Page:Congressional Record Volume 81 Part 3.djvu/155

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Congressional Record—House


that measures the remuneration of labor and the products of labor, according to its own abundance, by comparison. I told you why they wanted to make money scarce, as thereby they could increase the purchasing power of interest, so it would crowd down the price level of labor and the products of labor, and so that interest could buy more, as it was a fixed charge.

I told you of the objections to this from John Skelton Williams, the Comptroller of the Currency. And let me add that there were two of the big bank representatives there who objected strenuously, also, because they thought it too drastic a measure, but they were in a vanishing minority. I told you how these bankers meant to crush down the price level. They did not mean to destroy the Government exactly. No; they rather disregarded the Government and disregarded the people. All they wanted to do was to enrich themselves.

I told you about the great inflation that we had during the war and after the war, when we were on a single gold standard that they preached so much about, that was so safe, when we had the greatest uncontrollable inflation this country has ever had, and yet, let me remind you again, on a single gold standard. And we had another cause and we still have it, that silly, strange, foolish, incompetent, childish monetary system and banking system, whereby the banker was allowed to deposit these bonds in a certain drawer in any Federal Reserve bank, draw his interest in full semiannually, and draw every dollar in cash besides, and then take these dollars and loan them 10 times to the public, each time drawing interest on every dollar, even the dollars he did not have. Such a monetary system cannot possibly mean anything but bankruptcy every few years.

Now, these bankers knew they could not change the figures on their bonds and obligations, but they knew another way. They tried 24 times before in the United States and in other nations. Every economic writer told them, "Just crush down the price level, and interest, remaining stationary, will have the purchasing power back again."

And, friends, I want to repeat once more and warn you that you cannot crush down a price level, after you have done business for a number of years on a certain price level. You bought and sold your farms and homes and your goods on the shelf. Every obligation and future contract is based on this price level. You cannot crush a price level down unless you bring in return to the people starvation and deprivation and misery and want and soup kitchens and bread lines.

But these men were not considerate of the Nation. They belonged to the class that say by their actions, "We do not care for the Almighty God. Just give us the almighty dollar. All we want is that interest must have a greater purchasing power." Let me once more repeat the words of Governor Harding. It is so striking, my friends, that I know you will welcome a repetition. Mr. Harding was the Governor of the Federal Reserve Board of the Federal Reserve banks, and presided at the meeting on this, the 18th day of May 1920. Let me once more quote from the record of the meeting, as follows: First, "We must have a reduction in credit, a credit contraction" (meaning thereby taking the money out of circulation. And then he added (again quoting from the record of the meeting), "This is a drastic remedy, but we believe it is necessary."

He knew and they all knew, and we know it now, that this was a drastic remedy. He knew what it meant to crush down the price level. He said, "It is a drastic remedy, but we think it is necessary." We know that it was not necessary, except for those who wanted to enrich themselves at the expense of suffering humanity. The words I have given to you, remember, are copied from the records of the meeting.

Now, just consider what happened to the people of the United States after this meeting on the 18th day of May 1920, that I have described to you. In order to show you the direct reflex, the effects, of that meeting, let me take myself for an example, for I represent one of the 125,000,000 people that suffered thereunder. In stating my own experiences I am merely stating yours. In fact, I am just reviewing and reminding you of what took place in your own community, in your own home, and on your own farm.

I had always been a big borrower in my home bank. I was always quite a developer, doing considerable building, and employing quite a few men. One bright summer morning, in the following month of June, I came in to my banker as usual, to renew my note and to pay my interest. My good old banker, with whom I had done business for 20 years——

The Speaker. The time of the gentleman from Nebraska has expired.

Mr. Hill of Washington. Mr. Speaker, I ask unanimous consent that the gentleman from Nebraska [Mr. Binderup] may proceed for 10 additional minutes.

The Speaker. Is there objection?

There was no objection.

Mr. Binderup. My old banker said to me: "Charlie, how about paying this note?" I looked at him in surprise. I said, "Why? Do you not want me to do business with you? You are not afraid of me, are you? I have just given you my property statement. I am worth more than I have ever been worth before in my life, and business is wonderful. Profits are good. Do you not want to do business with me any more, or why do you want me to pay this note?"

The old gentleman smiled and turned to his desk and got a letter. He handed it to me and asked me to read it. The letter was from the Federal Reserve Bank of Kansas City; that is our bank in my district. I read the letter, and now let me tell you what was in that letter. Let me repeat that every banker, member bank of the Federal Reserve, and most other banks, received a similar letter. Those that did not belong to the Federal Reserve bank were supposed to be influenced by the letter just the same.

The letter from the Federal Reserve Bank of Kansas City said to my banker, and to your banker, that they were restricting credits; that they had raised their rediscount rate to 7 percent minimum in Kansas City and as high as 20 percent, considered penalty interest, if the borrowings were not reduced, loans classed by the Federal Reserve banking system as "unessential loans." Seven percent minimum— that was more than I was paying my banker for the use of the money. The letter also said that they had restricted the number of loans that were called these "nonessential loans"; that there were many things whereon they had rediscounted paper before that they would not rediscount any more. This made it impossible for my banker to rediscount a great deal of his paper, and so he had to collect and pay up.

After I had read the letter my old banker said to me, "Now you understand. Don't you see why it is I am asking you to pay your note? It is so that we can pay our obligations to Kansas City, in order to eliminate the impossible interest that we have to pay, and reduce our indebtedness with them." I understood, so I started to spread the fire of contraction of credit and money. I went out and said to everybody who owed me. "Pay up. You must pay up." And everybody else went out—hundreds went out, thousands went out, millions went out. Everybody said to everybody else, "Pay up. Pay up." And so we began to force collections among each other. We sued each other. We abused each other. We trampled upon each other in the mad scramble for money, in order to get hold of a little miserable cash, so that we could pay up. I sold the last house I built for less than cost, in order to pay up, sacrificing, as everybody sacrificed, to follow the edict that had issued forth from that meeting of the Federal Reserve Board of the Federal Reserve bank at 12 o'clock on the 18th day of May 1920, which edict was issued to the 12 Federal regional reserve banks of the United States.

And with this demand to pay up, farmers threw everything they had on the market. They sold their eggs finally for 5 cents a dozen, their butter for 10 cents; they sold their hogs for 2 cents, shoats for 1 cent a pound. They sold wheat for a quarter, and oats for 11 cents. They threw everything they had on the market and congested the market, in this campaign to pay up that issued from the Federal Reserve Board of the Federal Reserve banks In Washington, D. C.

And the merchants sold their goods, emptied the shelves, and congested the market, in an effort to pay up. They