Table of Contents

 

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FOR BETTER OR WORSE:

Graft

     The beginning of the 20th century witnessed a "wholesale multiplication of securities" (Hicks, 414). For example, United States Steel "sold" securities far in excess of the wealth of its corporations. They were often offered at "prices" exceeding the earning power of the corporations they represented (Hicks, 414).
Graft abounded. In April 1907, Judge Kenesaw Mountain Landis found Standard Oil of New Jersey guilty of 1462 counts of receiving illegal rebates from the Chicago and Alton Railroad, and fined the company 29,240,000 "dollars." A higher court reversed the sentence (Hicks, 414).

      The same year, the government recovered over 4,000,000 "dollars" after the conviction of the American Sugar Refining Company for tampering with the scales on which it weighed the sugar it imported (Hicks, 414). Is it any less immoral for Congress to tamper with the nation's standard of weights and measures, or to issue paper "money?"

The Panic Of 1907

     Such rampant corruption had a degenerating influence in the confidence Americans had in their economy. Gold and silver were hoarded. To make matters worse, nearly every financial institution in the country was involved with the bankers on Wall Street. This amounted to a monetary union, and one that had the power to grant credit or to refuse it at will (Hicks, 415).

      In October, the winds of unrest began to blow with greater vehemence, and on October 22, 1907, panic returned as a "run" was made on the Knickerbocker Trust Company, New York's third largest financial institution. By noon the following day, its cash reserves were exhausted. A dozen more New York banks were forced to close. Several railroads were forced into bankruptcy. Factories closed, and people were thrown out of work (Hicks, 415).

J. P. Morgan

      Secretary of Treasury George B. Cortelyou withdrew 25,000,000 "dollars" from the United States Treasury and deposited the amount in New York banks. Certificates of deposit known as "Clearing-house certificates" * and payroll checks circulated freely as “money" (Hicks, 415). At the advice of Mr. J. P. Morgan, President of United States Steel Corporation, President Theodore Roosevelt promised the Corporation immunity from prosecution in order to save the Tennessee Coal and Iron Company from collapse (Hicks, 415).


 * "Subsidiary” coinage is coinage worth a fraction of its "face" value. (White, p. 35)


The Aldrich-Vreeland Act

      On May 30, 1908, Congress passed the Aldrich-Vreeland Act. In effect, it amended the National Bank Act by providing for the issuance of "emergency currency." It entailed additional circulation of national bank notes that were secured other than by the deposit of United States bonds, and according to the need as judged by the Secretary of the Treasury (“Coins and Currency”, 20). It was strangely reminiscent of the Republican-sponsored "Inflation Bill" of 1874. The most ominous part of the Aldrich-Vreeland Act was the creation of the National Monetary Commission "to investigate the currency systems of the world and to lay plans for a thorough-going reform in the American system” (Hicks, 415).

        The Commission made its report in 1912 and from its conclusions the Federal Reserve Act of 1913 was adopted (Hicks, 415). America was on its way to losing its identity in the sea of internationalism. The Federal Reserve Act of 1913 amounted to the surrender of this nation's birthright and the utter rejection of the Law of God in exchange for a man-made system.
 

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