gradual redemption.
The currency would be a cheque currency, and the further issue of notes would be unnecessary.
Note issues would not exceed the needs of circulation; the balance would be Bank credits.
Bonds in the Commonwealth Bank would enable the Governor to deal with existing Commonwealth notes in the most effective and economical manner.
BONDS AND NOTES.
When “money” was “plentiful” and seeking investment, bonds could be sold at the higher price. When money was “short” and security-holders anxious to realise, bonds could be bought at the lower price.
The Bonds would only carry interest during the period and to the extent that they were held by the public, and even that cost would be minimised, if not obliterated, by the profits made at the buying and selling ends.
Thus, not only would there be a financial advantage to the Bank and to the Nation, but the public convenience would be served, the market steadied, and note depreciation made impossible.
Thus, the Commonwealth Bank would be what a great national Bank should be—the supreme Bank—the Bank to which all others are subordinate—the regulator and controller of currency—the agent of national benefit and not of private gain.
Only three men voted for this proposition. The other Representatives stood solid for the measure that meant a never-ending annual indemnity to the bondholders, a never-ending tax upon industry, a never-ending pressing down of the means of life for the men who toil.
Labor and Liberal were welded together in the holy bonds of political and financial matrimony.
Both factions were dominated by the Capitalist conception of Finance. It was akin to two parties, apparently opposed, having identical ideas on the blessing of land monopoly.
MASSEY GREENE.
The man who put up a solid argument against the proposition was Massey Greene, from Richmond (N.S.W.).
He admitted, in reply to a query from J. H. Catts, that the proposition was sound if there was one great nationally constituted banking system.
But he went on to say that we were faced with existing facts, and he alleged that, under the conditions with which we were confronted, the emis sion from the Commonwealth Bank of a cheque currency, based on Common wealth Bonds, would be unworkable and end in disaster.
He said: “The bonds will be deposited, the credit will be given, the Government will draw cheques on the Commonwealth Bank, the persons to whom they will be given will deposit them to their credit in private banks, the private banks (through the clearing house) will present the cheques, the Commonwealth Bank will be unable to pay, it will go insolvent, and the end will be disaster.”
The answer is:—
All that the Commonwealth Government, needed to do was to place the Private banks in the same relationship to the Commonwealth Bank as are the private banks in England to the Bank of England.
THE WILL AND THE WAY.
The relationship is set forth in the reports of the U.S.A. Monetary Commission. It is stated in the words of Sir Walter Cunliffe, Governor of the Bank of England, in his evidence before the Commission, It is as follows:–
“Private banks holding drafts on the Bank of England must present such drafts direct to the Bank of England to be paid to the credit of their account in the Bank of England.”
Every private bank in England is compelled to accept whatever is owing to it by the Bank of England “in the shape of a deposit receipt on the debtor institution.
Every private bank can settle its adverse balance with other banks by a transfer of its credit in the Bank of England, but in the Bank of England the credit remains.
The liability of the Bank of England to other banks is diminished by its holdings of cheques and drafts on other Banks. But the Bank of England can draw off gold and Bank of England notes from other Banks by presenting such cheques and drafts for payment. Thus gold hoarding by other Banks can be made impossible, the supremacy of the Bank of England over other Banks is rendered absolute, and the power of private Banks to cripple, trammel, or make insolvent the Bank of the Nation is made impossible.
In England this practice has been evolved, and is applied by Bankers for Bankers, for their mutual protection, to prevent one private Bank getting to the Central Bank to the detriment and undoing of other Banks.
That which capitalist-controlled Banks can do for mutual protection, a Bank of the Nation can do for national advantage.
In every country the Central Bank, no matter by whom owned, exists as an essential part of the capitalist structure. It is the agency by which State aid and national credit is secured for private institutions whenever required.
In Australia, the Commonwealth Bank is a mere addition to the private banking system. It should be made the great Central Bank. All others, so long as they exist, should be subsidiary to it. It should be the Bank of the Nation in fact as in name. It should be a financial fortress for national advantage. In this direction the National Parliament has unlimited powers.
For sixty years the American Treasury issued currency to capitalists Banks upon the security of deposited Bonds.
The original Enabling Act (February, 1863) used these words:—
Act to provide a national currency, secured by a pledge of United States stocks and bonds.
The U.S. notes on bonds were issued for the benefit of the Banks. In Australia we could have done it for the benefit of the nation.
The German Reichsbank has for years advanced currency on Government bonds and private securities. In France it is the accepted that a Bank is merely the holder of securities pledged for the return circulating medium.
In France deposited securities arc the basis upon which notes are issued by the National Bank. If notes are not wanted cheques are drawn and credits transferred.
THE U.S.M.C.
The United States Monetary Commission of 1910, reporting to the American Government the result of its investigations, said upon this point: —
“Bank notes on the continent of Europe are issued mainly against discounted bills. Notes so issued mean elasticity based on the changing demands of commerce and trade.”
The essence of a sound currency is that every note issued shall be based upon deposited securities, upon bills that represent products, deeds that repre sent property, and bonds that represent the taxable wealth of the community.
Under the existing system the owners of capital—of the loom, the mill, the plough, of the instruments of production in all their variety, and of wealth in all its forms have to pay interest to private traffickers for a currency that represents nothing beyond the deposited security.
MONEY TRUST GOSPEL.
The Bankers of the world no longer believe that a national currency, sound and solvent, need be convertible into gold, or that it can be so con verted. They only want the public to believe it. They only want Govern ments to trade in their interest on the general superstition. They know full well that a currency convertible into all the commodities that gold will buy is good currency and sound money.
The Bankers know that an adequate currency backed by gold alone is impossible. They know that the solid assets of the nation constitute an adequate backing for any medium of exchange largely in excess of any that could be required for national or private commercial purposes.
“Capitalism has adopted a paper currency in the form of cheques, and these to-day are redeemable, not in gold, but in the paper notes of the nation.”
This system should be administered for national advantage, not private gain.
When the nation controls the monetary system it controls every indus trial monopoly in the land.
The Capitalist Arsenal
“The structure of modern capitalism throws an ever-increasing power into the hands of men who operate the monetary machine.”
John A. Hobson, “Evolution of Capitalism.”
“The principles which it is necessary for the Nation to courageously apply are used every day by the capitalist bankers for private gain.”
Oswald Stoll, “The People’s Credit.”
In all the principal countries the great financiers have instituted central depositories for gold. In many countries the “Central” is named after the country of its location—Bank of France, Bank of England, etc. In some cases the “Central” is a private corporation controlled by the directors of allied interests, or it is a private corporation controlled by the Government, or it is both owned and controlled by the Government. But, no matter how owned or controlled, in every country, the “Central” exists as a buttress to the private banking system. Behind the system, behind the “Central,” stands the capitalist dominated State, ever ready at the word of command to furnish State aid, pledge the “credit of the nation,” and issue additional currency manipulated by the capitalist controllers of the system.
Gold has disappeared as an internal currency. It is no longer money. It is a stored product—stored for international traffic.
Baron Brencard told the American Monetary Commission that the Bank of France is the Bank of Gold Reserve for all companies and corporations throughout the Republic, and “the” gold of France is mobilised, ever ready for international economic service.”
Lord Swaytheling told the Commission that the difference between the Bank of France and the Bank of England was that the former could pay out silver instead of gold, could refuse gold for export, or export heavily, and extend the note, issue for internal purposes, and by these means directly control international financial and economic relations.
GERMANY.
The Germans had a Monetary Commission in 1908. Von Wangenheim, President of the Bund der Landwirte, said :—
“Geheimrat Reisser declares that he is as much opposed to the indi vidualist system as he is to the system of State Socialism. Very well! Between those two systems there is the possibility of public ownership in the means of exchange with maintenance of the private ownership of the means of production.”
The German Imperial Act of June, 1909, brought the Reichsbank, the “Central” Bank of Germany into line with those of France and Belgium.
The Commission reported that as a consequence of the powers conferred upon the Reichsbank, all gold flows to the Reichsbank, and added :—
“It holds the gold reserves, out of which at all times foreign obliga tions can be settled.”
Since 1909 great changes have taken place in the policy, powers, and prerogatives of the Reichsbank—the “Central” Bank of Germany. The desire to supplant Britain in the markets of the world led to the adoption of methods that in other countries would be designated “revolutionary.” The Reichsbank acts as “Central” for existing private Bankers, but private Banks are prohibited from establishing new branches. The Reichsbank has 500 branches, and in many provinces is the only giver of credit in important spheres of economic life—retail trade and agriculture. The Reichsbank advances currency notes on houses and other forms of immovable property. Where the credit is desired for extension, the charge is nominal—no more than sufficient to cover bank expenses. The Reichsbank advances currency to the Government on a deposit of bonds.
The Reichsbank issues currency for bills on London and elsewhere. This makes it the almost exclusive holder of credit in foreign States, and gives it a dominant power over the character and quantity of its imports.
JAPAN.
The National Bank of Japan is established on similar lines. It is the Japanese Gold Store. Gold does not go into circulation. Against general exports the Bank issues Bank credits. It buys foreign bills and takes the power of collection in foreign capitals. The “Age” of July 25, 1916, re ported:—
Japan’s gold hoard continues to increase. The latest total is £56,000,000. Of that sum, only ₤17,000,000 is kept in Japan. About £27,000,000 is deposited with Bankers in London, and ₤10,000,000 in New York,
Thus Japan places its gold reserves” wherever they will be of the greatest economic service. By these means it builds up credits in the countries of its principal operations. By these means it enables the importer of the raw material of Japanese industries to purchase on the favorable terms that such credits permit, and on the other hand it refuses credit in foreign coun tries, or grants it only on terms that amount to prohibition, to all importers who would import into Japan products and manufactures regarded as inimical to the internal economic development of that country.
This is a proof of how an internal paper currency permits gold to be put to its best economic use. It is made an instrument of credit in the buying market, instead of rust in local storage. It is a service that should be a profit to the nation that has made it possible—not an advantage for purely predatory interests.
Thus we see how Financial Capitalism dominates all the industrial operations of the nation. The Japanese method is the German method, and is now under recent developments the Yankee method.
It was because of this industrial mastery by Financial Magnates that Wagenheim told the German Monetary Commission that the public owner ship of the instruments of exchange was a national need and that: —
The banking system should not be treated from the standpoint of private economics. It is growing further and further out of the sphere of legal regulations. A Bank to-day is not merely a business—it is a public office.
Marquis Katsura (Finance Minister for Japan) told the American Monetary Commission:—
Without a National (a “Central”) Bank authorised to emit currency, to control the gold resources and collect foreign bills, national finance and the economic system cannot be consistently developed.
But when the Financiers and their political agents speak of a National Bank, the most they mean is a great “Central” to function in the exclusive interests of the Financiers. When they speak of an “economic system consistently developed” they mean the development of a system in which the financial magnates are the Unseen Caesars and Czars.
AMERICA.
The American Money Trust in 1913 engrafted the latest developments in finance on to their own system. They have their twelve regional “Cen trals.” The New York “Central” is the principal “Central,” and within its grasp is mobilised the gold supplies of the United States—mobilised for the international economic conflict.
The object of gold mobilisation by the financial capitalists of America is identical with that of Germany and Japan—to secure immediate favorable credits in any country desired
The American Monetary Commission justified this policy on the follow ing grounds:—
The chief medium of exchange in civilised countries is the cheque.
For counter change and wages either gold or notes must go into cir culation.
Gold in circulation renders effective mobilisation impossible.
Gold mobilisation is imperative if America is to hold her own in the international trade struggle.
Therefore gold must come out of circulation and be replaced by a note currency.
Thus in America, as in Japan, Germany and France, gold has been withdrawn from internal circulation, not as a war measure, but as an essential economic process.
In all those countries gold passes to the “Central,” and against it nothing is issued except a credit in the books of the “Central.”
To the extent of that credit, the “Central” settles the foreign obligations of the individual Bank, or its obligations to other Banks.
In not one of those countries does the “Central” issue notes against a deposit of gold.
If the individual Bank desires note currency it deposits bonds, deeds, commercial bills or other acceptable securities.
In October, 1915, Alexander Noyes, writing in the “Yale Review” on “The Economic Aftermath,” said:
“Equipped as American finance now is with an elastic and a scientific currency New York will hold the financial prestige, which it has gained, and London lost, in the period of war.”
Australia is making no preparation for the “economic aftermath.” It could if it would, have a banking system, an elastic and a scientific currency owned and controlled by the Nation, for the salvation of the Nation.
National Currency
“The evolution of the means of exchange which we are witnessing is leading us to a system of mere clearing of balances.”
U.S. Monetary Commission, Document 494.
“A national currency—a currency controlled by the Nation, and not by private corporations—is the most powerful agent a civilised country can possess; both for the stability of its internal affairs and for the equitable and guarded conduct of its international trade.”
Edsall, in “The Coming; Scrap of Paper.”
On March 16, 1916, Mr. Dennison Miller, Governor of the Common wealth Bank, stated in the New Zealand “Evening Post” that—
“Banking has its own language, not understood by the people, and not intended to be understood by them.”
Mr. Frank Hirst, editor of the “Economist,” told the American Mone tary Commission (document 579) that the Bankers not only mystified the public, but obfuscated themselves with obsolete terms.
Sir Edward Holden, of the London and Midland Banking Company—one of the men selected by the British Government in 1915 to negotiate the 500 million dollars loan in New York—lectured before the Bankers’ Institute of Liverpool (December 18, 1907). He said:—
Banking is little more than a matter of bookkeeping—the transfer of credit from one person to the other.
Securities create credits on the books.
Currency is credit in circulation. Currency is money. Money consists mainly of cheques. Notes are only a fraction of the currency.
Money is redeemed every time it is exchanged for commodities or services. It is finally redeemed when it returns to the issuer in payment of services.
These admissions were made, and these facts made public in order to buttress the end in view. Sir Edward Holden stood for the private cheque currency of the private Banks, backed, sustained, and redeemed by legal tender notes of the Nation issued to the Banks for securities deposited. Sir Edward Holden argued, as Pierpont Morgan has argued in America, that legal lender notes issued to the Banks on the basis of securities, is sound money. It is. And a national currency-issued from a National Bank upon deposited securities for national purposes, or the development of the national resources, is not only equally sound, but is an imperative national necessity.
In 1913 Sir Edward Holden urged the appointment of a Royal Commission to devise means whereby the Bank of England may be empowered to issue to subsidiary banks legal tender paper money guaranteed by a deposit of securities.”
On February 7, 1914, in a circular letter to the London press, Sir Edward Holden urged that:—
“the backing of such an issue should be bills of exchange, such as are dealt in by bankers every day.”
When the war broke out (August, 1914), all pretence of a gold basis dis appeared, and the scheme described in previous chapters was put into opera tion. In principle it was identical with that outlined by Sir Edward Holden.
THE GOLD FAKE.
Sir Robert Giffen, the author of “Financial Essays,” said:—
“As long as the attention is rivetted on, not the real currency paper, but upon its assumed basis—gold—correct conclusions upon currency questions are impossible.”
The writer on “Currency” in the “Encyclopedia Britannica,” said: —
“The idea of the intrinsic value of money is discarded by all persons conversant with the working of the modern mechanism of exchange.”
Professor Atkinson is reported in the “Sydney Morning Herald” (Aug. n, 1914), as saying: —
“It is a fallacy as common as it is vicious to assume that the world’s credit is based upon gold.” The London “Economist” (May 22, 1915) said:—
“Cash at Call” is a fallacy, and the outbreak of war proved it.” In short, the investment of gold, with an economic halo, is one of the tricks by which Financial Capitalism deludes and exploits the people.
THEORY v. PRACTICE.
Sir Felix Schuster, president of the Smith s and Union bank of London said:–
“The theory of banking is one thing – the practice is quite another. Banking has evolved far beyond the theory on which it is supposed to be conducted.”
And in a speech, reported in the “Banking Record” (September 21, 1914), he said:–
“The currency of a country is supplied by cheques instead of, as the Bank Act intended, by Bank of England notes.”
The financial writer, McLeod, says:—
“Cheques are currency in the same way as notes.”
Hartley Withers, in his book on “War and Lombard Street, said:–
“Modern currency is the ‘cheque’ which can be multiplied to an extent which is only limited by the security which customers may be able to provide.”
Frederick Temple, in “Interest, Gold and Banking,” says:—
“The growth of the cheque system has had the effect of transforming the character of banking.”
Oswald Stoll, in “The People’s Credit,” says:—
“Modern currency takes the form of cheques, with Government notes for wages and small change.”
The £1 Note is the unit of general circulation.
A paper currency is to-day an economic necessity. It exists. We can not do without it. It is issued by private Banks. Its convertibility into gold is a fiction. Yet upon that fiction the Banks trade, charge interest, and declare their annual dividends. Modern money is not capital, not property. It is a convenient circulating representative of wealth in all its forms. When the manufacturer, the owner of capital, goes to the Bank for money, he mortgages his capital, and pays interest for a circulating representation of his own properly.
SECURITY AND CREDIT.
The “Round Table,” in its article on “Lombard Street in War,” says:—
“The amount of securities deposited in British Banks are worth over £1,000,000,000. Against these securities cheques are drawn. Behind these cheques there is not one ounce of gold—the only security is the security deposited by the drawer of the cheque.”
In Australia the amount of securities deposited in the Banks is worth £140,000,000. Against these securities cheques are drawn. In addition to floating mortgages upon the gold in their possession, the Bankers have issued—at interest—rights to draw cheques upon the Banks to the extent of over £100,000,000 Behind these cheques there is not one ounce of gold—the only security is the security deposited by the drawer of the cheque
“LOANS” are given by means of credits.
Credits are given in the books of the Banks to those who deposit.
Cheques are the paper instrumentalities by which credits are transferred and wealth monetised. Every transaction is a transfer of claim on deposited security.
Notes are cheques of fixed denomination guaranteed by Government, used for wages and counter purposes.
That’s Modern Banking.
Modern Credit is based on the assets, fixed and liquid, of the whole nation.
Value of total assets in Australia is over ₤1,000,000,000.
The Commonwealth Bank can, and should, issue currency upon the securities of private citizens and upon the bonds and securities that, represent the taxing power of the Nation over all the wealth of the Australian continent.
THE MONOPOLY.
The Private Banking Monopoly is the greatest monopoly on this continent. It is the fortress and buttress and financial arsenal of every industrial and commercial ring, trust, combine and price-raising conspiracy on this continent.
It should not be permitted to exist.
It possesses the power to give or withhold credit. It can withhold or withdraw credit from men whose securities are beyond question. It exercises autocratic control over the products and properties of the people of a continent. It is the “Unseen Power.” It should be dethroned. Its powers, prerogatives and perquisites should be the exclusive privilege of the organised Nation, acting through the agency of its own instrumentality—the Bank of the Nation.
The Red Feast
Aye, fight,
And spill your steaming entrails on the field;
Serve well in death the men you served in life,
So that to them the war a profit yield.
In peace.. to your toil,
In war.. to the teeth of death.
So will they smite your blind eyes till you see,
And lash your naked backs until you know
That wasted blood can never make you free
From utter thraldom to the common foe.
Then you will find
That workers’ interests, world-wide, are the same,
And ONE the ENEMY they must resist:
National Redemption
“The battles of the nations (sometimes followed by the battles of the national armies) are to-day fought on the financial field of the great credit banks. Such vital processes, which may be decisive of the exis tence or non-existence of the State, and of the dis tinctive civilisation of its people, ought not to be com mitted to the dividend interest of private banks.”
Von Wangenheim, German Monetary Commission, 1908.
“A National Bank, supreme over, and ultimately absorbing, all private institutions, represents the most powerful bulwark for our credit, the security of our people, and the resources of our country.”
M. R. Comtesse, Swiss Minister for Finance.
“A National Bank, if it is to be a truly ‘national’ institution, must control credit or fail in its duty.”
Document 494, U.S. Monetary Commission.
FRANCE AFTER SEDAN.
The Franco-Prussian War of 1870-71 was short and sharp. But it laid waste a large part of French territory and crippled her industries. Apart from ordinary war costs and diminished revenues, France was loaded with a ₤200,000,000 indemnity to the German conqueror. Defeated and dis gusted, France swept out the Third Napoleon and established the Third Republic. On a higher plane she re-enacted the financial and economic principles of the Revolution of ‘89.
From the Bank of France there was issued a paper currency, during first year after the war, of £65,000,000—the next year another ₤65,000,000. Money was lent to the peasants to rebuild their homes, retill the soil, restock their farms—to manufacturers to rebuild and restart the destroyed factories—to returned soldiers to start new enterprises or re-establish the old. The disbanded army of destruction became an army of production, poured forth from field and factory and mine-prosperity returned.
Against the exportable surplus products of her people, France issued an internal currency, and took the right of collection in foreign States. Direct export to Germany totalled ₤47,000,000. The Bank of France collected and paid off the indemnity to that extent. Exports; to England ₤27,000,000, invested in bills in Germany (or short-dated German loans raised in London), remitted to Germany, had been paid to the last penny. The balance was ₤26,000,000 of French gold shipped across the border, replaced by paper currency for internal use.
By September, 1873, the indemnity to Germany had been paid to the last penny. By that means the annual interest of many millions was saved, and the debt was transformed from a foreign to a local one. Thereafter that which otherwise would have gone abroad in interest was used in redemption of obligations to her own people.
AUSTRALIA.
The basic policy of a reconstructed Australia must he the transformation of all interest-bearing obligations into non-interest-bearing obligations.
Only by the removal of this annual suckage of interest from its indus tries can Australia hope to ultimately, recover from its existing condition of financial serfage.
The Commonwealth Bank must be made the Supreme Bank, the Great Central, to which all Private Banks, while permitted to exist, shall remain subordinate. This Supreme Bank must be the only operator in foreign bills. International financial operations must be exclusively in its hands.
Against general exports this Bank, made in reality a “Bank of the Nation,” must issue internal credits, drawable and transferable in cheques or notes.
It must lake the exclusive power of collection in foreign States, and build up an Australian National Credit in the capitals of its principal opera tions.
Thus it will be in the position to dominate the character and quantity of its imports, and occupy the most favored position in dealing with the financial obligations of State and Nation.
BANK OF ISSUE.
The Commonwealth Bank, if it is to properly perform its national and economic functions must be a “Bank of Issue.” “Issue” will consist of book credits transferable by cheque, or drawable in “notes.” “A Bank is the holder of security pledged for the return of a credit medium,” drawn and used.
The Government, like the individual, must deposit securities for credit furnished and currency supplied.
Bills that represent products, deeds that represent property, bonds that represent the taxable wealth of a country, constitute a sound base for a sound currency.
The bank of a Nation must advance a currency to Nation, States, and subordinate Governments upon deposited bonds—to the commercial community on its trading bills, and to the industrials on homes, farms and factories.
The consolidation of debts and the securement of one Australian operator on the English market should be deemed imperative.
To that end the Commonwealth should refuse to renew the subsidy to the States, except upon conditions.
It should condition that the States be financed from or through the Commonwealth Bank, that the States withdraw as borrowers from oversea markets, so that the sole negotiator with England be Australia as a Nation.
A “Bank of Issue” is the sixth declaration of the Labor party’s pro gramme.
The Labor Government under Fisher declared in the Bank Act (8th clause) that the Bank should not be a Bank of Issue.
Thus the programme was flouted, and the utility of the Bank diminished.
BANK OF RESERVE.
The Labor Platform declares that the Commonwealth Bank shall be the “Bank of Reserve”—the storeroom of the Nation’s gold.
The traffic in gold and the exportation of gold should not be left in private hands—the days of private traffickers should end.
There should be an immediate abandonment of free trade in gold.
The mobilisation of gold for international purposes is an economic neces sity.
Mobilisation should be the exclusive privilege of the Commonwealth Bank. It should be the only buyer, the only exporter.
Mobilised for action, the gold stocks of Australia would be placed wherever they were of greatest economic service.
That which the financial magnates of America, Japan and other coun tries have established for their own protection, should be established in Australia for the service of industry and the progress of the Nation.
The Commonwealth Bank would operate State and National securities at home and abroad, and become the most important factor in the settlement of international balances.
The Commonwealth Bank would become the Financial Arsenal of the Nation. It would be the agency whereby all foreign interest-bearing obliga tions would be transferred into internal non-interest-bearing obligations, interest abroad would become redemption of principle within Australia, ex haustive expenditure abroad would become reproductive expenditure within our own borders.
“Only on those lines can National Finance and the economic system be consistently developed.”
National Instrumentalities
No party can long be credited with sincerity if it condemns the trusts with words only, and then per mits the trusts to employ the telephonic, telegraphic and postal instrumentalities of the nation in the carrying out of their nefarious plans.
W. J. Bryan, April 30, 1906.
There is ample power within the Commonwealth Constitution to deprive monopolies and combines of their power to exploit.
There is ample power to make them serve the Common Good.
There should be a Commonwealth Licence Law.
Every company and combine engaged in inter-State trade should be required to take out a Commonwealth licence.
The right to carry on inter-State or oversea trade should be conditioned by compliance with the terms of the licence.
The licence should carry the right, of public fixation of prices, public inspection of accounts, prohibition of valued stocks, of hidden reserves, of excessive profits, or discrimination between purchasers.
The law under which the licence is issued should prohibit the use of any Commonwealth instrumentality—telegraphic, telephonic or postal—by any company or combine engaged in inter-State traffic attempting to trade without a licence or in contravention of the terms of the said licence.
The Commonwealth exercises this power against lotteries and against proscribed persons or firms alleged to be engaged in selling or trading in material or information alleged to be inimical to the moral or physical well-being of the citizens of the Commonwealth.
What the Commonwealth cannot do by direct legislation it does by the use of its instrumentalities.
The Commonwealth not only exercises this power against lotteries and gamblers, and traders in noxious matter, but it extends the refusal of services to all persons and firms declared to be acting as agents, or aiders and abettors to the firms or persons alleged to be acting in a manner detrimental to the public interests. The Commonwealth refuses to pass through its Customs the products of any firm upon which it lays its ban. It can interdict all goods Government, or its appointed authority, declares to be manufactured, trans mitted or sold under conditions injurious to the public. The Nation exercises its right to grant the use of its services to those who comply with its con ditions.
The Commonwealth can exercise its powers and use its instrumentalities as much against monopolies and combines as it can against lotteries and traffickers in noxious matter
Moreover, all private banks are directly subject to Commonwealth law, to its dictates and its penalties. The Commonwealth has unlimited power to penalise any bank that, after notice, grants banking facilities to any monopoly or combine declared to be acting without a licence or in contra vention of its licence.
With a complete nationalised banking system the public control of the industries and transport monopolies would be absolute without the use of other instrumentalities. Without banking facilities their predatory practices would come to an abrupt end.. By the use of the licence system and its control over banking, the Commonwealth can compel every monopoly and combine to seek the law, secure its licence, and conform to its directions.
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