arV 12800 CORNELL UNIVERSITY LIBRARY The contession of a trust magnate, ,. 3 1924 031 231 008 olin,anx Cornell University Library The original of tliis book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31 924031 231 008 THE CONFESSION OF A TRUST MAGNATE THE CONFESSION OF A TRUST MAGNATE BY ■ > GEORGE ALLEN YUILLE CHICAGO, ILLINOIS 1911 T COPYRIGHT Wn BY GEORGE ALLEN YUILLE Picture the combined navies of the world anchored off our seaboard cities^ the com- bined armies of the world in possession of our inland cities, envoys from each nation congregated at Washington partitioning our country, the entire population being appor- tioned as slaves to do the bidding of the conquerors. Would you be interested? An equally appalling situation confronts the people of this country to-day. Read of it in the following pages. CONTENTS chapter page Letter of Transmittal 7 I. The Eelation of Trusts to Evert Inhabitant 35 II. Ownership 53 The Evil§ of Concentrated Owner- ship The Blessings of Distributed Owner- ship III. The Great Conspiracy 75 IV. Money and Its Uses 107 V. The Panic of 1907 138 The "Aldrich-Vreeland" Currency Law The "Eeserve Association of Amer- ica^'. VI. The Eound-Up 156 VII. The Great Problem and Its Solution 164 VIII. In Conclusion 186 Appendix 305 TO THE NINETY MILLION NON-OWNEES OF TEUST INDUSTEIES. In this magnificent country of ours there is a growing unrest. Workers complaia of hardships in terms of employment and hous- ing accommodations, poverty is attendant upon many, and the cost of living has be- come oppressive to a large majority of the inhabitants. Formerly affluent people have been compelled to forego their accustomed luxuries and those previously in comfortable circumstances are now forced to practice the most rigid economy to make ends meet. While these conditions exist, it is noticeable that a comparatively few are amassing fabu- lous fortunes and becoming absolute dic- tators of the big business affairs and the government of our country. It is the generally accepted idea, fomented by some political leaders, that trusts, the or- ganizations, the instruments controlling the big industries of the country, are in some way responsible for existing conditions. The idea is also current that trusts exercise an undue 7 TEE CONFESSION OF A TRUST MAGNATE influence in the selection of representatives in government, — legislative, executive and ju- dicial, — and that they exact special privileges from government in return for bribes ex- tended to representatives. These commonly accepted ideas have caused action along legislative lines attempt- ing to control and regulate or destroy trust organizations. The effort on the part of the executives of the several governments, na- tional and state, to enforce these laws has practically brought big business to a stand- still, curtailed investment and precipitated a crisis in the affairs of the country, which, if not promptly and wisely handled, will disrupt our nation. As a nation we are the richest on the globe, we occupy the highest pinnacle in point of power, amongst nations. It is our form of government and our industrial development that have brought us to these positions. These are indisputable facts, and every loyal citizen must glow with pride in their con- templation. If there is cause for complaint of hard- ships, poverty and oppression on the part of individuals in this country of such wonder- ful wealth, it cannot be found in the instru- 8 THE CONFESSION OF A TRUST MA GNAT A ments that have produced this wealth or in the administration of government under ■which the instruments have operated. The cause must be found in something the aflSicted have neglected to do to bring about distribu- tion of the wealth produced. It is plainly eAddent that the complained of hardships, poverty and oppression, arise from non- participation in controlof the developing in- struments and the profits they produce. No, trusts are not responsible for existing hardships, poverty and oppression. Trusts are beneficent, the offspring of the best brains of our enlightened country, forward steps in the evolution of humanity. Trusts conserve labor, eliminate waste, and are the prime fac- tors in the wonderful upbuilding of our coimtry. No, government is not debauched by trusts. Trusts exact no special privileges from government. It is the duty of govern- ment, to foster and promote industry. Gov- ernment is instituted to protect owners against the raids of non-owners. It maintains a navy, a standing army and officers of the law for that purpose. The effort exerted by the owners of trusts to influence the selec- tion of representatives and control their ao- 9 TEE CONFESSION OF A TRUST MAGNATE tioiis has been exerted to prevent despoil- ment by non-owners. You complainants of hardships, poverty and oppression in this magnificently rich country are led astray by false leaders seek- ing to climb to place amongst you, using your woes as stepping stones; you are victims of the hypocrisy of unscrupulous intrenched owners seeking to extend and maintain their ownership through the use of the product of your thrift and energies. The cause of your troubles lies in your lack of ownership in the trusts, lies in the fact that the trusts are exclusively owned hyvery . few people. OWNEESHIP CONFERS PROFITS AND POWER OF CONTROL, MORE OWNERSHIP, MORE PROFITS AND GREATER CONTROL. This is fundamental in economics. Read it in the negative and see the cause of your hardships, poverty and oppression. NO OWNEESHIP, NO SHARE IN PROFITS AND NO VOICE IN CONTROL. Mark well these statements and let their full import sink into your minds, because, upon your thorough grasp of the statements 10 TEE CONFESSION OF A TRUST MAGNATE and your belief in their trutli depends the elimination of existing evils. Concentrated ownership of the trusts, not the trusts and their operations, is the cause of your troubles. Salvation from the existing hardships, poverty and oppression, can only come through a wide distribution amongst the whole people, of the ownership of the trusts, which are the instruments used to develop the resources of our country. These trusts, these instruments of development, create and absorb the profits of the whole country, and in obedience to the economic law, "Owner- ship confers profits," the few owners of the trusts appropriate,, to the exclusion of all others, the profits produced. Participation in profits, means prosperity in the degree of participation ; non-participation means hard- ships, poverty and oppression. The power of control conferred by owner- ship gives to the few the ability to fix the incomes of the many dependent upon the trusts for employment and to dictate the sell- ing prices of living commodities produced. Decreased expenditures for services. rendered and increased selling prices for products, in- crease profits. The income of every inhab- 11 TEE CONFESSION OF A TRUST MAGNATE itant of the Country is dependent upon the trusts, and every inhabitant, by necessity, consumes the products of the trusts. These conditions being true and having no share in 'trust profits, through having no share in ownership, need there be any won- der that the mass of the population of this rich country experience hardships, poverty and oppression? Trusts have become the very foundation of the nation's existence; attack them and the material interests of every inhabitant is at- tacked, destroy them and the nation is de- stroyed. Do you suppose for one moment that you can destroy them! You may sncceed in com- pelling a change in form, but no power lies in government to confiscate private property. If the time ever comes in this country when government deprives its citizens of the fruits of their efforts, anarchy will follow close upon the heels of the act. We, the own- ers of the trusts, fully understand the situa- tion and are simply fighting back to gain time for the working out of certain plans we have in mind. You are payinig the expenses of the litigation in the prices exacted for commodities. 13 THE CONFESSION OF A TRUST MAGNATE Why should yon destroy the trusts? Do you not know that Billions of dollars of bank deposits, your money, is invested in the se- curities of these same trusts that you are try- ing to destroy? Oh, the denseness of your ignorance! Your "Square deal" and "In- surgent" political leaders, your "Muck- raking" magazine contributors have stolen your reason and led you blindly into a situa- tion from which you can extricate yourselves only by the exercise of .great acumen and extreme forbearance. What are the complaints against the trusts? Surely the turmoil that hjas arisen in this country, rending it from coast to coast, is worthy of a little calm consideration on the part of every individual citizen in the light of common sense and reason. Lay aside your plows and reapers, drop your hammers and saws, stop measuring your tape and counting your buttons, lej; your pens and pen- cils rest for just a moment while you think and think hard on this vital problem, more vital and more urgent than you suppose. Dis- miss . from your minds all you have ever heard from the rostrum by political climbers, for it was only the noise they made in climb- ing; forget everything you have ever read 13 THE CONFESSION OF A TRUST MAGNATE from the pen of the "Muck-raker" — it was written to sell. What are the complaints against the trusts ? Trusts are charged with extortion in the prices they exact for their production; they are charged with monopolizing the fields in their several lines of endeavor; with fight- ing labor to keep down wage scales; with imposing hardships upon employes in their terms of employment and housing accom- modations; with controlling the election and appointment of legislative, executive and ju- dicial representatives; with bribing those representatives to extend special privileges; and so on down the list. Mr. Farmer, of whom there are some mil- lions, you enter into combinations with your fellow farmers for the purpose of storing and holding your grain until shortage in mar- ket supply forces a higher price; you will drive the legs off of a pig to get him to the market in which he will fetch the most. Do you stop to think how ill-equipped are most pf the people to pay the price you receive for your production? You would buy your neighbors' farms on all sides of you if you had the money and could drive a good bar- gain with them. Would you stop to think 14 THE CONFESSION OF A TRUST MAGNATE what they were going to do for a living after they sold out? D6 you pay your farm la- borers more than you are compelled, do you furnish them with parlor accommodations? No; they get no checks on the side out of your profits, and they sleep in the barn on the nice soft hay. Mr. Storekeeper, wholesaler and retailer, in fixing the selling prices of your commodi- ties, do you take into consideration the ability of your customers to pay the prices ; do you have two prices, one for the rich, another for the poor? Don't you get all the traflfic will bear? You get all that is coming to you even if you have to call in the Sheriff. If you are a storekeeper in a large city is it not the height of your ambition to have a red-front store in every part of the city with your name or trademark emblazoned across the roof in electric bulbs ? Nothing but your lack of money keeps you from having them. Should you buy other stores you do not stop to think you are endeavoring to monopolize the trade in your particular field. Is not the pay of your help down to barely living rates, and are you not continually combating applications for raises? There are no upholstered rockers in your stores for the use of your tired help. 15 THE CONFESSION OF A TRUST MAGNATE Mr. Householder, in your domestic life, where the needs and stresses of competitive business do not enter, why do you only pay your serving maids from three to six dollars per week of seven days, from dawn until any old time at night that suits your pleas- ure, with only a half day off on Thursday? Why do you provide for her housing the one six-by-eight room adjoining the kitchen and fronting the court? Mr. Farm Laborer, Mr. Storekeepers' Help, and all of you, not specifically men- tioned, as soon as you become farmers, store- keepers, householders or proprietors of any kind, you will follow in the same footsteps in the conduct of your business and your homes. Is there any great difference, except in de- gree, between the conduct of the business of the trusts and the conduct of the business of the individual citizen? You, my fellow citizens, are prone to mix Sentiment with the other fellows' business, you do not mix it with your own. Sentiment finds no place in business any more than in government. "When either business or gov- ernment relaxes its rigid front in the interest of any class, chaos results. As in(Jviduals we can allow our sympathies and sentiments 16 I'EE CONFESSION OF A TltVST M AGITATE full play; but in business as in government, no special privileges sbould be extended. And now about this thing called "Special privilege" which trusts are charged with ex- acting from government, and to secure which, it is charged, they control politics and bribe representatives. It is the duty of govern- ment to foster and promote industry, your in- dustry, my industry, trust industry, all indus- try. Government is instituted to protect ownership in property, your ownership, my ownership, trust ownership, all ownership. Government has performed its duty. It has fostered and promoted the industries of this country until now this country is the richest on the globe. What must be said of the ac- tions of government iu fulfilling the purposes for which it is instituted — the protection of ownership? Blindly following the leadership of demagogues that have sprung up amongst you seeking fame and fortune, you have caused government to attack my ownership, trust ownership, at the same time resting se- cure in the knowledge that government must protect your ownership. Special privilege!. You are demanding that government extend to you the special privilege of sharing in the fruits of my ownership without the assump- 17 TE^ 00NPE88I0N OF A TRUST MAGNATE tion by you of the responsibilities tliat go with ownership; that is, the investment of your money. Are you a nation of sand- baggers? Fighting for my very existence, I have used every means at my command to control the selection and actions of represent- atives in government, legislative, executive and judicial, in my efforts to defeat your attacks. Call it bribery if you will, I call it justifiable action in warfare. You have been told by your demagogues that all your hardships, poverty and oppres- sion would vanish with the "Busting" of the trusts. What is meant by "Busting" a trust? It means, the dissolving of the trust organization into its constituent parts; that is, compelling the several corporations form- ing the trust to conduct their operations in- dependently, the theory being that the sev- eral separated corporations would come into competition, resulting in increased wage scales and decreased selling prices of com- modities produced. A moment's considera- tion only is required to see the fallacy of this theory. Would the dissolution of the trust alter or change the ownership in the constitu- ent corporations ? Would the owners of those corporations, that now own the trust, con- 18 TEE CONFESSION OF A TRUST MAGNATE duct their business in competition with them- selves? The only results following the sepa- rated operation would be increased cost of production and consequent increased selling prices of commodities produced. No, my fellow citizens, "Busting'^ the trusts, the upbuilders of your country's pres- tige, cannot benefit you. Your only salva- tion lies in buying into the ownership of the trusts, thus placing yourselves in position to share in the profits they produce, and through sharing in those profits increase your ability to meet the high cost of living, the oppression' of which you now experience. One of you come with me to the head- ■quarters of these trust hives of industry ; get a change of viewpoint, it will cure your sore- ness. Take along some of the money you have hoarded in bank, you may decide to invest it. This is dividend day; I am about to receive the returns for the year on my investment in the stock of this trust. Here comes the treasurer. How much this year, partner? Fifty cents for each dollar you invested. Good! Bully! Great business! Friend, stack this fifty cents up alongside the three cents you got from the bank for a year's use of your dollar. I didn't work any harder 19 THE CONFESSION OF A TRUST MAGNATE for my fifty cents than you did for your three cents. We each had a dollar. The forty- seven cents difference lies in my being a stock owner and you being a bank depositor. I put one thousand dollars in the stock of this trust ten years ago, since which time the stock has been "Watered," so that to-day I have ten thousand dollars in stock on which I get every year five cents on each dollar, which is the same as getting fifty cents for eiach dollar of the thousand dollars I originally put in. We "Watered" the stock as our profits in- • creased, because it looked better to the peo- ple outside for us to be making five cents on each dollar instead of fifty cents.. The "Watering" made me worth ten thousand dollars instead of one thousand. They don't do such things down at the bank. You only get your little three cents once a year and you are worth no more to-day than you were ten years ago. And do you know where I got that first thousand dollars? I borrowed it down at the bank and paid them five cents a year for the use of each dollar. The bank paid you or some other "Guy" three cents and loaned it to me for five. Of course I have long ago paid the thousand dollars back 30 THE CONFESSION OF A TRUST MAGNATE to the bank out of the ttioney I made from the use of it. Look around you and see if you discover any hardships, poverty or oppression. All of these men you see are stock owners; they have just received their dividends for the year and they can buy all the beefsteak they want even at a dollar a pound. Government has fostered and promoted the interests of this industry, in common with all other indus- tries, and it was not bribed to do it. We are enabled to sell our production at high prices netting us handsome profits, thanks to the protective tariff laws enacted by a beneficent government. Government, national and state, using funds derived from general taxa- tion, is daily and hourly performing some act in the interest of industries. Inland water- ways are being developed, the Panama Canal is being constructed at the enormous cost of hundreds of millions of dollars, movement is now afoot to enact a ship subsidy law; I could go on to the end of time in a recitation of benefits conferred. It is the duty of gov- ernment to foster and promote industry, it cannot evade its duty; the country would die of dry rot if it neglected its duty. The 21 THE CONFESSION OF A TRUST MAGNATE development of inland waterways facilitates and cheapens the handling of the products of industry; the construction of the Panama Canal and the enactment of a ship subsidy law brings isolated foreign markets within our gi'asp and puts us in position to com- pete with foreign nations in the marketing of our productions. Who should profit from these benefits if not the owners' of the indus- tries, those staking their money in the sev- eral enterprises? For non-owners to appeal to owners for a division of profits on the grounds of poverty and need is childish, the act of beggars ; to compel government to force a division is to adopt the tactics of the sand- bagger. Look over there, outside the wall of de- stroyed confidence that is daily growing around our field of operations, — see that howling mob! They are non-owners, your fellows, gathered in countless thousands listening to the harangues of demagogues who are anarchists in talk if not in action. Hark ! Hear them ! Down with the trusts ! To jail with the robbers and oppressors! There, over yonder, is an advocate of the "Square deal." He is vehemently de- nouncing the "malefactors of great wealth," 23 THE CONWMSSim OF A TnVST MAGNATE wildly proclaiming against the "Ananiases" of industry. What is that raining down upon the assembled multitude like unto a veritable snow storm? Newspapers, magazines, pub- lications of every known kind and description, filled with contributions of "Muck-rakers" raking the trusts from stem to gudgeon, tell- - ing the people how they are suffering, widely advertising the jobberies of the get-rich-quick promoter. See the wall grow ! The pages of these publications contain, side by side with the confidence destroying stuff, advertise- ments of the ba,nks, appealing for the deposit of the people's money, each setting forth its superior facilities for the handling of that pioney and offering three cents a year per dollar for the use of it. Articles without num- ber are in these publications, warning the people against investing their money in — anything. Watch the wall grow ! Out of the twenty-seven thousand banks in existence today, eighteen thousand have been organized within the last dozen years. Deposits in that time have grown from five billions to sixteen billions of dollars. This sixteen billions of dollars belongs to those people you see out there frantically denouncing the industries of the country and they are piling it up in banks 33 THn CONFESSION OF A TRUST MAGNATU now at the rate of a billion and a quarter yearly. Tnrn your eyes away from the "harrowing scene and view again the activities within the wall. Another mine opened, pouring out its wealth for the enrichment of its owners; another railroad'built across the continent to earn dividends for its owners; another fac- tory built to supply the growing needs of the world and enhance the wealth and power of its owners. No cessation of industry here, no hardships, poverty or oppression here. The work goes on uninterrupted by the beat- ing storm outside. Picture yourself as an owner of stock in this trust receiving large dividends each year upon your investment. You are gratified at the returns, you are grateful to the repre- sentatives in government, who in their wis- dom have made such success possible; you feel like rewarding them out of your profits. What is your feeling toward the representa- tives, in minority, who have been fighting your progress, the profitable prosecution of your business? You would spend money to defeat the reelection of these Anarchists seek- ing to destroy the instruments which have brought the country to its present eminence 24 THE CONFESSION OF A TRUST MAGNATE amongst nations. Your antagonism to "Watering" capitalization has vanished; you appreciate the beauties of the system that enables you to convert the results of your talents and energies into the "Coin of the Eealm" or its equivalent. Your change of viewpoint causes you to regard as benefi- cent the acts of your representatives formerly considered dastardly ; and, entering into own- ership of the country's industries, would cause the same revulsion in the mind of every present non-owner. What did you say? You are convinced, you want to buy my stock? No, my friend, I have tasted too long the sweets of ownership to be willing to part with it now. Put your money in your pocket, take it back to the bank, I will get it when I want it. The bank will give you three cents a year per dollar, I will borrow it for five and make fifty. It is the business of the bank to loan money. Returning from my excursion into the camp of the enemy in company with one of your number, again I say to you, — for the sake of your women, your children and your chil- dren's, children, — use your money now depos- ited in bank in buying into the ownership of the trusts and thus share in their profits and 35 THE CONFESSION OF A TRUST MAGNATE have a voice in control of their operations. It is your only salvation. In the same breath I say to you, in the pres- ent situation, you cannot buy, however strong your desire, and, if you could buy; you should not do so in the present condition. of their capitalization. There is just one action,. and one only, which you can take, that will cause present owners to market to you a large por- tion of their holdings, after they have been . compelled to squeeze the "Water" from the capitalisation at their own cost. You have the power now; but you will lose the power if you delay in taking the action. YOUE POWER LIES IN THE MONEY YOU HAVE ON DEPOSIT IN THE BANKS. You scoff at the statement that you can- not buy trust stocks and point to the enor- mous daily trade on the stock exchanges of the country. Eeserve your judgment. This traffic has its purpose, but the purpose is not to permit outsiders to acquire ownership of the instruments that produce and absorb the enormous profits of the country. The traffic is between present owners and is conducted for three purposes, viz. : First^To create the impression of ready convertibility; that is, to show the banks 36 THE CONFESSIO N OF A TRUST MAGNATE a ready market for the securities they own and hold as collateral on loans. Second — To make market quotations on which banks base their loans. Third — The absorption of weak owners by strong owners. Yes, you can buy and own, temporarily, trust stocks ; but woe unto you if you attempt it in the present situation — ^you will be ab- sorbed. Think ! "Why should owners sacri- fice their ownership in the things that pro- duce profits, as long as they have exclusive control of the money with which to maintain that ownership? "Why should they desire to exchange places with non-owners? "Owner- ship confers profits and power of control." "No ownership, no share in profits, no voice in control." Have you ever subjected to analysis your reasons for depositing your money in bank instead of investing it in some profit pro- ducing channel? You see the owners of the industries of your country waxing richer and richer each year from the use of money, and yet you continue to deposit your mojiey in bank, receiving only three percent per annum income. You are afraid of losing your money 27 TEE CONFESSION OF A TRUST MAGNATE if you invest it ; you have no confidence in cor- poration securities as mediums for invest- ment. That is it ! Your confidence has been destroyed. Then, it is destruction of your confidence that is the underlying cause of the oppression you experience to-day. Your destroyed confidence limits your income to three percent per annum on your savings, the result of your thrift and energies; your de- stroyed confidence keeps you out of the own- ership of the industries of the country, which ownership absorbs the profits of the country ; your destroyed confidence permits the few to fix your incomes, dictate your living costs, your terms of employment, your housing. I am come to tell you, the destruction of your confidence has been and is being designedly promoted for the sole purpose of forcing you out of ownership and forcing your surplus earnings into banks for the use of a few in acquiring and maintaining the exclusive own- ership of existing industries as well as the industries to be developed in the future. You are the victims of a gigantic conspir- acy, the object of which is the acquirement of ownership of all of the industries of the coun- try, and through that ownership, the absorp- tion of all the profits produced by the whole 28 THE CONFESSION OF A TRUST MAGNATE people. The effect of tlie workings of the conspiracy is to reduce the great mass of the population to a wage-earning basis. Every inhabitant, either knowingly or unknowingly, is being used in the furtherance of the ends of the conspiracy. It has assumed world-wide proportions, and most of the industrial enter- prises as well as a large part of the unde- veloped opportunities have been acquired. Plans for the maintenance of ownership, against all comers, have been adopted and are daily being perfected. Through the destruc- tion of public confidence in corporation se- curities as investment mediums, the control of the use of the earnings of the country has been acquired, resulting in the existing ex- clusive ownership and control of industries. You must take steps to restore confidence in order to defeat the conspiracy, and there is no time to be lost. What is it that gives you confidence in banks as custodians of your money? It is the supervision and inspection of government, national and state. It is equally the province of government to supervise and inspect (not regulate and con- trol) the operations of industrial corpora- tions, to the end of furnishiag you opportuni- 39 THE CONFESSION OF A TRUST MAGNATE ties for the safe investment of your money, so that you can enter ownership, and thus appropriate the profit and power of control arising from the use of your money. This does not mean that you will proceed to have government force control of existing corporations. Control is one of the rights of ownership, and government must protect owners in the right to control their property. Under our form of organization, government governs by consent of the governed, and own- ers of property must consent before govern- ment can assume control. Undertaking to force trusts under the control of goverrunent is as hopeless as the undertaking to "Bust" trusts has proven. ' You should proceed to have the several governments, national and state, each, organ- ize "Supervising and Inspecting Bureaus" for the voluntary use of those desiring to pro- mote new industries of a magnitude re- quiring an appeal to the general public for the use of its money. The operation of these Bureaus will furnish opportunities for the safe investment of money now hoarded in banks and the withdrawal of money from the banks for investment in these opportunities will automatically compel owners of existing 30 THE CONFESSION OF A TRUST MAGNATE industries to beg for admission to the Bu- reaus and offer their securities for sale. Con- ' fidence will be restored, your direct invest- ment in the existing industries will follow, resulting in a wide distribution of owner- ship and a consequent wide distribution of profits and control. When you become trust owners, if you are not as black as you paint me, there will be no more hardships, poverty and oppression. Go with Ta6 to the end of this volume and I will show you in sequence : First — The relation of trusts to every inhabitant; how every person either di- rectly or indirectly, but finally, is depend- ent upon them for his or her income ; how trusts fix the prices of all living commodi- ties. The falsity of the commonly accepted theories accounting for high prices : the true cause of the oppression from high cost of living. Second — The evils of concentrated oivn- ership of the industries of the country, the blessings of widely distributed ownership. The country cursed with an hungry horde of sympathizers ; Business a game. Owner- ship the summum bonum of existence, the mainspring of endeavor — its rights must 31 THE CONFESSION OF A TRUST MAGNATE not be abridged. Owners should receive commendation for their efforts to prevent enactment and enforcement of laws detri- me^tal to ownership. The people have the money with which to acquire ownership, but its use is exclusively controlled for the purpose of acquiring and maintaining ex- clusive ownership. The ideal condition. Concentrated ownership the curse of the Old World. Two kinds of ownership, actual and nominal. Third — The great conspiracy to obtain and maintain exclusive ownership of the country's industries. The great mass of the population to be reduced to a wage- earning basis. Every inhabitant used, their best traits turned to good account. Government powers freely used. Destruc- tion of public confidence in corporation se- curities as investment mediums, the issu- ance of varied kinds of securities, manipu- lated trade on stock exchanges, control of banks, control of channels of publicity, the foreign trade in securities, stock watering, "corners" in food products and leading staples. Postal Savings,— all fill their re- spective places in the workings of the -con- spiracy. Undeveloped resources, private 33 fa's CONFESSION OF A TETJSf llAGNATJH and public, being appropriated. Panics precipitated to further the ends of the con- spiracy. Fourth — Money and its uses. Deposits the total banking power of the country. The ownership of bank deposits. The ma- chinery devised for the concentration of bank deposits. The uses made of deposits. Increase in banks and deposits. The coun- try has arrived at forks in the economic road — a choice must be made. Fifth— The Panic of 1907. The '' Aldrich- Vreeland" Currency law, the crowning act in the conspiracy. "The Eeserve Associa- tionrc^f„.America. " The "Manufacturing Aristocracy^ in sight. Sixjt— The Eoun(L«p7^ SevVfrtn^The greaL^oblem and its so" lutio»t,„^ie poliey^[^l)t4ihould^e adopted A concr^^^aBB^tguBrovideepp^tiUlities for the safe investmem^l!ftMBaig3j^ireglr1>f its owners. Eighth — In conclusion: My reasons for making this confession? Eecent developments in your attacks upon the industries of the country; your avowed intention to adopt the Initiative, Referendum and Recall principles in government and to 33 THE CONFESSION OF A TRUST MAGNATE elect Senators by popular vote, thus enabling you to institute and pass upon all legislation and keep in office only those doing your de- structive bidding ; and, your undoubted deter- mination to put me behind the bars, — all prompt me to make this confession. I feel certain when you grasp the great truth that all the ills which now afflict you arise from your non-ownership in the indus- tries of the country, you will take the neces- sary steps to acquire ownership. I feel cer- tai]j when you become owners you will dis- continue your attacks upon your industries; you will not wish to empower non-owners to destroy the value of your ownership and your desire to put me in jail will be abated. Also, I have seen a great light; I have awakened from the hypnotic spell of prece- dent that has bound me and my class; I no longer feel that I have been Divinely selected to handle your affairs, control your destinies. I am sick of the hypocrisy practiced in big business, of the ignorance, the gullibility of your political leaders. I see that "Equal op- portunity" in this fair land has become only a platitude. My heart goes out to you in your tribulations. 34 CHAPTER I. The Relation op Tkusts to Every Inhab- itant. The average citizen of the United States is a self-satisfied individual. His country has done big things. The richest nation on the globe carved out of a wilderness in less than a century and a half, a young giant setting the pace -for the balance of the world. So absorbed has he been in counting the great deeds of his country he has failed to realize the gradual usurpation of his heritage. He has noticed the rise of the trusts, the absorp- tion by them of the industries of the country, the gradual lessening of individual oppor- tunity. He has been lulled to sleep by his big business and political leaders with the prom- ise of changes for the better, and while he has slept these leaders have been exceedingly busy. He recognizes his growing oppression in the midst of great national prosperity and has latterly become very talkative on the sub- 35 THE CONFESSION OF A TRUST MAGNATE ject. He does not yet understand the cause of Ms oppression, and his leaders, in aiding him in his search for the cause, direct his attention in all directions but the right one. He has the growing feeling that the trusts are in some way chargeable with his troubles but fails to satisfactorily trace the connec- tion. He redoubles his efforts, sharpens his wits in his endeavor to escape oppression, but without avail. He does not recognize the fact that trusts have become the foundation of all business, the fixers of all prices, the arbiters of all incomes, the absorbers of all profits. Let us examine the situation; let" us get at the true cause of high prices, the true cause of oppression from high cost of living. Mr. Farmer, you are credited with being the most independent citizen amongst us. You are entirely dependent upon the trusts for your existence. You do not market your production direct to the consumer. You sell your grain to the milling trust, your cattle and hogs to the beef trust, your poultry, eggs, milk and butter to the several consolidations throughout the country handling these prod- ucts. Your cotton goes to the spinners' trust for use here and for shipment abroad. You 36 THE CONFESSION OF A TRUST MAGNATE market your production by the -use of the facilities furnished by the railroad trust. Prosperity has attended your efforts during recent 'years and you should be prosperous; you own your land, you are proprietors in business. While you are proprietors in busi- ness, owning the land that produces what ultimately becomes the food and clothing of the whole people, through the agency of the trusts, you are still employes of the trusts. You supply the trusts with the necessary raw material required by them to supply the daily needs of consumers. Instead of paying you wages per hour or day, they al- low you so much per bushel, pound or gallon for your production. They fix your income just as much as they fix the income of the day laborer employed in their mills and pack- ing houses, or the day laborer employed in digging their iron ore and coal from beneath the ground. Do not rest too securely in your present prosperity. The big owners of trust industries need you in their plans only a little longer. You and your influence elect the majority representation in legislative bodies, and your aectuiescence iri the existing condition of the country is being purchased by the liberal prices paid you for your pro- 37 THE CONFESSION OF A. TRUST MAGNATE duction. The time is coming when trust own- ers will have acquired the ownership of all industries and natural resources of our coun- try and will have plans ■ perfected for the maintenance of such ownership. When that time comes they will no longer need your sup- port, and your income will be curtailed. While there is yet time, you should acquire ownership in trust industries, which dictate your income and fix your living cost, and thus share in their profits andihave a voice in con- trol of their operations. Mr. Manufacturer, Storekeeper, Wholesaler and Eetailer and Mr. Builder, do you think you are independent business men? You are employes of the trusts engaged in market- ing their products to consumers. Your wage is the difference between your purchase and selling price, less your expenses. Mr. Manufacturer, what article entering into your production is not purchased from a trust! Mr. Storekeeper, what do you sell to your customers that is not produced by a trust or that you do not buy from a trust ? Mr. Builder, what article enters into the creation of a structure the component parts of which are not produced by a trust? 38 TEE CONFESSION OF A TRUST MAGNATE In your effort to make the most from your business, you advance selling prices of the commodities you produce and sell, and keep your labor and other expenses down to the lowest, possible point. Ever watchful, the trusts see your growing income and raise their selling price, your purchase price, and thus absorb your profits. Trusts thus deter- mine your income and dictate consumers' prices. Mr. Lawyer, Doctor, Minister, and all of you rendering either professional or personal service — all of you not directly in the employ- ment of trusts or their agencies — extend serv- ices to trust employes whose ability to pay is fixed by their incomes derived from the trusts. Mr.' Farm Laborer, Storekeeper's Help, Builder's Help, Factory Help, your employ- ers are working for the trusts, and can only pay you in proportion to what the trusts allow them to make. These trusts, these fixers of prices of your living necessities, these dictators of your in- comes, these absorbers of profits must be de-' stroyed? So say your demagogues. No! They cannot be destroyed; they are a part of you and you are a part of them. You must 39 TUB CONFESSION 6P A TRUST MA&lfAfB foster them; you must BUY them. Enter into their ownership and have a voice in the fixing of prices, a voice in determining your wage, a share in the profits they produce and absorb. And the men who own and operate these trusts. Your leaders say they must go to jail. No ! Enter into partnership with them ; let them make you rich as they have made them- selves rich. They are engaged in the laudable effort to make the most of their opportunities, the same as each of you is engaged. Is that a crime? Should you put them behind the bars"? In your efforts to account for the constant- ly increasing prices exacted for your living necessities, you have been searching far and wide, and the numberless reasons assigned have furnished food for endless discussion, which has had the tendency to inflame your minds without finally furnishing any satisfac- tory solution of the problem. The discussion has narrowed the reasons down to three, viz. : Lack of supply to meet the demand, the middlemen, and increased cost of production. Let us analyze these rea- sons in order, in the light of knowledge from the inside. 40 THE CONFESSION OF A TRUST MAGNATE First — Lack of supply to meet the de- mand. Ton are probably aware of the fact that the valne of annnal exports to foreign countries of food products, products of manufacture, and raw materials of all kinds, reaches in the aggregate nearly two billions of dollars. You are also probably aware of the fact that the value of prod- ucts held in storage in this country aggre gates hundreds of millions of dollars. These facts should be sufiS.cient to cause you to dismiss from your minds the thought of lack of supply. The trade with foreign countries is profitable to the industries of this country, and our government is doing all it can to stimulate and extend the chan- nels of that trade, to take care of our con- stantly increasing surplus production. The surplus stocks held in storage in this coun- try are necessary to provide against lean years and to regulate prices. It is true, the export trade acting as a safety valve, and the storing of products acting as an equal- izer, enable the owners of industries to maintain high prices, resulting in great profit to the industries. If you are op- pressed by these high prices, it is because you have no ownership in the industries 41 ' THE CONFESSION OF A TRUST MAGNATE entitling you to share in their profits. To curb foreign trade, to do away with storing facilities means destruction of the indus- tries by which you live. Second— The middlemen. If we, the own- ers of the trusts, the instruments which pro- duce what the middlemen convert and mar- ket to you, succeed in creating the impres- sion sufficiently strong in your minds that high prices arise from the greed of the mid- dlemen, we will be only too glad to enter the field of the middlemen and supply your wants direct. We are doing this now to some extent with our subsidiary organiza- tions. By doing this we would be able to absorb all the present profit of the middle- men. No; the middlemen are not respon- sible for high prices — theirs is a hard road to travel. They are in direct touch with you as consumers and receive the abuse en- gendered by your oppression. They are our marketing agencies, our outriders, our scouts, sounding your ability to pay. Some of them, isolated cases, in the endeavor to iACrease their profits above what we allow them to make, cheat you by adulteration, short weight and measure. Visit upon those your wrath to the fullest extent, but 43 THE CONFESSION OF A TRUST MAGNATE support your middlemen, as there is -some satisfaction in proprietorship even such as theirs. In the meantime, acquire owner- ship in the trusts, and through your owner- ship share in profits and thus be enabled to pay, without oppression, the prices the middlemen are compelled to exact. Third — Increased cost of production. The cost, per unit of production, of all initial commo'dities has decreased within the last decade. This is true, notwithstanding the enforced increase in wage scales. This is owing to the introduction of improved mar chinery with which labor works ; to the dis- coveries and utilization of values in resid- uals, formerly lost; to the elimination of waste in material, due to improved meth- ods of handling; to the increase in quan- tity produced, thus decreasing the item of general expense per unit; and to the sav- ing resulting from the combination of nu- merous separate enterprises. The amount paid for labor, per unit of production, is constantly decreasing, notwithstanding the increased wage scales. You should simply know the truth of these statements witout resort to figures or records. If the effect of years of educa- 43 . TEE CONFESSION OF A TBU8T MAGNATE tion, experimentation, scientific research and development of inventive genius is to increase the cost of production of living necessities, humanity should back-track and take another route in its upward march toward a higher civilization. It is true, the cost of production of the fin- ished commodity, ready for consumption, has increased ; but the increase is due to the arbi- trary increase in cost (to the finisher and marketer) of the initial commodities entering into the production of the finished commodity. This arbitrary increase in cost of the initial commodities has been imposed by the owners of trusts through the power of exclusive control of production of initial commodi- ties. Example: The cost to produce a building or structure of any kind has in- creased, due to the increased cost to the builder of the structural steel, the lumber, the bricks, the initial commodities enter- ing into the finished commodity. While the cost of production of structural steel, lum- ber, bricks has decreased, the owners of the trusts producing the several initial commodi- ties named have increased selling prices to their marketing agent the builder, thus in- 44 THE CONFESSION OF A TRUST MAGNATE creasing the cost to produce buildings or structures. It is plainly evident the owners of trusts, through the exercise of their power to fix selling prices of initial commodities, thus dic- tating the prices of finished commodities, are absorbing the benefits accruing from educa- tion, experimentation, scientific research and development of inventive genius. Acquire ownership in the trusts and partake of these benefits. The railroad trust is now before the coun- try demanding increased rates to offset its claimed increased cost of production of the commodity it furnishes — viz., transportation. The cost to produce transportation, per unit —that is, per ton per mile—has decreased, and is constantly decreasing. This is true, notwithstanding enforced increases in wage scales and higher prices paid for materials and supplies entering into construction, main- tenance and operation. The item of expense for labor, per unit, has decreased, notwith- standing the increases in w'age scales. These results have been attained in part through the elimination of grades, the adoption of cars of increased carrying capacity, the instal- lation of enlarged power units, all united, 45 THE CONFESSION OF A TRUST MAGNATE enabling tlie movement of enormously in- creased ^tonnage per train, requiring no in- crease in labor. The tonnage to be moved has always increased faster than the facilities for its movement, guaranteeing large immedi- ate returns upon investment in improved facilities. It must not be supposed the railroad pays retail or even wholesale prices for the com- modities it consumes. It is a direct customer of the original producer, due to its enormous trade. The railroad pays only cost for the transportation of its material and supplies. Large saving has accrued to existing sys- tems from the merging of former separate lines. The expenses and losses attendant upon competition have been eliminated and numbers of complete expensive managements have been abolished. Yes, the cost to transport one ton one mile is lower today than ever before. Proof is found in the fact that interest and increasing dividends are being regularly paid on con- stantly increasing capitalization. However, the need for increased rates is great and ur- gent, and it comes about in this way : The owners of the railroads, the big control- ling owners, have long recognized the grow- 46 THE CONFESSION OF A TRUST MAGNATE ing demand in the public mind for govern- ment ownership of the railroads. A master mind amongst these owners has been for years merging separate lilies into systems, dividing territory and maintaining territo- rial neutrality. One system has not been per- mitted to encroach upon the territory of an- other system, competition has been practically eliminated, and the whole railroad situation now is in prime condition to be surrendered to the government, except for one thing. In the acquirement of the constituent parts of existing systems it has been necessary to issue quite an amount of stocks in excess of the value of tangible property ; that is, consider- able "water" has been poured into the capi- talization of the existing systems. The enor- mous expansion of the industries of the coun- try during recent years and the exercise of the power to advance rates, gained by concen- tration of ownership, have furnished earnings on the "watered" capitalization, and it has become valuable in the hands of its owners. These owners fully understand the first step necessary to be taken by the government in its acquirement of the railroads will be to make a valuation of existing tangible prop- erty. These owners know that such a valua- 47 THE CONFESSION OF A TRUST MAGNATE tion, even on the b^sis of cost to reproduce at present market prices, would not produce a sum equal to present capitalization; they Jcnow the necessity would arise to sacrifice capitalization down to the valuation figures; they know the sacrifice would have to be in stocks they own not in bonds owned in foreign countries, by home investors and by the banks. The. only way to prevent the sacri- fice is to produce, in advance of valuation, sufficient tangible property to equal the fore- seen deficit, without further increase of capi- talization. This necessarily means the prop- erty must be created from earnings in excess of present earnings, as present earnings are required for present interest and dividend requirements; hence, the urgent need for immediate increase in rates. This accounts for the short-term notes railroads issue in preference to long-time bonds. They are an- ticipating earnings. These owners will ultimately win in their demand for increased earnings. Government- assumption of control of private property, by force, equals confiscation of private prop- erty. The power does not lie in our form of government to place a limit on the fruits of its citizens' endeavors. Government is insti- 48 THE CONFESSION OF A TRUST MAGNATE tuted to protect the rights of ownership, and the great right of ownership is control of property owned. If government arbitrarily and unjustly uses its power to prevent in- crease of rates, owners will increase net earn- ings by decreasing expenses; that is, will reduce wage scales and curtail facilities. Nation-wide warfare with labor will ensue and the conduct of the business of the coun- try will be in chaos. Who will suffer the most? The interests of the whole people are inextricably interwoven with the interests of the owners of the industries of the country, and the material welfare of the whole people is dependent upon the success of those in- dustries. If oppression follows in the wake of indus- trial success, it must be on account of non- ownership in the industries. Let the rail- roads raise rates ; but in the meantime take steps to acquire individual, not governmental, ownership, to the end of sharing in the profits produced by increased rates, and thus avoid oppression. Government ownership of rail- roads would withdraw from the whole people one-half of the profits produced by the whole people, the acquisition of which profits is the incentive to endeavor. • 49 T HB CONFESSION OP A TRUST MAGNATE The inevitable conclusions to be drawn from the foregoing discussion are : High prices are caused by the praise- worthy effort on the part of everyone to better his or her condition, to make the most of his or her opportunity. Everyone is responsible. High prices are both the cause and effect of high prices. Owners raise prices to ia- crease profits, labor raises prices to in- crease income in the effort to escape op- pression induced by high prices. Owners raise prices to meet the demands of labor. High prices cause high prices and are the effect of high prices. "High prices" and "Oppression" are not "Siamese Twins," inseparable. "High prices" is not the cause of "Oppression," Owners of the industries of the country, who share in the profits produced by high prices, are not oppressed, although they pay ruling high prices. Insufficient income is the cause of op- pression. Abandon all attempts to have govern- ment control or regulate the operations of 50 . THE CONFESSION OF A TRUST MAGNATE the industries of the country in the effort to reduce prices of living commodities. Government cannot do it. Turn your attention and the attention of government to increasing your ability to pay high prices, and thus escape oppres- sion. The owners of trusts, in their efforts to increase profits — that is, to better their condition, to make the most of their oppor- tunities — use the power of control, con- ferred by ownership, to raise prices. The People, laboring under the mistake that oppression is caused by high prices, at- tempt to use the power of government to regulate and control the acts of trust own- ers ; hence, the existing warfare. The people, now seeing that trust own- ers are only exercising their inalienable rights of ownership, should abandon their warfare upon the rights of ownership, and become owners, participating in the bene- fits arising from the exercise of the rights of ownership. When your attention is specifically directed to the fact, you cannot fail to see that the progress and happy development of the whole people is dependent upon their sharing 51 THE CONFESSION OF A TRUST MAGNATE in the ownership, profits and control of the country's industries. It is through the efforts of the whole peo- ple that the country and its resources are developed, and unless the whole people are permitted to share in ownership according to their respective ability and thrift, they cannot share in the prosperity which their efforts produce. Ownership is the only cure for the ills arising from non-ownership. 53 CHAPTEE 11. OWNBESHIP. The Evils of Concentrated Ownership — The Blessings of Distributed Ownership^ Humankind, in common with animal crea- tion is prone to strike at the visible instru- ment inflicting pain or discomfort, without pausing to determine the source of the affic- tion, or without endeavoring to change posi- tion and thereby escape punishment. Human- kind is also prone to look without for the source of its troubles, rarely ever being will- ing to concede the source may be within. Troubles demand sympathy. If troubles are widespread, good sympathizers gain high place and lucrative returns from the troubled. To remove troubles, means, to sympathizers, loss of occupation. Our country is today cursed with an hun- gry horde of sympathizers climbing to wealth and position upon the woes of an afflicted community. More woes, easier the ascent. 63 THE CONFESSION OF A TRUST MAGNATE The sympathizer, who has chosen the polit- ical route for his ascent, tells you the trusts are afflicting you, and counsels their destruc- tion. He must know that trusts are the great agencies of industrial development by which you live and move. He must know that gov- ernment which is all of you in concerted ac- tion, cannot destroy the foundation of your existence without destroying each and every one of you. To show you the source of your troubles within yourselves, arising from your rigid refusal to acquire ownership in the in- struments of your industrial development, thus sharing in the profits they produce, means loss of his occupation as sympathizer. The sympathizer, choosing the literary- road to his eminence — and his number is le- gion — trots out for your inspection the doings of the get-rich-quick promoter, points out and magnifies your troubles and inflames your minds against the owners and indus- tries of your country. He must know he is destroying your confidence in the integrity of the men and agencies upbuilding the coun- try, and, through the destruction of your con- fidence, is preventing you from sharing in the prosperity of your country. The banker sympathizer, choosing the use 54 TEE CONFESSION OF A TRUST MAGNATE of your money as his highway to his exalted position of wealth and power amongst you, counsels retrenchment in your expenditures and urgently appeals to you to save, save, and put your surplus earnings in bank. He uses your fear of impending sickness, of tem- porary loss of employment, the dependency upon you of your loved ones, in his arguments to induce you to open a hank account. He offers you the magnificent return of three per cent per annum for the use of your money. He does not tell you he uses your money to buy for himself and his bank the things that produce profits and contribute to his riches; the things which, through your non-ownership, produce your hardships, pov- erty and oppression. He does not tell you when you deposit your money in bank in- stead of investing it in some profit-producing channel, you are forging the fetters that bind and gall you. And the Insurance sympathizer, who goes farther than all others. He sympathizes with your loved ones after you are dead. He does not tell you he uses your premiums to create and own industries, the exclusive ownership of which, thus acquired, oppresses you and yours. He does not tell you the same pre- 55 THE CONFESSION OF A TRUST MAGNATE miums directly invested by you in profit- producing mediums would relieve the oppres- sion of you and yours while you lived and provide tor your family when you passed' away. You are living in a hypocritical age; very little is what it seems to be. The necessity for straight, original thinking is becoming greater each day. If you do not think for yourselves, the hungry horde of sympathizers will devour you. Let us examine the situa- tion with the searchlight of truth. What are the prime evils commonly charged' to the trusts? Monopolization of the industries of the country, by which prices of living commodi- ties are controlled, resulting in high cost of living and consequent oppression of the great mass of the population. Child Labor and all its attendant ills. Hardships imposed upon Labor in its terms of employment and housing accom- modations. The debauchery of legislative and judi- cial bodies. Humankind must discriminate between the instrument inflicting punishment and the source of the punishment. Eeasoning pow- 56 THE PONFESSION OF A TRUST MAGNATE ers are conferred upon humankind for that purpose. Having discovered the true source of punishment, the instinct of self-preserva- tion, if no higher attribute, should prompt a change in position in order to escape punish- ment. Trusts are instruments wielded by own- ers. Trusts, in their monopolization of indus- tries, confer benefits upon humanity. Waste is eliminated, losses of competition are abolished, and labor is conserved. Concentrated ownership of trusts is the ' source of your punishment, trusts are in- struments inflicting punishment, and your failure to change position is the cause of your receiving punishment. Then you are wrong in attributing to the trusts the evils that afflict you, and the war- fare you are waging on trusts is wrong. You have been deceived ; the evils that aflflict you are chargeable to the concentrated ownership of trusts; in other words, your lack of owner- ship in trusts. Who permits the concentration of owner- ship of the trusts ? By your rigid refusal to enter into ownership of the industries of the country, and through your custom of deposit- 57 THE CONFESSION OF A TRUST MAGNATE ing your money in banks you not only permit the few to monopolize ownership, but you furnish the money with which the ownership is acquired and maintained. To escape pun- ishment you must become wielders of the in- struments inflicting punishment; you must become owners in the trusts. Your punishment is not abated by the plea of destroyed confidence in corporation securi- ties as mediums for investment. It is the de- struction of your confidence that has forced you out of ownership and forces your money into banks for the use of the few, and present owners depend upon the continuation of your destroyed confidence for the maintenance of their ownership. You must take steps, with the assistance of government, to restore your confidence in cor- poration securities, in order that you may be provided with opportunities for the safe in- vestment of your money, thus enabling you to withdraw it from the control of the few who are using it for your -oppression. Let us analyze the evils of concentrated ownership of trusts. In the laudable effort to improve their con- dition, make the most of their opportunities, owners take advantage of all possible factors 58 TEE CONFESSION OF A TRlfSf MAGNATE to increase their ownership and increase their profits. They take advantage of your igno- rance on matters financial; they give hypo- critical explanations of their actions. Using the power of control, gained through exclu- sive ownership, which you permit and abet, they increase prices of your living commodi- ties, employ cheap child labor, keep down wage scales, impose seemingly unnecessary hardships upon Labor and provide it with inadequate housing facilities. While their effort to improve their condi- tion, make the most of their opportunities, is praiseworthy, the methods they adopt in so doing are open to question. It must be admitted, in our present state of development, the possession of property or money is the summum-boniun, the one great aim of existence. If it was not for this urge within us, there would be little to life. Ad- mitting the right of everyone to put forth every endeavor to improve his or her condi- tions of life we are confronted with the fact that we are all responsible for the existing evil conditions. Child Labor arises, prima- rily, from the desire on the part of parents to improve their condition and the 'condition of their children. This desire furnishes the 59 THE CONFESSION OF A TRUST MAGNATE children for employment, and owners, ever watchful for opportunities to improve their own condition, furnish the employment. Child Labor is wrong, from all points of view, and every effort should be exerted to do away with it. Parents should be brought to a realization of the fact that no condition is warrant for offering children for employ- ment. Ceasing to provide children for em- ployment means employment of more adults at the higher wage scales. Child Labor and all its attendant ills should be placed squai'e- ly upon the shoulders of parents who are re- sponsible for the existence of children and whose duty it is to nurture them to the proper point of self-support. The desire for improved conditions prompts Labor to demand increases in wage scales. When increases are enforced, owners raise prices of products to offset, and too often the demands of Labor, involving increased ex- pense to owners of only thousands, furnish the excuse to owners to raise prices netting hundreds of thousands, and so the intermiaa- ble circle goes on. Owners will always win. Exclusive control of both the channels of em- ployment and prices of products, gained 60 THE CONFESSION OF A TRUST MAGNATE through ownership, confers upon them the power to win. You must grasp the fact that business is a game, played the same as any other game. No player, in any game, should expect or de- mand consideration from opponents. Senti- ment finds no place in business. In our pres- ent stage of development, owners in business owe nothing to non-owners. Let us hope, some time, the "Spirit of Brotherly Love" will enter into business; but in the mean- time, non-owners should become owners and partake of the benefits conferred by owner- ship, and thus escape the punishment meted out to non-owners. You owners of money that deposit it in bank for the use of the few are primarily responsible for the evils of concentrated own- ership of industry that afflict the great mass of the population. View the blessings of widely distributed ownership. The entrance of employes — and the whole population are employes — into the ownership of the instruments controlling the channels of employment and dictating the selling prices of living commodities, would convert em- 61 THE CONFESSION OF A TRUST MAGNATE ployes into proprietors, sharing in the profits produced by their efforts, and having a voice in the control of the instruments now being used for the oppression of employes. Through sharing in profits, the income of parents would be increased, removing the claimed necessity for offering their children for em- ployment; the participation in control of the operations of the instruments would tend to maintain selling prices of products at fig- ures not oppressive, and would mitigate, if not entirely remove, the present imposed hardships in terms of employment and hous- ing accommodations. The conversion of em- ployes into proprietors, sharing in profits, would introduce the element of self-interest into the consideration of demands for in- creased compensation for services rendered. The demands would be gauged by the effect on profits, whereas now there is no limit for demands, labor having no interest in profits. Under the existing condition of concentrated ownership, yielding to the demands of Labor increases owners' profits through the excuse furnished owners to increase selling prices of products; thus, the advances in wage scales become the cause of increased oppres- 63 THE CONFESSION OF A TRUST MAGNATE sion of both the recipients of the advances and other consumers of products. Going back to the consideration of the evils of concentrated ownership, the one remain- ing for consideration, viz., the debauchery of legislative and judicial bodies. It Tias been said the ownership of property, in our pres- ent state of development, is the summum bonum, the great aim of existence. Owners have been very successful in keeping from the statute books laws detrimental to owner- ship. Where detrimental laws have slipped through, owners have successfully opposed enforcement. For this, they should receive your commendation. Everyone, sometime, in some way, hopes to become an owner of some- thing. This hope is the mainspring of en- deavor. When you become owners in the in- dustries of the country, you will be grateful that your rights of ownership have not been abridged, that you have a free field in which to make your ownership yield fruit abun- dantly. If at times you have thought owners were prospering beyond their due, and some- thing should be done to control their actions and abate their prosperity, the thought was engendered by your view-point. Change your 63 THE CONFESSION OF A TRUST MAGNATE view-point from non-ownership to ownership, and actions of your representatives, formerly- considered dastardly, become commendable. It would be folly to so insistently urge upon you the acquirement of ownership, if you did not have the money with which to acquire it. You own the money, but you have failed to invest it; your confidence has been designedly destroyed to keep you from in- vesting it. Money must be invested direct by the owners of money in some profit-producing medium before owners of money can secure adequate compensation for their efforts. You own the money; sixteen billion dollars of money is on deposit in the banks to the credit of thirty million depositors. Eighteen mil- lion wage-earners have over six bUlion dol- lars deposited in savings banks. Sixteen bil- lion dollars would buy all the railroads in the United States. Sixteen billion, dollars would buy every producing trust in the United States. The ownership of money is widely distrib- uted amongst the whole people ; but the con- trol of money, the use of money, is concen- trated in the hands of comparatively few people, through the concentrated control of banks in large financial centers and the oper- 64 THE CONFESSION OF A TRUST MAGNATE ation of the machinery that has been devised to concentrate the surplus money of the whole country in the banks located in the large financial centers. This machinery is de- scribed in chapter four. The exclusive con- trol of money, the exclusive privilege of the use of money, has enabled the comparatively few to acquire the exclusive ownership of the things that produce profit, and the exclusive control of the profit-producing things, gained through the exclusive ownership, has been exerted to increase profits, resulting in the oppression of non-owners. The only way to remove the oppression is by a. wide distribu- tion of ownership; THE IDEAL CONDITION. Some thinkers have arrived at the conclu- sion that the only solution of our economic problem lies in permitting monopolization, by few owners, of the industries of the coun- try^ regulated and controlled by government. Perish the thought ! It is born of the belief in the "Divine Eight" of one man to control the destinies of another. Submission to such a plan would introduce into our country a "Manufacturing Aristocracy," the cruelty of 65 THE CONFESSION OF A TRUST MAGNATE which would surpass the cruelties of all his- tory. Private ownership cannot justly be regulated and controlled by government. Government must foster, promote and pro- tect private ownership. In practice, if not in theory, private ownership regulates and controls government; it always has and it always will. The self-interest of the indi- vidual citizen demands that it should. Other thinkers are firmly of the opinion the only solution lies in government ownership and operation of the industries of the coun- try, necessarily involving the perpetual em- ployment of the workers of the country on a wage-earning basis. Away with the energy- killing, thrift-destroying idea! It is the thought of the ' ' Quitter, ' ' the sluggard seek- ing a soft spot on which to lie and dream out an animal existence. It is not worthy a mo- ment's consideration of a true American. Think for yourselves; think of this ideal condition. Monopolization of the industries of the country by one corporation in each line of industry; ownership of the several corpora- tions widely distributed amongst the people, each owning according to his ability and thrift; supervised and inspected (not regu- G6 TEE CONFESSION OF A TRUST MAGNATE lated and controlled) by government, guaran- teeing to each owner a "square deal" in divi- sion of profits. This is the ideal condition. Something to work for here — equal opportunity here. This condition is attainable if the proper course is pursued. No more waste of time and energy fighting monopoly; no more lost effort in trying to compel government to exercise a power which it does not possess, viz., the reg- ulation and control of private ownership. Under this condition, monopoly would be fos- tered and allowed to confer its benefits upon all ; each citizen, according to his ability and thrift, could freely and safely acquire and maintain ownership in the industries of his country, with equitable treatment guaranteed to him by his government. Through his own- ership, the poorest citizen would have a share in profits produced and a voice in control of the instruments by the operations of which he lives. Benefits of "watering" capitaliza- tion would be distributed to the poorest, ac- cording to his. ownership. In fact, all of the practices of modern business which havefup- builded the country and made owners rich would operate for the benefit instead of op- pression of the mass of population. 67 TEE CONFESSION OF A TRUST MAGNATE And, last but greatest, the entrance of the whole people into ownership of the industries would forever remove from the control and use of the few vast sums of money hoarded in banks. OWNERSHIP. View broadly this thing called "Owner- ship." Nations have been wrecked because of it ; millions of living souls have been held in bondage because of it. The nations of tha Old World should furnish object lessons for you in the modeling of your young nation. You should only adopt methods employed by them, resulting in the progress, peace and happiness of all their people. It is a matter of general report, undenied, that England, with a population of forty mil- lion, has seven million paupers. The most powerful nation of the Old World, its age centuries one-sixth of its population paupers. The cause? Concentration of ownership of land and all instruments producing profits and 'prosperity. Look at Russia with its mil- lions of serfs, their very lives subject to the whim of the Czar and the Grand Dukes. The Cause? Concentration of ownership, which 68 THE CONFESSION OF A TRUST MAGNATE gives power. Go through, all nations, the same everywhere, only differing in degree of oppression of non-owners. What is the mean- ing of one million emigrants from all sec- tions of the globe landing on our shores each year? Why are they leaving their native lands? Why are they braving ocean storms to reach an unknown country? Escaping from lands of restricted opportunity, due to concentration of ownership — seeking equality of opportunity guaranteed by our form of government. Do they find it? It matters not how concentration of owner- ship is acquired — whether through inherit- ance from forefathers who acquired it through force of arms, or whether through the exclusive control of the money of a coun- try — ^the effects are the same — magnificent prosperity for owners, oppression for non- owners. Is this country to follow in the wake of the nations of the Old World? Is it to be- come a pauper nation, a nation of slaves, a nation of oppressed wage-earners. Ownership is the badge of freedom, non- ownership the fetters of the slave. Ownership is the distinguishing mark be- tween master and slave. 69 THE CONFESSION OF A TRUST MAGNATE Acquire ownership and be free; acquire ownership and escape oppression. Ownership is your only salvation. TWO KINDS OF OWNERSHIP. It is necessary, in order to gain a clear understanding of the situation, that you grasp and retain the following : There are two kinds of ownership, viz.: actual and nominal. Actual ownership is acquired with money owned; nominal ownership is acquired with money borrowed. Actual ownership cannot be disturbed; nominal ownership can be dis- tributed amoAgst the owners of the money borrowed, and thereia 'lies the power that stijl rests in your hands to rid yourselves of existing oppression. An example will best serve to make plain the difference. A man owns ten thousand dollars in money. He buys a house with the money. He be- comes the actual owner of the house ; no one has a claim; his ownership cannot be dis- turbed. A man owns two thousand dollars in money. He desires to buy a house costing ten thousand dollars. He borrows eight 70 THE CONFESSION OF A TRUST MAGNATE thousand dollars and gives a mortgage on the house as security for the payment of the bor- rowed money. He puts the house up against the loan. In this transaction he becomes the owner of the house; but his ownership is nominal until the borrowed money is paid; his ownership is subject to the claim of the lender of the eight thousand dollars. Should he fail to pay the borrowed money when due, the lender of the money can take possession of the house, and the nominal ownership is forfeite(C"'^"?^w«4Jia?j3wnership is converted into ac^MaZ^wnership by the payment of the loan. DuKggjA^e womi^aZ^wnership, the^ owner has pogSt5ssion_^f-^:S!e house^^d ap- propriate^^ii»^Ji^benemS"'OT\i3Wlja^ijjj; he receives all rentsana''^?!*eaw ,in va has the tise and control of the hou? as if his ownership was actual. In the same manner are corporation securi- ties bought and owned. It is the business of the banks to loan money. The ownership of securities of industrial corporations is very desirable, as these securities absorb the prof- its of industry and confer upon owners the control of industry. Nominal ownership of these securities, for all practical purposes, is as good as actual ownership as long as no n THE CONFESSION OF A TRUST MAGNATE attempt is made to dispossess owners. Nom- inal owners are, however, always open to dispossession. Having some money as a nucleus upon which to build,. a man borrows money from a bank for investment in these securities, per- mitting the bank to hold the securities pur- chased with the borrowed money, as collat- eral security for the payment of the loan. While the bank holds the securities as col- lateral, the nominal owner secures all the ben- efits accruing from their ownership, the prof- its they produce and absorb and the power of control that goes with ownership. The accruing profits, which are increased by the exercise of the power of control, enable the nominal owner to pay off his loans, and thus convert his nominal ownership into actual ownership, which cannot be disturbed. New industries are created in the same manner. A man having actual ownership of securities in an existing industry borrows money from the banks using these securities as collateral, and with the borrowed money creates the property of the new industry. When the new industry gets into profitable operation, its securities become valuable and are accepta- ble to the banks as collateral on further loans, 72 THE CONFESSION OF A TRUST MAGNATE and thus the business of acquiring existing securities, creating new securities and ab- sorbing the profits they produce, goes on uninterruptedly in growing volume, in a con- stantly narrowing circle of owners having ac- cess to banking funds. The power of exclu- sive control of industry, gained through the constantly increasing exclusiveness of owner- ship, is exercised to increase profits by in- creasing selling prices of products and the increasing profits are utilized for the conver- sion of nominal ownership into actual owner- ship by paying off loans at the banks. Own- ers are thus daily and rapidly gaining unas- sailable position. From the foregoing it will be seen that the banking power is the power being used to concentrate ownership. The evils of cbncen- trated ownership and the blessings of dis- tributed ownership have been hereinbefore discussed. Figures show that banking power is wholly derived from deposits. As all de- posits are either inversted by banks or loaned for investment, in order to make money for the banks and pay interest on deposits, the money on deposit in the banks is responsible for approximately sixteen billion dollars of nominal ownership. Nominal ownership in 73 TEE CONFESSION OF A TRUST MAGNATE the industries of the country can be distrib- uted amongst the owners of bank deposits, in one way only, and that way is set forth ia chapter seven. The knowledge of the great benefits con- ferred by ownership of the industries of the country has caused the development of a gigantic conspiracy to obtain and maintain exclusive ownership. The workings of the conspiracy are set forth in the following three chapters. U CHAPTER III. The (xbeat Conspiracy. A well defined conspiracy has been afoot in our country for a number of years. The ob- ject of the conspiracy is the absorption of the profits produced by the whole country from the development of its resources. The object is to be accomplished through the ac- quirement of exclusive ownership of the de- veloping instruments, the corporations and trusts. The ultimate effect of the conspiracy is to bring the whole population down to a wage-earntug basis. The conspirators are unnamed, unnum- bered, constantly changing and rapidly de- creasing in numbers. Conspirators today, victims of the conspiracy tomorrow. When a conspirator ceases to be of use to the lead- ers in. the conspiracy, or when he becomes puffed up with his growing power, he is snuffed out, his ownership is confiscated, and he is relegated to the rank and file of wage- 75 THU CONFESSION OF A TRUST MAGNATE earners. Few of the conspirators know of the conspiracy; few know they are being used — through their seeming self-interest — to further the ends of the leaders. Every inhabitant is being used, either wit- tingly or unwittingly, to further the' ends of the conspiracy. The best traits of human nature are turned to good account; patriot- ism, thrift, love of family, love of the beauti- ful, desire for higher education, religious in- clination — all are used to great advantage. Great dependence is placed upon the exercise of the instinct of self-preservation. The ignorance of the great mass of the population on matters of national impor- tance; the inability of the masses to think abstractly or to follow one line of action when determined upon ; the propensity of the masses to follow leadership of any kind in any direction — all are great aids in the work- ings of the conspiracy. Hypocritical representation, cunning and secretiveness are the weapons of offense. The leaders in the conspiracy, now depleted by absorption and death to a point where they can be numbered on the fingers of one hand, are giants in intellect. They dwell on the heights, from where they view the whole 76 THE CONFESSION OF A TRUST MAGNATE country, to its utmost confines, the size of their office table. They see only one farmer, one mine, one forest, one fish-pond; these four factors, as the sources of all production of living necessities, the sources of the na- tion's wealth and power, the foundation of all business. Mother Earth, the source of all. They see only one railroad, one factory, one marketing enterprise; these three fac- tors as subsidiary to and dependent upon the four sources. They see the whole people, no matter what their occupation, primarily de- pendent upon the four sources for employ- ment, income and living necessities. These giant leaders, hereinafter called big owners, thus clearly seeing the situation, pro- ceed to acquire the ownership and control of the four primary sources and as many of the subsidiary factors as are useful and prof- itable, using small owners, the whole people and government in their respective fields of usefulness. Mining, forestry and fishery are uniformly conducted by corporations, the ownership of the capital stock of these cor- porations, conferring upon owners the power of control of operations and the profits pro- duced. The agricultural field has, as yet, been left to the individual, and the big owners 77 THE CONFESSION OF A TRUST MAGNATE have been content with the ownership and control of the corporations handling the prod- ucts of agriculture ; but farming by corpora- tions is just appearing on the horizon. Not content with the entire profits produced from mining, forestry and fishery, and a portion of the profits of agriculture, they are pro- ceeding to absorb all the profits of agricul- ture by becoming farmers. These big owners, with their all-seeing eyes and their all-knowing minds, observe that the use of money is required to carry out their plans. They see that the great mass of the population consider the ownership of money as the great desirable end; that they do- not understand^ money must he directly invested in some profit-producing medium in order to produce values for its owners. Tak- ing advantage of this ignorance on the part of the people, they proceed to acquire the ownership and control of banks, wherein the people hoard their money, the product of their thrift and energies. Having thus ac- quired the exclusive use of the constantly ;rowing surplus money of the whole country, which naturally carries the power to uAthhold its use from others they are in the position to successfully prosecute their designs. They 78 THE CONFESSION OF A TRUST MAGNATE are constantly tinkering with the banking machinery of the country to make it better suited to their uses, the "Reserve Associa- tion of America" being the latest move. These big owners deal only in principles, grand totals, final results — all non-essentials are eliminated from their calculations. They use small owners in the primary steps of con- centration of ownership ; but as soon as small owners assume to scale the heights whereon they dwell, absorbing machinery is set in operation, ' resulting in the absence of the small owner from the field of ownership. They employ the best brains of the country in their behalf, and reward, temporarily, with ownership; but as soon as brains grow dull or wander from defined paths, the ownership is absorbed. Safe, sane and conservative members of society are allowed lines of credit at the banks in the promotion of their enterprises if non-competitive; but woe unto the mem- ber that develops unsafe, insane or non- conservative tendencies; that is, assumes to protest, defy or interfere in any manner with the ordained order of things. His privileges are withdrawn, and through an underground system of communication he is prevented 79 THE CONFESSION OF A TRUST MAGNATE from forming new connections. Should a -member Have the temerity to attempt the promotion of an enterprise in competition with an exclusively owned existing enter- prise, as soon as his activities become notice- able, the snuffer is applied and his enterprise becomes either a wreck or is swallowed up by the existing enterprise. Government in all of its ramifications is freely used, and even powers which govern- ment does not possess, but which are igno- rantly supposed to lie in government, are used to great advantage. The supposed' power of government to regulate and control private ownership is a wonderful distractor of attention, a wonderful entertainer. The effort on the part of government to enforce its unconstitutional mandates has given these big owners years of time in which to absorb ownership and perfect their working plans. The mass of population have patiently waited upon government to reguate and control own- ership, and with the setting of every sun, ownership of the industries of the country has become more concentrated and living conditions more oppressive. Government bu- reaus, maintained at great expense by gen- eral taxation, furnish statistics of the doings 80 THE CONFESSION OF A TRUST MAGNATE both of this country and foreign natioj( materially assisting their plans. | ||^H» Politics is a great absorber of attention. ' large supply of good live issues are kept in stock at all times to be doled out t ^ '^^,[^ff3, .sirm , .^ „ demands. Love of country is very strong in the American heart. American forefathers fought, bled and died for freedom and the maintenance of individual rights. Let the idea get abroad that there is an attempt being made to usurp either individual or govern- mental rights, and the average American will fight like a wildcat. He becomes so absorbed in the fight that he fails to observe the steady usurpation of the thing he is fighting for. Love of liberty and fair play is so strong in the American heart that it extends to and embraces the oppressed of foreign nations. Under the guise of protecting citizens in for- eign lands and extending aid to the oppressed of foreign nations, the powers of our govern- ment have been used to acquire additional territory for exploitation by big owners. The activities in our Insular Possessions act as a safety valve for the big owuers in the utiliza- tion of the surplus money being daily hoarded in banks at home. Further territorial expan- sion is involved in the "Canadian Eeciproc- 81 TEE CONFESSION OF A TRUST MAGNATE ity Treats" and the Mexican disturbance. ^ x¥nde**twlbiiise hi "hitting the trusts," "re- ducing the cost of living," big owners are opening up vast regions for exploitation with your money. Government, which is all of us, is used by these big owners to develop inland water- ways, build harbors, build a Panama Canal, etc., etc., in the interests of industries they own and of which they are daily acquiring ownership. Movement is on foot to have gov- ernment pay subsidies to ships to facilitate the marketing of the products of the indus- tries of our country. You are proud of the achievements of your government, of the big- ness of its doings. Government expendi- tures necessarily must be made from funds secured by general taxation ; thus your patri- otism is used to increase the profits and en- hance the power of these big owners. These big owners do not alone depend upon the exclusive control and use of the money you hoard in banks, for the successful carry- ing out of their designs. They also have the exclusive control and use of the money you pay for life insurance premiums. The aggre- gate of annual premiums is nearly one billion of dollars — almost as much as the annual in- 83 THE CONFESSION OF A TRUST MAGNATE crease in bank deposits. Thus these big own- ers turn to good account your lovfe for your dependent ones. When you grow restless under the burdens imposed by concentrated ownership, and be- come garrulous over them, these big owners endow colleges, libraries, churches, and pre- sent you with museums and art galleries, and these beneficent acts are heralded far and wide as evidences of a growing regard, in the minds of the rich and powerful, for the poorer members of society. You are told by your educational and religious leaders to ac- cept these gifts with gratitude and soften your hearts toward the donors. Thus your desires for higher education, your love for the beautiful, and your religious inclinations become powerful factors in the success of the conspiracy. The foregoing is only a rough outline of the conspiracy and its workings; personal knowledge and experience will undoubtedly enable you to elaborate thereon. The usual effect of such a recitation is to inflame your minds and engender a feeling of bitterness against the rich. Let us analyze the workings of the conspiracy. Is there an act, in the foregoing recitation, that does not tend to 83 THE CONFESSION OF A TRUST MAGNATE upbuild the country's prestige and increase the values of its industries? Is there an act that does not confer benefits upon our country as a nation? If burdens are im- posed upon non-owners ; if the effect of the recited acts is to deprive owners of their ownership, the fault lies in the failure of non- owners to acquire ownership and the failure of owners to provide necessary protection for their ownership. The improvement of inland waterways, the building of the Panama Canal, the payment of ship subsidies, the maintenance of infor- mational bureaus, all are good. To keep the necessary taxation from becoming burden- some, taxpayers must share in the ownership of the industries benefited and thus share in profits. The acquisition of additional virgin terri- tory in which to profitably use the money earned by your energy and thrift, is good business ; but the owners of the money used must be permitted to directly use their money for their own benefit in order that the earn- ings of the money may offset any burdens imposed through the competition of virgin territory with home industries. Canadian and Mexican reciprocity is good ; reciprocity 84 THE CONFESSION OF A TRUST MAGNATE of any kind is always good; the protection of our citizens in foreign lands and the exten- sion of aid to the oppressed of foreign na- tions are commendable acts on the part of government ; but it is extremely unfortunate that these commendable acts are hypo- critically used for the enrichment of the few through the exploitation of those designed to be benefited. Withdraw from the few the great special privilege of using your money, and oppressive exploitation will cease. Colleges, libraries, churches, museums and art galleries are all very desirable factors in the development of a higher civilization; but the fact must not be overlooked that they are created and endowed by industrial securi- ties, earnings on which are furnished by the whole people. To prevent these refining in- struments from becoming burdensome, every inhabitant must share in the profits of indus- try in order to furnish his or her share of the earnings, without oppression. The bene- fits accruing to the donors are found in the fact that the whole people are interested in maintaining the integrity and earning power of not only the specific securities donated, but all securities of the corporations issuing the donated securities. Attacking these cor- 85 THE CONFESSION OF A TRUST MAGNATE porations means attacking the existence of the colleges, libraries, churches, museums and artgalleries of the country. Those who have become non-owners through the relentless workings of the con- spiracy, those having money hoarded in banks through lack of opportunity for its safe investment, and present minority own- ers, should join hands in forcing the adoption by the several governments, national and state, o'f a plan which in its operation would enable non-owners to freely and safely be- come owners, protect equally all ownership, and have the effect, in its automatic work- ing, to distribute existing nominal ownership. In this way, and in this way only, can the conspiracy he defeated. Permit me again to urge upon you the necessity of a free and full recognition of the fact that sentiment finds no place in business or government. The effort to have govern- ment regulate and control private ownership grows out of the belief that one class owes a duty to another class, that the fortunate owe something to the unfortunate, that the rich owe something to the poor. This widespread erroneous belief is a prime factor used by the chief conspirators; it furnishes numberless 86 THB CONFESSION OF A TRUST MAGNATE opportunities for delay, which are fully util- ized in extending actual ownership ; it is the underlying cause of political strife on which the conspirators fatten. Eecoguize the truth, that distribution of ownership is the only cure for the evils of concentrated ownership, and proceed diligently to acquire ownership in the industries of the country. Life Insurance is an excellent thing, pro- viding as it does for your family after your death; but the premiums you pay are used for the oppression of you and yours while you live. Steps should be taken to "mutual- ize" all insurance companies. All ownership acquired with premiums, in excess of the por- tion of premiums required to create a reserve for payment of policies, should be distributed amongst policy-holders while they live, and thus permit the owners of money paid in pre- miums to enjoy the fruits of their endeavors. Destruction of public confidence in, corpora- tion securities as mediums for investment, has been the most efficient channel through which the conspiracy has worked. Destruc- tion of confidence has forced owners out of ownership and forced their money into banks for the use of the conspirators. Destruction of confidence today prevents owners of money 87 TUB CONPSSSION OP A TRUST MAGNATn from using it, thus enabling them to fully appropriate their share of the country's prosperity. Government has been very active in its supervision of banking institutions, re- sulting in uniform public confidence in banks as custodians of money ; but government has done nothing toward restoring confidence in corporation securities as investment me- diums. On the contrary, through its attacks on corporations, — endeavoring to exercise a power which it does not possess, — it has added fuel to the flame and the conspirators have profited thereby. A subsidized ' ' Press ' ' has been a powerful agent in destroying your confidence. The "Muck-raker" has contrib- uted wonderfully, and while his contribu- tions have stirred your passions against the .industries of the country and the men con- ducting them, the effect has been to keep you out of ownership and leave a free field for the conspirators. What care the conspirators for your wrath, — they own and are daily ac- quiring the ownership of the things that pro- du€« profits and they have provided means to prevent your disturbing them in their own- ership (details to follow). The stock exchanges of the country and the creation of corporation securities in varied 88 THE CONFESSION OF A TRUST MAGNATE forms have their places in the conspiracy. It IS through the manipulation of the trade in securities upon the stock exchanges that con- fidence in securities is destroyed and owner- ship of industries is concentrated. It is the trade upon "the stock exchanges that makes market quotations for securities, on which banks base their loans. It is the active trad- ing upon stock exchanges that creates the im- pression of ready convertibility, thus main- taining corporation securities in good stand- ing as collateral for loans. The general im- pression prevails that the enormous daily trade in securities upon the New York stock exchange is created by the general public ab- sorbing ownership of the industries of the country. Nothing could be further from the truth. The trade is between owners and pro- fessional gamblers, and is conducted for the purposes above outlined. The New York stock exchange has become simply a tool for the use of big owners, the chief conspirators. Through the refusal of banks to loan on any-- thing but "Listed" securities the securities of all big industries are .forced upon the New York Exchange, where they are subject to the manipulation of big owners who quickly absorb their ownership. 89 THE CONFESSION OF A TRUST MAGNATE Corporation securities are subdivided into common stock, preferred stock and bonds. The stock of both kinds carries the ownership and control of the properties of the corpora- tion and receives all net earnings in excess of the interest on bonds.. Preferred stock is so called because it receives earnings prior to common stock. Common stock receives all earnings in excess of earnings required for preferred stock and bond interest. Bonds are notes of the corporation secured by mort- gage on tangible property, bear a fixed rate of interest and carry no ownership or voice in control of the corporation. Bond interest is an expense item, the same as interest on any kind of loan. Bonds are issued by the corporation for the sole purpose of securing - the use of money without permitting the own- ers of money, paid for bonds, to share in ownership or control of the eorporatioA. Bond owners only hold an evidence of debt of the corporation. Bond owners do not share in any increase in value of the corpora- tion properties arising from increased busi- ness or age development. Bond owners have no share in the "Melons" frequently cut for the benefit of stock owners ; that is, they do not participate in the profits arising from 90 THE CONFESSION OF A TRUST MAGNATE ' ' Stock Watering. ' ' A knowledge of the uses of the respective securities issued by cor- porations is necessary to an understanding of the part they play in the conspiracy. The issuing of bonds in financing an indus- try secures the use of money for a long fixed period at a rate of interest slightly in excess of the rate paid by banks on deposits. So closely are bonds held by the banks and big owners that they cannot be purchased by the general public at a figure yielding even their face rate. Preferring not to tie its money up for a long fixed period for such small returns, the general public deposits its money in banks where it is either used by the banks to buy bonds or is loaned on stock or bond collat- eral; thus is the general public barred from participation in the profits of the industries of the country, even to the limited extent rep- resented by bond interest. The idea is pre- valent that there is always great pressure to pell bonds. Why should big owners desire to sell bonds, carrying five percent interest, when they can get the use of the same money for three percent through their ownership and control of banks? Eemember, the hanks and the big owners are one and the same in the conspiracy; the banks are only instruments, 91 THE CONFESSION OF A TRUST MAGNATE tools of the big owners; the profits of the banks are the profits of the big owners; the securities owned by the banks, — purchased with your deposits,^belong to the owners of the banks; the collateral held by banks as security for loans, — made out of your de- posits, — belong to the big owners. You see daily extensive advertisements of- fering trust . bonds for sale in enormous amounts; you think all you have to do is to send the money and get them. Try it; get up early and send your money by wire. You are too late, they are all gone. The fact is, their absorption was all arranged before they were issued ; the advertisement was simply a small cog in the machinery of the conspiracy. C Of course there are securities, both stocks and bonds, that you can buy that are actually offered for your consumption; but they are securities of independent enterprises of doubtful merit. You have the feeling that you must invest in something and you ask your banker about the value of the inde- pendent security that has attracted your at- tention. Your budding hope is soon blasted and you let your money remain in bank. Sometimes you disobey the injunction of your banker and embark on the financial sea un- 93 THE CONFESSION OF A TRUST MAGNATE piloted. If the enterprise proves to be a "Get-ricli-qmck" promotion, yon lose yonr money; if it proves to be a " Winner," the big owners want it and set their absorbing machinery in motion and get it at their own price. You lose either way. A few such ex- periences and you become a confirmed bank depositor. Eeaders of financial news are familiar with the effort on the part of big owners to create an active foreign market for the in- dustrial bonds of this country. The effort has met with indifferent success. Foreign finan- ciers are as intelligent as home financiers. For- eign financiers see sixteen billions of money, the product of the thrift and energy of our people, hoarded in our banking institutions, uninvested directly by its owners ; they argue, if American securities are not worthy the confidence of Americans, why should foreign money be risked? The truth is, an active foreign market is sought to provide a tem- porary dumping ground for the use of big owners. If the home market was utilized, banks would lose deposits and big owners would thus lose the use of cheap money. I say temporary dumping ground because, when the pressure in the use of home money 93 TEE CONFESSION OF A TRUST MAGNATE is lessened, big owners regain ownership by putting their confidence destroying machin- ery into operation. Bonds come tumbling back across the water as rapidly as they can be absorbed, to be sent out again when the demand for the use of home money strengthens. The marketing of our indus- trial securities in foreign countries is wrong. Why should securities that carry profits be sold abroad? Profits make prosperity and we want all the prosperity this country pro- duces, and we want it widely distributed at home. This country does not need foreign money, derived from the sale of industrial securities, for its development. Foreign money, derived from the sale of the products of this country, is all the foreign money this country needs or wants. The industries of this country annually produce an amount largely in excess of the amount required for the next year's development and the great and crying need of this country to-day is a plan providing for the safe investment of this annual wealth production, direct by the pro- ducers and owners of the wealth. Then and then only can the whole people share in the magnificent prosperity of our country as a nation. 94 THE CONFESSION OF A TRUST MAGNATE It will be noted the foregoing discussion relates to bonds only. Stocks of corporations serve a somewhat different purpose in the conspiracy. Stocks represent ownership in the corporation, stocks are the absorljers and distributors of the net profits produced by the corporation. It is the ownership of the stock that gives the power to .issue the bonds, the power to control operations for the in- crease of profits, the power to increase the stock issue. The promoters of an enterprise, in its formative stage, secure a Charter of Incorporation from a state which carries an authorization to issue a certain amount of capital stock. In theory, the capital stock is to be issued for cash with which to acquire and produce the tangible property of the corporation. In practice, the capital stock is generally issued for some intangible, imag- inary values, say patent rights, secret' proc- esses, good will, franchises, etc. The capital stock thus paid for is issued to the promoters of the enterprise as fully paid and non- assessable. Thus equipped, the promoters are empowered to issue bonds to secure the use of money with which to create the tan- gible property of the corporation. The bonds are disposed of either by sale to in- 95 THE CONFESSION OF A TRUST MAGNATE vestors or through using them as collateral' at the banks on loans. The momey thus se- cured is used in creating the property of the corporation. The bpnd owners or holders are secured by mortgage on the property created, but the ownership and control of the property is vested in the capital 'stock; thus the owners of the capital stock, the promoters of the enterprise, become owners and con- trollers of the tangible property without the investment of a dollar. Operations com- mence, earnings flow in, interest is paid on bonds, surplus earnings are paid in divi- dends on the capital stock, and the capital stock, for which no money was paid, becomes of value, the value increasing with increased earnings. Custom has decreed that a stock earning five percent is .worth, par, and it is popularly conceded that an earning of five percent; on the capital stock of a corporation is legitimate and should be allowed, even if the prices charged for the commodity pro- duced by the corporation, in its effort to earn five percent, may be oppressive, — so great is the fairness and liberality of the American people. Taking advantage of this liberality, and exercising the powers conferred by own- ership, owners have increased capitalization, THE CONFESSION OF A TRUST MAGNAT E without increasing investment, and have in- creased earnings, to provide dividends on the fictitious capitalization, by exacting extor- tionate prices for commodities produced. In the effort to justify high prices, owners have pleaded lack of- supply to meet the demand, increased cost of production due to in- creased wage scales, etc., and show, in fur- ther justification, that even with the high prices they are only earning five percent on their capitalization. The effect of this manip- ulation of corporation stocks is to produce enormous profits for owners and enormously increase their paper wealth. These stocks, costing nothing in the be- ginning, having been doubled and quadrupled in the hands of their owners, without addi- tional investment, are acceptable to banks as collateral security for loans in proportion to their market value, their ready convertibility and the financial strength of the backers of the enterprise. These requisites are pro- vided by the manipulated trade upon the stock exchanges. Can you beat it? Can you imagine a more complete, a better plan for the absorption of the ownership and profits of the industries of the country? Do you now see why present owners of corporation 97 TEE CONFESSION OF A TRUST MAGNATE stocks will not part with their ownership as long as they are able to hold it with the use of bank deposits I It never was intended by promoters of our industries that stocks should be represented by invested money; a large number of our state incorporation laws specifically say capi- tal stock can be issued for money or property, the value of which is to be solely determined by the directors of the corporation. A num- ber of our states require the capital stock to be equal to or in excess of bond issue, thus tacitly authorizing a duplication of capitaliza- tion. The capital stock of corporations has always been considered and treated as a legit- imate perquisite of promoters, to be used by them in any manner they deemed advisable. Frequently capital stock is openly given as a bonus to bond buyers. It may safely be assumed that all existing corporate capi- talization has been issued in accordance with the laws relating thereto, and any attempt to force by law a reduction in capitalization will prove a failure. Overcapitalization is one of the instruments employed to increase and absorb profits and to increase the wealth of owners. If the instrument works for your oppression, it is because you are non-owners, 98 THE CONFESSION OF A TRUST MAGNATE and the relief is not by attacking the instru- ment, but by becoming wielders of the instru- ment. A great deal has been said about "Stock Watering." Within certain well defined lines, "Stock Watering" should be allowed and encouraged; beyond those lines it should be prohibited. Example: A man buys a house in a thinly settled locality, streets poorly improved, transportation facilities in- suBficient. Owing to these conditions he gets it at low cost. With the passing of time, settlement grows up around the house, streets are improved, transportation facilities im- prove, resulting in an increased value attach- ing to the house. The owner of the house is entitled to and gets the increase in value should he sell. Again : A man buys a green colt at a colt price, he trains, feeds, grooms the colt to horse age, resulting in increased value which belongs to the owner, and he gets it when he sells. Any future increase in value belongs to the second owner should he further develop the horse. The same with industrial enterprises. Owners should be permitted to increase capitalization to the same extent that the value of the enterprise increases, not on the basis of earning power, 99 THE CONFESSION OF A TRUST MAGNATE but on the basis of cost to produce at existing market prices. The original cost figures or investment should not enter into the calcu- lation. Owners are entitled to the values they produce through the exercise of their energies and talents and values that accrue from lapse of time ; but they are not entitled to values produced by excessive earnings taken from the people through extortionate prices for commodities they produce. The basis, cost to reproduce at existing market prices, is equitable and desirable, because new enterprises are compelled to adopt that basis. This is the treatment that should be accorded present owners, in the adjustment of capitalization of existing enterprises, when they are compelled to submit to governmental supervision and inspection, following the adoption of the plan submitted in Chapter VII. Stock exchanges are not bad institutions when legitimately used; but when used by the few as tools to destroy confidence, to manipulate prices of securities to rob the unsuspecting investor and through these means absorb profits and ownership, they be- come bad. Conducting "Corners" in food products 100 THE CONFESSION OF A TRUST MAGNATE and the leading staples of the country is a source of great profit to owners. It is the prevailing impression that extraordinary knowledge regarding crop conditions, visible supply, etc., is required for the successful conduct of a "Corner." An unbroken con- nection with bank deposits is all that is re- quired. Given sufficient money with which to pay for all actual product as delivered and an uninterrupted use of the money until the product is marketed to consumers, anyone can successfully conduct a ' ' Corner. ' ' Ware- house certificates and railroad bills of lading are good collateral security for loans at the banks. Whenever a "Corner" fails, it can safely be assumed that some "interest" hav- ing a stronger "pull" at the source of money supply has stepped in and broken the connec- tion. Thus are big owners and operators absorbed. As Boards of Trade and Money are used to operate "Corners," — that is, ob- tain and maintain exclusive ownership of the visible supply of the food products and staples of the country, — so are Stock Ex- changes and Money used to "Corner," — that is, obtain and maintain exclusive ownership of corporation securities, — resulting in a con- tinuous "Corner" in the products of corpora- 101 THE CONFESSION OF A TRUST MAGNATE tions. The "Banking Power" of the country is the power used, Boards of Trade and Stock Exchanges are instruments only. If "Corners" are undesirable, withdraw the power that makes them possible. Statistics show that the total banking power is derived from deposits. Undeveloped opportunities are always a menace to owners of existing enterprises. Someone, somehow, may succeed in getting control of money somewhere, and if oppor- tunities for its use are left open, competi- tion with existing enterprises may ensue; hence, the activities in the undeveloped field. Prospecting organizations are constantly operating throughout the ' country ; test oil wells are being bored, coal, iron and copper fields are being located, sulphur and salt beds are being defined. As "Strikes" are made, as the presence of the sought for com- modity is indicated, drills conveniently break off, the hole is filled up, activities cease, and the word goes out, "Nothing found." Soon thereafter the records show an active trans- fer of ownership in the surrounding terri- tory. Undeveloped resources lying within the Public Domain are equally a menace; hence the extraordinary efforts on the part 102 THE CONFESSION OF A TRUST MAGNATE of big owners to acquire their control. The nfagnificent fight that has been made by a few disinterested public-spirited citizens for the conservation of these resources is worthy the conunendation of the people; but, under the existing situation, how can they be de- veloped for the benefit of the whole people? Money cannot be secured for their inde- pendent development on account of the de- stroyed confidence in corporation securities as investment mediums. It need not be ex- pected that a new order of altruistic gentle- men wUl suddenly spring up in business — business will never be conducted except for the utmost profit to its owners. Development by government is not to be considered ex- cept as a last resort after all other efforts have failed. The people must use their gov- ernments in supervising and inspecting ca- pacities, to restore their confidence in cor- poration securities, thus enabling them to in- dependently develop their resources for their benefit. The resources in the Public Domain that have been temporarily saved to the peo- ple furnish a foundation upon which the peo- ple can honestly build and conduct new industries, and thus compel owners of exist- ing industries to part with their nominal 103 THE CONFESSION OF A TRUST MAGNATE ownership. No time can be lost in doing this. The resources have only been temporarily saved. The big owners are resourceful gen- tlemen and 'some plan will ultimately be de- vised for their absorption. Uncontrolled money supply is also a men-, ace to owners. Through ignorance of the great beneficence ( f) of banking institutions, through distrust in them as custodians of hard earned money, some of the poorer and more ignorant members of society have con- tracted the habit of hoarding their savings in stockings, stoves, mattresses or any other convenient place. Under the guise of bene- fiting the poor and ignorant, a widespread sentiment was created by big owners, in favor of "Government Postal Savings Institu- tions," resulting in the recent enactment of the Postal Savings Act. Banks outwardly opposed its passage. The Act provides that ninety-five percent of Postal deposits may be deposited by the Government in banks at a minimum interest rate of two and one-half percent. Thus banks secure the use of the formerly uncontrolled money for less than they pay for other money, government bears the cost of gathering it and the menace to owners, of uncontrolled money, is removed. 104 THE CONFESSION OF A TRUST MAGNATE "Postal Savings" are good institutions, pro- vided opportunities for the safe investment of the gleaned money, direct hy its owners, are furnished as rapidly as the driblet sav- ings reach investment proportions. Panics are frequently resorted to by these big owners, the leaders in the conspiracy, to carry out their designs. You have undoubt- edly noticed that panics follow closely upon the heels of prosperous times. They come down upon the country out of cloudless skies. Panics are the harvest times of the big own- ers. During these harvesting seasons they gather into their storehouses the choicest fruits of your endeavors they take back at panic prices what they have allowed you to buy and create at prosperity prices. Panics can only be created by a stringency in money supply or a restriction in extension of credit. Banks exclusively control the use of money and exclusively dispense credit. Banks are tools of the big owners, reapers in the har- vest field. When harvesting time comes the banks are caused to withdraw the use of money, restrict the extension of credit, and the fruit falls into the hands of the owners of the reapers. Simple? Oh, so simple ! The money you receive for the interests you are 105 TEE CONFESSION OF A TRUST MAGNATE compelled to sacrifice goes directly into banks for the use of the big owners in pay- ing the next victim. The "Panic of 1907" was precipitated by big owners for the purpose of creating a widespread sentiment in favor of currency legislation. The legislation that followed was the crowning act in the conspiracy to acquire, and maintain for all time, the ownership of the industries of the country. The impor- tance of this revelation entitles it to a place by itself, so I devote to it Chapter V. It is plainly evident that the success of the conspiracy is dependent upon the control of the use of money and of the .dispensation of credit which is founded upon money. Under the caption "Money and Its Uses," the fol- lowing chapter will give interesting and im- portant information too long buried from the public in dry government reports. Do you begin to see the conspiracy, the part you play in its workings, the great meaning its successful termination has for every in- habitant of this magnificent country? The conspiracy must be defeated, and no time can be lost in taking the necessary steps to de- feat it. 106 CHAPTEE IV. Money and Its Uses. The improper use of money is the root of all evU. What is it that makes the conditions under which we live? The use of money. What is it that promotes comfort, peace and happiness in our daily lives? The use of money. What is it that imposes distress, discord and unhappiness in our daily lives? The use of money. It is the use of money, whether by our- selves or someone else, that makes the condi- tions under which we live, whether those con- ditions are desirable or undesirable. This is bringing life down to a sordid, dol- lar and cent basis, but the truth must be faced. In our present stage of development the possession of money or its equivalent stands for everything desirable, the non- possession for everything undesirable. This 107 THE CONFESSION OF A TRUST MAGNATE condition being true, it would seem necessary that everyone should understand money and its proper uses ; but it is a fact that almost universal ignorance on the subject prevails. The conspirators, working to absorb the own- ership and profits of the country, depend largely upon this ignorance and its continua- tion for their success. They have created such a complicated maze around the. use of money, in their efforts to exclusively control its use for their benefit, that it is impossible, in this writing, to thread the maze, — I can only touch upon the general uses. Money must be invested in some profit producing channel to multiply. Money must be invested direct by its owners to multiply for the benefit of its owners. Money invested in profit producing chan- nels multiplies for the benefit of ivhoever invests it. Money, entrusted by its owners to some agency for investment, becomes a menace to the prosperity of its owners as well as all others not owning money. Forty years ago the ignorance of these truths made little difference, because busi- ness was individually conducted and owners 108 THE CONFESSION OF A TRUST MAGNATE of money generally used it direct in their own business, thus benefiting from its multipli- cation ; but with the rapid growth of popula- tion and the enormous expansion of the in- dustries of the country, under corporate form, the non-observance of these truths, by the great majority of money owners, has brought oppressive conditions to the great mass of the population and conferred extraor- dinary prosperity upon comparatively few. The introduction of the corporation into the conduct of business was, theoretically, a forward step in the evolution of society, per- mitting as it did, the great number having limited means to become owners in business and sharers in profits; but with the coming of corporations came also the opportunity for the few to control the use of the money of the many. With the use of the aggregate money, paid into the treasury of the corporation in exchange for capital stock and bonds, indi- vidual business was absorbed and large units, having numerous stockholders, were created in the several lines of industry. In the ab- sence of any supervising and inspecting pow- er, operating impartially in the interest of all stock owners, the majority interests in control of operations; using the control of 109 THE CONFESSION OF A TRUST MAONATM money, the facilities furnished by stock ex- changes and the power, conferred by major- ity ownership, to manufacture varied classes of securities ; manipulated the affairs of cor- porations with the result of forcing minority owners out of ownership. It being unadvis- able to again enter individual business, in competition with the constantly growing cor- porations, and having lost confidence in all corporation securities as investment me- diums, the owners of money, thus forced out of ownership, deposited their money in banks. Then came the organization of trusts, a dupli- cation and enlargement of the tactics pre- viously adopted for the absorption of indi- vidual business and the elimination of mi- nority corporation owners. Using the money forced into banks, the majority own- ers of the constantly decreasing number of owners, organized trusts for the absorption of the several corporations engaged in each line of industry, resulting in the further elim- ination of owners and the consequent up- building of bank deposits. During all these activities government has been freely used to provide safe custody for money. At the present time banking laws 110 THE CONFESSION OF A TRUST MAGNATE and the active supervision and inspection of banking institutions by government, both, na- tional and state, guarantee absolute protec- tion to depositors of money ; provided depos- itors withdraw deposits for immediate invest- ment or for immediate use in trade channels. All depositors can at all times get all their deposits, provided the withdrawal is for im- mediate use or investment. If bank depos- itors should demand cash payment of more than ten percent of deposits for the purpose of hoarding money out of banks they could not get it, the banks would not have the actual money to meet the demands. The 1910 report of the Comptroller of the Currency (page 58) states as follows: "The general stock of money in the United States at the close of the fiscal year ended June 30, 1910, stated roundly, was $3,419,500,000. Of this amount, $317,200,000 was in the Treas- ury as assets; $1,414,600,000, or 41.37 per- cent, in (23,095) reporting banks ; and $1,687,- 700,000, or 49.36 percent, outside of Treasury and banks, — that is to say, in circulation among the people." The same report shows, on June 30, 1910, the individual deposits in 23,095 reporting banks to have been ($15,283,- 111 THE CONFESSION OF A TRUST MAGNATE 396,254.35) Fifteen billion, two hundred and eighty-three million, three hundred and ninety-six thousand, two hundred and fifty- four dollars and thirty-five cents. It is readily seen that slightly less than ten per- cent of the deposits was represented by money, — it is therefore seen that banks could not pay, in actual money, more than ten per- cent of their deposits unless the money with- drawn was used or invested and thus found its way back into banks for use by them in paying other demands. "Wealth is measured in terms of dollars and cents, but it is not necessary to have enough dollars and cents actually in existence to represent all exist- ing wealth any more than it is necessary to have a bushel measure for every bushel of wheat or corn raised. To provide enough money to at all times equal bank deposits, in order that banks could pay in cash all de- mands of depositors, would cheapen money enormously; that is to say, would decrease the purchasing power of money. If enough money was provided to equal present bank deposits, ten dollars would buy only as muck as one dollar now buys. A thorough under- standing of the foregoing is necessary in or- der to grasp the meaning of the action of 113 TEE CONFESSION OF A TRUST MAGNATE the conspirators related in the following chapter. Bank depositors should understand, when they deposit money in banks, it is trans- formed from money into bank credit; that is, the amount of their deposits is credited to their accounts on the books of the banks and the money (circulating medium) deposited is thrown into the money drawer along with other money to be paid out to any depositor desiring mo we?/ for use. Any drafts or checks are charged against the accounts, and the differences between the two sides of the ac- counts are termed credit balances. These credit balances added to the capital, -surplus and undivided profits of the bank, constitute what is known as banking power; that is, the amount of bank credit which the bank is able to dispense. The expression "Business is conducted on credit" is often heard. It is the general thought, the credit referred to is the same credit which the grocer extends to his customer; that is, reliance placed in the integrity and ability of the customer, and it is thought. "what a fine thing it is, when the enormous business of this big country is con- ducted on confidence in each other." The heart thrills at the thought. The credit re- 113 THE CONFESSION OF A TRUST MAGNATE ferred to in the expression is the credit dis- pensed by banks, for which, they are fully secured and for which business fully pays. The Comptroller's Eeport for 1910 (page 63) gives, for 23,095 reporting banks, as fol- lows: Capital $1,879,943,888 Surplus and undivided profits . 1,952,475,818 Individual deposits 15,283,396,254 Total banking power $19,115,815,960 Computing the percentages, it is seen that capital, surplus and undivided profits fur- nish twenty percent and individual deposits furnish eighty percent of the total banking power of the country. This is the "Money Power," the "Money Trust" about which the people rave, and it appears that the peo- ple furnish eighty percent of it. It will be found, upon a closer analysis, that individual deposits furnish nearly the total banking power of the country. The law requires banks in reserve cities to main- tain a reserve, for the protection of depos- itors, amounting to twenty-five percent of deposits; all other banks, called country banks, are required to maintain fifteen per- 114 THE CONFESSION OF A TRUST MAGNATE cent reserve. The Comptroller's 1910 re- port (page 10) shows the average reserve required to be maintained by all reporting banks (23,095 in number) on June 30, 1910, was 21.22 percent. The deposits on that date were $15,283,396,254, or the reserve required to be maintained on that date amounted to $3,243,136,631. The reserve must be maintained through the use of bank capital, surplus and undivided profits. The total of these three items on June 30, 1910, was $3,832,419,706 ; therefore, only $589,283,- 075 of the capital, surplus and undivided profits was available to the banks for dis- pensing to business. This amount added to deposits produces $15,872,679,329 as a total banking power on June 30, 1910, — capital, surplus and undivided profits being 3.72 per- cent and individual deposits being 96.28 per- cent of the total. Thus it is seen that prac- tically the total bank capital, surplus and un- divided profits is locked up in the banks as a guaranty fund for deposits, and the business of the country is done upon deposits. The most important thing to be borne in mind when considering banking statistics is this: Every dollar called "Deposits" in any bank statement is money, or its equivalent 115 THE CONFESSION OF A TRUST MAGNATE bank credit, uninvested by the owners of that money or credit. It has been said, "Money must be invested direct by its owners to, mul- tiply for the benefit of its owners, ' ' and it has also been said, ' ' Money entrusted by its own- ers to some agency for investment becomes a menace to the prosperity of its owners as well as all others not owning money. " It has been shown, on June 30, 1910, individual de- posits in 23,095 banks amounted to over fif- teen and one quarter billions of dollars, and that these deposits constituted the banking power, the "Money Power," the "Money Trust" of the country. Every dollar of this money is invested, the investors are reaping big returns from its use, and the owners of the money as well as all non-owners are suffering thereby. It is interesting to know to whom this enor- mous sum of bank deposits belongs and how it is invested. The Comptroller shows (see Appendix, Exhibit "A"), on June 30, 1910, 19,194 banks reported 16,399,164 savings de- , positors and 11,580,378 other depositors, a to- tal of 27,979,542 depositors ; 8,069 other banks did not report this information. It has been estimated by various authorities that there are thirty million bank depositors, and these 116 THE CONFESSION OF A TRUST MAGNATE actual partial figures seem to bear out the estimate. It has been estimated that there are more bank depositors than workers in all of the industries of the country. It is no un- common event, throughout the breadth of the country — in every city, town and village large enough to boast a factory — to see on pay night lines of workers standing in front of bank windows waiting their turn to de- posit ^the meagre amount possible to save from the week's wage. Next day perhaps, or when required, the owners of the factory, where the money was earned, borrow some of it for the extension of their business. Often 1 the owners of the factory own the bank, or the bank owners own the factory. The fac- tory makes money from its use, the bank makes money from its use and the real owner of the money, the worker, gets perhaps three percent. The same money is used numerous times during a year by the factory and the bank, with a new profit each time it is used ; but the worker, the real owner of the money, gets one three-cent piece for a year's rental of his dollar. The portion not required for use at home by the factory or the bank goes to the banks in the large cities to swell the sum for the exclusive use of the big own- 117 TEE CONFESSION OF A TRUST MAGNATE ers, who use it for the acquirement of owner- ship of all the big things of the country, thus gaining, the power to increase the living costs of the worker. The complaint to-day is that the worker does not receive adequate recom- pense for his efforts, and he never will until he is provided with opportunities to freely, safely and directly invest the product of his thrift and energies. When the time comes that a worker can drop into a stock exdiange on his way home on pay night and buy a few dollar shares of stock in an industrial enterprise that is supervised and inspected by government, then, and then only, will the worker get full returns for his efforts. Soon thereafter the worker's money will be earn- ing more for him than his personal labor. The same trait of character that prompts the opening of a bank account, for the meager returns allowed, would prompt the acquire- ment of ownership in the industries of the country, producing many times the interest rate on bank deposits, — and where there are now ten bank depositors there would be twenty stock owners, so. great would be the incentive to save. The classification of deposits (see Appen- dix, Exhibit "B") on June 30, 1910, as given 118 TEE CONFESSION OF A TRUST MAGNATE by the Comptroller, shows $9,015,684,728.43 deposited subject to demand of depositors, and $6,267,711,525.92 deposited for some fixed time or subject to notice to the bank before withdrawal. The latter amount, the six and one quarter billions amount, is the savings of the country, the contribution of the wage earners to the "Banking Power," the "Money Power," the "Money Trust," that is daily concentrating the ownership of the industries of the country. It is forty- one percent of the whole. The "Subject to demand" item is a very desirable item to the banks, as only a small percentage of it draws interest. About thirty-five percent of this item, three billion dollars, is really liquid credit used by its owners in the transaction of current business and the remaining sixty- five percent, six billion dollars, might as well be deposited on time, drawing interest, as far as the use of it by its owners is concerned. Even the thirty-five percent of liquid credit is dispensed by banks on a demand loan basis. Owing to the lack of safe opportunities for direct investraent by owners of deposits, banks have no hesitancy in using the full amount of their deposits. If, by any chance, a sudden, unexpected demand should arise, 119 TBI! CONFESSION OP A TRUST MAGNATE it is met either by temporary encroachment upon "Eeserve" or by temporary accommo- dation loans from neighboring or correspond- ent banks. Of course, savings deposits are in the banks to stay and are treated as so much permanent capital with which to do business. The following figures show how 23,095 re- porting banks, on June 30, 1910, had invested and loaned deposits and a portion of their Capital, Surplus and Undivided Profits. These figures are detailed in Exhibits "C" and " D " in the Appendix : Investments in bonds, se- curities, etc $ 4,723,400,000.00 Tiine loans 9,313,623,268.75 Demand loans 3,208,185,708.48 Total $17,245,208,977.23 These figures show, roundly, that five billion eight hundred million demand deposits were loaned on time and three billion two hundred million were loaned on demand. Three and one-half billions of savings . deposits were loaned on time and two and three quarter billions were invested in bonds and other se- curities. The remaining two billions of in- 120 THE CONFESSION OF A TRUST MAGNATE vestments and loans were made from capital, surplus and undivided profits. All of the fifteen and one quarter billions of deposits were either invested by the banks or loaned to borrowers for investment ; thus, all of the deposits were in use doing the profitable business of the country &nd main- taining nominal ownership of profit pro- ducing instruments in the hands of non- owners of the money. Owners of the "money were receiving rental for only a portion of the money at the rate of approximately three cents per dollar per annum. In the absence of published statistics as to the collateral held by banks on loans and the nature of the unsecured loans, it is impos- sible to make authoritative statements; but from knowledge as to how business is con- ducted, I have no hesitancy in making the following statements regarding bank loans. Eef erring to Exhibit "D" in the Appendix, it will be seen the total loans on June 30, 1910, amounting to twelve and one-half bil- lions, are divided into four main items. The item "On demand unsecured by Collateral," amounting to seven hundred and ninety-eight millions, consisted of temporary accommo- dations to local business where the ability 131 THE CONFESSION OF A TRUST MAGNATE of the borrower to pay was undoubted. The item "On demand secured by Collateral," amounting to nearly two billions, was largely loans secured by railroad and industrial stocks and bonds. The item "On time unse- cured by Collateral," amounting to over four and one quarter billions, was largely short- term notes of railroads, issued in anticipa- tion of earnings to obtain money for increasing facilities ; and, short-term notes of large industrial enterprises, the "Beef Trust," etc., to obtain money for carrying stocks of products and for purchase of raw materials. The item, "On time secured by collateral, secured by real estate mort- gages and mortgages owned," amounting to nearly five billions, was distributed, approx- imately, as follows : Two and one-half bil- lions secured by railroad and industrial stocks and bonds; one and one quarter bil- lions secured by mortgages on real estate owned by railroads and industrial enter- prises; and one and one quarter billions se- cured by mortgages and other liens on real estate owned by small investors. Exhibit "C" in the Appendix gives the classification of bank investments in bonds, securities, etc.; ninety-six percent of the to- 122 THE CONFESSION OF A TRUST MAGNATE tal, subdivided into six items. United States bonds, $773,400,000. Tbe total bonded debt of the United States is $913,317,490. The 23,095 reporting banks, on June 30, 1910, owned, approximately, eighty-five percent. These bonds are purchased with bank capital and are deposited with the government as se- curity -for the redemption of $713,430,733, money issued by national banks and to se- cure government deposits. State, County and Municipal bonds amounted to $1,116,200,- 000. TJiese are also purchased with bank capital and are a part of the legal reserve held for protection of depositors. Eailroad bonds amounted to $1,464,800,000; bonds of other public service corporations, $478,000,- 000; other bonds, $399,900,000; and stocks, $283,400,000. These latter four items, total- ing $2,626,100,000, are obligations of railroad and industrial corporations. Combining and summarizing the foregoing loan and investment figures, to show the use made of fifteen and one quarter billions of bank deposits, the following is produced : Owners of railroads and industrial cor- porations (who are also owners of banks) used two and three quarter billions to main- 133 TEE CONFESSION OF A TRUST MAGNATE tain, through banks, nonjinal ownership of railroacl and industrial securities. Owners of railroad and industrial cor- porations used five and three quarter bil- lions to directly maintain nominal owner- ship of railroad and industrial securities. Owners of railroad and industrial cor- porations used four and one quarter bil- lions to provide additional facilities, carry stocks of products and purchase raw ma- terial, in anticipation of earnings. Owners of real estate used one and one- eighth billions to maintain nominal own- ership. Owners of small business used three quarters of a billion in anticipation of earnings. Other owners, unclassified, used one- half billion to maintain nominal ownership. Are not the following statements true? If the thirty million depositors had been per- mitted to directly use their fifteen and one- quarter billions, in the same manner, the same amount of business would have been done and the same amount of profits would have been made; but the ownership, profits and power of control of operations would 124 TEM COt[FBS8lON OF A TRUST MAGMtS have been widely distributed, resulting in a wide distribution of the prosperity now ex- clusively absorbed. What stands in the way of direct invest- ment? Lack of opportunity for safe invest- ment. The time has come to use government, in a supervising and inspecting capacity, to provide opportunities for safe investment. In addition to the plans devised by big owners to force surplus earnings into banks, plans have been adopted to concentrate de- posits received by country banks in banks lo- cated in the large cities, where they are more readily accessible to big owners. Forty- eight of the principal cities in all parts of the country have been designated as "Eeserve Cities." Of these cities, New York, Chicago and St. Louis have been designated as "Cen- tral Eeserve Cities." The law requires banks located in the three central reserve cities to maintain a reserve in bank of twenty-five per cent of deposits for the pro- tection of depositors; the same rate is re- quired for other reserve city banks, but one- half of the amount may be deposited to their credit with correspondent banks in central reserve cities. Country banks, — that is, all banks outside of reserve cities, — are required 135 THE CONFESSION OF A TRUST MAGNATE to maintain fifteen percent reserve, two- fifths of wtich. must be in bank and three- fifths may be deposited with correspondeBt banks in any of the reserve cities. Under these provisions there are, approximately, two and one-half billions transferred to re- serve city banks, the item being designated in bank statements as "Due to and from banks." This amount is constantly increas- ing as local demand for the use of money de- creases, due to the tactics of big owners. As a further means of concentrating money, big owners cause railroads and indus- tries in all parts of the country to forward earnings for deposit in the banks of reserve cities, where the use of them can be readily secured prior to their quarterly or semi- annual use in payment of bond interest or dividends. This procedure accounts for the large individual deposits in banks of reserve cities. The operation of these plans results in a distribution of the total banking power of the country, approximately, as follows : Cen- tral reserve cities, about three hundred banks, thirty-five percent; other reserve cities, about one thousand banks, thirty per- cent; all reserve cities, about thirteen hun- 126 THE CONFESSION OF A TRUST MAGNATE dred banks, sixty-five percent; country- banks, about twenty-two thousand, thirty- five percent. The merging of two or more banking in- stitutions in large cities is hailed as a great boon to the country by financiers and finan- cial organs. These consolidations — and there have been many in recent years — ^mark the passing into oblivion of former power- ful interests, and each consolidation further concentrates the control of the use of money. It is plainly evident that the exclusive con- trol of bank deposits gives the power to dic- tate their use. Independent promotion is thus held in check. "Equal opportunity" in the promotion of business has become a plati- tude. Banks in reserve cities hold a paternal re- lationship to country banks. They take care of surplus funds and furnish investments and borrowers for same. Country banks are sub-agencies of reserve city banks, engaged ia gathering, in a local way, the product of the energies and thrift of the small individ- ual. It is no uncommon thing to find strings of banks in a territory belonging to one man or one set of men. Eeserve city banks or their owners are large owners of country 137 THE CONFESSION OF A TRUST MAGNATE banks, and, through their ownership, control the disposition of their deposits. Eeserve city banks or their owners are largely the owners of the small neighborhood banks in the large cities. Banks in the central reserve cities — New York, Chicago and St. Lonis — occupy the same paternal relationship to banks in other reserve cities as those banks occupy to country banks. The control of banks in the central reserve cities thus con- fers the control of the use of deposits of the whole country. Banking is one of the fine arts, requiring the exercise of very superior talents. The banking fraternity is composed of the flower of our business world. Bank deposits must be kept employed in safe profit producing channels at all times and big owners of banks and industries require them to be employed in non-competitive channels. To meet these two requirements brains of a very superior order are required. It is becoming more and more difficult to keep the rapidly growing de- posits thus employed, owing to the growing unrest of the people of the country evidenced by the governmental attacks upon the indus- tries of the country, the investment mediums. We are approaching forks in the economic 128 THE CONFESSION OF A TRUST MAGNATE road and we imist choose whicli road to fol- low. Eightly Tinderstanding the situation it would seem an easy matter to choose. One road is a continuation of the present road we are traveling. To continue on this road means a continuation of the warfare upon industries, which means the destruction of both safe and profitable employment for the deposits of the country, which in turn means the withdrawal and cessation of investment within the borders of this country. Move- ment is now on foot to open new country to both the north and south of us on equal terms with us, but not under the control of our government. Capital will be transferred to this virgin territory unless the present war- fare ceases. The other road is the direct use of deposits by the owners of the deposits, which means the withdrawal of the banking power from the hands of the few who are using it for their exclusive benefit, resulting in the oppression of the owners of the de- posits as well as all non-owners of money. The choice and adoption of this road will keep the money of this country employed m this country, the benefits arising from its profitable employment at home will be widely distributed amongst the people of this coun- 129 THE CONFESSION OF A TRUST MAGNATE try and the existing warfare upon the in- dustries of the country will come to an end. Is there any question as to which road to choose? The holding of the World's Columbian Ex- position in Chicago in 1893 marked the real commencement of operations of the great conspiracy. The Exposition, displaying as it did the resources of our country from its farthest corness, gave excellent opportunity for comprehensive study of its possibilities. The foreign exhibits gave information as to what they produced that we did not and what they needed that we produced. The Exposi- tion was followed by several lean years ia our industrial development ; but during these years the conspirators were laying their plans and securing possession of unde- veloped opportunities as well as existing in- dustries, at lean figures. The effect of their activities was evidenced as early as 1896 and 1897 in advances in prices of living commodi- ties; but the real beginning of the great in- dustrial expansion that has taken place was in 1900. As the use of money is the founda- tion of the operation of business, and as it is the business of banks to receive money on deposit and dispense its equivalent credit to 130 TBE CONFESSION OF A TRUST MAGNATE business, banking statistics furnish, an index of the movement of business. The following is extracted from the 1910 report of the Comptroller of the Currency, page 63: "During the past decade the growth in the number and volume of business of the bank- ing institutions of the country has been es- pecially marked. In 1900 the total number of banks in operation was estimated at 13,- 977, with capital of $1,150,728,675. For the present year the number has increased to 27,- 263 banks, with aggregate capital of $1,957,- 138,888." This shows an increase of 13,286 banks and $806,410,213 in bank capital in ten years, or an average yearly increase in bank- ing institutions of 1,328. Individual deposits in the same ten years have increased from $7,688,986,450 to $15,859,533,644, or $8,170,- 597,194, an average of $817,000,000 per year. The increase in deposits of 1909 over 1908 was $1,155,000,000; the increase of 1910 over 1909 was $1,434,000,000, showing an increas- ing rate of increase each year. The increase recorded for the previous ten years from 1890 to 1900 was, in number of banks, 2,383, an average of 238 per year ; in individual de- posits, $3,176,000,000 an average of $317,- 600,000 per year. The foregoing figures, as 131 THE CONFESSION OF A TRUST MAGNATE well as comparative figures on resources and liabilities of banks, are set forth in detail in Exhibits "E" and "F" in the Appendix. The organization of trusts had become the vogue by 1900, and consolidations and mer- gers of all kinds in all lines have been rife ever since. Prices of commodities of all kinds have advanced in step with the in- creasing concentration of ownership and con- sequent control of the producing instruments and bank deposits have been climbing each year as owners were forced out of owner- ship and compelled to deposit their money in banks on account of lack of opportunity for its safe investment. It would seem as if sufficient had been said to show the part bank deposits play in the great conspiracy. You should not gather from the foregoing that banks are bad in- stitutions and responsible for your troubles. Banks are very necessary institution^, busi- ness could not be conducted without them. It would be just as reasonable to hold that railroads are bad mstitutions because people are run over when they get in the way of trains. It is the business of banks to invest and loan money. The more money they have to ia- 132 TEE CONFESSION OF A TRUST MAGNATE vest and loan the greater their profits. They are justified in using all legitimate means to increase the amount of their deposits and are justified in investing and loaning them to the best advantage. If a large part of the population have been compelled to deposit their money in banks on account of lack of opportunity for safe investment, it is not the fault of the banks. If a very small part of the population, possessing superior knowl- edge as to the uses of money, have obtained control of the banking machinery of the coun- try and used it to their great advantage, banks as institutions should not be held responsible. The banking power of the coun- try belongs to depositors and every depositor can use his share of it as he deems most advisable. If there are lack of opportunities for the direct use of the power by its own- ers and the power is being used by the few to the detriment of the owners of the power, the exercise of ordinary intelligence should prompt owners of the power to take steps to provide opportunities for its direct, safe use for their own benefit. When the owners of the power directly use it, the privilege of its use will be withdrawn from the few. Gov- ernment has been used to provide safe cus- 133 ' THE CONFESSION OF A TRUST MAGNATE tody for money, — use government to provide safe investment for money. The thought will probably occur to you, as it does to me, — while the direct investment of deposits would benefit owners of the de- posits, what benefit would accrue to non- Qivners of deposits, those whose earnings are insufficient to admit of saving, whose earn- ings are entirely absorbed by the high cost of living? The jadoption of a plan permitting the safe, independent promotion of indus- trial enterprises would open new and exten- sive channels of employment, the demand for labor would immediately increase, resulting in higher wage scales and more satisfactory terms of employment. The effect would be to increase the buying power of the whole population without increasing prices of liv- ing commodities, "thus removing the existiag oppression. With incomes increased and with opportunities for safe investment be- ing constantly provided, all would soon be- come owners in some profit producing enter- prise. The sixteen billions of dollars, hoard- ed in banks by the thirty million depositors, is the collar around the neck, the ring in the nose, of the ninety million non-owners in in- dustry. Only ten percent of deposits is 134 THE CONFESSION OF A TRUST MAGNATE represented by actual money, the remaining ninety percent is bank credit. To attempt to withdraw even ten percent of deposits, ex- cept for immediate use, would bring down upon the country the worst panic ever wit- nessed, and the remaining ninety percent must be used by its owners as hank credit, and the only way that it can be used is for investment. There are no opportunities for direct, safe investment. Opportunities must be provided. It has been said the leaders in the con- spiracy were giants in intellect, and it must not be supposed that they have overlooked any important factor in the formation of their plans. It has been shown that the bank- ing power is the power used for the acquire- ment of exclusive ownership of the country's industries; that ownership to the amount of fifteen billions of dollars is nominal owner- ship, maintained through the use of the bank- ing power ; that the foundation of the bank- ing power is bank deposits owned by thirty million depositors ; that ev^ry depositor has the right to use his share of the power as he deems advisable. These giant leaders, fully knowing the situation and recognizing the growing unrest of the people under the re- 135 "HE CONFESSION OF A TRUST MAGNATE straint imposed by the workings of the con- spiracy, saw that at some time, in some way, the people would be awakened to the true condition and attempt to withdraw the power that was being used for their oppression. They saw the withdrawal of the power meant sacrifice by them of that part of their own- ership which was maintained by the use of the power, unless they took steps to prevent the sacrifice. The steps that were taken are described in the following chapter. 136 THE CONFESSION OF A TRUST MAGNATE WARNING! NOTHING BUT DISASTER TO THE WHOLE COUNTEY COULD FOLLOW THE WITHDRAWAL OE BANK DEPOS- ITS WITHOUT SOME PROVISION BE- ING MADE FOR THE IMMEDIATE INVESTMENT OP THE WITHDRAWN MONEY. The money is absolutely safe in banks al- though being used to create undesirable con- ditions. The investments made by banks are in the best securities ; the loans made by banks are fuUy secured either .by a collateral or the fortunes behind the names of responsible bor- rowers; the legal reserve is intact; the capital, surplus and undivided profits of banks and the private fortunes of the owners of bank stock in the amount of the par value of stock owned are liable for the claims of depositors. • LET NOTHING CONTAINED IN THIS WRITING INDUCE YOU TO WITHDRAW YOUR BANK DEPOSIT EXCEPT FOR IMMEDIATE USE. 137 CHAPTEE V. The Panic of 1907. The " Aldrich-Vreeland" Currency Law the Crowning Act in thd Conspiracy. It will be well remembered how, in the latter part of the summer of 1907, banks in all sections of the country, simultaneously, refused to disburse currency upon the de- mand of depositors, except in limited and partial amounts. It will be remembered how clearing house certificates were resorted to; how industries issued pay certificates to their employes which circulated as money in the local trade ; how premiums were paid for cur- rency both to banks and to citizens that hap- pened to have currency in their possession at the time of the shut-down; how business re- fused to deposit currency in the banks; how large numbers withdrew their balances, threatening if refused to throw the bank into receivership; how bank deposits declined, followed by banks restricting loans ; how nu- merous business enterprises failed and 138 TEE CONFESSION OF A TRUST MAGNATE numerous projected undertakings were aban- doned. Those were stirring times, and more than two years elapsed before business re- gained its normal attitude. It will be remem- bered how the prices of all stocks declined, in numerous instances declining fifty per- cent and more. The harvest of the big own- ers was bounteous that season. See Exhibit " H " in the Appendix. The action of the banks, refusing the pay- ment of currency, came as unexpectedly as a lightning flash out of a clear sky. There had been no previous intimation of a shortage in currency supply, — in fact,' the use of cur- rency in the transaction of daily business is lessening in direct proportion to the increas- ing facilities furnished by banks. The neces- sity for the use of currency was at that time decreasing. The custom of paying pay rolls and bills with bank checks was on the in- crease at that time and has been Steadily increasing since. It is very much to the advantage of banks to reduce to the lowest possible point the use of currency, because they are required by law to keep a percentage of their reserve in bank, in the form of cur- rency, and if currency is indiscriminately drawn out of bank, more of the bank's capi- 139 TEE CONFESSION OF A TRUST MAGNATB tal is tied up in non-earning currency. Sta- tistic^ do not show any decrease in bank cur- rency supply in 1907 over previous years. See Exhibit "G." There were no circum- stances surrounding business at that time to warrant a panic. Times had been considered extraordinarily prosperous, — in fact, prom- inent financiers have attributed the panic to a too rapid pace in business development, too great prosperity amongst the people. The panic was deliberately planned by big owners, the banks were the instrmnents em- ployed for its precipitation. The following objects were accomplished through the precipitation of the panic: The conditions were created for the ab- sorption by big owners, at cut-throat prices, of profitable industries acquired and developed during the previous pros- perous years. Banks were given the opportunity to concentrate the attention of the business public upon the facilities they provided for the conduct of business without the use of currency, thus enabling them to use more of their capital in profit producing chan- nels. 140 THE CONFESSION OF A TRUST MAGNATE A widespread public sentiment for cur- rency reform was created, resulting in the enactment of the "Aldrich-Vreeland Cur- rency Law," approved May 30, 1908. An analysis of the "Aldrich-Vreeland" law is required to show the further benefits accruing to banks and big owners from the panic so disastrous to the welfare of millions of individuals. This law stripped of all surplus verbiage and unimportant provisions provides : That ten or more National banks, having an ag- gregate capital and surplus of at least five millions of dollars, may form voluntary "Na- tional Currency Associations," for the pur- pose of causing the issuance by the United States government of additional circulating medium ; that any bank belonging to an asso- ciation may deposit with and transfer to the association in trust for the United States for redemption purposes any securities it may hold, whereupon the association, in behalf of the bank, may make application to the comp- troller of the currency for an issue of addi- tional circulating medium, such application to be immediately transmitted by the comp- troller to the secretary of the treasury, who 141 THE CONFESSION OF A TRUST MAGNATE may, in his discretion, order an issuance of circulating medium to the association, on be- half of the applying bank, in amount as fol- lows: S^or commercial paper, railroad and industrial stocks, real esate mortgages or other liens on real estate, seventy-five per- , cent of the cash value ; for railroad or indus- trial bonds, state, city, town, county or other municipal bonds, ninety percent of the market value to be ascertained by the secretary of the treasury; that banks may withdraw and change securities on deposit with the associa- tion and the secretary of the treasury may call for addition or change in securities ; that the banks and the assets of all banks belong- ing to the association shall be jointly and severally liable to the United States for the redemption of such additional circulation. The law further provides that any national bank, not belonging to a currency association, having circulating notes outstanding, secured by the deposit of United States bonds to an amount not less than forty per centum of its capital stock and which has a surplus of not less than twenty per centum, may secure the issue of circulating medium, not exceeding in amount ninety per centum of the market value, but not in excess of the par value; by 142 THE CONFESSION OF A TRUST MAGNATE depositing railroad or industrial bonds, state, city, town, county or other municipal bonds, with the treasurer or any assistant treasurer of the United States and transferring the legal title to such bonds to the treasurer of the United States in trust for the redemp- tion of the circulating medium issued. The law further provides that the addi- tional circulating notes issued under this act shall be used, held and treated in the same way as circulating notes of national banks heretofore issued and secured by deposit of United States bonds; that there shall not be outstanding at any time .circulating notes issued under the provisions of the act to the amount of more than five hundred million dollars. The law further provides that q,ny national bank desiring to withdraw its circulating notes secured by deposit of United States bonds, may deposit with the treasurer of the United States lawful money and withdraw a proportionate amount of United States bonds held as security for its circulating notes heretofore issued. The law. creates a commission to be called the "National monetary commission," with the duty prescribed "to inquire into and re- 143 THE CONFESSION OF A TRUST MAGNATE port to congress at the earliest date prac- ticable, what changes are necessary or desir- able in the monetary system of the United States or in the laws relating to banking or currency. ' ' In the light of the knowledge of the great conspiracy, which is constantly and silently working underneath, let us view what this law permits and what benefits it confers upon the banks and big owners. This law permits banks 'to convert into money the securities purchased with de- posits; convert into money commercial paper and collateral taken, on loans made from deposits; pay depositors with the money thus secured, without parting with the ownership of the securities and without calling their loans. Through their owner- ship and control of banks, big owners of industries are thus permitted to maintain their nominal ownership against their cred- itors, which ownership confers profits and power of control. "When the United States government ac- cepts title, in trust for redemption pur- poses, of securities deposited for money issue, it places its stamp of approval upon 144 TEE CONFESSION OF A TRUST MAGNATE the issuance of the securities and thus makes them immune from further attack by government. Government could not rea- sonably attack corporations issuing securi- ties held by it for redemption of money is- sued by it. This law (in the provision for the retire- ment of existing circulation) permits banks to withdraw government bonds deposited as security for circulation and substitute commercial paper and industrial securities. Government bonds deposited for money issue are purchased with capital and yield small returns. The law releases half a bil- lion dollars of bank capital, heretofore tied up in a non-producing investment, for use in profit-producing channels. What are the benefits, if any, conferred by this law upon non-owners of industries, non-owners of money and bank depositors? This law provides for the retirement of money based on government bonds, to be replaced by money based on "watered" securities that depend largely for their value upon earnings wrung from the whole people through extortionate prices ; securi- ties that are being daily attacked by the 145 THE CONFESSION OF A TRUST MAGNATE national and state governments; securi- ties the market values of which are fixed through manipulation on stock exchanges by professional gamblers; securities, the values of which are to be determined by one man — the secretary of the treasury. Money based on government bonds is to be replaced by money based on unsecured notes of hand and securities of corpora- tions and trusts, privately and exclusively owned. The law .places a lien on banks and the assets of banks ahead of deposits, thus in effect making bank depositors the under- lying guarantors of the money of the country. This law has the effect of constituting government and the whole people sponsors for privately and exclusively owned in- dustries. This law makes banks and big borrow- ing owners absolutely independent of bank depositors, their creditors. Before the en- actment of this law, bank depositors, by withdrawing their deposits, could have compelled banks to sell the securities they owned and demand payment of loans, which would have compelled borrowers to 146 TEK CONFESSION OF A TRUST MAGNATE sell the securities deposited as collateral on loans. Now, should depositors attempt to withdraw their deposits, they, would he paid in money, such as it is, and banks and borrowers would not be compelled to part with their ownership. This law does away with the necessity for the further use of bank deposits by big owners in creating industries. Big own- ers, through their control of banks, can oonvert .the securities they now own into money for ^ use in creating additional in- dustries, the securities of which can in turn ^ be converted into money, and so on with- out end, all done without sacrificing owner- ship of any securities. This law make^ it possible for bank depos- itors to withdraw their deposits in money; but what would the money be worth; what would be its purchasing power; how could it be used? Money would be the cheapest thing in the market. It is true, the amount of money to be out- standing under this law at any one time is limited to five hundred millions ; but the same power that was used to enact such a law could be depended upon to remove this limit , 147 TEE CONFESSION OF A TRUST MAGNATE should thirty million depositors in all parts of the country be pounding upon the doors of banks, demanding their money. In consid- ering this law, the limit can be dismissed from the mind as meaning nothing. It was inserted to secure easy passage and was also inserted as a safeguard to big owners. It must be understood that there is no unity of action in the conspiracy; the eonspirators prey upon each other as well as upon the whole people. If such a law as this was left wide open it might be used by one set of conspirators very much to the detriment of another set. Big owners do not want an in- flated currency at the present time, but if pressed to it they would put it out. An in- flated currency means the necessity of in- creasing prices to offset the inflation, in order to maintain existing values, and it is becom- ing harder and harder to increase prices against the protests of the people. This law was enacted as an emergency measure — not to cure any defect in the cur- rency system, but to protect big owners against bank depositors in case depositors should awaken to the fact that the power being used by big owners was their own power. As proof that the currency system 148 THE C^ONFESSION OF A TRUST MAGNATE did not need aliy treatment and that the law was not enacted to cure any defect, attention is called to the fact that the law provides for the retirement of existing national bank cir- culation in amount equal to the amount of additional circulation authorised under the law. There will only be issued under this law the present authorized five hundred million, and that will be used to retire existing cir- culation, unless bank depositors make addi- tional issue necessary by calling for their money. This law was intended only as a temporary makeshift until the monetary commission created by section seventeen could have time to inquire into and report to congress what changes were necessary or desirable in the monetary system or banking laws. Section twenty provides "that this act shall expire by limitation on the 30th day of June, 1914," before which time, it is expected, the supe- rior facilities to be devised by the monetary commission will be in full operation. The comptroller of the currency, in his 1910 report, page 31, which reports up to October 31, 1910, gives the total organization of national currency associations as follows : District of Columbia, 11 banks ; Philadelphia, 149 THE CONFESSION OF A TRUST MAGNATE 28 banks; New York City, 35 banks; state of Louisiana, 10 banks; Boston, Mass., 15 banks ; state of Georgia, 21 banks ; St. Louis, Mo., 11 banks; Chicago, 111., 11 banks; St. Paul and Minneapblis, 14 banks; Detroit, Mich., 16 banks. Total associations, 10 ; and total banks embraced by all associations, 172. The report also says (page 31): "Circula- tion has been prepared for everi/ national bank, an,d there is stored in the reserve vault ; of the bureau a stock of incomplete currency amounting to $500,000,000. So far, no circu- lating notes, other than those secured by United States bonds, have been issued." The machinery is all set and all that re- mains to be done to flood the country with this putrid money is for bank depositors to evidence a disposition to want their deposits. The chairman of the monetary commission (who, by the way, is also the author of the foregoing act), after over two and one-half years' arduous labor, during which time he traveled in foreign countries, inspecting the most approved methods of handling the money of the many for the benefit of the few, has informally transmitted his conclusions to the commission, in the shape of a report on which to base a bill to be enacted by the Con- 150 THE CONFESSION OF A TRUST MAGNATE gress creating "The Eeserve Association of America. ' ' The report has been discussed in a desultory way in the financial columns of the press, and leading bankers have, after spending a day at Atlantic City with the author of the report, expressed themselves as satisfied with the conclusions reached. It can safely be assumed that the bill will be en- acted when introduced, as there are few, even in the halls of Congress, who are qualified to discuss its provisions, so universal is the ignorance on the subject of money and its uses. From the preliminary report it is plain to be seen that "The Reserve Associa- tion of America" is simply a mammoth con- centrator. All previously designed methods for concentrating the control of the use of the money of the country dwindle into insig- nificance in comparison. All of the benefits to banks and big owners conferred by the "Aldrich-Vreeland" law are incorporated in the plan, with the power to dispense the bene- fits concentrated in twenty-three men. All of the benefits ( ?) conferred by the "Aldrich- Vreeland" law upon non-owners of indus- tries, non-owners of money, and bank depos- itors are conferred by the creation of the re- serve association. The creation of the pro- 151 TES CONF^E^ON OF A TRTlSf MAGNATE posed association places the control of the banking facilities of the whole countTy in the hands of twenty-three men, viz. : the majority of the board of forty-five directors of the as- sociation. Power? No power in our coun- try could stand against it. Legislatures, courts, government officials, all, would be compelled to bow before it. The author of the measure is right when he says politics could not control it. The future development of our country would be along lines laid down by these men ; the developers would be only those having the ear of these men. Twenty- two of these men would soon become tools of one m5n. It is so in other corporations; it would be so in this corporation. Stop and think ! This tinkering of the cur- rency, this manipulation of the banking laws, is all done in the name of business with the avowed intent of facilitating the promotion of industries. Whose industries? The in- dustries belonging to a few big owners, the ownership of which is acquired by the use of the banking power of the country belonging to thirty million bank depositors ; the owner- ship of which confers upon the few owners the profits produced and the power of con- trol of operations, which power is used to 152 THE CONFESSION OF A TRUST MAGNATE increase profits to the oppression of the own- ers of the banking power and all non-owners. Do you see that "Manufacturing Aristoc- racy" appearing, owning all the industries of the country, possessing the power of con- trol of all channels of employment, appropri- ating all profits produced, dictating the prices of all commodities, issuing the money of the country to suit its convenience, government doing its bidding in fostering and promoting its industries with funds derived from gen- eral taxation? How long is it to be before you formulate and adopt plans permitting the owners of the banking power to directly use their power and thus widely distribute amongst the whole people the blessings at- tendant upon a widely distributed ownership of the industries of the country? How long is it to be before you deal the death blow to the manufacturing aristocracy arising in your midst ? The first step to be taken is to repeal the "Aldrich-Vreeland Currency Law," ap- proved May 30, 1908, and voice in no uncer- tain tones your disapproval of the creation of the ' ' Eeserve Association of America. ' ' The second step is to adopt the plan out- lined in chapter seven, for the creation of 153 THE CONFESSION OF A TRUST MAGNATE opportunities for the safe investment of money direct by the owners of money. Do you see the culmination of the great conspiracy? Awake from the hypnotic spell, of prece- dent and custom ! You are free in name only as long as you are barred from ownership, voice in control and share in profits of the industries of your country. You acquiesce in the assumption of "Divine Right" to con- trol your destiny when you permit the few to invest your money, the product of your thrift and energy. . The time has come to throw off the yoke of concentrated ownership that galls the neck of a free people. 154 TEE CONFESSION OF A TRtfST MAGNATE WARNING! LET' NOTHING CONTAINED IN THIS WHITING INDUCE YOU TO WITHDRAW YOUR BANK DEPOSIT EXCEPT FOR IMMEDIATE USE. YOUR MONEY IN BANK IS ABSO- LUTELY SAFE. THE WITHDRAWAL OF BANK DE- POSITS, EXCEPT FOR IMMEDIATE USE, WOULD FLOOD THE COUNTRY WITH A WORTHLESS CURRENCY AND IMMEDIATELY INCREASE THE COST OF LIVING. STEPS MUST BE TAKEN TO PRO- VIDE SAFE INVESTMENT MEDIUMS BEFORE DEPOSITS CAN BE WITH- DRAWN. 155 CHAPTER VI. The "Eound-Up." Before taking up the proposed plan for providing opportunities for safe investment of money direct by its owners, contained in the following chapter, it seeiiCis necessary to briefly summarize the foregoing findings — so large and complex is the subject. It must be evident to the most casual ob- server and the most cursory reader of cur- rent events, that there is a growing unrest and a growing feeling of oppression amongst the great mass of the population, which is generally attributed to the increasing prices of commodities directly and indirectly enter- ing into the cost of living. "Trusts" are held responsible for the high prices and consequent oppression, and rep- resentatives in government are charged with granting special privileges to "Trusts" in return for bribes received. Yielding to public clamor, government ex- ecutives, both national and state, have insti- 156 THE CONFESSION OF A TRUST MAGNATE tuted legal proceedings against trusts, their officers and owners, with the avowed intent of destroying or regulating and controlling their organizations and imprisoning their offi- cers and owners. Either through ignorance or with intent to deceive, numerous political leaders and a cer- tain portion of the daily press and magazine publications are continually poisoning the minds of the people against the industries of the country and their owners, which action, coupled with other causes, has resulted in the withdrawal of the general public from ownership in those industries. In the effort to escape the oppression in- duced by high cost of living, the workers of the country are continually demanding in- creased wage scales and endeavor to enforce their demands by declaring strikes and boy- cotts, which actions are met with lock-outs and shut-downs by proprietors of business, resulting in an endless warfare between Capi- tal and Labor. When Labor succeeds in en- forcing its demands, increases in prices of products immediately follow, more than off- setting the enforced increases in wages. Under the guidance of ignorant or self- seeking leaders, with the hope of bettering 157 THE CONFESSION OF A TRUST MAGNATE conditions, making life in this magnificently rich country more bearable, the people are constantly enacting or endeavoring to enact legislation destructive to industry and inim- ical to ownership, the effect being to retard development and drive Capital from the in- vestment field. The whole country is in a turmoil ; the situ- ation has become unbearable; some definite policy must be adopted and carried out that will clear up the situation and permit the people to peaceably continue their upward march. Being in a position to know the true in- wardness of the situation, seeing the ap- proaching crisis in the economic affairs of the country, fully appreciating the dangers threatening the government and its entire citizenship, and having become thoroughly sickened by the hypocrisy of big business leaders, I am impelled to indite this message. It is my hope that it will have the effect of awakening at least a few, and that a grow- ing sentiment will be started amongst £he people, eventually causing them to adopt the recommended policy, which is the only avenue of escape from the present oppression and the threatening dangers. 158 THE CONFESSION OF A TRUST MAGNATE Those understanding the true situation know that trusts have become the very foun- dation of all business of the country; they fix the prices of all commodities directly and indirectly entering into the daily cost of liv- ing ; they dictate the income of every inhab- itant. Every inhabitant is directly or indi- rectly an employe of trusts and is by neces- sity a consumer of their products. High prices are the result' of the praise- worthy effort on the part of every person to better his or her condition. High prices are both the cause and effect of high prices. All are responsible for high prices. Insufficient income is the cause of oppression. Eecognizing the economic law, viz. : ' ' Own- ership confers profits and power of control; more ownership, more profits and greater control," a comparatively few are promoting a gigantic conspiracy to obtain and maintain exclusive ownership of the industries and the undeveloped natural resources of the coim- try. The effect of the conspiracy is to reduce the great mass of the population to a wage- earning basis. The workings of the conspir- acy have forced the general public out of ownership and forced its money into banks where it is subject to the exclusive control of 159 THE CONFESSION OF A TRUST MAGNATE the conspirators. Confidence in corporation securities as mediums for investment hav- ing been destroyed by the workings of the conspiracy, there are few opportunities for profitable and safe investment of money di- rect by its owners, and the result is an accu- mulation of sixteen billions of dollars in banks to the credit of thirty million depos- itors, the amount now increasing at the rate of over one and one-quarter billions annually. "No ownership, no share in profits, and no voice in control," is the negative of the economic law above stated. Through having no ownership, consequently no share in prof- its, the income of the general public is insuffi^- cient to meet the high prices exacted for living commodities; hence ihe oppression. Through having no ownership, consequently no voice in control, the general public is help- less in the hands of the comparatively , few owners. In the endeavor to control prices — that is, force a division of profits without possessing ' ownership — the people have caused govern- ment to attack industrial organizations and their owners ; hence the existing warfare. It is the duty of government to foster and promote industry and protect ownership. 160 TBE OONPESSION OF A TRUST MA&NATE Wlieii government ceases to do this, anarchy will reign. Owners of the industries, fully understanding this, could soon settle the war- fare by taking this position, but to do so would awaken the people to the true situa- tion. Owners prefer to fight the attacks of government, and in the meantime open new territory for the employment of money where it can be employed free from the attacks of governmelit and labor organizations; hence, the Canadian Eeciprocity Treaty and the Miexican disturbance. The people of this country are about to receive a lesson. When home production is restricted and the people are forced to consume foreign products, pro- duced w:ith the use of their money, they will sorely repent their sandbagging attacks upon home industries. The evident policy to be pursued under these conditions is to cease attacks upon in- dustries by which the country lives and pro- ceed to acquire ownership in the industries, thus sharing in the profits they produce and having a voice in their control. There are sixteen billions of dollars on deposit in the banks of the country to the credit of thirty million depositors, with which to ac- quire ownership ; but the lack of confidence 161 THE CONFESSION OF A TRUST MAGNATE in corporation securities as investment me- diums prohibits the acquirement of owner- ship — besides, present owners do not care to part with their ownership. A plan must he adopted that will compel present owners to voluntarily submit their enterprises to the supervision and inspection of government, thus restoring confidence, and compel them to sell that portion of their ownership main- tained by the use of borrowed money. The plan submitted in the following chap- ter is devised with three ends in view, viz. : First — To provide a method and means for much needed development, impossible under the existing lack of confidence and exclusive control of money and bank credit. Second — To provide opportunities for the safe investment of money direct by the owners of money, thus restoring equal op- portunity in industry. Third — To provide a method to compel owners of existing enterprises to volunta- rily place their enterprises under the super- vision and inspection of government and distribute their nominal ownership amongst the owners of the money, with the use of which their nominal ownership is being maintained. 163 TEE CONFESSION OF A TRUST MAGNATE Finally, and most important : The owners of existing enterprises have caused the en- actment of a law known as the "Aldrich- Vreeland Currency Law," which makes it possible to pay bank depositors their money without sacrificing ownership of the indus- tries purchased with the money. The law must be repealed or government cannot ac- quire supervision of existing enterprises and their nominal ownership canot be distributed. The creation of the proposed ' ' Eeserve Asso- ciation of America" must be prevented. 163 CHAPTEE VII. The Gkeat Problem and Its Solution. The great problem confronting the people of this country today is, How can bank de- positors withdraw their money from banking institutions — that is, how can they directly use their bank credit — without creating a panic? All other problems would be solved in the solution of this, as all of the ills afflict- ing the people grow out of concentrated ownership of industry made possible by the existing exclusive control of money or its equivalent bank credit. I offer the following plan as a solution of the problem : Cause the United States government and each state government to organize "Super- vising and Inspecting Bureaus" for the vol- untary use of those desiring to create an en- terprise, where the magnitude of the enter- prise required an appeal to the general public for the use of its money. 164 THE CONFESSION OF A TRUST MAGNATE The promoters of an enterprise would pre- pare their plans, specifications and estimates of cost, together with a prospectus of the enterprise, and present to the bureau for ex- amination by its duly qualified experts; the examination to involve an inspection of the premises, a rigid checking of the cost esti- mate, plans and specifications, a judgment as to the probable success of the enterprise in operation from an earning standpoint and all other things necessary to determine the fact that the enterprise was one in which the general public could invest its money with reasonable chances of safety and profit. (The same procedure at present adopted by banks and trust companies before investing or loan- ing their deposits.) Should the enterprise, upon examination, meet the requirements, the bureau would authorize the promoters to incorporate a com- pany to create and operate the enterprise, specifying the amount of capitalisation, such capitalisation to be in common stock of the face value of one dollar per share. After the company had been incorporated, it would enter into a contract with the bureau, agreeing, among other things : 165 THE CONFESSION OF A TRUST MAGNATE Not to increase, alter or change its capital- ization without the consent of the bureau. Not to list its capital stock upon any ex- change without the consent of the bureau. Not to enter into any combination, or in any manner enter a pooling agreement with any other organization, without the consent of the bureau. To give the veto power to the bureau on any item of expenditure. To furnish monthly, quarterly, semi-annual and annual reports of operations to the bu- reau, such reports to be published and dis- tributed by the bureau. To permit inspection and audit by the bu- reau of all methods and accounting, at any and all times. To dispose of its capital stock only at face value and for cash or tangible property. The penalty for infraction of any of the terms of the contract, or for improper con- duct of any of the affairs of the corporation, to be the withdrawal of the bureau from the contract ; such withdrawal to be privately an- nounced by the bureau to each stockholder, sixty days in advance of withdrawal, and to the general public, by advertisement, thirty days in advance of withdrawal, should the 166 THE 'CONFESSION OP A TRUST MAGNATE stockholders fail to adjust all difficulties to the satisfaction of the bureau within the thirty days allowed. This is my plan in brief. A corporation thus organized, supervised and inspected could offer its capital stock di- rect to the general public and the general public would buy it. The making of capital stock in shares of one dollar each would permit the poorest to become owners and profit-sharers. The limiting of the issuance of securities to common stock prohibits the issuance of other forms of securities now issued for the sole purpose of acquiring the use of money with- out permitting the owners of money to ade- quately share in the profits produced by its use, or have voice in management of the in- struments created with the money. The control by the bureau of capitalization, combination and pooling agreements, and the listing of stocks on- exchanges, would remove the opportunity for manipulation of securi- ties and their market values. The veto power vested in the bureau would prohibit the absorption of earnings by the few in unearned salaries and padded ex- penses. 167 THE CONFESSION OF A TMUSf MAGNATE If the object of conducting business is to benefit investors and serve the general pub-. lie, publicity should be courted ; if the object is to rob investors and oppress consumers, publicity is absolutely essential to frustrate the design. The inspection and audit by experts, duly qualified and acquainted with the methods adopted and the results obtained by other enterprises in the same line, would be invalu- able to each enterprise. The provision for the corporation to dis- pose of its capital stock only at its face value and for cash or tangible property, prohibits overcapitalization from exorbitant promotion fees and declaration of stock dividends. Pro- motion fees and interest during construction should be considered a part of the legitimate cost of creating a property, and should be paid in cash. Promotion fees should be a percentage of the cost to create the initial en- terprise ready for operation, the percentage rate to decrease in proportion to cost in- crease. The penalty of the withdrawal of the bu- reau from the support of the corporation would be sufficient to keep it in line, because the contract with the bureau would be its 168 THE CONFESSION OF A TRUST MAGNATE very essence. A timely warning to the stock- holders by the bureau would cause them to check up the management. The foregoing is a rough outline of the plan, with comments on its main features. The plan is based on the following assump- tions and propositions. The United States government and the several state governments, by their super- vision and control of banks, assume to pro- tecf the people in the custody of their money. Why is it not equally a province of the several governments to protect them in the investment of their money? What is it that creates confidence in banks? Governmental supervision and in- spection. What is it that compels bank manage- ment to conduct the affairs of the bank in such manner as to inspire confidence ? Gov- ernmental supervision and inspection. It is the duty of government to promote equality of opportunity in industry. The plan constitutes our national and state governments Umpires of the business game, to see that it is played fair and square, ac- cording to rules. It is not contemplated that the several gov- 169 THE CONFESSION OF A TRUST MAGNATE ernments shall guarantee any results to be obtained by corporations operating under their fostering care, any more than they now guarantee results obtained by banks. Their supervision and inspection is simply designed to prevent majority owners from robbing minority owners. Investors would still as- sume the risk involved in the investment of their money in a well organized, intelligently conducted, honestly administered, impartially inspected business enterprise, which risk is very slight. It might arise that the bureau of a certain state would get under the control of some powerful interest able to influence its opinion on the merits of a competitive enterprise and cause the rejection of a meritorious enter- prise. The bureau of another state would be open for the use of the applicant. All bureaus should be open to all comers — first come first served — so as to prevent the block- ing of the development of any enterprise. It would be advisable to use the United States Bureau for all interstate enterprises — rail- roads, telegraph, telephone, etc. It might be argued that unwise develop- ment along certain lines would follow the adoption of the plan. What agency could be 170 THE CONFESSION OF A TRUST MAGNATE better qualified to determine as to this than the bureau examining the application? If, upon examination, it was determined suffi- cient development existed in a certain line, that in itself would be sufficient cause for the rejection of the application. The enterprise would not be considered by the bureau as being, in its judgment, ' ' one in which the gen- eral public could invest its money with rea- sonable chances of safety and profit." Other bureaus would closely investigate applica- tions previously rejected. It is not contemplated to make it obligatory upon all corporations to enter these bureaus. The bureaus should be organized for the vol- untary use of those desiring to create an enterprise. The desirableness of the super- vision and inspection furnished by the bu- reaus would soon cause their universal use. An enterprise would be unable to float its securities without it was a member of a bu- reau. The bureaus would soon become mod- els of efficiency ; great rivalry would ensue in the endeavor to provide the best mediums for investment; the failure of an enterprise would be considered a reflection upon the effi- ciency of the bureau. The bureaus would form associations for interchange of views 171 TEE CONFESSION OF A TRUST MAGNATE^ and information, the experts of bureaus in the several lines of industry would be brought together in discussion of the different meth- ods and practices obtaining in the enterprises under their respective supervision, and the enterprises would materially benefit thereby. Inefficient management of enterprises would soon be detected by the bureau experts, who would be qualified to suggest changes in prac- tices, which would convert failure into suc- cess. The securities of enterprises thus su- pervised and inspected would become as safe investment mediums as government bonds, and their ownership would be and remain widely distributed; because the investment, direct by owners, of the money now hoarded in banks, which would follow the creation of such securities, would withdraw from banks the power to loan money (or bank credit), which power is the cause of the exist- ing concentrated ownership. "State Rights" are preserved and ex- tended in this plan. There is a growing tendency toward national usurpation of state rights. Big owners are responsible for this, finding it easier to control one body than forty-seven. "While the proposed "National Incorporation Law" is outwardly opposed by 172 THE CONFESSION OF A TRUST MAGNATE big owners it is being inwardly promoted by them. The "Corporation Tax Law" enacted with the Payne- Aldrich tariff law was the en- tering wedge in taking over supervision of corporations licensed by states. The people pay the tax in increased prices, there is no loss to owners. The natural tendency will be for citizens to use their home bureau in creat- ing home enterprises and home money will be first invested in home enterprises, thus ex- tending the powers of state governments. The bureaus would be self-supporting from fees exacted for examination, inspection and audit. The organization of the bureaus could be used to produce revenue for state ex- penses, thus lessening direct individual taxa- tion; but care should be taken not to make the tax burdensome upon new enterprises in the beginning. Great care should be taken in the organiza- tion of the bureaus not to permit "Eegula- tion and Control" to creep in. There is a vast difference between ' ' Supervision and In- spection" and "Eegulation and Control." Our governments have wasted years trying to regulate and control industry, without suc- cess. Eegulation and control means limiting the fruits of endeavor, usurpation of the 173 THE CONFESSION OF A TRUST MAGNATE rights of ownership. Supervision and inspec- tion means increase in the fruits, promoting and fostering ownership. No regulation of prices, no limitation of earnings, no "don'ts." Government by prohibition has always been a failure ; wise parents have long since aban- doned the word "don't" in governing their children. The bureaus should simply be um- pires. Play the game square or we withdraw as umpires of your game. The whole people will soon be in the game, sharing in the prof- its, so there will be no need to regulate prices, and it would be unjust to curtail their earn- ings when they enter into ownership, after having allowed the few present owners to fatten for years, unregulated. The uses for these bureaus are numberless ; their immediate installation is imperatively demanded. Is there a territory that has been discriminated against in railroad rates or neglected in railroad building? The way is provided for the people adversely affected to help themselves. Is it desirable to build north and south lines of transportation through our country, connecting the Gulf ports with the surplus production of the Middle West, thus saving a railroad haul of five to seven hundred miles 174 THE CONFESSION OF A TRUST MAGNATE over mountain ranges to tide-water? The construction of the Panama Canal calls for these lines. They cannot be constructed as long as the owners of the existing transconti- nental lines are in control of the money of the country. Is there a state (California, for example) in the grip of a railroad monopoly that drains the whole state of its earnings'? Its grip can be loosened. Electric railways are needed everywhere to facilitate communication in local terri- tory ; additional telephone and telegraph lines would be profitable investments in many localities. Is there a territory underlaid with fuel, where the local population are compelled to pay exorbitant prices for fuel produced in other fields ? The way is provided to develop the home field. ■ Under the existing exclusive ownership of both the manufacturing and transportation instruments, manufacturing is conducted at points" far removed from the base of supply of raw material, resulting in extensive busi- ness for the transportation instruments. Ore mined in the Superior region, manufactured at the foot of Lake Michigan ; wheat raised 175 TEE CONFESSION OF A TRUST MAGNATE in Kansas and Nebraska, milled at Minneap- olis; cotton raised on the gulf coast, milled on the eastern seaboard; cattle and hogs raised west of the Missouri river, slaughtered in Chicago. The consumer pays the freight. With confidence restored in corporations as investment mediums, independent manufac- turing industries could be installed at the source of supply of the raw material, and decrease in cost of production would ensue. By the use of the bureaus, unappropriated natural resources, privately owned and lying within the public domain, could be developed by the whole people for the benefit of the whole people. The untold riches of Alaska could be appropriated by all instead of the few. Cuba's citizens would not longer be subjected to the existing merciless exploita- tion. Mexico could be assisted in the devel- opment of its riches on a basis profitable to our people and not oppressive to its people. The virgin territory, across ,the Canadian line, to be opened to development by the pro- posed "Reciprocity Treaty," would furnish extensive employment for the bureaus. The foregoing are only a few of the chan- nels in which money could be profitably em- ployed if opportunities for its safe invest- 176 THE CONFESSION OF A TRUST MAGNATE ment, direct hy its owners, were provided. In this magnificently rich country of ours, and in the virgin territory to the north and south, so soon to be opened, no enterprise could fail to produce most satisfactory re- turns to its owners if it was organized and operated under the impartial and duly quali- fied supervision and inspection provided in my plan, and the money of the thirty million now hoarded in banks would freely come to the support of any enterprise — backed by a bureau; that is, bearing the stamp of ap- proval of government. This country has never seen such universal prosperity as would follow the entrance of the whole people into ownership of the instruments that produce profits. It will be noted that the uses of the bureaus have been confined, in th6 foregoing, to the organization and operation of new enter- prises which come voluntarily and ask for admission. The bureaus will be equally effect- ive in supervising and inspecting existing en- terprises, when those enterprises come volun- tarily and ask for admission. My plan is de- vised with three ends in view : First — To provide a method and means 177 THE CONFESSION OP A TRUST MAGNATE for much needed development, impossible under the existing lack of confidence and exclusive control of money and bank credit. Second — To provide opportunities for the safe investment of money direct by the owners of money, thus restoring equal opportunity in industry. Third — To provide a method to compel owners of existing enterprises to volun- tarily place their enterprises under the supervision and inspection of government and distribute their nominal ownership amongst the owners of the money, with the use of which their nominal ownership is .being maintained. The accomplishment of the first and second compels the accomplishment of the third, in the following manner : As new enterprises are created, owners of bank deposits will withdraw them for invest- ment in the new enterprise. In order to pay the deposits, banks will be compelled to offer for sale the securities in which deposits are invested and will also be compelled to de- mand payment of loans made from deposits. The demand for payment of loans will com- pel borrowers, nominal owners, to offer for 178 THE CONFESSION OF A TRUST MAGNATE sale the securities held by banks as collateral on loans. When the banks and nominal owners are thus compelled to offer their securities for sale, will the general public buy them? Se- curities of new enterprises, organised and operated under the fostering supervision and inspection of government, will be daily of- fered to the general public. Will the general public prefer to buy "watered" securities, securities being daily attacked by govern- ment, securities depending for their value upon earnings wrung from the people through exorbitant prices, securities of corporations, the majority ownership of which will still remain in the hands of the few, unsupervised, uninspected? No! Never! Banks mttsi pay depositors; borrowers must pay their loans. Owners of the securities will be compelled to voluntarily beg for admission of their enter- prises to the bureaus. The enterprises will come to the bureaus on the same footing as .new enterprises. They will have to submit to examination ; their tangible property will be valued; their combination and pooling agreements will be closely scanned; their capitalization will be adjusted to meet the demands of the bureaus. After the enter- ing THE CONFESSION OF A TRUST MAGNATE prises have gone through this purifying proc- ess, they will be permitted to enter into the contract with the bureaus; that is, receive the stamp of approval of government. The owners of the securities thus purified can then offer them for sale in competition with the securities of new enterprises and, on equal terms, the general public will buy them. Borrowers can then pay loans and banks can then pay depositors. At this point it is fitting to revert to the ' ' Aldrich-Vreeland Currency Law, ' ' the pro- visions of which "permit banks to " convert into money the securities purchased with de- posits ; convert into money commercial paper and collateral taken on loans made from de- posits; pay depositors with the money thus secured, without parting with the ownership of the securities and without calling their loans." The law was enacted as an emer- gency measure; the emergency anticipated is just above set forth. Unless this law is re- pealed and the creation of the proposed "Ee- serve Association of America" is prevented, government supervision of existing enter- prises can never be acquired; ownership in them can never be distributed, and the coun- try will be flooded with a currency based on 180 THE CONFESSION OF A TRUST MAGNATE the exclusively owned enterprises. This cur- rency will be the currency which the people wUl be compelled to use in the creation of their new industries, expending it for the creation of their new industries with the own- ers of existing industries at its greatly re- duced purchasing value due to its inflation. There must be no money issued under the provisions of the " Aldrich-Vreeland Cur- rency Law." The creation of the "Reserve Association of America" must he prevented. To gain a clear understanding of the situ- ation and the part banks play in the situation requires concentrated thought. Bank credit is founded on the deposit of money and the deposit of checks or other instruments used in the conduct of business to transfer credit from one adcount to another account. If this bank credit is kept constantly in use by the owners of the credit (the owners of the ^6- posits), the bank cannot use it, cannot invest or loan it. If the owners of the credit, the depositors, accept an interest consideration, the bank acquires the right to use it as it de.-. sires. From lack of opportunity for safe investment, owners of bank credit have been unable to directly use it for their own bene- 181 THE CONFESSION OF A TRUST MAGNATE fit, and nearly sixteen billions of dollars has accumulated on the books of banks. It is this credit that owners of banks exclusively con- trol, exclusively dispense. It is the use of this credit that makes it possible for present owners of tangible property of any kind to acquire further ownership in excess of what they could acquire through earnings accru- ing from their present ownership. It is the general thought that the great fortunes of a few families constitute the money power that is being used for the oppression of the masses. This is not true. If the existing bank credit was in use direct by its owners, the owners of these great fortunes would only have for investment (for use in acquiring additional ownership) just the earnings of their present ownership. Under the existing enormous amount of bank credit and the existing con- dition of exclusive control of bank credit, the owners of these fortunes are able to procure for further investment, without sacrifice of present ownership, seventy-five to ninety per cent of the value of their present ownership, in addition to the earnings of their present ownership. Eemember, this bank credit that is being used for the benefit of the few be- longs to the thirty million depositors and is 183 THE CONFESSION OF A TRUST MAGNATE the product of their thrift and energy, which they are barred from using for their own benefit by lack of opportunity for its safe use. The providing of opportunities for the safe use of money and bank credit direct by its owners (the adoption of the foregoing plan) would produce the following results : Every worker would be permitted to re- ceive full compensation for his efforts. No person would be permitted to unduly profit from the efforts of another. Are these attainments desirable? Are not these conditions guaranteed under our gov- ernmental organization? Any other condi- tion recognizes and acquiesces in the right of one person to control the destiny of another, which means slavery. The great troubles in our country today grow out of the general acquiescence in the assumption by the comparatively few of the • right and superior fitness to handle the big business of the country. The people of this country should never concede this right to any man or set of men ; they should recog- nize and acknowledge the superior fitness of 183 THE CONFESSION OF A TRUST MAGNATE some, and be glad to permit them to conduct the big business; but, it is not necessary that exclusive ownership and control of big business should.be a condition precedent to its conduct — that is too great a price to pay for superior fitness. There need be no fear that these superior men will quit their jobs when the people take steps to acquire owner- ship in big business ; they will work just as hard under orders, and for less pay. They will constantly be sustained by the belief that their superior talents will find a way to re- gain exclusive ownership and control. Let us see what bearing the adoption of this plan would have upon the main issues before the country to-day. GrOVEENMENT OWNERSHIP. There is no de- mand for government ownership amongst owners of industries. Socialism. Socialistic doctrines are repug- nant to owners of industries. Initiative — Eeperen-dum — ^Eecall — Elec- tion OF Senators by Direct Vote. All are inimical to ownership; all are dangerous weapons to place in the hands of non-owners. Capital and Labor. Unrestricted owner- ship in industry by Labor would end the war- fare. 184 THE CONFESSION OF A TRUST MAGNATE Legislative and Judicial Debauchery. Ac- tions favorable to industries would benefit all. It would not longer be necessary to bribe representatives to do their duty, and sand- baggers would be summarily dealt with. The Taeiff. Protection of industries would benefit all. Take steps to enter into ownership of the industries of the country and wipe out all these issues, and others; they retard prog- ress. Our experiment in government is being closely watched throughout the world, and the existing internal and eternal strife is ex- tremely interesting to the onlookers. It is daily weakening our structure. Take steps to stop it. 185 CHAPTEE VIII. In Conclusion. And now, my fellow citizens, the ninety million non-owners ia trust industries, it is apparent that there is today no policy in our country looking toward your material prog- ress. At no time in the history of our country has there been such wealth production as ex- ists today, such perfe'ct machinery for the production of wealth. You should have prof- ited and should be increasingly profiting each day, from this wealth production; there should be no poverty in this magnificently rich country. This is the richest country on earth today as a nation. And why is this great wealth production not distributed amongst you? I have told you in the foregoing and shown you the meth- ods employed to prevent the distribution. And what are you going to do about it? 186 mt! CQNJ^usSioN Of a trust magnate Are you going to continue your warfare upon the macMnery that is producing the wealth and the men that are operating the machin- ery, or wUl you abandon the hopeless war- fare and take the necessary steps to acquire ownership in the machinery, and thus secure your share of the wealth produced? Every step you take, or permit government to take, tending to curtail the rights of ownership, will react upon you, should you ever become owners; every weapon designed for attack upon ownership, and placed in the hands of non-owners, will be used against you, should you ever become owners; and remember, only through ownership in the things that, produce profits can you share in profits and thus escape poverty and oppression. To show you how utterly hopeless is the warfare being waged by government upon trusts, and how perfectly hypocritical it is, I call your attention to the enactment, in the thick of the fight of the "Aldrich-Vreeland" currency law, permitting the defendants in the warfare to make their attacked securi- ties the foundation of the money of the coun- try—and the then "Colonel" of the govern- ment forces, the greatest "Trust-Buster" that ever occupied the presidential chair, 187 THE CONFESSION OF A TRUST MAGNATE signed the bill, making it law. The present General of the government forces has also dis- played his great earnestness (?) in the war- fare in your behalf by the manner in which he kept his promise to revise the tariff down- ward; by his strong support of legislation creating Postal Savings Institutions, thus supplying the defendants with the use of for- merly uncontrolled money, at your expense; by his initiation of the "Corporation Tax" law, tending to remove corporations from the supervision of states that create them; by his activities in bringing about "Canadian Reciprocity, ' ' thus providing virgin territory in which the defendants can use your money free from governmental attack ; by his ready mobilization of government troops upon the Mexican border, looking toward further ter- ritorial expansion. Understand me, I find no fault with government and its representa- tives fostering and promoting industry and protecting owners in their ownership. It is the duty of government to do this, and it is the perfect performance of its duty by gov- ernment that has upbuilded our country to its present eminence amongst nations and made owners fabulously rich. I rail at the hypocrisy of the methods, pretending to you 188 THE CONFESSION OF A TRUST MAGNATE that a righteous warfare is being waged in your behalf, and underneath continually fos- tering, promoting and protecting the inter- ests of the supposed enemy. There is no policy in our country today looking toward your upbuilding. You must adopt a policy. All non-owners in trust in- dustries should join hands in lawfully break- ing iilto the existing concentrated ownership of the industries of the country. Let your rallying cry be: "EESTORATION OF CONFIDENC E— DISTRIBUTION OF OWNERSHIP." The first accomplished, the second must follow, and the realization of both will reinstate in our country EQUAL OPPORTUNITY, the demand for which was the underlying reason for the birth of our country. This movement on your part will meet with the vigorous opposition of powerful in- trenched owners. You have seen to what lengths they have gone in the great conspir- acy to obtain and maintain ownership, and you caji count on every obstacle that can be devised and every argument that can be mar- shaled being used to block the movement. Owners have always vigorously and sue- ' cessfuUy opposed all efforts of government 189 THE CONFESSION OF A TRUST MAGNATE to assume supervision over their operations. To thwart your movement, they may now gracefully yield to the supervision of the na- tional government ; that is, they may permit the passage of a national incorporation act and reincorporate their enterprises under the act. Do not be fooled by this concession on their part. In the first place, such a proced- ure would rob state governments of any' voice, in the industrial pursuits of their citizens, and would concentrate the supervision of in- dustry in one organization, readily control- lable. Concentrated supervision of industry would soon become as great a menace to the prosperity of the whole people as is concen- trated ownership of industry at the present time. In the second place, no provision would be made for the distribution of existing own- ership maintained with the use of borrowed money. You should proceed entirely inde- pendent of existing enterprises. Organize supervising and inspecting bureaus, as sug- gested, for the use of new enterprises,, and existing enterprises will be compelled by force of circumstance to use them. Owners of existing enterprises will see the "hand- writing on the wall" and will not wait for many new enterprises to be organized ; they 190 THE CONFESSION OF A TRUST MAGNATE will come promptly and submit their enter- prises to the bureaus. You will have to meet the arguments and opposition of the banker and the business man who is conducting his business on bor- rowed money. Ask the banker how. much he is making from your money, the use of which he gets for nothing, or, at the most, three per cent Ask the business man how much he is making from the use of your money, bor- rowed from the banker for five or six per cent ; ask him to put his business on an hon- est basis and take the same money direct from you and give you an ottmership interest in his business. Ask them all if, in the land of the free, there is any good reason why every man should not be permitted to reap the full fruits of his endeavors. Tell them you have awakened from the hypnotic spell of precedent and custom and have decided to no longer acquiesce in their assumption of the right to control your destiny. Tell them you will be glad to avail yourselves of their superior talents in the conduct of business and will pay them well for their services, but that you purpose from now on to have a voice in the use made of your money, and an ade- quate share of the profits its use produces. 191 THE CONFESSION OF A TRUST MAGNATE The big owner of big business, in the dual capacity of big banker and adviser on things financial, will tell you, through his controlled channels of publicity, that the adoption of any such policy will destroy the industry of the country, will make it impossible for your country to do big things. Ask him if there will be any less money for use in industry — if it is not a fact that the adoption of your policy means a wide distribution of the own- ership and profits of industry — if this fact is not the cause of his opposition to the adop- tion of your policy. Tell him, if your money is being used to finance revolutions in for- eign countries, you want to know about it, and when it is openly used to finance foreign governments, you want a share in the rake- off on the side that comes to the negotiators of the deal. Tell him you are tired of fur- nishing the money for his use in acquiring and maintaining his exclusive ownership and control of the industries upon which you are dependent for your living, receiving in return for the use of your money only three per cent, high prices and oppression. The attempt will be made to claim present wide distribution of industrial ownership. Do not be misled by such a claim. Ee- 192 THE CONFESSION OF A TRUST MAGNATE member, secondary inanufacturing enter- prises and wholesale and retail marketing enterprises are but agencies, employes, en- gaged in converting and marketing to con- smners the production of the mammoth trust industries. The profits of these agencies, these employes, are but a living wage, and are dictated by the owners of trust industries in the prices charged them for the initial commodities entering into the "finished prod- uct marketed. The most extravagant claim- ants of present wide distribution of owner- ship of trust industries could not claim more than one million stockholders. What becomes of the remaining ninety million of our popu- lation? You must bring about a wide distri- bution of ownership of trust industries, be- cause trust industries ultimately absorb the whole profits of the whole country. Remem- ber also that the ownership of bonds of trust industries confers no ownership in the prop- erties, no share in the profits and no voice in control of operations. Bonds are but evi- dences of debt — ^instruments with which to borrow, money ; bond interest is but an ex- pense item of the industry, and at the ruling prices for bonds, the interest yield is but slightly in excess of the rate paid by banks 193 THE CONFESSION OF A TRUST MAGNATE on deposits. You must bring about a wide distribution of ownership of the capital stocks of trust industries, because the profits go to the stocks, and the stocks control the operations, the stocks get the increase in profits arising from high prices, the stocks get the enormous profits derived from "watering" capitalization. Too long have you been fooled about the value of stocks. Bonds have been held up to you as the desir- able^ safe investment for your money, and ^stocks have been represented as being unde- sirable, ujisafe investments. The reason is obvious. The adoption of the plan heretofore outlined will cause owners of trust industries to do away with bonds in their capitalization and make stocks a safe investment medium. "When bonds arg done away with, and stocks are made a safe investment, the bonds that now hold the great mass of the people in slavery to the few owners of industry will be sundered. Beware of the comparatively new idea now being promulgated, viz.: "Co-operation: a better understanding between Capital and Labor." One of the big owners has nomi- nally withdrawn from partnership with the 194 TEE CONFESSION OP A TRUST MAGNATE "King" of the big owners and is stumping the country in behalf of this idea. The plan is to permit employes to buy stock in the en- terprises for which they work and pay for it out of their wages. Capital is to take Labor into partnership — minority partner- ship, of course, without any umpire to see that the majority interest plays fair. The stock that employes will be permitted to buy will most likely be "watered" stock, unrep- resented by invested money — stock that cost nothing but the incorporation fees and the printing. In nine cases out of ten the em- ployes' money will not go into the treasury of the enterprises, but into the pockets of the promoters of the enterprises. The employe entering into any such arrangement will be converted into a debtor of the enterprise, or of the majority owners of the enterprise, and . everyone knows about the freedom and inde- pendence of a debtor. Halters and hobbles are old devices used to control the unruly— they can be fashioned in various ways to suit the circumstances. Under the plan herein- before presented, workers can obtain uncon- trolled ownership in any enterprise, and there will be, at all times, a perfect under- 195 THE CONFESSION OF A TRUST MAGNATE standing between Capital and Labor through the publicity provided in the organization of the bureaus. The doctors of banking laws and the cur- rency system will come to the front, freely proffering advice. Tell them you are not interested in banking laws; that you intend to leave your money in bank until you get an opportunity for its safe investment, and when you pay it out it will find its way back into bank for use in paying the next depositor that wants to invest, and finally, all money, or its equivalent bank credit, will be working direct for its owners. Tell them when that time comes deposits will not be as large as now, and what deposits there are will belong to the industries of the country and will be in active use by those industries, requiring little attention of the banks. Tell them banks will then have only their own capital, surplus and undivided profits to invest and loan, and the laws governing them will consequently require little doctoring. Tell them when de- posits are reduced to the minimum, through direct investment hy owners, it will not be necessary to keep one-half of the circulating medium of the country locked up in banks as a guaranty fund for deposits, and the cur- 196 THE CONFESSION OP A TRUST MAGNATE rency system will regain its one-time vigor, through active service, no longer requiring their treatment. Tell them when you get your bureaus in good working order, grind- ing out good, safe investment opportunities, the part of the other half of the circulating medium that is now in hiding in stockings, old stoves and mattresses, will come forth for use in the business of the country, and money will cease to be the scarcest thing on earth. The reformation of the banking laws and the currency system has always fur- nished the excuse for big owners to enact legislation tending to extend and strengthen their control of bank credit and money, thus increasing their ability to unduly profit from the efforts of the many. The adoption of the suggested plan does not call for any banking or currency legislation, so do not attach any importance to any advice given you by the specialists in this line. I am free to admit that the adoption of the plan, which means the use of banking credit direct by the owners of the credit, will withdraw from banks the present ex- clusive privilege of dispensing the credit, and that is just the desirable end to be attained. It is the volume of bank credit and its ex- 197 THE CONFESSION OF A TRUST MAGNATE elusive control that makes the present con- centrated ownership of industries possible, and it has been shown that all the ills that afflict the country grow out of the present concentrated ownership of the industries. Those profiting from the present situation will portray me as an anarchist seeking to destroy the industries of the country. Do not be misled. This country has never seen such widely distributed prosperity and on such a scale, as will follow the investment of money direct by its owners. There will be no more panics, no more necessity to reform banking and currency laws, the warfare be- tween Capital and Labor will be ended and the need to control legislative and judicial bodies will no longer exist. A word to the minority owner in indus- try, no matter how large your holdings or how powerful you may consider your in- fluence. You are marked for slaughter, you have not yet been reached. You see around you, each day, owners as strong as you be- ing compelled to part with their ownership. Some powerful hand reached out and shut off their money supply when they were least prepared. You may be the next victim. The conspiracy works night and day. Join hands 198 THE CONFESSION OF A TRUST MAGNATE with non-owners in placing the business of the country on an honest ownership basis in- stead of a loan basis. "Half a loaf is better than no bread." And the big owners of big business, the leaders in the great conspiracy, the Pharaohs in finance — let these children go in peace! Too long have they been kept in bondage making your bricks without straw! If you continue to hold and oppress them, plagues will be visited upon this country such as were never witnessed before, and all your treas- ured wealth and power will be swept away as chaff before the wind. Let them go now, peacefully, or they will eventually go, under the "Eed Flag." Your gifts, offered in atonement after some accentuated depreda- tion upon their interests, will not much longer suffice to purchase you peace. They will now forgive and forget the past if you freely allow them to enter into partnership with you in promoting the great affairs of their country on a safe, equal basis. They only ask their heritage, EQUAL OPPOE- TUNITY. And now, my fellow citizens, one and all, we might as well face the truth squarely, see the situation as it really is. There is 199 THE CONFESSION OF A TRUST MAGNATE nothing the matter with BUSINESS as con- ducted to-day. The growing greatness of our country and the rapidly increasing riches of the onmers of big business are proofs of the truth of the statement. Of course there are isolated cases of dishonest practices in busi- ness but such practices are easUy stamped out. The instinct of self-preservation keeps business almost universally clean from dis- honest practices. Business is conducted for the purpose of making the greatest profits for its owners and any owner conducting his business with any other intent would be uni- versally considered incompetent, a driveling idiot. Everyone should understand this to be a fixed condition and expect nothing differ- ent. To conduct business just for the fun of it would soon rob us all of our livelihood. The general impression prevails that the greed of owners of business is the cause of the hardships, poverty and oppression exist- ing amongst the mass of our population. This is not true. It is the duty of everyone to make the most of opportunities. The rich and powerful amongst us are not rich and powerful because of greater greed, but be- cause of greater ability, greater strength. The poor and unfortunate amongst us are 300 THE CONFESSION OF A TRUST MAGNATE not so because of less greed, but because of ignorance, less aptitude, weakness in enforc- ing their rights. No; there is nothing the matter with BUSINESS as conducted to-day. The whole cause of existing troubles is found in the dishonest practices of majority owners in business with reference to minority owners. Dishonest practices have forced mi- nority owners out of business and prevented non-owners from entering business. As profits and consequent prosperity can only come through ownership, non-owners must necessarily experience hardships, poverty and oppression. Understanding the situation, it would seem as if the exercise of ordinary intelligence, on the part of non-owners, would prompt them to combine in the effort to bring about the adoption of a plan making it possible to freely and safely acquire and maintain own- ership in business and thus share in the profits of business ; in other words, adopt a plan that would protect one from the dis- honesty of the other. Labor as a unit should espouse the cause. Labor has savings amounting to over six bil- lions of dollars on deposit in the banks of the country and there are no opportunities 201. THE CONFESSION OF A TRUST MAGNATE for its direct, safe investment. Earnings from this amount safely and directly invested in industry would reach one billion of dollars for yearly distribution amongst the workers of the country, and the vdiee in control of industry which would come from its direct investrtient would go a long way toward solv- ing the problems confronting Labor to-day. Those following agricultural pursuits should be strong supporters of this policy. They are deeply interested, for the reason that not much longer will the trust indus- tries handling their production be willing to pay them the ruling prices. The owners of these industries are rapidly approaching the point where they will be independent of voters and law makers, and millions of acres of virgin farm lands across the Canadian line are soon to enter into competition on equal terms. When their income from agriculture is thus curtailed, profits derived from owner- ship in other industries will offset their loss. Leadership of a superior kind will be re- quired. Not only must leaders possess sym- pathy for the oppressed, absolute disregard of their own material interest, and unwaver- ing honesty of purpose, — they must be pos- sessed of great wisdom; they must be able 203 THE CONFESSION OF A TRUST MAGNATE to see at least six inches beyond the ends of their noses. The "World has passed through the Stone Age, the Glacial period and sev- eral other stages, and this part of the world, at least, is now living in the hypocritical age, — ^nothing is what it seems to be. Misrep- resentation, cunning and secrecy are the weapons of the conspiracy working in our country, and leaders of the new policy must be accordingly equipped. Do not longer allow yourselves to be fooled by those profiting from existing conditions. While our country is vast in its resources, there is a limit, and already the compara- tively few have absorbed the greater portion of the resources. Eecognize the true situa- tion before it is everlastingly too late and take steps to reclaim the portion now being held through the use of borrowed money. Concentrate on the one problem of providing opportunities for the safe investment of money, — all other problems will be solved in the solution of this. Get together in promot- ing the new policy,— ''EESTOEATION OF CONFIDENC E— DISTBIBUTION OF OWNERSHIP." 303 APPENDIX EXHIBIT "A." Eepoet op Compteollee of Curebnoy — 1910. Table No. 100— Page 780. Number of savings and other depositors (exclusive of banks) in banks reporting this information, June 30, 1910: Number of Total Banks Savings Other Number of Divisions Reporting Depositors Depositors Depositors New England States. . . . 1,013 3,730,589 577,011 4,307,600 Eastern St&tes . . . 2,460 6,200,140 1,024,246 2,830,985 2,179,742 9,031,125 Souttiern States ... 3,870 3,203,988 Middle States ... 6,373 4,186,310 3,426,145 7,612,455 Western States . . . 4,066 333,411 1,681,281 2,014,692 Pacific States . . . 1,384 897,634 870,879 1,768,513 Island Possessions ... 28 26,834 14,335 41,169 Total 19,194 16,399,164 11,580,378 27,979,542 Total number of banks reporting other Information 23,095 Other banks not reporting any information 4,168 Total number of banks of all kinds 27,263 Total number of banks reporting this information 19,194 Number of banks not reporting this Information 8,069 207 EXHIBIT "B." The Comptroller's 1910 Eeport, page 54, under the heading "Classification of De- posits in Banks of the United States," gives for 23,095 reporting banks, on June 30, 1910, as follows : Percent of Claeslficafion Amount Amount Total Subject to checks $7,824,005,940.M Demand certificates of de- posit 623,547,113.74 Certified cheeks 214,737,806.17 Cashiers' checks 104,974,839.81 Not classified 248,419,028.18 $9,015,684,728.43 59.0 Savings deposits 4,866,842,682.11 Time deposits, including time certificates of deposit 1,400,868,843.81 8,287,711,525.92 41.0 Total Individual Deposits.... $15,283,396,254.35 100.0 SOS EXHIBIT "C." The Comptroller's 1910 Report, page 55, under the heading "Investment in Bonds, 8e- ctirities. Etc.," gives for 23,095 reporting banks, on June 30, 1910, as follows : Percent Amount of Classification Roundly Total United States Bonds $ 773,400,000.00 16.4 State, County and Municipal Bonds 1,116,200,000.00 23.6 Railroad Bonds 1,464,800,000.00 31.0 Bonds of otlier Public-service corpora- tions 478,000,000.00 10.1 Otlier Bonds 399,900,000.00 8.5 Stoclts 283,400,000.00 6.0 All otlier Securities, Warrants, Judg- ments, Claims, Etc 158,700,000.00 3.4 Foreign Securities 24,300,000.00 ^ Premium on all Bonds, Stocks, Etc 24,600,000.00 J 1.0 Total $4,723,400,000.00 100.0 ^09 EXHIBIT "D." The Comptroller's 1910, Report, page 55, under the heading "Classifications of Loans and Discounts in Banks of the United States," gives for 23,095 reporting banks, on June 30, 1910, as follows : Percent of Classification Amount Amount Total On demand, unsecured by Col $ 797,796,845.87 On demand,' secured by Col. 1,891,441,452.17 Overdrafts . ; 62,381,193.45 Not Classified 456,566,216.99 $ 3,208,185,708.48 25.62 On time, unsecured by Col.. 4,392,801,358.49 On time, secured by Col. ... "I Secured by R. B. Mortgages !■ and Mortgages owned J 4,920,821,910.26 9,313,623,268.75 74.38 Total $12,521,808,977.23 100.00 310 05 O 11 1x1 « § rA OS ^ t-5C C CO t-; n H PQ I— i M M Ph o W H o « o Ph O O H W H P^ O H Ph O PM Isi ) a "ill o 3 1 mi <) «■ 1 III a ™tocc sa !>: ".05 in Sqo« Boot- es m ^^oi ^ -a^J ea « CO 03 Tt< KQO CO 3n o fees'* WCOt- CO b. C^tr« 3 OS"* SrHOS WOCQ W liSOS OoO'^ S «: i <^^ H OS M CJecTj? 9 -? S « 2 oT et) * O 210 I 0) O W ■"■SO !S£K si . S li 103 a o Sggg Ot-T(t t— 1-1 (P ri^ 52 cow QOiAO gl3 Ctf * O. OS * o A u o rH QQ W 00 ti IN A ni d tH S P> < -o v a +J Id g a o w CQ PJEa EXHIBIT "F." Principal items of resources and liabili- ties of banks. Eeport of the Comptroller ^ of the Currency, year 1910 — ^pages 60 and 61: Items 1900 1910 Number of Beportlng Banks 10,382 23,095 Resources: Millions Millions Loans and Discounts 5,657.5 12,521.7 Bonds, Stocks, etc 2,398.3 4,723.4 Due from Banks and Bankers 1,272.8 2,393.0 Casli in Bank.. 749.9 1,423.8 10,078.5 21,061.9 Liabilities: Capital 1,024.7 1,879.9 Surplus and Undivided Profits 882.2 1,952.6 Circulation 265.3 675.6 United States Deposits 98.9 54.5 Individual Deposits ; 7,238.9 15,283.4 Due to Banks 1,172.5 2,225.3 10,682.5 22,071.3 214 EXHIBIT "G." Distribution of money in tlie United States. Compiled from the Eeport of the Comptroller of the Currency, 1910 — page 58: Coin and other Money Coin and other in Reporting Banks — Money in the Per cent United States of Tear Ended June 30 — Millions Millions Total 1900 . . 2,339.7 749.9 32.06 1901 . . 2,483.1 794.9 32.02 1902 2,563.2 837.9 848.0 982.9 987.8 1,010.7 32.69 1903 2,684.7 31.59 1904 2,803.5 35.06 1505 2,883.1 34.27 1906 . . 3,089.9 32.92 1907 3,115.6 1,106.5 1,862.9 1,444.3 1,414.6 35.51 1908 , . . 3,378.8 ■ 40.34 1909 , . . 3,406.3 / 42.40 1910 , . . 3,419.5 41.37 215 EXHIBIT "H." Eange of Quotations, taken from "In- vestors' Manual," page 137, published in May, 1908, by "The Economist Publishing Company," Chicago: Higb. Low. Name of Security— 1906. 1907. Adams Express 300 150 American Express 272 175 Amalgamated Copper 118% 41% American Beet Sugar 35 7% American Can 11% 3 American Car & Foundry 47% 24% American Cotton Oil 44% 21 American District Telegraph • 37 20 American Hide & Leather 10 2% American Ice SecBrities 94% 8% American Linseed Oil 29% 6% American Locomotive 78% 32% American Malting 6% 2^ American Ship Building 81 30 American Smelting & Refining 174 58% American Steel Foundry 15% 4% American Sugar Eeflning 157 92% American Telephone & Cable 93% 60 American Telephone & Telegraph 144% 88 American Woolen 48 11 Anaconda Copper Mining 300 25 Brooklyn Rapid Transit 94 % 26% Brooklyn Union Gas 178 80 Calumet & Hecla 900 535 Central Leather 49% 11% Chicago Edison 165 129 Chicago Pneumatic Tool 63 21 Chicago Telephone '. 139 95 Colorado Fuel & Iron 83% 14 Diamond Match 147 188% Distillers Securities 74% 25 General Chemical 84% 50 General Electric 184 89% Illinois Brick 71%. 34 International Paper 26% 7% International Power 95 35 Knickerbocker Ice 84% 20 National Biscuit '. 79% 58% National Carbon 95 50 National Lead 95% 33 New York Air Brake .'. 163% 47% Pacific Coast 142 56 Pittsburg Coal 18% 7 Pressed Steel Car 64% 15^ Pullman Company 270 135% Quaker Oats 152% 105 216 High. Low. Name of Security — 1906. 1907. Republic Iron & Steel 41% 12 Standard Oil 528 390 Swift & Company 119^4 75^ Union Bag & Paper Company IS^ 4 United States Cast Iron Pipe 63 17 United States Reduction & Refining Company 40% 5% United States Rubber 59^4 13^4 United States Steel 50%, 21% Western Union Telegrapli 9414 B4 Westlngbouse Electric & Manufacturing Company 176 32 Baltimore & Ohio 125% 75.% Canadian Pacific 2OI14 138 Chesapeake & Ohio 65% 2314 Chicago & Alton 35% 8% Chicago Great Western 23% 6% Chicago, Milwaukee & St. Paul 199% 93^ Chicago & North-western 240 126 C, C, C. & St. Louis 109% 48 Colorado & Southern 41 17 Denver & Rio Grande 51% 16 Great Northern 348 107% Kansas City Southern 37% 18 Illinois Central 184% 116 Lake Shore & Michigan Southern 335 300 LouisTiUe & Nashville 156% 86% Missouri, Kansas & Texas 43% 20%' Missouri Pacific 106% 44% New York Central 156% 89 Pennsylvania Railroad 147% 103% Reading Company 164 70% Southern Pacific 97% 6314 Southern Railway 42% 10 Texas & Pacific 40% 17% Union Pacific 195% 100 Wabash Railroad 26% 8 Wisconsin Central 33 11 217