Full text of The Money Question of the 52nd Congress : The Loan Bureau : Speech of Hon. William A. Peffer of Kansas, Debate in the Senate

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THE LOAN

BUREAU.

SPEECH
OP

HON. WILLIAM A. PEFFER,
OF

KANSAS,

IN THE

SENATE OF THE UNITED STATES,

Monday, June 13, 1892.




W a s h i n g t o n .

1S92.




The Loan Bureau.
S P E E C H
or

HON. W I L L I A M A. PEFEER,
OF K A N S A S ,
I N THE S E N A T E OF T H E U N I T E D

STATES,

Monday, June 13,1892,
On the bill (S. 3316) to increase the currency and provide for its circulation,
to reduce the rates of interest, and to establish a bureau of loans, introduced by him.

Mr. PEFFER said:
Mr. PRESIDENT: This- bill is by way of suggesting a principle which I and those whom I have the honor to specially
represent insist upon, rather than its framework. It is a
suggestion by way of relieving what is conceded on all sides
to be an embarrassing condition of financial affairs. In 1890
our Government responded six times to the demands of bankers
and capitalists in New York City for assistance to relieve what
was termed a stringency in the money market. The failure of
one great banking house in Europs came near precipitating
a panic at every great trade center.
The President of the United States is eagerly pressing the importance of an international monetary conference with the view
of safely securing a larger uss of silver coin in the world's ex*
changes, and our statesmen hesitate in responding to popular
appeals for an increased volume of money lest a mistake be made.
The distinguished-Senator from Ohio [Mr. SHERMAN], in an able
and elaborate address delivered in this Chamber a few days ago,
expressed clearly his own views and those of the greaj) party
which he has long represented on this subject, acknowledged
both the need and the demand for more money, and frankly confessed his inability to see any way to supply the want except
through a more general use of silver, and that can be safely
brought about, he thinks, only through an agreement among the
governments of the leading nations of the earth.
This is a confession that in case no such agreement can be
secured, troubles of a grave character must befall us, for no man
ever more plainly or forcibly demonstrated the absolute need of
more money to transact the business of this busy people, whose
population and trade are increasing with wonderful progress.
According to the Senator's view the case is well-nigh hopeless;
MT




3

4
for the nations whose consant is essential in this matter are creditor nations, drawing from American securities not less than
$200,000,000 annually in the way of interest, and it will be no gain
to them that our money should be increased and to that extsnt
cheapened. We, baing the nation most interested, as appears
from our making the first move, must show that they, the other
nations, will be benefited by granting our request, and that, I
suppose, nobody expects will b3 done.
If ever Great Britain conceded anything which operated
against British interests, there is no record of the fact in the
Statesman's Year Book. And if anything were to be gained to
the people of that country by free coinage of silver its Go vernment would not ask anybody's advice or consent. If the people
of the United States are to abandon the policy of taking care of
themselves, and if our industrial interests are to have no relief
until European nations assist us in procuring more money for
our own use, our condition is not only deplorable, it is hopelessr.
If the drain upon our labor is to continue at present rates until
Britain and Germany give ijs money to pay debts due them, we
might as well yield at once, for inevitable ruin would bafall us.
But, Mr. President, our case is not hopeless. We have demonstrated our ability to provide for the common defense when
trouble came upon us, when our Treasury was empty, with no
gold and silver in sight except what was in bank vaults, loanable
at 12 per cent. We prosecuted the greatest war in history on
our credit, and nobody ever lost a dollar on account of it. And
if we are wise in the present emergency we will fall back on our
own resources and solve the pressing problem by a courageous
exercise of our sovereign powers in our own interests.
The bill now before the Senate proposes a simple, honest, and
feasible plan to relieve the situation. It would in no sense outrage the most fastidiousfinancialfancy; it would violate no rule
of finance; on the contrary, it is in harmony with banking
methods older than our Government. The proposition is not to
flood the country with what some persons are pleased to denominate fiat money, nor to issue unlimited amounts of irredeemable currency: not even to coin any more silver money than present laws provide for. The proposition is simply to issue Treasury notes like those we are now using equal in amount to $1.50
for every dollar of gold and silver coin and bullion belonging to
the Governemnt and not set apart for a special purpose by any
act of Congress. .We havo at least $450,000,000 of specie, coin,
and bullion not so set apart. If $1.50 pap3r money were issued
for every dollar of this amount, we should have $675,000,000
more money than we now have, and, used as proposed in this
bill, that amount would relieve the people and set the industries
on their feet again.
It will probably be objected that a large part of the silver now
in possession of the Government could not ba used in the manner suggested by this bill; that the law requires all coin represented by outstanding certificates to be held in trust for payment
or delivery to the certificate-holder on demand. If there is any
force in the objection, it is of a purely technical character and
may be passed as of no practical importance.
547




5
I am aware, Mr. President, that under the act of 1878 provision
was made for the depositing1 of silver coin to the extent of $10,
and the issuance of certificates upon it, payable to bearer. But
a dozen years afterwards, or nearly so, in 1887, if my memory
serves me, an act was passed authorizing the issuance of certificates of smaller denominations, $1, $2, and $5, without any reference whatever to the depositing of coin, assuming, as ,the people
have a right to take it, that the certificates were issued in the
ordinary course of the Government's business, and that the coin
was reserved simply for the purposes of redemption, as we are
pleased to use the word. But I shall not enter into the discussion of that subject, for Senators can examine the law for themselves if they see proper to do so.
It has been the custom of our bankers and of our Government
ever since we have had a government to issue paper money based
upon specie. That has been the rule of all our banking institutions.
It is the rule of all banking institutions of the world where it is
a part of. their, business to issue money. In 1882 the Government
of the United States had paper money authorized by its own laws
circulating among the people equal to $7 for every dollar of specie
that was behind it. The report shows that upon the 30th day of
June,* 1882, the national-bank circulation amounted to a little upwards .of $358,000,000, and at the same time our United States
notes circulation amounted to $346,000,000, amounting to nearly
$700,000,000 in all. The bank notes being redeemable in green^
backs, and the greenbacks being redeemable in the $100,000,000
in gold, I put it, therefore, as a proposition that we had at that
time nearly $700,000,000 of paper money upon $100,000,000 of gold,
and that reserve was set apart long after the law authorizing the
issue of both those classes of paper money had been enacted. So
when I ask in this bill to increase our circulation to the extent
of $2.50 of paper upon every dollar of silver specie, I am asking
certainly nothing either unreasonable or that is out of harmony
with our practice from the foundation of the Government.
But, sir, important as it is to increase the amount of money in
the country, that alone will bring little or no relief. Money not
in active circulation among the people is no better than idle
machinery or stagnant water. It is only active money that serves
the common interests. Money has no value when hidden away
from sight and kept out of use. It must circulate to be useful.
Of our $1,500,000,000 of money not more than one-third of it is
actually doing duty as money. The other two-thirds is idle in
the Treasury vaults of the nation, of the various States, cities,
counties and of other public offices, and in the private safes of
speculators. And the reason why it is not in circulation is not
that it is not greatly needed among the people, but because the
owners of it are not willing to let it out at rates of interest which
borrowers can afford to pay. The time has come when the overburdened private debtors of the country are compelled to seek
remedies which governments, municipalities, corporations, companies, and partnerships have always sought to relieve themselves
of debt, and this without offense to either the legal or moral
sense of the community; namely, to reduce interest rates.
We all remember that during our great war we offered and
547*




6
paid rates of interest amounting to 7.3 per cent. We know more,
sir, that after the war had concluded ani we began to call in our
securi{ies. we at the same time began to reduce our rates of interest, and there was only one reason for reducing the rates ot
interest, because they were too high. We continued that reduction until at the present time we are floating Government
b?nds 'at 2 per cent interest. Every State that has found its
people under the necessity of borrowing money as a State matter has at the first favorable opportunity insisted upon a reduction of the rates of interest in order to make it easier for the people to pay the debt that was incumbent upon them. So it is with
cities.
Every city has done the same thing. So it is with counties,
and in the Western part of the country particularly with townships and school districts. A large part of our legislation in the
Western States, as Senators very well know, has baen in reference to the funding of our indebtedness at lower rates of interest,
extending the time. I submit that there is but one reason why
$he people desire to reduce the rates of interest. It is because
they are too high, more than they can properly afford to pay.
I have here a clipping from a newspaper which I found a few
days ago, dated Chicago, May 23. I will read it:
It is stated that arrangements have been perfected by the Atchison, Topeka and Santa Fe Railway Company for a new issue of second-mortgage
bonds to the amount oi 5100,000,000, bearing interest at the rate of about 3
per cent.

It will be remembered that about two years ago* that great
corporation, just like a great many individual partnerships and
persons, found it had loaded itself with excessive burdens. The
stockholders were called together, a new organization was effected, uew bonds were issued, the old ones recalled, and the
new rate of interest was 4 per cent instead of 6 and 7, as had been
the rule beforehand now we have notice through the Associated Press that the same company is about to make arrangements to still further reduce its rates of interest to 3 per cent.
On the same day a dispatch from New York concerning the same
subject was in the following words:
A statement was published on Wall street and confirmed by Atchison authorities here that the Atchison company contemplates the issue of a permanent fund to provide for betterments and improvements, and formal action may be taken in this direction at the next directors' meeting. It is
understood that the plan will provide for the issue of $100,000,000 secondmortgage bonds, probably bearing interest at graded rates, from 2J to 3£ per
cent.
Of this $80,000,000 will be used to raise the present income bonds, leaving
120,000,000 applicable for future needs.

I refer to these facts for the purpose of calling the attention
of Senators to the common, the usual, and customary practice of
governments, States, municipalities, and corporations in reducing their rates of interest whenever they *are burdensome, and
they invariably regard the first rates agreed upon as burdensome
if they are long continued. So when we ask, as is done in this
bill, and when we insist upon reducing the rates of interest, it is
because, and only,because, it is beyond the line of justice, because it is more than the people can pay, as I expect to show
very clearly before I have concluded.
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7
Mr. President, I-desire to call the attention of the Senate and
of the country to this matter of interest. I have said that rates
of charge for the use of borrowed money are higher than the
people can afford to pay; and permit me to add, that fact will
grow more apparent as population spreads and the necessities
of men become more pressing. So much importance do I attach
to this subject that I believe the perpetuity of the Republic and
indeed of ail forms of free or liberal government depend largely
upon the bringing down of interest rates to a level with the
average net/profits in the industrial pursuits. As long as the
lending of money is more profitable than tilling the soil, or making shoes, or the doing of any other manual labor, that long
will continue the old process of transferring the profits of labor
to men that do no work.
Once in every generation the wealth of the people passes into
the hands of the few who produce nothing. Labor is despoiled
through the protection which law anct custom have thrown
around the control and ownership of money. Interest is the
only profit which the law determines in advance. In all the
older*States of our Union, and in most of the new ones, the rates
of interest are prescribed in the laws. The wages of labor and
the prices of all productions of industry are left to regulate themselves, and when courts are called upon to determine disputes
involving t£e question of extortion, the rule adopted is, "What
is the service reasonably worth?" or 4'What price is customary
in like cases?"
Money is the idol of the law. It is protected at every point—
protected in the hands of its owners to the extent, as I shall
show, that the creditor is saved though the debtor be destroyed.
The law, which is presumed to be for the protection of the common rights of all the people, as between debtor and creditor,
knows only one party to the contract. It is this legal protection
of money that is preying on the people, a dangerous relic which
has descended to us from the despotism of the past.
I hold, Mr. President, and so argue, that the reduction of interest is a necessity; that we have come to a time where we are
compelled to act in that line. This necessity grows out of the
Conditions which are about us. The rates of interest are away
above the profit line in all the productive industries. There is
no productive industry to-day which yields a net profit equal to
the legal rate of interest in the State or the country where those
institutions are in operation. The values of all other articles of
production have fallen in their prices. Money alone remains
nominally the same, while comparatively it grows dearer through
contraction and through the single standard.
Then there is another reason why the interest rate ought to be
reduced; it is because borrowers can not, as I expect to show
presently, afford to pay this rate of interest and continue tobq
owners in this country. The Senator from Alabama [Mr. MORGAN] a few days ago, and repeatedly during the last sixty days,
in this Chamber has called the attention of the Senate to the
distressed condition of the people in his own-State and the difficulty, they have in borrowing money, not that the people are
impoverished in the matter of something to eat and wear—that
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8
Is not the condition of the people anywhere in the country—but
the kind of distress about which the Senator was speaking-, and
about which I am speaking, is the difficulty people have in meeting their money obligations; and this difficulty is growing continually from the fact that the interest rates are destroying
them and are more than they can make in their business.
Gentlemen standing high in business circles in different States of
the Union have called my attention personally to this matter,
more especially in the Western States and in the Southern and
Southwestern States. Business men in cities represent that with
money at 3 per cent or 4 per cent they could go ahead with new
•enterprises, they could revive old ones, they could continue the
work of the people and the progress of the country, but that because, and only because, of the high rates of interest prevailing, they are compelled to-.abandonmany enterprises already begun and to refrain from going into new ones which are perfectly
feasible if they could only obtain money at a rate per cent which
would justify them in doing it.
In slave times an able-bodied man on a good plantation was
worth about a thousand dollars. That Was when another man
owned him. To-day lawyers who are doing me the honor to
listen to me recognize this statement, perhaps, to be correct,
that the average value placed upon the life of a laboring man is
$5,000. When a workman along the line of a railroad or in the
service of any great corpora ion is killed, and the company is
made responsible to the wife or to the heirs, or to those dependent upon the man when he was living, the amount allowed is
about $5,000. You put $5,000 at interest at 6 per cent, the average rate in the Eastern and Middle States, and you will find that
it amounts to $300 a year net, and there is not one laboring man
in this country in ten thousand who is able to save half of that.
Take the agricultural industry, and you may carefully go over
the last twenty-five or the last thirty years, yea, the last fifty
yeas, and you will find that the net increase, the net profits, in
agriculture do not during that period exceed an annual average of
2 per cent compounded annually.' <
We find, furthermore, that the average increase on the productive industries of the country all combined, with our railroads, our canals, our coastwise trade, our manufacturing establishments, our mining, our fisheries, our forestry, and our
greatest of all, agriculture—put them all together, and the net
average increase has been a little below 4 per cent, take the
country over, and yet we are paying 6 per cent, and from that
up to 100.
Now, Mr. President, I wish to call the attention of the Senate
to this matter just enough in detail to impress the magnitude of
the proposition which I present upon the minds of Senators and
upon the minds of the people. I will take first my own native
State of Pennsylvania, and I am with that old State like the Senator from Alabama is with the subject of the free coinage of silver. Whenever I have an opportunity to say a word in favor of
it, I invariably doeo.
The State of Pennsylvania in I860 was worth $1,400,000,000.
That was the value of the property in the State for the purposes
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9
of taxation. The actual amount is $1,416,510,818. The census
shows that in 1890, on the 1st day of January, the assessed valuation of that noble old State has increased to $2,592,841,032, an
actual gain of $1,176,330,214. The legal rate of interest in Pennsylvania has been as long as I can remember, and that is* nearly
sixty years, 6 par cent.
*
Now, at 3 per cent compounded annually, if the value of the
property in the State of Pennsylvania in 1860 had bsen put at
interest, the amount to-day would be $823,783,000 more than the
people of the State actually earn. At 3 per cent, compounded
annually, it would have amounted in 18b'0, two years ago, to
eight hundred and odd million dollars more than the people
were able to earn. That is only one State.
t But let us compare the progress of Pennsylvania with some
other States to show how this influance extends out among the
people. I have here a table prepared from the census report.
Putting against Pennsylvania, Ohio, Missouri, Kentucky,
Georgia, North Carolina, Virginia, and South C ;rolina, I find
that those seven States increased their wealth only $906,458,815,
during the 10 years, while Pennsylvania increased her valuation
$1,176,330,214. I will not take the time of the Senate to go into
details and show the difference in area, which was about seven
times, or the difference in population, which was about three
times, or to show that the assessed valuation of those seven States
in 1880 was about twice as much as that of Pennsylvania, and
that yet, with all their great territory, and with all their large
number of people, thev were unable to make as much as the State
of Pennsylvania, and that the State of Pennsylvania did not make
more than 3 per cent annually upon her assessed valuation.
That is the point I wish to make.
Now, another case. Ijvilltake the State of New York and for
a little longer period, because as Senators know very well in the
later period of our history our progress has been more rapid
than in the earlier period.
I take the State of New York. In 1835 the valuation of that
State was $530,653,524. In 1890 it had increased to $3,755,325,938.
The legal rate of interest of New York is 6 per cent. - At 6 per
cent compounded annually the, value of the property in New
York in 1835, if put at interest at 6 per cent, would have amounted
to four times what the people do annually make, or to state it
accurately, $12,941,316,975. At 31 per cent compounded annually
the money value of New York in 1835 would have amounted to
$332,871,642 more than the actual gains.
Now, Mr. President, I want to compare the State of New York
with some other States. I put against New York the States of
Michigan, Minnesota, Wisconsin, Florida, Louisiana, Mississippi, and West Virginia, and I find while their area is nearly
eight times that of New York, while their population was 25
per cent greater, and their assessed valuation not quite so much,
that their gain was $14,000,000 less than the gain in the State of
New York, and in the State of Xfew York the actual gain was
less than 3£ j)er cent annually. I will ask to have this table incorporated with my remarks.
The table referred to is as follows:
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§

State.

Increase
Area in Populapopula- Assessed val- Assessed valsquare tion, 1880, Popula- in
tion, 1890. tion in ten uation, 1880. uation, 1890.
miles.
years.

Pennsylvania

45,215

4,282,891

5,258,014

975,123 $1,683,459,016 $2,592,841,032

Ohio
Missouri.
Kentucky

41,0G0
69,415
40,400
59,475
52,250
42,450
30,170

3,198,062
2,168,380
1,648,690
1,542,180
1,399,750
1,512,565
995,577

3,672,316
2,679,184
1,858,635
1,837,353
1,617,947
1,655,980
1,151,149

474,254
510,804
209,045
295,173
218,197
143,415
155,572

1,534,360,508
532,795,801
350,563,971
239,472,599
156,100,202
308,455,135
133,560,135

1,778,138,457
786,343,753
512,615,506
377,366,784
212,697,287
362,422,741
132,182,638

335,220 12,465,204 14,472,564

—

North Carolina
Virginia
South Carolina

i

Increase in
valuation in
ten years.
$909,382,016
243,777.949
253,547,1)52
162,051,535
137,894,185
56,597,085
53,967,606
*1,377,497

2,007,360

3,255,308,351

4,161,767,166

900,458,815

New York

49,170

5,082,871

5,997,853

914,982

2,651,940,006

3,775,325,938

1,123, 385,932

Michigan
Minnesota
.
Wisconsin
Florida
Louisiana
Mississippi
West Virginia

58,915
83,365
56, (M0
58,680
48,720
46,810
24,780

1,636,937
780,773
1,315,497
269,493
939,946
1,131,597
618,457

2,093,889
1,301,826
1,686,880
391„432
1,118,587
1,289,600
763,794

356,952
521,053
371,383
121,939
178,641
158,003
144,337

517,666,359
258,028,687
438,971,751
30,938,309
160,162,439
110,628,129
139,622,705

915,450,00j
588,531,743
592,890,719
76,926,938
234,320,780
157,578,906
169,927,587

377,310

6,692,700

8,644,998

1,852,298

1,656,018,379

2,765,566,663

Totals as against Pennsylvania

Totals as against New York...




•Decrease,

Total increase
in wealth in
ten years.
$909,382,016

•

906,458,815

1,123,385,932

427,783,641
330,503,056
153,918,968
45, 988, 629 - 1,109,548,294
74,158,341
46,890,777
30,304,882
1,109,548,294

11
Mr. PEPPER. Mr. President, I have here a few figures in
relation to Massachusetts, beginning one hundred years ago,
when the value of the State was $44,000,000 in round numbers.
The exact figures are $44,024,349. The actual value of the State
in 1890 was $2,154,134,626, and the legal rate of interest there is
6 per cent. I find that at 6 par cent in 1890 the amount of the
value of Massachusetts one hundred years ago would have
amounted to $14,937,461,615.
Mr. President, I now wish to call the attention of the Senate
to the growth of the country at large, not only to take the States
I have mentioned, but to take the United States. In 179Cf-the assessed valuation of the United States was estimated to be $519,977,247, and in 18(J0 it had increased to $24,249,589,804. Thetotal
gain is $23,629,612,557. The average legal rate of intsrest in the
country from that time up to the present, I will put at 7 percent,
which 1 think is fair, but at 6 per cent compounded annually,
the value of the country one hundred years ago, namely, $619,977,247, would amount to $210,358,279,907 or $186,108,690,103
more than the people ail told actually gained.
This gain is made up in large measure of acquisitions of territory. When we began our career one hundred years ago, our
territorial area was but 877,844 square miles; in 1803. through
the purchase of Louisiana, through the subsequent acquisition
of territory upon the north in connection with it, by the Spanish
cession in 1819, when Florida came to us, by the accession of
Texas in 1845, by the territory that came to us through the war
with Mexico in 1848, and by the Gadsden purchase in 1853, we
have increased our territory nearly 400 per cent, and that is included in this gain.
I present these facts, Mr. President, and desire to repeat, in
order that it majr be impressed upon the minds of Senators,
that that is the point to be met in this argument, that the people with all their energies, with all their inventive genius,with
all the, aid that the Great Father above gives us in the best and
most fruitful soil upon earth, and with the use of all the capital
we have received from other countries, we have not been able
to make by our own industry more than an * annual average of
about 3 per cent upon our investments, taking the 3 per cent
yearly'compounded. In the West we c mpound our interest
semi-annually at much higher rates than, that, and it is because
of that fact that I argue that our interest rates are altog*ether
too high and that they must be reduced.
In addition to all this gain and in addition to the difference
between our actual gain and thegain of an equal amount of money,
it is discovered that at the end of this period of one hundred
years we are wonderfully in debt among ourselves, that our
States and municipalities are in debt about $2,000,000,001) to a portion of our people, that our railroad companies to their stockholders and bondholders are in debt $10,000,000,000.
So, Mr. President, I charge all the present misfortunes among
the American people and the people of the world upon this mat
ter of usur-y. It is the most persistent, relentless, and remorseless destroyer that has ever come among men.
In order that I may present something else that the boys and
547




12
girls who read this speech, if they ever do, may think about in
the years to come, I will have a table inserted in my remarks
showing the rates of increase between different rates of interest
compounded, taking $1 as the standard, and it is a wonderful
showing.
The table is as follows:
Proportionate results of compounding §lfor one hundred years at various rates
per cent—ratio to 1 per cent.
1 per cent
$2.70
2 per cent
7.24, or about 2§ times 1 per cent.
3 per cSnt
19.22, or 7 times 1 per cent.
4 per cent
50.50, or 18$ times 1 per cent.
5 per cent
131.50, or 45 times 1 per cent.
6 per cent
339.30, or 125 times 1 per cent.
8 per cent
2,200.00, or 815 times 1 per cent.
10 per cent
13,780.61, or 5,164 times 1 per cent.

Mr. PEFFER. About a year and a half ago in this Chamber
and within a few feet from where I stand my distinguished predecessor called attention to this very matter from another standpoint, and he showed, with-that clearness of speech and graphic
portrayal for which he was so famous, how our working people
are falling behind those who lend money and who control money.
I will not occupy the time of the Senate by reading an extract
which I saved from the lips of that-distinguished gentleman, but
will ask to have it inserted with my remarks.
The extract referred to is as follows:

George Washington, thefirstPresident or the Republic, at the close of his
life in 1799 had the largest private fortune in the United States of America.
* * * At this time, ninety years afterwards, it is not without interest to
know that the entire aggregate and sum of his earthly possessions, his estate,
real, personal, and mixed, Mount Vernon and his lands along the Kanawha
and the Ohio, slaves, securities, all of his belongings, reached the sum total
of between 1800,000 and $900,000. This was less than a century ago, and it is
within bounds to' say that at this time there are many scores of men, of
estates, and of corporations in this country whose annual income exceed,
and there has been one man whose monthly revenue since that period exceeded, the entire accumulations of the wealthiest citizen of the United
States at the end of the last century.
At that period the social condition of the United States was one of practical equality. The statistics of the census of 1800 are incomplete and fragmentary, but the population of the Union was about 5,300,000, and the estimated wealth of the country was between $3,000,000,000 and $4,000,000,000.
There was not a millionaire, and there was not a tramp nor a pauper, so far
as we know, in the country, except such as had been made so by infirmity,
or disease, or inevitable calamity. A multitude of small farmers contentedly tilled the soil. Upon the coast a race offishermenand sailors, owning
the craft that they sailed, wrested their substance from the stormy seas. Labor was the rule and luxury the exception. The great mass of the people
lived upon the products of the farms that they cultivated. They spun and
wove and manufactured their clothing from flax and from wool.
Commerce and handicrafts afforded honorable competence. The prayer
of Agur was apparently realized. There was neither poverty nor riches.
Wealth was uniformly diffused, and none were condemned to hopeless penury
and dependence. Less than 4 per cent of the entire population lived in towns,
and there were but four cities whose population exceeded 10,000 persons.
Westward to the Pacific lay the fertile solitudes of an unexplored continent,
its resources undeveloped and unsuspected. The dreams of Utopia seemed
about to be fulfilled—the wide, the universal diffusion of civil, political, and
personal rights among the great body of the people, accompanied by efficient
and Vigorous guaranties for the safety of life, the protection of property,
and the preservation of liberty.
What is the condition to-day, Mr. President, by the statistics? I said at
the beginning of this century there was a condition of practical social equal547




13
ity; wealth was uniformly diffused among the great mass of the people. I
repeat that the people are not anarchists; they are not socialists; they are
not communists, hut they have suddenly waked to the conception of the fact
that the bulk of the property of the country is passing into the hands of
what the Senator from Ohio, by an euphemism, calls the " speculators " of
the world, not of America alone. They infest the financial and social system of every country upon the f&ce of the earth. \ They are the men of no
politics—neither Democrat nor Republican. They are the men of all nationalities and of no nationality; with no politics but plunder, and with no principle but the spoliation of the human race.
A table has been compiled for the purpose of showing how wealth in this
country is distributed, and it is full of the most startling admonition. It has
appeared in the magazines, it has been commented upon in this Chamber,
it has been the theme of editorial discussion. It appears from this compendium that there are in the United States 300 persons who have an aggregate of
more than $20,000,000 each; and there has been one man, the Midas of the century, at whose touch every thing seemed to turn-to gold, who acquired within
less than the lifetime of a single individual, out of the aggregate of the national wealth that was earned by the labor of all applied to the common
bounty of nature, an aggregate that exceeded the assessed valuation of 4
of the smallest States in this Union.
*

*

*

*

*

*

*

Four hundred persons possess $10,000,000 each, 1,000 persons $5,000,000 each
2,000 persons $2,500,000 each, 6,000 persons $1,000,000 each, and 15,000 persons
$500,000 each, making a total of 31,100 people who possess $36,250,000,000.
Mr. President, it is the most appalling statement that ever fell unon mortal
ears. -It is, so far as the result of democracy as a social and political experiment are concerned, the most terrible commentary that ever was recorded in
the book of time; and Nero fiddles while Rome burns. It is thrown off with
a laugh and a sneer as the "froth upon the beer" of our political and social
system. As I said, the assessed valuation recorded in the great national
ledger standing to our credit is about $65,003,000,000. [Exact, te,610,000,000.1
Our population is sixty-two and a half millions, and by some means, some
device, some machination,some incantation,honest or otherwise, some process that can not be defined, less than a two-thousandth part of our population have obtained possession, and have kept out of the penitentiary in spite
of the means they have adopted to acquire it, of more than one-half of the
entire accumulated wealth of the country. That is not the worst, Mr. President. It has been chiefly acquired by men who have contributed little to the
material welfare of the country, ana by processes that I do not care in appropriate terms to describe; by the wrecking of the fortunes of innocent
men, women, and children; by jugglery, by bookkeeping, by financiering,
by what the Senator from Ohio calls "speculation," and this process is going on with frightful and constantly accelerating rapidity.
The entire industry of this country is passing under the control of organized and confederated capital. More thanfiftyof the necessaries of life to-day,
without which the cabin of the farmer and the miner can not be lighted, or
his children fed or clothed, have passed absolutely under the control of syndicates and trusts and corporations composed of speculators, and, by means of
these combinations and confederations, competition is destroyed; small
dealings are rendered impossible; competence can no longer be acquired,
for it is superfluous and unnecessary to say that if, under a system where
the accumulations distributed per capita would be less than a thousand dollars, 31,000 obtained possession of more than half of the accumulated wealth
of the country, it is impossible that others should have a competence or an
independence.
So it happens, Mr. President, that our society is becoming rapidly stratified—almost hopelessly stratified—into the condition of superfluously rich
and helplessly poor, we are accustomed to speak of this as the land of the
free and the home of the brave. It will soon be the home of the rich and the
land of the slave.
We point to Great B ritain and we denounce aristocracy and privileged and
titled classes and landed estates. We thought when we had abolished primogeniture and entail that we had forever forbidden and prevented these
enormous and dangerous accumulations; but, sir, we had forgotten that
capital could combine; we were unaware of the yet undeveloped capacity of
corporations, and so, as I say, it happens upon the threshold and in the vestibule of our second century, with all this magnificent record behind us* with
this tremendous achievement in the way of wealth, population, invention,
opportunity for happiness, we are in a condition compared with which the
547




14
accumulated fortunes of Great Britain are puerile and insignificant.—Speech
of Senator Ingalls in the United States Senate, January 14, 1891.

Mr. PEFFER. There is another matter in connection with
this, Mr. President. It appears that about once in a generation
the wealth produced/ by the labor of the people is transferred
from their hands through usury as a conduit to the 'possession,
ownership, and enjoyment comparatively of a few persons. Such
a condition, unless there is an outlet for the overflow of population, must bring disaster and eventual national ruin. The only
reason-why the nations of Europe have been this long enabled
to endure th3 strain is that wa.* and emigration have kept their
population below the level of perpetual revolt. The United
States of America has absorbed vast numbers of such immigrants,
but, as was shown last Wednesday by the Senator from Oregon
[Mr. DOLPH], our available public lands are about all taken up
under the land laws and our own overflow of population no longer
has an outlet.
When an Indian reservation is opened up for settlement men
and women risk their lives in a mad race for homes. As long as
there was abundance of room "out West," men who had been
overtaken by misfortune simply changed places and started
again, but the limit has been reached. Even Indians are now
persuaded to take lands in severalty—so scarce is land becoming. Our increasing population, increasing from foreign as well
as from local sources, must spread over territory already occupied, where lands are increasing in market value by reason of
their comparative scarcity and the consequent demand for them.
By way of indicating some«of the processes operating in the
settlement of the Great West, I quote an ex tract from an article
by Prof. Gleed in The Forum for April, 1890.
Prof. Gleed is a gentleman of learning. He has been in the
West a long time, is thoroughly familiar with the habits and
customs of the people and the manner of doing business. He has
been a long time connected with the University of Kansas, one
of our leading educators, a gentleman in every way worthy of
confidence and respect, and in the article to which reference has
been made he describes the manner < in which the West was settled up. In large measure, he says, it was through the use of
borrowed money. He describes the processes of the borrowing
and of the lending, of the selling and of the disposing of property, and of the collection of debts. It is a very interesting article, and I hope Senators will enjoy reading it when they have
more leisure than they have now.
The article referred to is as follows:
The Western mortgage business was begun by individual brokers, who invested on their own judgment, based on personal knowledge of borrowers
and securities. Their profit lay in the margin between the low interest capitalists would accept and the high interest borrowers would pay. Capitalists
sent their money for investment, and mortgages were made to them directly,
so that the brokers required no capital. The business of bringing borrower
and lender together has always been profitable. The broker of the community becomes the capitalist of the community. The Western mortgage
brokers have been no exception to the rule. One of them in Kansas has
made nearly $10,000,000 since 1870. The business developed rapidly. An increased capital has become necessary, individual brokers have given way to
corporations. There are probably two hundred such corporations nowoper547




15
ating In Nebraska and Kansas alone. Wbile the individual broker confined
his operations to his own and adjoining counties, the corporation took States
for its field, established local agents, and adopted the plan of taking all mortgages In the company's name. * * *
As to the payment of the commission, various plans are in use. The most
profitable is this: Out of the proceeds of the note and mortgage the negotiator receives all the expense of making the loan and his commission. For
many years this commission was enormous. The companies located at St.
Paul, Omaha, Des Moines, Kansas City, St. Joseph, Topeka, Denver, or
Dallas sometimes received as high as 15 per cent commission on a five-year
loan, and for many years the home company never received less than 10 per
cent. The local agent exacted all that he could above this amount. Another
custom as to commission is to secure it by notes and a second mortgage.
This commission is usually made payable in ten semi-annual installments.
On default in the payment of one installment, the whole sum becomes due.
Embodied in the note or mortgage are all conceivable provisions lor the
protection of the lender. Interest is made payable semi-annually, and is
represented by interest coupons that bear interest Irom maturity at the
llighest legal rate. The borrower assures the payment of the taxes, and
agrees to keep the buildings insured for the benefit of the mortgagee. On
default in the payment of interest, or in the performance of any of the
agreements of the note or mortgage, the lender may declare the whole amount
of principle and interest immediately due.
Such being the contract, other sources of profit besides the Initial commission will immediately be perceived. The transaction may have such a
history as this: The first interest coupon is paid; the second is defaulted.
The company remits to the eastern investor, and then declares the whole
debt due on account of the default. The borrower wishes to pay up and have
the loan reinstated. The company then collects the amount of the defaulted
interest, with interest compounded thereon at the highest legal rate, and a
further commission or bonus for reinstating or renewing the loan. Or perhaps the company insists upon payment of principal and interest. In that
case the borrower borrows elsewhere; the company is paid in full; the
Amount is reinvested, earning another 10 per cent commission', and the new
mortgage is sent to the investor and the old one canceled. The borrower
who for any reason desires to pay off his mortgage before it i£ due must do
so on such terms as the company may prescribe. He can not treat directly
with the eastern owner of the mortgage, for he can not ascertain who that
owner is; the assignment from the company to the investor is not recorded.
The borrower is usually allowed to anticipate his obligation on payment of
a bonus of 2 per cent per annum for the unexpired time. * * * If a foreclosure becomes necessary the company secures it at the lowest possible
cost—at a wholesale cost. • * * Many companies, however, adopt the invariable rule of taking the land. The best and most conservative companies
have made large profits'by the sale of lands by themselves taking title to all
foreclosed tracts. * * * As yet in most of the Western States the laws are
more favorable to the lender than they are in the Eastern States and courts
are in the main fair.
'

Mr. PEFFER. An enormous amount of money was invested
in real estate secureties, and as the reports thus far published
show, in the six States of Alabama, Tennessee, Illinois, Iowa,
Nebraska, and Kansas the aggregate during the ten years including and following 1880 was $2,274,970,435, of which about
$490,000,000 went to Kansas, the farmers alone taking about $326,000,000 or two-thirds the total, and at the end of the period they
had repaid more than one-half of it at an annual interest charge
of 10 per cent, an average yearly oayment—principal and interest, equal to about $20,000,000, what was equivalent to $100 for
every five persons of those who had to pay. And while they were
doing that we increased our population nearly half a million persons; we settled and organized thirty-five new counties, covering
an area half as large as all New England; we added more than
5,000 miles to our railways; we erected nearly five thousand new
schoolhouses; we doubled the area of our farming lands; we increased the number of our domestic animals 100 per cent, and
during the last year of-the period our farmers produced 273,000,517




16
000 bushels of corn. No such record was ever made bafore. I
challenge history to produce its equal. I am proud to have the
confidenca and commission of sucn a people.
Our progeess during the last four or five years has not baen
so rapid, but our farmers have continued the work of' payment
with wonderful promptness and fortitude. The Daily Capital,
a newspapar printed in Topeka, began early^ last year to collect
reports f romdifferent counties in the State with the view of showing the numb3r of old farm mortgages released and the number
of new ones recorded. Only sixty-one of the one hundred and
six counties reported,'but the reports from them, covering a
pariod of twelve months, ending with April of the present year,
make a showing which was copied and commented on favorably
by the leading papers of New York, Philadelphia, and Boston
It appears from the summary that during the time covered by
the reports old mortgages amounting to $17,000,000 were released, and new mortgages amounting to $13,003,000 were recorded, showing a difference in favor of the releases of $4,000,000 in eight and one-half months.
One important fact baaring on this matter which, however,
does not appear in the reports, but which the editor discovered
and to which he several times called attention in his editorial
columns, is worth mo3t careful consideration. Last January
(1892) the following editorial article appeared in the paper:
MB. MONEY-LOANER. DON'T BE TOO GREEDY.

Some money-loaners in Kansas are, in anticipation of a demand soon for
farm lands and other property foreclosing, bidding the property in at a
nominal price and holding the balance of the loan as a judgment against the
party. For instance, a man has borrowed 13,000 on a farm said to have been
worth at the time of the loan, according to the loan company's appraisers,
$8,000 or $9,000. The company forecloses and bids the farm in for $500, taking
a judgment for $3,500 of the original loan. Thus the party who has borrowed
the money loses his land and iinds back interest, costs of foreclosure, etc.,
to exceed the amount the loan company has paid for his farm. In other
words, the costs, etc., added to the $2,500 makes a judgment larger than the
original loan.
Now the fact and the common justice of the case is, that when a loan company risks $3,000 on its own judgment on a farm or any other kind of property it is nothing more or less than robbery to take the property, leaving the
debt unsatisfied. It don't matter, Mr. Lawyer, what the provisions of the
law are that protect this kind of legal plundering it should be changed, and
the property upon which a loan is made should pay in full the debt. The
next Republican Legislature can protect the people by making it impossi*
ble for a man's farm to be taken representing double or trebble the value
of the loan made upon it and the debt remain unpaid. No amount of slick
legal quibbling can make this system less than downright robbery and it
should and must be stopped in Kansas.

I ought, perhaps, to say in justice to the editor of this paper
that he has bsen all along and is now distinguished for his fealty
to the party which has long been in power in Kansas, the Republican party, and he takes this viaw of the case, calling attention to the fact that, property which is being sold under foreclosure proceedings, in many case3 brings but a small proportion of tne amount of the judgment, leaving the difference between the judgment and the proceeds of the sale still in judgment hanging over the original debtor, and the editor takes the
position that the Legislature of the State ought to enact a law
requiring that when a piece of proparty is taken as security for
547




17
the payment of a debt, and through misfortune the debtor is
unable to meet his obligation, and the creditor is compelled to
collect his debt through processes of law, the property ought to
pay the debt.
I am not arguing in favor of that proposition. I am simply
calling the attention of the Senate to what is being talked about
by our leading- men in the State of Kansas to-day and by a large
number of people in all parts of the country, without any reference to their political affiliations, and I assure you, sir, so far as
I am concerned, there is no politics in this thing, but a great
amount of earnestness.
A little while ago, only about three weeks ago, I think on the
19th day of May, the editor of the same paper called attention to
She same fact in this sententious editorial:
The next'Legislature should enact a little l a w -

Just a little law—
providing that property shall not be sold under foreclosure for less than th#
amount of judgment.

I say, sir, lest my motives may be misconstrued and my opin
ions may be misunderstood, I do not agree with the proposition
of the editor. I do not insist that that ought to be done; I do
not insist, indeed, that it can be done under our Constitution;
but I am trying to show to the Senate what our people are talking about, in order that those gentlemen who are so far away
from us that they do not hear us when wa cry may understand
that there are so.ne other men who are crying as well as those
of us who are in debt, and here the editor sees a most serious
feature about this matter; we must have relief; the Republic
goes down unless the people are saved. There is no way <o
save them but to take away these destroying rates of usury.
Perhaps it may be answered 4 * We have no power to do that." Let
that alona for the present." There is power somewhere to do it.
If there is ijo power in the law. there must be power in the lawmakers; if there is no authority in the Constitution, we can put
it there.
His suggestion directsd public attention to the subject, and
other papers throughout the State began to publish reports in
relation'to the sams matter. I have recently found in the lccal
papers which come to my table Some very suggestive facts along
this line. Here, for instance, is a table prepared from half a
dozen papars in as many counties, showing the number of cases
that were disposed of in courts by decre2S for the sale of property in foreclosure, showing the amount of the judgment, the
amount for which the property sold, and the amount of - tht*
judgment left unpaid. I find that in six counties there were
three hundred and eighty-three cases; the amount of the judgment was $399,411.70; the amount for which the property sold
was $101,461.51, leaving an aggregate judgment unpaid of $249,017.29, hanging over the original debtors. The average amount
of the judgment was $1,043: the average amount that the property sold for was $265, and the average amount of judgment still
left over the people's head is $650, and the interest on those
judgments runs anywhere from 8 per cent to 12 per cent.
M7

2




18

The table referred to is as follows:
Number of cases, amount of judgment, what the property sold for, and balance
of judgment unpaid, in six counties,
the averages.
Counties.
Osage
Jewell
Davis
Elk
Phillips
Coffey
Total
Average

No. of Amount of Property •Balance of
cases. judgment. sold for. judgment
22 $17,078.76
27 38,163.39
35 64,687.81
175 144,035.30
45 30,280.60
79 105,155.84

$2, $50.00
10,437.00
36,109.00
44,664. 95
10,824.71
45,497.89

$14,228.76
27,725.76
28,578.57
99,370.36
19,455.89
59,657.95

383 399,411.70

101,461.51

249,017.29

265.00

650.00

64

1,043.00

•Interest on these judgments 8 per cent to 12 per cent.

In connection with that I made another clipping from one of
our State papers on the same line, showing that in eighteen counties on the bar dockets for the first term of the district courts in
1892 in our State there were nine hundred and eighty-one foreclosures and four hundred and eighty-nine confirmations, making
nearly one thousand four hundred cases, and an average of judgments of $650 hanging over those men, without any outlet, without any public lands to go to, without any new country to go to
and grow up with, presents to us a formidable question, a condition of things that is actually appalling.
Our people have an abundance toefit and an abundance to wear,
but it is not in the soil alone or in what is produc 3d therefrom
by human hands that will bring what the paople are required
to pay. I have shown you that with all our energy, with all our
industry, and with all of our acquisitions of territory we have
been unable, with all the enginery that our ingenuity and invention could bring to bear, to compete with the interest we have to
pay; no nation under heaven can do it, and the time has come
when our people, seeing that there is no West to go to, are in rebellion against this condition of things, and we come to the people showing not only what ails them, but proposing to them some
remedy, and we say to you, Sana tors, we say to our friends in the
other end of this building, we say to the man who occupies the
Chief Magistracy of the Republic, we say to all men everywhere
that we are in earnest.
Mr. President, when we consider the fact that this con<Ktion
exists to greater or less extent in every State of the Union, with
perhaps a single exception—Rhode Island, it is plain that we
are rapidly nearing trouble. "We have inherited the warm blood
of the Anglo-Saxon, a born conqueror, who emerged from feudalism and will never return to it. The careless facility with
which many of our party leaders and public men ignore the popular appeal is exasperating in the extreme. The 4 * imperialism
of capital," as a late writer puts it, and the insolence of wealth
are fast becoming intolerable. Voters by the hundred, by the
thousand—aye, by the million, are organized in opposition to
these growing wrongs, and it is strange beyond understanding
547




19
that men, wise in everything' else, do not understand what this
means.
We come to you, Mr. President, notonly showing-wrongs, but
in our crude and imperfect way suggesting remedies. The bill
now before the Senata is in that line. It may be very crude;
there may be nothing in its provisions that would commend itself
to the enlightened judgment of statesmen long accustomed to
dealing with public affairs. Still it is the best that we have been
able to do this far along the line. We believe that it is worth
thinking about. We believe that it is at least suggestive and
helpful, and that even grave Senators who have grown gray in
the* public service may with great propriety listen to. us long
enough to examine the things we suggest, and then possibly
with their learning and with their experience they may be able
to suggest something that will at least satisfy us temporarily,
for, as has bean shown, it seems to me to be beyond question,
some change must come; the people will have it one way or
another, and we only know one way, and that is the legal way.
We want to get rid of burdens that we can not much longer bear
and that some of us are now unable to bear as what I have, very
disagreeably to myself, been reading to the Senate this morning
will show.
A number of different suggestions have been made, none of
tham, however, in the form of legislation, but one that has been
pressed upon the attention of the farmsrs recently is that in the
course of two or three years (I think we have only two years
more of a five-year period to run) by reason of our increasing
population and the comparative increase in the area of lands
given to agriculture our wheat crop and our cotton crop will b3come more valuable in the markets of the world; in other words,
that .we are at the limit of our productive capacity and that in a
little while, by reason of that fact, the prices of our products
will correspondingly increase. That proposition will hardly
bear serious examination, and yet a great many serious studies,
of it have been made. There is not one State in the Union today that is producing one-half as much of any article on the farming lands as it could producs under ab3tter condition of culture.
Take the country over, take the aggregate area now in cultivation—I have not made the estimate, but I have no doubt you
will find it running somewhere from 25 to 30 acres to the head
of population; that our farming lands have really within their
boundaries, say, 20 acres to every head of population; and yet
under a high state of culture 1 acre is sufficient to support one
person. Out in that delightful region of the country that has
been so long adorned by the presence of the gentleman who now
occupies the chair [Mr. PADDOCK in the chair], the country south
of it and the country north of it for a thousand miles, aye, you
may go from Galveston to Duluth, and all through that magnificent r 3gion west of the Mississippi you will find that where it is
put under such cultivation as it is susceptible of—throw out the
rocks, throw out the streams, throw out everything that can not
produce corn or wheat or cotton —we will support a population
equal in numbers to our acres of land. But we do not expect to
do it when the population is in Europe or in the Eastern States.
However, when the people come to us we can maintain them.




20
I say the arguments about our wheat crop being short within
a year or two, and that therefore the price will be up to $1.50 or
$2 or $2.50 within the next five or ten years is hardly worth serious attention.
Then we are offered a remedy, and my distinguished friend
upon my right [Mr. DOLPH] gave it to us the* other day in his
own cogent and powerful language, that the thing which will
redeem all the country is to continue the doctrines and the policies of the party which he has so ably and so long represented.
But we insist that under that policy and under those measures
these conditions have come upon us, and if that is the best those
gentlemen can do we would be perfectly willing to risk a change.
Then we are offered tariff reform, and yet, as I had the honor
to suggest in this place a few days ago,'our tariff reform friends
will take the duty off of wool that our farmers raise and leave it
on the goods that the manufacturers make down in the region
where the money changers live. We do not want any more of
that kind of tariff reform.
Mr. President, I will refer briefly to the provisions of this bill,
and in order that the reader and the student, for such there wiil
be, may have the benefit of the bill near him when he reads I
ask that the bill may be copied with my remarks. The bill is S.
3216, to increase the currency and provide for its circulation, to
reduce the rates of interest, and to establish a bureau of loans,
and is as follows:
Be it enacted, etc., That there is hereby created within the Treasury Department a bureau of loans, to be subject to rules and regulations prescribed by
the Secretary of the Treasury under and subject to the provisions of this
act. The business of said bureau shall be conducted bv three commissioners. to be nominated and by and with the consent of the Senate appointed by
the President. They shall not all belong to the same political party. They
shall be selected, one from the profession of law. one from among banker^ and
loan agents, the other from the ranks of labor. The regular term of their
office shall be six years; but those first appointed shall hold two, four, and
six respectively, and they shall determine by lot among themselves their
respective terms. Their salary shall be 15,000 a year each, payable quarterly
as the salaries of other officers of the Treasury Department are paid . As
soon as practicable after their appointment they shall take the usual oath of
office, which shall befiledand preserved as in other cases; they shall organize by selecting one of their members as president, one as secretary, ana the
other shall act as president in case of inability or necessary absence of the
president. The secretary shall make and preserve a complete record of all
their proceedings and report annually, under the approval of the president,
to the Secretary of the Treasury, for transmission through the President to
Congress. The board of loan commissioners shall keep their office in Washington City, in quarters prepared, furnished, and supplied by Secretary of
the Treasury as the quarters of other bureaus and divisions are provided.
The board shall have such clerical assistance as shall be found necessary for
the prompt and efficientperformance of the work to be done, to be assigned
by the Secretary of the Treasury from persons in Government employ who
are familiar with that kind of service.
SEC. 2. That it shall be the duty of the board of loan commissioners to establish loan agencies, one at the capital of every State, Territory, and district, and at such other places througaout the country as will be convenient
for the people; to establish as nearly as may be a uniform method of doing
business at the State and local agencies, and under direction of the Secretary of the Treasury to prepare and distribute rules of precedence and blank
forms for use at the agencies; to instruct the agents and adjust on appeal
all differences arising in the administration of the law; to pass on all requisitions of State superintendents for money, and to perform any and all
other duties which shall be found necessary to a faithful administration of
the law.
,
_
Sec. 3. That the agency at the capital of a State, Territory, or district
shall be known as the central loan agency for that State or Territory or dis647




21
trict. The central ageticy shall be in charge of a superintendent appointed
by the Secretary of the Treasury; he shall employ such clerical assistance
as may be needed, subject to the approval of the board of loan commissioners, and he shall have charge of such funds as may be intrusted to him, by
order of the Secretary of the Treasury on requisition of the board of loan
commissioners through its chairman and secretary, and he shall pay out
the same on orders from superintendents of local agencies. He shall report
specially once a month and generally once a year to the board of loan commissioners upon the business and condition of all the local agencies within
his State. He shall have general supervision over the local agencies to the
extent of having access to all their offices, books, and papers, and advising
the local superintendents in all cases of need or of difference. The salary
of the superintendent-of the central agency shall be $4,000 a year, and his
term of office six years, subject to removal for cause. He shall enter into
bond in the sum of $150,000, conditioned for the faithful performance of his
duties and the safe-keeping and handling of all public moneys intrusted to
his care. He shall appoint to assist him a deputy superintendent (a practicing lawyer), who shall have general charge of all legal business arising
out of the administration of this law in the State, and advise officers connected with all the agencies in the State touching their duties in matters
where questions of law are raised, subject to revision by the board of loan
commissioners on reference or appeal. Subject to the approval of the
board of loan commissioners he shall prepare rules and regulations, with
necessary blank forms, for the safe dispatch of business at the several agencies, and he shall revise the same whenever changes or additions are needed.
His term of office shall be seven years, subject to removal for cause, and his
salary $3,500 per year.
SEC. 4. That the local agencies shall be in charge of local superintendents
appointed, as nearly as practicable, equally from different political parties, by
the superintendent of the central agency, subject to approval of the Secretary of the Treasury. They shall appoint such assistants as are necessary
for the transaction of the business of the offices, and tix their wages, subject
to the approval of the State superintendent. They shall not have or engage
in any other general or special business during the time they hold office
tinder this act. They shall report monthly to the superintendent of the central agency, showing the state of their business, and shall make to him an
annual report recovering all the business of the year in detail, in time for
him to make up his report to the board of loan commissioners. Their salary
shall be $3,000 a year and their term of office seven years, subject to dismissal at any time for cause. They shall give bond each in the sum of $25,000, conditioned for the faithful performance of their duties. Salaries of assistants
in all the agencies shall be determined with reference to wages paid for similar work in private lines of business in the particular State or locality.
In the same manner and subject to the same conditions, the superintendent
of the central agency shall appoint an attorney—a lawyer of experience and
high standing in his profession—to assist each local superintendent, and,
under and subject to his direction, have charge of all legal business arising
out of the administration of the law in the district. He shall give bond in
the sum of $25,000 conditioned for the faithful performance of the duties of
his office. His term of office shall be five years, subject to removal at any
time for cause.
SEC. 5. The business of the local agencies shall be to lend money to the
people as hereinafter provided, in manner, as nearly as practicable, like
such business is now conducted by responsible and well-regulated real-estate
pnd loan agencies. Applications will be made on blanks prepared by the
deputy superintendent as aforesaid, showing the location, description, and
estimated value of the particular lot, parcel, or piece of land ofTered as a
security, with the appraisement, under oath, of three disinterested freeholders of the neighborhood who have personal knowledge of the premises,
showing the actual value of the land, with and without improvements, estimated as other lands in that locality are valued, and its assessed value for
taxation, togethef with the report of a local examiner in cases where, for
good reason, the assistant superintendent is of opinion that such examination is necessary. In case the land offered be public land, not subject to
homestead entry, the Government price shall be taken as the assessed value
qf the land, and may be taken as security for a loan of that amount. The
application shall be accompanied by a complete abstract of title, and if it
appears to the satisfaction of the local superintendent that the security offered is sufficient, under the rules established, for the amount of money
asked for, the application shall be granted; and after the due execution of
note or notes, as the case may be, with first mortgage on the land or lot, conditioned that taxes and insurance be kept paid, an order shall be drawn by
the local superintendent on the superintendent of the central agency for the
5*7




amount of the loan. In all cases of dispute in the administration of the law
an appeal may be taken to the deputy superintendent and through him to
the board of loan commissioners. The notes shall be tiled and preserved at
the local agency infireproofvauits or safes, the mortgages recorded according to the laws of the particular State, and afterwards preserved with the
notes.
SEC. 6. That all official bonds required by the provisions of this act to be
given shall be conditioned for the faithful discharge of the duties imposed,
by this act. to be approved by the United States district attorney for the
particular district in the same manner and with the same effect as other
bonds which he is required to approve. The bonds shall be filed and preserved in the office of the loan bureau. Additional security or a new bond
may at any time be required by the board of loan commissioners, in order
to protect the interests of the people.
SEC. 7. That the salaries of all persons appointed and employed under the
provisions of this act shall be paid as other persons connected with the work
of the Treasury Department.
SEC. 8. That cause for removal shall be incompetency, general unfitness,
neglect of duty, dishonesty, intemperance in the use of intoxicating liquors'
or of any narcotic which interferes with proper discharge of duty, impolite
ness or rudeness in official conduct, or any habit which prevents efficient
service.
SEC. 9. That the time for which money may be lent under the provisions
of this act shall not be less than one year except as provided in section
,
nor longer than
years; but for good cause shown, when the interest,
taxes, and insurance have been promptly and regularly paid according to
contract, on recommendation of the local superintendent, the State superintendent may extend the time not exceeding two years. The extension
sha':l be recorded by writing in different colored ink across the record the
words "Time extended
years." In case of failure for two years to pay
merest, taxes, and insurance, or other stipulated charges, the whole debt,
principal and interest, shall become due and payable, and the attorney shall
proceed without unnecessary delay to collect the same according to law in the
State court. Proceedings shall be conducted in the name of the superintendent of the central agency for the use and benefit of the United States. When
any loan has been paid the mortgage record shall be released in an instrument signed by the local superintendent of the district, and in cases,of foreclosure and court decrees the release shall be made by the attorney who
brought the suit, following the State law as to manner and form. And in all
cases of orders for the sale of land under court decrees in foreclosure proceedings on application of mortgagor execution shall be stayed ;md he shall
have three years' time in which to redeem the land on payment of judgment
and accruing costs: Provided, however, That the snay shall operate onlyfrom
year to year, on condition that interest on the judgment, t ogether with taxes
and insurance on the property, be paid each year as they become due. In
other words, the stay inay be extended from year to year for three years
on condition that the annual charges be paid when due. The proceeds of sale
shall be paid over to the Government attorney, who shall immediately
forward same to the superintendent of the central agency.
SEC. 10. That no loan under the foregoing provisions shall be for less than
$100, nor for more than $2,500 to or for any one person or family; and no tract
of land containing more than 160 acres shall be accepted as security for one
loan, and no loan shall be granted unless It be to procure or to save a home;
that is. to say, before a loan is made it must appear that the applicant, being
without a home, needs the money to purchase one, or that, having a home,
it is incumbered and he is in danger of losing it by reason of his being unable then to pay the incumbrance which is about to be enforced in court.
In no case shall money be loaned under the foregoing provisions for purposes of speculation, and every application shall contain a statement of the
applicant, under oath, showing what the money is intended for, and that it
is not for purposes of speculation.
SEC. 11. That in order to provide funds to carry out the provisions of thi3
act the Secretary of the Treasury is hereby authorized and directed to cause
to have prepared Treasury notes similar in all respects to those now being
prepared under the provisions of the silver-bullion act of June 14. 18S0, with
the^ddition of the date of this act printed on the face of said notes, in amount
equal to one dollar and a half for every one dollar's worth of gold and silver
coin and bullion belonging to the United States, excepting the gold-redemption fund provided in pursuance of the redemption act of January —, 1875,
estimating the bullion at its coinage value, and a like amount of notes for
all the coin and bullion coming into possession and ownership of the United.
547




23
States hereafter. As nearly as may be, one-eierhth part Of said notes shall
be of the denominations following; that is to say: One-eighth part each of $1,
$2, $5, $10, $20, $50, $100, and $500. As soon as said notes are prepared they
shall be deposited in the Treasury, to be paid out on requisitions from the
board of loan commissioners, as hereinafter provided.
SEC. 12. That the Treasurer of the United States shall pay out said notes
on requisition of the directors of State agencies approved by the president
and attested by the secretary of the board of loan commissioners, indorsed
by the Secretary of the Treasury. The money shall be forwarded as other
Government funds to the sup?rintendent making the requisition. When
said notes are afterwards received in the Treasury they shall be paid out the
same as other moneys; and when the notes prepared under the authority of
this act are all paid out, requisitions from State superintendents shall be
paid out of any moneys in the Treasury not subject to draft under appropriations by Congress,
SEC. 13. That the notes and mortgages and other instruments of like nature, if any there need be, shall be drawn in favor of the superintendent
(giving proper name) of the central loan agency of the State and his successor in office, for the use and benefit of the people of the United States,
conditioned that in case of failure for two ye*rs to pay interest, taxes, and
insurance, or other necessary charge specified, as the same become due and
payable, according to the contract of loan or the law of the State, the whole
debt, principal and interest, shall become at once due and payable, and proceedings, for collection shall,be begun as provided in the last preceding section.
SEC. 14. That from and after the taking effect of this act money shall not be
subject to taxation under the laws of the United States nor of any State; nor
shall notes, bonds, judgments, mechanic's liens, or other evidences of debt
be so taxable, the intent hereof being to relieve all money evidences of debt
and securities, public and private alike, from taxation.
SEC. 15. That hereafter in the establishment of new national banks and in
the reorganization of old ones, it shall not be necessary to deposit bonds in the
Treasury for security of circulation, but in lieu thereof the banks may deposit lawful money of the United States, gold or silver coin. United States
notes, Treasury notes, and coin certificates. New banks may be established
with a minimum capital of $25,000 and notes may be issued to the banks in
the full amount of their several deposits, subject to existing laws in other
respects, except that before notes are delivered the expense of their preparation and transmission shall be paid by the banks. Banks now in business
may avail themselves of the provisions of this section by depositing lawful
money in lieu of bonds under rules and regulations to be prescribed by the
Secretary of the Treasury.
'
•
'
SEC. 16. That no bank, banking firm, company, or corporation, shall demand or receive interest for the loan of money or for the discounting of
notes or bills more than what would amount to a rate of 5 per cent per
annum, and where the time is six months or longer, not exceeding twelve
months, the rate shall not exceed what would be a yearly rate of 4 per cent.
Any violation of the provisions of this section shall work a (forfeiture of the
principal and interest, enforceable in any court of jurisdiction.
SEC. 17. That, beginning on the first day of the sixth calendar month after
the approval of this act, the rate of interest which may be charged by any
person, firm, company, or corporation for the use of money borrowed or
withheld for a period of twelve months or longer shall not exceed 3 per
cent per annum, payable annually, anything in the laws of any State to
the contrary notwithstanding. A violation of the provisions of this section
shall be held to work a forfeiture of the debt, principal and interest.
SEC. 18. That for the purpose of supplying the need of money to move crops
and other productions which mature annually and at particular seasons of
the year, and for the purpose of protecting farmers and others against the
evils of what are commonly known as " corners " and dealing in "futures"
and "options," and for the purpose of protecting borrowers from the exactions of pawnbrokers and other persons engaged inlikebusiness.it is further
enacted that money may be lent through the bureau of loans for a period of
less than tweve months on the security of personal property, as hereinafter
provided. That whenever any State, by laws duly enacted, shall authorize
the erection of public warehouses in cities, counties, or other subdivisions
of its territory for the purpose of storing for the people any of the productions of labor, imperishable products of agriculture, as cotton, wheat, tobacco. and manufactured articles that will not deteriorate by storage a few
months; and shall provide that such articles, under legally prescribed regulations for the safe-keeping and disposing of the same for the benefit of per547




24
sons and parties in interest, maybe used as security for loans of money; and
shall provide further, that such warehouses shall be in charge of public
officers duly qualified, who shall receive and receipt for articles to be stored,
grading them and noting their market value at the time, such warehouse
receipts may be taken by the superintendent of the loan agency of the district in which the warehouse is located as security for a loan equal to twothirds of the value of the articles mentioned in the receipt, for a period not
exceeding ninety days. The time may be extended thirty days on certificate
of the warehouse officer that the property which is held as security is in
good condition, that it has not materially depreciated in market value since
the date of the loan, and that there is no reason to expect such material depreciated within the next thirty days. The time may again be extended
thirty days on like certificate. In case of falling values, loans may be made
on the same security for additional periods of time, not exceeding in the
aggregate nine months from the date of the first loan; but before any subsequent loan shall be made, interest, insurance, and all warehouse charges
must be paid to date; the new loan shall be for only one-half the present
value of the property held as security, and the difference between the face of
the old and the new loan must be paid. This difference may be paid by deducting its amount from the new loan. The rate of interest on these loans
shall be one-third of 1 per cent a month.
SEC. 19. That all acts and parts of acts inconsistent with the provisions of
this act are hereby repealed. But all acts and parts of acts which are applicable, and which are not necessarily in conflict herewith, shall be construed
in aid of the intent and provisions herein.
, SEC. 20. That this act shall take effect on the 1st day of January next following its approval, and the officers herein provided for shall begin the
work intrusted to them without unnecessary delay.

First, the bill does not propose what is sometimes characterized as paternalism. We often hear gentlemen say to us, " You
are anxious to turn your indebtedness over upon the shoulders
of some other one; you are anxious to throw your misfortunes,
whatever they may be, upon the Government and let the Government take care of you." We repudiate all s ich accusations as
that, and nobody, man or woman, who understands the people of
the West would make such an assertion seriously. It is not to
get rid of what we owe that we ask. It is something with which
to pay that we ask, and we can pay with nothing but money.
They "are now compelling us even to put gold into our contracts.
They a ;e not willing to accept what we must 'accept for our toil
and for what little we accomplish in this world, the lawful
money of the country, bat insist upon our paying what we have
not, what they know we have not, what they know we are unable to get unless we get it from them at their price.
If the posjrofflce system of this country, which is the most stupendous business establishment in the world, is an evidence of
paternalism, then you may charge upon us that we arepaternalists, but if the present an^L the past splendid management of that
great business concern has been in the interests of the people,
has saved us money and in every way been serviceable, then we
want to introduce something of the same kind in our monetary
atlairs, so that th 3*people may have money when they need it
iust the same as they can have postage stamps or postal currency
or any other postal convenience when they need it; in other
words, to get the needs of the people, the things which they need,
close to them. That is what we want to do.
Now, take the railroads of the country. Is it paternalism, I
ask mv good friends, to restrict the corporate greed {if that is
the proper word, and it is often used) of the railroad companies
of this country? Is it paternalism to require that public mills
547




25
shall pay a certain toll upon the grain that th.it they grind for
their customers? Is it paternalism to require that a ferryman
shall not charge more than a certain amount of toll for passing
persons across a stream? Is it pat3rnalism for the State or the
nation to go into tha factories of the country and dictate what
the people there shall do and what they shall not do ? Is it paternalism for us to enact in our laws and to appoint commissions to
see that our animals upon the public streets and highways are
properly treated? Is it paternalism to require that the father
shall treat his child humanely .J, Is it paternalism th.it the lawmaking.power says to-the managers of public inns and theatres
and other buildings of that sort that they shall provide certain
-escapes in case of fire? Is it paternalism chat we establish boards
of health in order to take care of tha health of the people? .Is
it paternalism that authorizes the public officers to go through
your land or mine and make a diainway in order that miasma
may ba drained away and the health of the people saved? Are
all thesa things paternalism? Is it paternalism to require that
the citizens shall pay a certain rate of interest for the use of
money and no more? If these things are not paternalism, then
Iprotest that tha remedies proposed in this bill, to which 1 shall
call attention in a moment, are not paternalism.
But there is another very important matter in connection with
this. I have been-honored with the attention of a number of
Senators to whose minds probably it has air jady suggested itself
that we are proposing to override the rights of States under
constitutional guarantees. But in answer to that we have saved
in the Constitution to ona body alone the authority to manufacture money. No State is permitted to make anything except gold and silver coin a legal tender in payment of debt.
No Stat a can authorize a bank to issue legal-tender money, nor
can any county do it, nor any city, nor any corporation, nor any
power, either on the earth or in the waters under the earth or
in the heavens abov3 the earth—only one power, and that the
Congress of the United States. So when we ask for an increase
of currency, when we ask for any relief that comes to us and must
come to us through the channels of money, we go to the Congress
of the United States, because we have no other placa to go. It
is the only place. It is our only resort, and henca we come here.
But -V.lis matter of the Government interesting itself in the
welfare of its citizens in their private and individual capacity
in the way of advancing money to them is not a naw one. It- is
new, perhaps, in th3 United Statas, but it has been practiced to
a greater or less extent in European countries for many, many
years. Our own colonies in their early history issued paper
money and loaned it to the people on the security of their land.
That was done in the State of Pennsylvania, and Dr. Franklin
has left his testimony to the effect that it was a very successful
experiment. I do not hesitate to say that had it not been for
the interference of the Government of Great Britain in our colonial finances there would have ])een no disasters in any of the
colonies following the matter of the issuance of paper money.
But be that as it may, the experiment is not wholly a new one.
The colony of Virginia, whose honored Senator I see looking
547




26
this way from the other side of the Chamber, issued paper money
based upon taxes, and the money to pay them with was raised by
taxation. That money, Mr. Jefferson said, remained at par,
passed current, and was alwaysregarded with much favOr among
the colonies.
COLONIAL PAPER MONEY.

Prof." Sumner, in his " History of American Currency," refers to the landloan system of Pennsylvania, adopted in 1723:
''The issue was for £15,000 (about $75,000), put in the hands of commissioners
in each county, according to the taxable assessment. The commissioners
loaned the bills at 5 per cent on mortgage of land. The loan was for sixteen
years, payable one-tenth annually, and the interest was to defray the expenses
of government. Installments repaid during the first ten years of the period
were to be loaned out again only for the remainder of the period."

Benjamin Franklin is the reputed author of the Pennsylvania
paper-money system. He advocated it on two distinct grounds:
One, the necessity of a currency, and the impossibility of keeping a sufficient supply of gold and silver in the country, and so*
as he said before the committee of the House of Commons, if you
can not have what you would prefer, the expediency of taking the
next best thing; the other, the absolute advantages of this currency, even over the precious metals. One of these advantages
was the revenue derived to the Government from it. In Pownall's Administration of the Colonies this subject is referred to
in the following language:
In a country, under su2h circumstances, money lent to settlers upon interest creates money. Paper money thus lent upon interest will create gold
and silver in principal, while the interest becomes a reserve that pays the
charges or government. This is the true Pactolian stream, which converts
all into gold that is washed by it. It is upon this principle that the wisdom
and virtue of the Assembly of Pennsylvania established, under the sanction
of Government, an office for the emission of paper money by loan.—See
Pownall, Administration of the Colonies, fourth edition, page 186.

Thomas Jefferson, in his writings, frequently alluded to the
paper money used in the Colonies.
Previous to the Revolution—

He says in one place—
most of the States were in the habit, whenever they had occasion for more
money than could be raised immediately by taxes, to issue paper notes, or
bills, in the name of the State, wherein they promised to pay the bearer the
sum named in the note or bill. In some of the States no time of payment
wasfixed,nor tax laid to enable payment. In these the bills depreciated.
But others of the States named in the bill the day when it should be paH,
laid taxes to bring in money enough for that purpose, and paid tha bill
punctually on or before the day named. In these Staces paper money was
in as high estimation as gold and silver.—Jefferson's Works, volume 9, page
m

But more than that, Great Britain about twenty years ago (the
first act of the character to which I am aboutto refer was passed
in 1871, known as the Irish land act) provided a land court, authorized to advance money to tenant, farmers in Ireland to assist thenf in the purchase of homes. The act was amended and
extended in 1881. Senators who wish to examine that act will
find it in the English Law Heports for the forty-fourth and fortyfifth years of Victoria, page 194. Saction 28 of that act reads as
follows:
Any advance made by the land commission for the purpose of supplying
money for the purchase of. a holding from a landlord or of a holding or par547




27
eel from the land commission shall be repaid by an annuity in favor of the
land commission for thirty-live years of £5 for every £100 pounds of such advance, and so in proportion for any less sum.

That is to say, the British Government supplied money to
poor men in Ireland with which to purchase homes. After
they, the tenant farmers, had paid one-fourth of the amount
agreed upon, the land commission was authorized to advance the
remaining three-fourths of the sum required, and the payment
was^ .simply 5 per cent of the principal continued through a
period.of thirty-five years. It may astonish some persons to
know that a payment of 5 per cent of any sum, without touching
' the principal at all, simply paying the interest at 5 per cent for
thirty-five years, compounded annually, amounts to more than
four times the original sum.
Table showing what thirty-Jive yearly payments of $5 each amounts to at 5 per
cent interest, compounded annually.
Years.

Amount.

Interest.

One..
Two
Three
Pour
Five
Six
Seven
Eight
Nine
Ten
Eleven
Twelve
Thirteen ..
Fourteen..
Fifteen....
Sixteen ...
Seventeen
Eighteen..
Nineteen.,

$5.25
5.51
5.78
6.07
6.38
6.70
7.03
7.38
7.'75
8.14
8.55
8.97
9.42
9.89
10.39
10.91
11.46
M2.03
12.63

$0.25
.51
.78
1.07
1.38
1.70
2.03
2.38
2.75
3.14
3.55
3.97
4.42
4.89
5.39
5.91
6.46
7.03
7.63

Years.

Arilount.

Interest.

Twenty
Twenty-one
Twenty-two
Twenty-three
Twenty-four _
Twenty-five
Twenty-six..,
Twenty-seven
Twenty-eight.
Twenty-nine Thirty
Thirty-one ...
Thirty-two...
Thirty-three.Thirty-four...
Thirty-live . . .

$13.26
13.92
14.61
15.34
16.11
16.81
•17.76
18.65
19.58
20.56
21.58
22.67
23.67
24.99
26.24
27.58

$8.26
8.92
9.61
10.34
11.11
11.81
12.76
13.65
14.58
15.55
16.58
17.67
18.67
19.99
21.24
22.58

Total

473.57

298.57

I found a little while ago while this question was being discussed in the British Parliament or before the British people an
article in one of the Philadelphia papers relating to the same
subject. I desire to read it. It is copied from the Philadelphia
Press, and is as follows:

Mr. Gladstone's speech on the measure now before the House of Commons,
setting apart a credit of $50,000,000 to help poor men buy small farms, renders its passage certain. It would be hard to carry socialism farther in
principle than it goes in this bill, which takes from the national treasury to
aid local bodies In loaning money by which poor men are to buy farms.
Such a measure would be scouted in any American legislature, and nothing
like it could pass here, where men still believe that the state has no business to loan money for private purposes; but this land bill passes unopposed in England.

So we see that Great Britain, with all that we regard as sel-.
fish in the fiscal policy of that country, has been doing measureably just what a large number of the people in this country are
asking to have done here.
Sonle time ago, about six months, I think, I had the honor to
introduce a resolution in the Senate asking that the Finance
Committee
may be instructed to inquire into the cost of lending
547




28

money , in order that we might ascertain the necessary expenses
attending that business, so that the people might have that official data upon which to continue their reasoning in this respect.
The resolution is as follows:

Whereas complaint is made that money, when loaned at legal and customary rates of interest. yields larger profit than is realized in industrial pursuits, the law thus affording to money a protection not accorded to any other
kind of property; and
Whereas it is alleged that present methods of getting money in circulation
through banks and loan agencies is unnecessarily expensive: Therefore, be it
Resolved by the Senate, Tnat the Committee on Finance be instructed to inquire and report as soon as practicable what is the actual expense attending
the business of money lending as it is conducted in the United States by
bankers and other persons who lend money on short periods of time onlyless than one year—and by loan agents, trust companies, and other institutions that lend on long periods—one year and more—including such as negotiate loans for others; also to inquire as to the amount of business done by
the persons, companies, or corporations examined, and the proportion which
the aggregate expense bears to the amount of money loaned.
In considering expenses the committee will include rent or use of buildings, insurance, taxes, fuel, light, stationery, postage, telegraphing, clerk
hire, salaries of officers, and every other iteiii which goes to make up the
expense account, the object being to ascertain, approximately, the actual
and relative cost of conducting business of lending money, without reference to the value of the money lent.
' The committee is authorize 1 to send for persons and papers and examine
witnesses under oath touching any matter involved in the inquiry, and may
by a subcommittee, visit any part of the country to take testimony to the
end that the work may be done efficiently and without unnecessary delay or
-expense.
The necessary expenses of this inquiry will be paid out of the contingent
fund of the Senate.

But until this time no report has been made upon the resolution,
which was referred to the Committee on Finance. Therefore I
am compelled to rely upon my own resources. I have discovered
that it does not cost more than 1 percent to lend money: I mean
to say that all the necessary, legitimate expenses attending the
labor of all kinds incident in the business of lending money,
when it is carried on upon a large scale, does jiot exceed 1 per
cent. The rate in this bill proposes an interest of 2 per cent, so
that there is .1 per cent above that which is the actual co3t.
Another very intaresting matter is the cost of making paper
money. Some weeks ago I addressed a letter of inquiry to the
Secretary of the Treasury asking him for information as to how
much it costs the Government of the United States to prepare
its paper money and get it ready for issue to the people, and very
kindly and elaborately he presents a number of tabulated statements, covering in all three pages of text and figures, showing that
the average cost of making $1 is just a trifle over six hundredths of 1 per cent. That is the cost of making paper money,
which is just as good as any other money. The number of employes who would likely be occupied with the service under
what is proposed in this bill would probably hi from 3,500 to
4.000. That would dispense with the services of about ten times
that number of very pleasant ladies and gentlemen whom the
borrowers of this country are now keeping in luxury.
The
statement to which I refer is as follows:
TREASURY DEPARTMENT, OFFICE OF THE SECRETARY,

Washinqton. D. C., June 4,1892.
SIR: In reply to your letter of the 21st ultimo, requesting information as
to the per cent of cost in procuring the material and preparing and issuing
paper money, I have the hDnor to submit the following statement:
547




29
There were printed and delivered to the Treasury of the United States by
the Bureau of Engraving and Printing during the period from July 1,1891,
to May 1,1892, United States notes, silver certificates, and Treasury notes as
follows:
Class of work.
United States notes
II
2
5

Face value.

Cost in
Bureau.

Sheets.

$648,000
72,000
12,860,000
11,480,000
14,160,000
800,000

162,000
9,000
643,000
287,000
177,000
4,000

40,020,000

1,282,000

10,992,000
6,584,000
19,020,000
22,880,000
21,680,000
6,000,000
4,000,000

2,748,000
823,000
951,000
572,000
271,000
30,000
10,000

91,156,000

5,405,000

3,212,000
6,264,000
19,300,000
16,600,000
14,960,000

803,000
783,000
955.000
415,0i)0
187,000

Total

.60,336,000

3,153,000

177,303.00

Aggregate —,„

191,512,000 I 9,840,000

489,826.10

10......
20

50

Total
Silver certificates:
$1
2.

5.

10

20
50

100

Total
Treasury notes:
$1
2
5
10....
20. —

19,915.15

252,607.35

In estimating the cost of producing the 9,840,000 perfect impressions stated
above there should be added 5 per cent for sheets mutilated in printing,
making the total number of sheets of distinctive paper consumed 10,332,0(w.
The expense of the Government mill in manufacturing that number of
sheets, including cost of paper at 43J cents per pound, express charges in
shipping same, salaries of the United States superintendent and employes
at tne mill and miscellaneous expenses was $65,601.80.
Expense in the division of loans and currency. Treasury Department, in
receiving, examining, counting and issuing same to the Bureau for printing
was $2,665.91.
Expense of office of the Treasurer of the United States in sealing, separating and issuing United States notes, silver certificates and Treasury notes
duringperiod of ten months, from July l, 1891 to May 1,1892, was $27,426.10.
Expense of shipment of notes at the rate of 15 cents per $1,000, $28,726.80
making the aggregate expense of producing and issuing 9,840,000 perfect impressions, each containing 4 notes, or a total of 39,360,000 notes, $614,246.71.
Summarized as follows:
Expenses Bureau Engraving and Printing
Expenses Government mill
Expenses office Treasurer of the United States
Expenses division of loans and currency, Treasury Department
Cost of shipment of notes at 15 cents per $1,030
Total
Money value of notes printed
Number of perfect notes produced
£47




.

$489,826.10
65,601.80
27,426.10
2,665.91
28,726,80
614,246.71
191,512,000.00
39,360,000.00

30
Per cent of cost per dollar...
Cost per sheet of 4 notes each.
Cost per note
Respectfully, yours,
H o n . W . A . PEFFER,

Percent of cost.

$0.0032
.0624
.0156

CHARLES FOSTER, Secretary.

United States Senate.

In order to provide funds for carrying out the provisions of this
proposed act the Secretary of the Treasury is authorized to prepare $1.50 in paper money for every dollar's w^rth of gold and
silver coin and bullion now in the Treasury not covered by special
acts of Congress. As I estimate it, at the end of this year probably we shall have about $500,003,000 of that sort of commodity,
gold and silver coin and bullion. Add to that 150 per cent and
you have $250,000,000 more. We would have in all $750,000,000,
and that is enough, if I am not mistaken, with which to begin,
the necessary process of relief in this country. ' That is not adding a single dollar to the currency more than we would have had
if the authorities under the act of 1878 had given us all the silver money that we ware entitled to, and if in addition to that the
banks had left in circulation all the notes that they had out in
1882, and in addition to that had given us such a reasonable increase as the business and population of the country were entitled to.
t
More than that, it would only give us $2.50 upon $1 of spacie
while we are now banking with our greenbacks at the rate of
$S.46 upon $1 of sp cie, while, as I showed in the early part of
my remarks, in 1882 we had $7 of pajjsr money out on $1 of specie.
Personally I care nothing about specie. I have confidence in the
honor, the credit, and the integrity of the American people If
we were able to subdue the greatest rebellion known in human
history in four years with our paper credit alone, we certainly
can carry along our business during times of profoand peace,
when the country otherwise would be prosperous, upon a similar
sort of credit.
But the people care something about specie. The people care
something about gold and silver, and it is in respect ta their
wishes that I have constructed this bill, so that we shall not go
outside of systems that are now being practiced and that we ourselves have indorsed time without number.
Then, in section 14 of the bill it is provided that after the taking'effect of the bill money shall not be taxable. That, perhaps,
will seem like a novel proposition. After an inquiry sent six
months or more ago to fifteen governors of States for information concerning how much money was taxed in their States, I
received answers from eleven, and out of those eleven but four
of them were able to give me the information required. The
first one is Alabama. The amount of money assessed in * Ala-'
bama is $1,906,375. The total amount of assessable property in
Alabama is $263,776.624—a little over $1 of money to $263 of total
property, $1 in about $26Q. Now I take Virginia, and I find in a
total property valuation of $391,798,609 the amount of money taxed
is $1,656,484, about $1 in every $387 of mon3y. I come to Kentucky, and this is not quite an accurate statament upon the point
at issue, for the reason that it includes money in possession or on




31
deposit with corporations with persons in or out of th3 State.
It is not exactly what I wanted, but I give the total amount of
money that appears upon the tax rolls of Kentucky for the year
1891. The amount is $8,537,99S, while the total amount of property is $545,410,237, or about $1 in $70.
Now, I come to Kansas. I find that our total valuation in
Kansas for 1891 was $342,631,308, and that the total amount of
our money assessed was $1,749,386, about $1 in every $340. Tnose
are the only four States from which I was able to obtain returns,
because they do not tax their money separately, but in nearly all
the answers that I received in letters from the State officers the
statement was made that the amount of money in proportion to
other property was really very small indeed. I submit the statement in detail:
SOURCES o r INFORMATION.

Kansas: Figures by auditor of State.
Tennessee: Comptroller's report 1890, page 49.
Massachusetts: Public Document No. 19,1890, page 57.
Kentucky: Figures by. auditor of State.
New York: Figures by deputy comptroller.
Indiana: Report of State board of tax commissioners, 1891, page 217.
Georgia: Report of comptroller-general, 1890, page 127.
Virginia: Report of auditor of public accounts, tables 29 and 30.
Iowa: Biennial report of auditor, 1891, pages 82,83.
Alabama: Report of State auditor, 1891, pages 230-231.
Pennsylvania: Report of secretary of internal affairs, 1890.
STATES ASKED FOB INFORMATION.

Virginia,
iNeDrasKa,
Nebraska,
isy]
Pennsylvania,
:gia
Georgia,
547




Massachusetts,
Iowa,
Missouri,
Ohio,

Tennessee,
Indiana,
Kentucky,
Alabama,

Illinois,
Kansas,
New York.

Kansas
Tennessee
Massachusetts
Kentucky
New York,
Indiana
Georgia
Virginia
(Pennsylvania




II"

Year.

State.

Keal estate.

1891
1890
18M
1891
1891
1891
1890
1891
1891
1891
1891

$342,614,870
292,870,813
1,600,137,807
35)1,630,294
3,397,234,679
797, 418,117
225,054,915
295,188,129
376,181,276
158,262,563
2,035,571,641

Personal, including
everything
not otherwise
enumerated.

1
, r e r taxawes."
^ l ^ S S i i a n d o t h e * cor P or ations, banks, and insurance companies
exciuaea.

Money.

$98,267,052 $1,749,386
*54,637,292
513,013,315
£145,241,945 §8,537,998
382,159,067
452,389,782
152,311,869
93,586,068 "I,"656^484"
133,765,623
95,881,758
1,906,375
23,329,068

Money,
bank stock,
credits, etc.

Total.

$342, 631.308
-M
O r)H3
fwj
*70Q,nfti
uui

1,367,928
21,421,627
7,722,928

a, ii>lt lot, U/.D
545,410.237
3,779,393,746
1,249,807,899
377, 366, 784
39f,798,fi0il
531,368,526
263,776,624
2,058,899,703

Per
cent of
money
to total.
.5
1.5

.42
*7*

tDesignated as «resident bank stock."
§ Money in possession or on deposit with corporations or
persons in or out of State.

33
So, Mr. President, when it would be provided by an act of
Congress or by an act of the State Legislature that money should
not be taxed, the amount of property that would escape taxation
would be so small as that it would be hardly felt, but the vast
amount of labor exercised in smuggling operations that it would
save is enormous. People would have no difficulties then on
their consciences as to where their money should be upon the
day the assessor made his annual visit.
Concerning the rate of interest which the bill proposes to establish, I have already said all I wish to upon that point with one
exception. I wish to read an extract from the Chicago Inter
Ocean of a recent date:
There are 50,000 chattel mortgages in Cook County, 111. Perhaps 50 per
cent of these is for the purchase price-of furniture, etc., the remainder is for
loans on various forms of personal property, loans negotiable under the
stress of dire necessity, brought about hy loss of employment, sickness, death,
and other forms of misfortune, loans on which interest is paid at the rate of
10 per cent per month. Not long since a friend overtaken by misfortune
sought a loan of 1200 on household, watch, clothing, and other property worth
at least $1,000. He wanted it for a year, but was told he could have it no
longer than six months. The charges were $5 for drawing the papers, $6 for
examining the property, 10 per cent per month payable in advance. At this
rate he will pay $340 Interest and $10 extra for the use of $200 one year.
Such instances are not rare. The little all, the few household treasures of
thousands are thus absorbed every year. While I write there are 30,000 people in Chicago on the verge of starvation, men, women, and babies, old age
and helpless childhood. They want money, and a scheme which does not
cover their necessities is unjust. Save them from the loan shark and the
pawnbroker.—irate/*- Ocean.

That condition of things exists to a greater or less extent in
all the large cities of the country and it shows the imperative
need of some sort of assistance that comes from the whole people. They can not give it in any other way than through their
legislative authority. That same sort of assistance in which the
whole people aire interested must reach these classes or their
condition is beyond hope.
Mr. PEFFER. In connection -with this matter of the Government interesting itself on behalf of the people I found something
very instructive sometime ago in a work entitled Cyclopedia of
Political Science and Economy, by Mr. Lalor, and I gathered
some facts from the recitals there. I find, among other things,
that during the periods of war something over one hundred
years ago which distressed a great many thousand people in the
different countries of Europe, and especially during the period
of what is known in history as the seven years' war, the farmers,
the small proprietors, became wonderfully depressed in their
financial conditions, and that at the end of the seven years' war
the farmers in Silesia organized an association by which they
were to assist one another in the purchase of farm animals and
in obtaining loans to purchase supplies to carry on their different branches of agriculture, and to relieve them from the ruin
and distress that had been occasioned by the war.
A man named Buring, a merchant of Berlinj conceived the idea
that if the small farmers were to unite what little force they had
left under wise management and under the protection of the laws
they might be able to render one another very great assistance, for
it was discovered, notwithstanding the waste of the country and
the'waste of their resources by war in* other respects, that their
547—3




34
greatest burden was that of usury, the trouble, the difficulty in
obtaining the uss of money at rates that they could afford to pay;
and then in connection with that the necessary expenses attending private operations in borrowing money, the examination of
the property and the titles to property, and that sort of thing.
So under the leadership of this man Buring an association was
formed, and a number of others followed in rapid succession in
the succeeding years. The general outline of it was that they
should turn their mortgages into stock of the company, and that
the company as an organized body should stand between the borrowers and the lenders until the company itself became able to
lend.
The name given to systems of that kind under the French law
and the present system in France is Credit Fonyier. I find that
that system was established in Silesia in 177(3; and in the march
of /Brandenburg in 1777; in Pomerania in 1781; in Hamburg in
1782; in West Prussia in 1787; in East Prussia in 1788; in Luneburg in 1*791; Esthonia and Livonia in 1803; Schleswig-Holstein
in 1811; Mecklenburg in 1818; Posen in 1822; Poland in 1825;
Kalenberg, Grubenhagen, and Hildesheim in 1826; Wurtemberg
in 1827; Hesse Cassel in 1832; Westphalia in 1835; Gallicia in
1841; Hanover in 1842, and Saxony in 1844.
The magistrates of Bremen instituted a land bank. The owner
of real property has the right to deliver to commissioners appointed by the magistrates his titles to it, and these are made
negotiable like bills of exchange. In Belgium and Switzerland
similar institutions have been successfully operated. Their obligations have maintained through ail crises—monetary, war;
and revolutionary—a steadiness of value far beyond any other
public securities whatever, either government or commercial.
In 1848, when all public securities fell, these papers kept their
value better than anything else. Prussian funds fell to 69, shares
of the Bank of Prussia to 63, and railroad shares to 30 to 90 per
cent, whereas the land-credit bonds, producing 3i per cent in
Silesia and Pomerania, stood at 93, in West Prussia at 83, and in
East Prussia at 96. In 1850 those producing 4 per cent were at
102 in Posen and at 103 in Mecklenburg.
There were two classes of these associations, one wholly and
exclusively private in their character while the other was largely
assisted by government agencies. It is alleged by persons whose
testimony is left on record that the effect of those land-credit
institutions was remarkable in restoring agriculture to its earlier condition.
.
v
The last section but two of this bill provides for what is known
in common parlance as the subtreasury plan of the Farmer's Alliance, but it is not precisely what the Alliance itself presented.
It is my own personal view as to what their plan ought to be when
perfected, and it amounts to this, that whenever in any State
under laws duly enacted public warehouses are erected, placed
in charge of public officers charged with the receipt of property,
its inspection and the grading of it, and the publishing of its
value, such property may be used as security for the loans of
money; and in that ease, in order to relieve the pressure that
comes upon farmers during times of great stress when the crops
are ready to move, and in order to relieve the persons res547




35
ident in towns and cities who are constantly within the power
of the pawnbroker and the money shark, as the Inter-Ocean man
expresses it, the Government may lend money upon these securities under certain restrictions mentioned in the bill.
Upon that I have something here from a very interesting report which was sent out a short time ago by the Department of
Agriculture. It is in the miscellaneous series, report No. 3,
Division of Statistics, relating to cooperative credit associations in
certain European countries, in which I have found a very interesting detailed statement of what are known as credit unions or
people's banks in various portions of Germany, in Italy, in Austria, in Belgium, in Holland, and in Russia. I will not occupy
the time of the Senate in reading the statement but will incorporate it in my remarks:
[United States Department of Agriculture, division of Statistics, miscellaneous series. Report No. 3.]
COOPERATIVE CREDIT ASSOCIATIONS IN CERTAIN EUROPEAN COUNTRIES
AND THEIR RELATION" TO AGRICULTURAL INTERESTS.

[Prepared under the direction of the statistican, by Edward T. Peters.]
THE GERMAN CREDIT UNIONS OF PEOPLE'S BANKS.

The most important of the cooperative credit socities of Europe are the credit
unions or "people's banks " of Germany, which owe theirgorigin to Dr. Hermann Schulze, of Delitzsch,* by whom the first society of this type was
established in that town in the year 1850, and whose watchful care and untiring efforts did more than any other influence to promote their development
and assure their success. His attention appears to have been first drawn
in this direction by the hardships to which small tradesmen and other poor
people were exposed from the difficulty of borrowing and the exhorbitant
rates of interest they were obliged to pay on such loans as they could obtain.
Dr. R. T. Ely, in an article-on these German unions published in the Atlantic
Monthly of February, 1881, states that before the establishment of the
Delitzsch society the interest which small tradesmen in that town were obliged
to pay was enormous. He mentioned one man of this class who was carryon a lively little business, who, in order to borrow 50 thalers for a few days
to make purchases at the Leipzig fair, had to pay 1 thaler a day, or at the
rate of 780 per cent per annum. "Schulze-Delititzsch reports.*' continues
Dr. Ely, " that inquiry among small dealers and laborers has shown him
that an interest of 1 thaler a month for a loan of 20 thalers was common
enough, an interest of 60 per cent per annum."
But the plans of Schulze-Delitzsch looked much farther than the relief of
special hardships affecting the poorer classes of borrowers. He aimed at
placing the working classes generally on a more independent footing, and
this not by invoking state aid in their behalf or by enlisting in their favor
the efforts of philanthropists, but by increasing their opportunities and
strengthening their incentives for saviug, arousing within them the spirit of
self-help and providing the agencies through which that spirit could be made
practically operative. The associations which he founded were declared in
his own summary of their general principles to be "based throughout on
business principles," each association paying to its creditors and receiving
in turn from its borrowing members bank interest and commission at the
market rates, and allowing to its managers, especially those having charge
of its funds, "remuneration according to their services."
*

*

*
*
*
*
*
THE RAIFFEISEN LOAN ASSOCIATIONS.

It is now proposed to give a brief account of the type of loan associations
originated in Germany by Frederick William Kaififeisen, the necessay information being principally obtained from Emmanuel le Barbier's work on
Agricultural Credit in Germany.t
Educated for the Prussian army, Raifteisen was compelled by a disease of
the eyes to leave the military service, and being transferred to the civil de* Designated as Schulze-Delitzsch, to distinguish him from others having
the surname Schulze, who occupied seats in the national legislature while
he was a member of that body.
t Lie Credit Agricole en Allemagne. Berger-Levrault & Co., Paris & Nancy,
1890.
547




36
partment of the government he was appointed a supernumerary in the government of Coblentz. In 1843 he was secretary of the circuit of Mayence in
the government just named, and was then appointed burgomaster at Weyerbusch, in that circuit. Here his attention was attracted to the wretchedness of the peasants, or small farmers, and his indignation was excited by
the heartless extortions to which they were subjected by the usurers, and by
cattle dealers and others who practiced usury upon them under disguised
forms. During the winter of 1845-'46 he conceived the idea of forming an agricultural association by whose aid the peasants might free themselves from
their dependence upon the parasitic middlemen, of whom they were the
prey. His first task was to bring the people 'he desired to benefit to some
comprehension of his plan. This in so poor and backward a country as that
in which he was to operate was no easy matter, and his first association,
founded in 1847, or some three years before Schulze-Delitzsch established
the first of his credit unions, was not successful.
In 1848 he was appointed burgomaster at Flammersfleld, in the circuit of
Altenkirchen, where he had the administration of thirty-three communes,*
with an aggregate population of about 5,000. The holdings of the cultivators
in this district were very small, and they themselves were generally extremely poor. Without farm animals of their own, they hired from the cattle
dealers such as they needed, and were so dependent on this class of traders
that they had to accept almost any terms offered them.
*

*

*

*

*

*

#

*

*

#

*

*

*

This association borrowed money on three months' time, and used it in
buying farm animals, which it sold to its members on a five years' credit,
the debt to be paid in five equal annual instalments. After a short time,
however, the association simplified its business by ceasing to buy and sell
live stock and, instead, lending its members the money wherewith to make
their own purchases, the loans of money being for long terms, just as the
credits for animals had been.
*

In a paper on agricultural credit, read at the international agricultural
congress held at the Hague in October last, Mr. F. F. s' Jacob remarked that
Italy was as much favored as Germany in the matter of agricultural credit,
and this he attributed mainly to the action of the popular banks of that
country. He said:
"Monsieur Luzzatti, the present minister of finance, has introduced into
his country the system of small cooperative share banks which receive deposits, grant loans, and discount bills solely on behalf of their members.
* * * There are in Italy more than 700 cooperative credit societies, possessing a capital of 66.000.000 lire ($12,738,000) and having deposits to the
amount of 300,000,000 lire ($57,900,000). There is scarcely an agricultural center of any importance without a popular bank or a branch of such an institution. Their action is powerfully seconded by the aid lent them by the savings banks in the great cities, which has been developed more rapidly than
in any other country. Though seeking to place their funds where they will
be safe, easily collectible, and sufficiently productive, these banks make it an
object to pour back into the economic circulation the capital collected by
saving.
" A part of it is invested in Government bonds and in provincial and communal securities, while another part serves to support the small lines of trade
and agricultural industry by discounting bills and notes running for long
terms. Thus the one savings bank of Milan, which has a capital of 60,000,000
lire ($11,580,000) and deposits exceeding 300,000,000 lire ($57,900,000) comes to
the aid of petty trade by accepting the paper of the popular bank (of the
same city) which makes loans to agriculture and the small industries. The
notes of this (popular) bank, once indorsed by the savings bank, are readily
accepted by the national bank of Italy. The same course is pursued in the
rural districts where agricultural credit and commercial credit interact in
the same manner. Thanks to the rapid extension of these popular banks,
all solvent cultivators find similar facilities of credit to those enjoyed by the
merchants in the cities, and that without being held to a three months'
term."
RUKAIi COOPERATIVE BANKS IN RUSSIA.

In a monograph entitled,"The Artels and the Cooperative Movement in
Russia," by W. Louguinine, is found an interesting account of a form of
cooperation which has apparently proved well adapted to the needs of the
* Gemeinden, the Gemeinde being a civil division corresponding approximately to an American township or an English parish.
547




37
smaller class of cultivating laud-owners and the more thrifty agricultural
laborers of that country, namely, the cooperative banks modeled in great
part after the German peoples' banks already described. The emancipation
of the serfs and the measures adopted by the Russian Government to promote their subsequent acquisition of land, created a large body of small agriculturists having an insufficient amount of capital for the advantageous
cultivation of the land obtained by them and for which they were gradually
paying, partly out of its produce and partly out of their earnings by their
labor for larger proprietors.
In the case of loans on personal security the rates of interest exacted by
the village usurers ran as high as 60 to 100 per cent per annum, and there was
consequently a great need for institutions which in cases where money was
temporarily required for productive uses, or to tide over exceptional difficulties, could supply it to trustworthy persons upon reasonable terms; and
as cooperation in certain primitive forms had already existed for centuries
in Russia and had demonstrated the existence of the spirit of association in
that country among both the peasants and the laborers of the towns and
cities, it is not surprising that relief should have been sought in this direction.
*

*

*

*

*

*

*

These banks are most numerous in northern and central Russia, a little
less so in the south, and very much less so in the western provinces. As a
rule the sums lent to members have been repaid quite punctually, but in
cases where the borrowers have refused to pay, the banks had no recourse
but to appeal to the local authorities, which sometimes failed to enforce their
claims. The example of successful repudiation on the part of one debtor
has sometimes proved contagious, producing an epidemic of dishonesty, but
on the whole the losses have been very small. The results shown by the annual report for one year are cited as a fair example of the general experience.
This report showed that only one loan in fourteen was left unpaid at maturity; that of the total amount loaned only 1 ruble in 6,000 was paid by indorsers; that 1 ruble out of every 1,800 was obtained by sale of the debtor's
goods, and that only 1 ruble in 2,300 was lost. So also has it been as between
the associations themselves and their creditors.
As regards the loans which they obtained from the Imperial Bank it is
stated, as the result oi a pretty extended experience, that out of every 100
rubles borrowed by the association, the amount not paid when due was about
2 rubles, and the amount finally lost not more than 60 kopecks, or six-tenths
of a ruble; and as the loans were made at 7 per cent, there remained an interest of 6.4 per cent, after deducting losses. It appears, too, that private
lenders have had a like favorable experience in their dealings with these institutions, and it is said that they regard them with steadily increasing confidence—a fact which must result to their advantage in the form of decreasing rates of interest. It is worthy of especial note, too, that while the
banks began almost exclusively with money advanced by the provincial authorities, their operations are now mainly carried on by means of money
obtained from private lenders, coupled, of course, with their own capital,
derived from the payments of their members.
*

*

*

*

*

4

*

*

The latest date for which returns are at hand for all the countries is the
close of the year 1887. At that time Germany had 2,135 of the Schulze-Delitzsch credit unions, and probably about 800 of the Kaiffeisen associations.
The people's banks of Austria numbered 1,313, of which 118 were unregistered.
The totals in Hungary and Italy respectively appear to be identical with the
numbers making returns—at least, there is no indication to the contrary.
The total number in Russia at the same date was somewhat above 900. Of
the Schulze-Delitzsch unions the number which made returns for the date
named was only 886, or about 41 per cent of the whole number. For Austria
the number making returns as to their capital and business is estimated at
75 per cent, and 75 per cent of the 1,195 registered banks would be 896; while
the numbers for Hungary, Italy, and Russia are, respectively, 488, 641, and
712. This gives a total of 3,623 that made returns for the close of 1887, exclusive of associations of the Raiffeisen and Wollemborg types.
The number of members actually returned is highest In Austria, but that
is understood to include the membership of all the registered associations,
and if allowance were made for the large number of the German SchulzeDelitzsch unions which did not make returns, their membership would be
very much larger than that of the Austrian institutions. For Hungary no
figures as to the number of members have been found. The actual figures
furnished for the German societies are 456,276; for the Austria^, 513,756; for
the Italian, 318,979, and for the Russian 193,945—making a total of 1,482,956. A
547




38
very moderate estimate for Hungary, for the unregistered societies of Austria, and for the German and Russian societies not making returns as to
their membership—including among the former the Raiffeisen loan associations—would raise the aggregate membership to at least 2,250,000, and an estimate of 2,250,000 would scarcely be extravagant;
We have seen that in the German credit unions making returns about onethird of the members, if we include gardeners and rural laborers, belong to
the agricultural class. The proportion of agriculturists in those not making
returns is probably higher, since these will naturally consist to a greater
extent than the others of unions located in the smaller towns surrounded
by agricultural populations; while the membership of the Raiffeisen associations is mainly agricultural, as also is that of the Russian associations;
and in the Italian popular banks the rural class appears to be more largely
represented than in the Schulze-Delitzch credit unions. In view of these
considerations it is evident that considerably more than one-third of the
members estimated to be embraced in all the associations must consist of
farmers, gardeners, and others earning their livelihood by the cultivationof
the soil. The number of this clasS of members can, in fact, hardly be less
than 850,000, and it may not fall far short of 1,000,000.
It will be remembered that the date to which these figures refer is December 31,1887. The paid-in capital and reserve funds, with the deposits and
other borrowed capital of the institutions making returns for the same date,
are given below:
Paid-in
capital.

Countries.

Reserve
fund.

Capital
including
reserve.

Deposits
and other
borrowed
funds.

Total
capital
employed.

126,330,226 $5,770,262 832,100,488 $191,655,893 $133,756,381
9,815,250 3,822,600 13,637,850
77,310,360 90,948, 210
7,737,712
6,610,802 15,890,839
512,325 9,250,037
15,875,436 4,218,594 20,094,030
82,551,285 102,645,315
2,488,459
3,522,433
453,569 2,942,028
6,464,461

Germany
Austria
Hungary
Italy...
Russia...

63,247,083 14,777,350 78,024,433

Total

271,680,773

349,705,206

A study of that matter is very interesting indeed. The writer'
Bhows-a large number, thousands, of that sort of institutions,
many of them largely under the control of local government,
some of them under the central government, but all of them
doing great good by way of reducing rates of interest and assisting farmers, mechanics, and other persons of limited means.
Further, upon this matter of the Government in any way taking part with the people in supplying them with means to help
themselves, and that is all that this plan does mean, last fall, I
think it was in the consular reports for October, 1891, No. 133, is
a report from Consul-General Crawford at St. Petersburg, in
which he gives a very interesting account of the method by which
the Russian Government assists the farmers of that country in
utilizing their grain as security for the* borrowing of money. I
will ask that that may go in with my remarks.
GOVERNMENT LOANS TO RUSSIAN FARMERS.

[Report by Consul-General Crawford, of St. Petersburg.]
In obedience to instructions from the Department, I have prepared the
following report upon the system now in practice in Russia of making advances on farmers' grain stored in warehouses or delivered to officials of the
several railroads of the country. Inasmuch as the rules and regulations
touching this important question are not published for public distribution,
I am indebted to the imperial ministry of finance for an official copy of the
"Laws Governing Advances on Cereals on Account of the Imperial Bank of
Russia," from which I have been courteously permitted to make the following summary for the use of the Department:
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39
1. Advances on grain may be made by any railway company authorized by
the imperial ministry of finance.
2. The amount to be advanced is in direct ratio to the prices current for
cereals at the nearest market place, and must not exceed 60 per cent of the
value of the grain as thus estimated. In case the loan is granted for a period
of six weeks or less, an advance of 80 per cent of the estimated value may be
obtained.
3. The rate of interest on these loans is fixed by the Imperial Bank, and
is usually 6 per cent, varying, however, a little from this rate according to
the condition of the grain and the nature of the security. This interest is
paid in advance and for the length of time it has been actually granted.
4. In addition to the regular interest, as above stipulated, the^borrower is
charged: (a) 2 per cent per annum for a sinking fund, but the percentage
for the sinking fund must not exceed one-third of 1 per cent of the total loan;
(6) a sum not exceeding one-third of 1 per cent as remuneration to the railway company for the trouble of negotiating the loan.
5. Loans are granted usually for six months, or without fixing the time in
advance: but loans may be'made for longer period, as the necessity of the
case demands. In the latter case the loan must be settled not later than one
year from the date thereof.
6. The owners of the grain stored in the warehouses, or their legal representatives, are entitled, under the control of the railway company's agent,
to inspect the grain from time to time and to take measures in order to protect the same from beingdamaged or to demand that suchmeasuresbe taken
by the railway company on their account. Jn ease of need, the railway company may take these measures on account of the owner, without beinfe requested by the latter, and charge the expenses thereof to the owner.
7. The natural loss in weight resulting from the above operation is fixed
by the regulations issued by a council of officials appointed by the several
railway companies.
8. The grain is returned by the railway company on repaying the advances
made and other charges, as mentioned above.
9. If the sum advanced is not repaid when due and there is no good reason
to grant an extension, the grain is sold by the railway company at public
auction.
10. Such sale may be made imperative under the following circumstances
and regulations: (a) If the stored grain shows signs of being irreparably
damaged; (b) if the fear is entertained that the value of the grain stored in
warehouses can not cover the charges for storage, the amount advanced, and
other expenses. The receiver of the loan must in all Cases be informed at
least seven days in advance of the date of sale.
11. The railway company, after deducting the expenses of the public sale,
covers all its own charges, i\ e., the amount advanced, charges for storage,
and other charges allowed by the Government, before all other liabilities of
the owner, even if he be bankrupt, can be recognized.
12. Such railway companies as are authorized to make advances on grain
are entitled (a) to grant loans from their own means not being previously advanced by the Imperial Bank; (b) to build or hire warehouses for storing such
grain for a period of six months, charging for storage a certain percentage,
which isfixedfor each depot by the ministry of ways and communications,not
exceeding one-third of 1 copeck per pood per montb, and to engage special
agents for the uurpose of selling grain on behalf of the owner, charging a
commission therefor not exceeding t per cent of the total amount received.
13. The railway companies must bear the entire responsibility for the advances made on behalf of the Imperial Bank.
14. If the amount due to the Imperial Bank is not paid in seven days after
the sale of the goods or within seven days after the loan expires, the railway
company must pay, besides the interest to the day of settlement, afineof
one-half of 1 per cent a month for the amount overdue.
15. The Reserve fund, mentioned above, may be used, by permission of the
ministries of ways and communications and offinances,as a gratuity to railway officials and to cover any loss sustained by the railway company in the
operation of the loan.
16. The railway company may make advances (a) on grain intended for
transportation and on grain stored in warehouses at the starting point,
charging for storage not more than one-third of 1 copeck per pood per month;
(b) on grain received by the railway company for transport, whether stored
or loaded upon the cars at once or not; (c) on grain arrived at the place of
destination and stored there in warehouses until sold or consigned, the
charges remaining in all cases the same.
17. Advances can not be made on grain which is already hypothecated or
npon which any unsettled charges whatever are resting.
18. In fixing the highest percentage for advances on grain the prices cur647




40
rent at the place of destination are taken as the basis of such calculation;
provided, however, that such place of destination is a market place. In
making such calculation the usual expenses of transportation are reckoned
as a portion of the sum loaned. The highest advances which may be made
by any depot and for any kind of grain are fixed by the respective railway
companies, they in turn being responsible to the Imperial Bank.
19. The charges mentioned in paragraph 4, viz, one-third of 1 per cent of
the sum advanced, are entirely put into the reserve fund of the respective
railway companies and placed to the credit of the Imperial Bank. This onethird of 1 per cent so advanced is thus divided: Two-thirds goes to the railway company at the starting point and one-third to the railway company at
the place of destination for the management of the loan.
20. When an advance is granted, an indorsement to that effect has to be
made both on the railway note and its duplicate, mentioning the date on
which the advance is made, the rate of interest, and other charges on the
loan. Besides this, the receiver of the loan gives a special receipt for the
money advanced either on grain which is intended for transport or which
has been received to be stored in warehouses. When the loan is repaid, the
receipt and other papers are returned to the borrower.
21. In case of advances made at the place of destination, the railway companies are entitled to retain from the advance all their charges except those
charged for the operation of the loan, An indorsement to this effect is made
both on the railway note and on its duplicate.
22. The officers of the different railway companies are compelled to inform
the other companies, as well as the Imperial Bank, of the amount of grain
received in warehouses at the different railway depots, as well as to advertise
this fact in the local newspapers, that all may know when a given warehouse
is full and unable to receive any more grain.
23. The owner of grain which is intended for transport and is stored in
warehouses may receive it back on demand on paying the usual fee for storage. viz, one-third of 1 copeck per pood per month, and on settlement of all
legal claims relative thereto.
24. If the owner of the grain "wishes it warehoused at the place of its desti*
nation, he must declare such intention in advance, and an indorsement to
that effect must be made on the railway note and its duplicate; provided,
however, if the warehouses at the place of destination are full, such a request can not be granted.
25. Cleaning, reshoveling, and screening of grain stored in warehouses
must only be donfe under the supervision of the railway company. Before
taking measures to prevent the warehoused grain from being damaged the
railway companies must inform the owner or his representative of the necessity of such action.
f ,
26. Should the railway company be compelled to sell the hypothecated
grain for reasons mentioned in paragragh 10, the order for the sale may be
revoked if the advance, or a reasonable part of it, be repaid seven days after
the receipt of the notice of the intended sale.
In addition to the general rules governing this question, as enumerated
above, I have learned that no distinction is made between farmers and socalled middlemen. The loans are made only on the grain, and it is of no consequence who delivers it and negotiates the loan.
All such loans are made in paper rubles, the regular and only real currency of this Empire, and these paper rubles are taken fromths regular governmental issue.
This scheme went into effect on June 14-26,1888, and at the present day it
it is generally adopted throughout the country, and business is carried on
under it on a very large scale. I should also add that the scheme gives great
satisfaction to the farmers, many of whom declare that it has been an essential feature of successful farming in Russia.
J. M. CRAWFORD,
Consul-General,
UNITED STATES CONSULATE-GENERAL,

St. Petersburg, October 17,1891.

I find another thing in connection with this matter. It is frequently suggested that our plan is similar to that which has been
a long-time in operation in the Argentine Republic, and that
what we are really after is a duplicate of the inflated currency of
that country, whereas nothing could be more unlike. The notes,
or cedulas as they aiie callsd there, are simply certificates of the
mortgage banks that certain property has bean mortgaged.
The holder of those cedulas goes out in the open market and sells
547




41
them the same as I would go out with railroad stock or shares in
a mining company or canal and offer them to the public and
raise money on them. Our proposition is to use money and not
cedulas or notes.
ARGENTINE CfeDULAS.

The proposition that the Government shall lend money to the people on
real estate security is in no respect like the method of land hypothecation
practiced in the Argentine Republic, as many persons suppose. Mr. Consul
Baker gave a clear statement of that practice in his report under date August 10,1889, as it appears on pages 653 and 654 Consular Reports Nos. 108,109.
110, and 111, 1889. It is as follows:
" NATIONAL HYPOTHECARY BANK.

"In addition to the usual legal facilities for borrowing money on mortgage,
the Argentine Congress has by law established agreat national mortgage bank
whose special functions are to make loans on the hypothecation of real estate.' The law creating this bank was passed on the 14th of September, 1886.
The President, in his last message to Congress, speaks of it as ' an institution
which will greatly multiply the elements of credit in the Republic;' and the
minister offinance,in a speech he made in the House of Deputies a few days
ago, declared that ' the bank is a great boon to the people for the reason that
land is the great patrimony, the immense capital of the country, and every
facility should be given to mobilize that capital and increase its value.'
4< By its franchises this bank can operate in all the provinces and territories
of the Republic. Its functions are not to loan money on mortgage, but to issue
transferable mortgage bonds (ddulas) on the execution of mortgages in its
favor, which ddulas are put upon the market and sold for what they will
fetch by the holders, and the nation guarantees to the holders the service of
the interest and amortization. They are made payable to bearer, and they
bear an annual fixed interest not to exceed 8 per cent and an annual accumulative sinking fund for their ultimate payment, the maximum of which shall
not exceed 2 per cent. The bank is managed in the capital of the Republic by
a board of control, consisting of a chairman and eight directors, appointed
by the President, and in the different provinces and territories by means of
administrative councils. The board can make no loan of less than $1,000 or
more than $250,000 to any one person, nor can any provincial council grant
loans of more than $5,000 unless specially authorized by the board. The face
of the ddulas can not be less than $25 nor greater than $1,000. The responsibility for loans is not limited to the property mortgaged, but extends to all
other property the mortgagee may possess, so far as the excess is concerned,
in which case the order of preference to be followed is that laid down in the
civil code.
u The-central bank is the only one that delivers the ddulas though the mortgage deeds be executed in the provinces: and no loan can be granted for more
than half the value of the property mortgaged. A delay of over sixty days
in the payment of the hypothecary obligation authorizes the bank to put up
for sale by public auction the property or properties mortgaged without any
legal proceedings and to award them to the highest bidder. To provide for
the expenses of the bank, and to guarantee punctuality in the service of the
ddulas, a credit of $2,000,000 is kept open in the national bank in favor of the
National Mortgage Bank. No loans can be made on mines and quarries nor
on joint properties unless the mortgage be made on the whole of the property
with the consent of all the joint owners declared by means of a public deed,
nor on properties which may be rented for a term of more than live ye^rs at
the date of the contract for the loan, nor on properties whi<jh may not be susceptible of producing an income."
It will be seen that the Mortgage Bank of Argentine was not established,
and is not conducted for the purpose of assisting the people in the management of their daily business, nor is it intended to increase the supply of Government money. It is a scheme to aid speculators in "mobilizing" their
lands, i The Argentine Government does not issue and lend money to the
people on real-estate security. It only authorizes the bank to issue certificates showing that certain lands have been mortgaged at a certain valuation.
The certificates may then be sold in the open market, just as we sell shares
of mining stock, or railroad or bank stock, for money. The Government
puts out no money on these mortgages. Its obligation begins and ends with
securing the payment of the interest, and the money for that purpose is
raised by sale of the land if need be.

In Consular Reports No. 138, March, 1892, Mr. Consul Baker
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42
reports again on Argentine affairs. Among other things, he
says:
Besides these burdens of bonded and other indebtedness on the part of the
nation, the provinces, and the municipalities, there is another form of Argentine indebtedness frequently heretofore mentioned by me in my reports,
which is just now especially attracting attention on the part of the public.
I refer to the bonds, ov cedulas, which have within the last few years been issued on the security of landed property by the National Hypothecary Bank
and by the Hypothecary Bank of the Province of Buenos Ayres, and for the
payment of the interest on which the nation and the province are respectively responsible.
The amounts of these cidulas, when we consider the limited development
of the country and the present condition of its available resources, approach
almost to the fabulous. While there is no official information on the subject of a very recent date, I learn from reliable sources that the mortgage
bank of the province and that of the nation figure in the cidula business
about as follows:
Issued by the Hypothecary Bank of the Province
Issued by the National Hypothecary Bank
Total

$330,000,000
204,000,000
$524,000,000

The issues of the provincial bank are based on the Mortgage of real estate
in the province of Buenos Ayres, those of the national bank on real estate
in all the different provinces and territories.
At the beginning of 1891 the provincial ctdutas, which were originally put
on the market at prices ranging from 80 to 70 cents to the dollar, were worth
only about 45 cents in paper. They are now worth 33 cents in paper, equal
to about 9 cents in gold to the dollar.

Mr. CHANDLER. Mr. President, I desire to ask the Senator
a question, with his permission.
The PRESIDING OFFICER. Does the Senator from Kansas
yield?
Mr. PEFFER. Certainly.
Mr. CHANDLER. The Senator's bill, in section 5, provides
that the United States, through this local agency, shall loan
money upon real estate to persons desirous of procuring a home
or of preserving homes which belong to them. Section 18 provides that similar loans for short times shall be made upon any
of the imperishable products of agriculture, as cotton, wheat,
and tobacco and manufactured goods that will not deteriorate by
storage for a few months. Section 11 provides that in order to
supply funds for carrying out the provisions of this proposed act
in making these loans, the Secretary of the Treasury may issue
Treasury notes.
I desire to ask the Senator whether in preparing this scheme
and submitting it for the consideration, as he says, of Congress
and the people of the United States, he has examined the constitutional question. He has said that the bill is not open to
the objection that it is parternalism, because other governments
have done these things, and he cites the English acts and also
the Russian acts. But the Senator is well aware that the English people have no written constitution, and that the Russian
Empire has no constitution at all, while we are in this country
blessed, as we suppose, by a written Constitution. The powers
granted to the Federal Government .under that Constitution are
limited. I ask the Senator whether he has considered the question. Where do we find within the limits of the Constitution of
the United States authority for the General Government to
enter upon this very extensive scheme of lending money on real
547




43
estate and on personal property, even if these loans would relieve the great evils which afflict the country, as he says, and
which he has so fully and elaborately depicted, although I think
with some disposition to exaggerate those evils? Where, I ask
him, is the constitutional power to do what he proposes?
Mr. PEFFER. It will afford me great pleasure, when the
proper time comes to discuss that phase of the subject at lensrth.
Until the principle is established, or until the principle for which
I contend is well understood, it is hardly worth while to spend
much time upon the details. But this question is a preliminary
one, and I thank the Senator for calling my attention to it. My
answer will be very brief, but at some proper time I shall avail
myself of an opportunity to discuss it more at length.
I have examined the constitutional questions, and *I believe,
having made such examination, that Congress has as much right,
has as good a right and as perfect authority to lend its money to
the people or (if the expression is a better one I prefer it) to lend
the people's money to them, taking for security such as they
now give to a private citizen and such as the Government enforces in favor of a private citizen, as security for the whole
people, as it has to go down to the Baltimore and Ohio or to the
Pennsylvania Railroad depot and through the fingers of a boy
pick up a mail sack and throw it into a railway car and carry it
to-Boston.
Last autumn I was passing down one of the streets in the city
of Chicago nearing a depot station. I saw a large wagon coming
up the way. I wondered if we were going to have a circus. T
stopped to see it turn, and in a moment it was backed against
the sidewalk and three or four trucks were brought up and half
a dozen men began unloading great sacks and taking them intov
the station. Every one of those sacks contained letters fromv
different parts of the country Belonging to private individuals.
It was doing the private ^vork of citizens. I find that that is going on in every part of the country. When I go to the post-office
and ask for a 1-penny stamp I hand in my penny and receive the
stamp. That is all there is about it. A stamp is provided
through the Government by the people. I believe, and will be
most happy to produce the authority when the time comes, that
the lending of money to the people and the charge of interest
upon it is no greater stretch of authority than the carrying oi
the people's property and their persons from place to place.
Mr. CHANDLER. Will the Senator allow me to interrupt
him right there?
Mr. PEFFER. In just a moment, as I am upon this particulai
point. I say it is no greater stretch of authority for this reason:
that money is as much an instrument of commerce as a railway
car or a ship or an ordinary farm wagon, and that the regulatior
of the value of money, the price which the owners of monej
should charge others for its use, is no greater stretch of constitutional authority than it is to say how much a railroad fcompanj
may charge for the use of a freight car.
Mr. CHANDLER. But I call the Senator's attention to thii
point: I find in this old-fashioned instrument here, the Consti
tution, that Congress has express power to establish post-office*
and post-roads.
547




44
Mr. PEPPER. Certainly.
Mr. CHANDLER. I also find this clause: "The Congress
3hall have power * * * to coin money, regulate the value
thereof, and of foreign coin, and fix the standard of weights and
measures." But I do not find it written anywhere here that
Congress may issue Treasury notes or may raise money by taxation in order to loan that money to the citizens of the United
States who want to borrow it upon their farms or upon their
corn, or wheat, or tobacco. That is my trouble.
Mr. PEFFER. The Senator perhaps does not discover in that
old instrument any authority for carrying the mails?
Mr. CHANDLER.* I infer it from the power to establish postoffices and post-roads.
Mr. PEFFER. Yes, I presume so.
Mr. CHANDLER. From what power does this proposed legislation come? That is what I ask the Senator.
Mr. PEFFER. From the authority to coin money and to regulate the value thereof. That is one. ''To regulate commerce
with foreign nations and among the several States." Congress
may determine the number of railway cars that shall be built
and run over the rails. Congress may determine the rate of
freight that may be charged. Congress may determine the
sort of money that may be made. So the Supreme Court have
determined. Congress may determine the rate of interest that
may be charged for it. It has done it in repeated instances; in
the case of the United States Bank twice, and in the case of the
national banks to-day. But I do not care to go at length into
that matter now; it will take up too much time of the Senate,
and I have already occupied a considerable time.
- Mr. CHANDLER. I will only take occasion to say that I agree
with the Senator as to all those points, but as to raising money
by taxation to lend to people on their farms and their merchandise, it seems to me that power is hardly deducible from any
constitutional clause or any constitutional authority.
Mr. PEFFER. I have not said one word about raising money
by taxation.
Mr. CHANDLER. Does the Senator think that if we can
issue Treasury notes to make these loans to the people, which
they very much need, we can raise money by taxation for that
purpose?
Mr. PEFFER. When we come to that bridge we will walk
over it together, I have no doubt.
Now, Mr. President, in conclusion permit me to express a profound appreciation of the courtesy extended to me by the Senate.
I assure you, sir, I do not desire to be known for my much speaking. It would have been much more agreeable and altogether
in accord with my inclinations to have listened while others spoke.
But I can not, and have no desire to relieve myself of what I regard as a sacred duty.
Before God and my fellow-men, I believe the country is facing
grave perils. The working people—that includes the farmers,
the mechanics, the day laborer, the men and women who perform the manual toil, the men and women who have opened our
farms, builded our cities, and opaned the great arteries of trade—
these, the most deserving people on earth, are in need of immeM7




45
diate attention on the part of the lawmakers, and they are ignored. They appeal to their party leaders and are thrust (aside
with an insolence that will breed resentment. These people are
loyal citizens of the Republic, and they are honest, brave men.
Wh$n they turn upon their leaders—and they will unless their
appeal is heard—their movement will be as that of a multitude
whose numbers alone will conquer. The people aroused are a
mighty host and can not be turned aside.
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o