Re: TURMEL: Ben Franklin, Prof. Flaherty, on Death gamble
From: Castlef (joejmd_at_yahoo.com)
Date: 11/13/04
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Date: 12 Nov 2004 17:14:39 -0800
>
> From Keith Wilde:
>
>
> It is reassuring to get Owen's affirmation, because
> on reading the McGeer book I am not impressed that
> the quotations he provides from Lincoln really add up
> to an inference of the man's views that is as
> unmistakable as McGeer would like his readers to
> believe.
>
> Keith Wilde
> -
If anyone is curious on the matter I have a link to Gerald Grattan
McGeer's chapter V of his book CONQUEST OF POVERTY here:
http://heritech.com/pridger/lincoln/mcgeer/mcgeerv.htm
Perhaps if McGeer's inference is in question then Lincoln's own
actions of creating government issued currency free of interest or
fees will serve to obviate any misunderstanding.
LINCOLN's MONETARY POLICY:
"Money is the creature of law and creation of the original issue
of money should be maintained as an exclusive monopoly of national
government.
"Money possesses no value to the State other than that given to it
by circulation.
"Capital has its proper place and is entitled to every protection.
"The wages of men should be recognized as the structure of
government and in the social order as more important than the wages of
money.
"No duty is more imperative on the government than the duty it
owes the people of furnishing them with a sound and uniform currency
and of regulating the circulation of the medium of exchange so that
labour will be protected from a vicious currency, and commerce will be
facilitated by cheap and safe exchanges.
"The available supply of gold and silver being wholly inadequate
to permit the issuance of coins of intrinsic value or paper currency
convertible into coin in the volume required to serve the needs of the
people, some other basis for the issue of currency must be developed
and some means other than that of convertibility into coin must be
developed to prevent undue fluctuations in the value of paper currency
or any other substitute for money of intrinsic value that may come
into use.
"The monetary needs of increasing numbers of people advancing
towards higher standards of living can and should be met by the
government. Such needs can be served by the issue of national currency
and credit through the operation of a national banking system. The
circulation of a medium of exchange issued and backed by the
government can be properly regulated, and redundancy of issue avoided
by withdrawing from circulation such amounts as may be necessary by
taxation, redeposit and otherwise. Government has the power to
regulate the currency and credit of the nation.
"Government should stand behind its currency and credit and the
bank deposits of the nation. No individual should suffer a loss of
money through depreciated or inflated currency or bank bankruptcy.
"Government possessing the power to create and issue currency and
credit as money and enjoying the right to withdraw both currency and
credit from circulation by taxation and otherwise, need not and should
not borrow capital at interest as the means of financing governmental
work and public enterprise. The government should create, issue and
circulate all the currency and credit needed to satisfy the spending
power of government and the buying power of consumers. The privilege
of creating and issuing of money is not only the supreme prerogative
of government, but it is the government's greatest creative
opportunity.
"By the adoption of these principles, the long-felt want for a
uniform medium will be satisfied. The taxpayers will be saved immense
sums in interest, discounts and exchanges.
THere is also another document worth reading (Senate document
87-240)-169 money facts
http://dewoody.net/money/
some interesting ones:
8. What is the problem of political responsibility?
Since the Federal Reserve is independent it is not accountable to
anyone for the economic policies it chooses to pursue. But this runs
counter to normally accepted democratic principles. The President and
Congress are responsible to the people on election day for their past
economic decisions. But the Federal Reserve is responsible, neither to
the people directly nor indirectly through the people's elected
representatives. Yet the Federal Reserve exercises great power in
controlling the money-creating activities of the commercial banks.
14. Why are interest charges important?
For many reasons. First, interest plays a large part in the cost of
living. All business firms borrow to conduct their operations—some
more than others. These include firms at every stage of production. So
interest is a charge which is added on at each link of the production
chain. This is a cost which must eventually be paid by the consumer.
If it is not paid by consumers, output cannot be sustained. Thus,
interest rates also are a determining factor of the level of business
activity. Additionally, interest rates influence production because
interest rates influence the amount business spends for investment in
plant and equipment, the third largest amount of spending for the
country's annual output. (Interest has this effect because a part of
the country's annual investment is financed by borrowing.)
15. Do interest rate changes and tight money have other effects?
Yes. Consider what happens when the Government is restricting money
and credit. Firms find loans difficult to obtain and investment
tumbles. Small business is especially hard hit because the larger
firms tend to have their credit needs catered to first. Further, when
investment falls, firms which produce machinery or build factories
find their orders slumping and lay off workers while cutting their own
orders for goods. The economy pays for high interest in incomes not
earned and in output not produced.
18. What reasons have been given by the Federal officials responsible
for the uptrend?
The reasons have differed as the years passed. In the early years, the
official reason given was that "too many dollars were chasing too few
goods," causing inflation. In recent years, the deficit in our balance
of payments was cited. High interest rates, it was argued, were
necessary to keep American capital at home. At all times, there has
been constant talk of "fighting inflation," real or imagined.
20. How effective is high interest as an "inflation fighter"?
Well, if killing the patient is considered an "effective" treatment
for an illness, then high interest is an effective anti-inflation
tool. Of course plunging the country into a deep recession will cut
labor's wage demands and will cause some business firms to make price
concessions. But the cost of this is economic stagnation. And even
then prices overall will probably not fall and they may even rise.
That is, in the modern economy, just lowering the demand for goods and
labor somewhat will not necessarily stop a price push. The country
learned this bitter lesson in 1958.
33. Do private banks issue money today?
Yes. Although banks no longer have the right to issue bank notes, they
can create money in the form of bank deposits when they lend money to
businesses, or buy securities. (The next chapter will explain how
banks create money.) The important thing to remember is that when
banks lend money they don't necessarily take it from anyone else to
lend. Thus they "create" it.
69. If the Government can issue bonds, why can't it issue money and
save the interest?
A few clear-headed and firm individuals, such as Abraham Lincoln, have
insisted that the Government should.
The late Thomas A. Edison stated the matter this way: If our Nation
can issue a dollar bond it can issue a dollar bill. The element that
makes the bond good makes the bill good also * * * .
It is absurd to say that our country can issue $30 million in bonds
and not $30 million in currency. Both are promises to pay: but one
promise fattens the usurer and the other helps the people.
However, it has long been one of the political facts of life that
private banks must be allowed to create the lion's share of the money,
even if not all of the money. Thus there is little opposition to the
Government's printing bonds and then permitting the banks to create
the money with which to buy those bonds; but proposals that the
Government itself create the money instead of the bonds have always
set off tremendous political upheavals. For example, Abraham Lincoln
set off a political furor when he insisted upon having the Government
issue $346 million in money (the so-called "greenbacks") instead of
issuing interest-bearing bonds and paying Interest on the money.
70. If the Government issued more money instead of Government bonds,
isn't there a danger that the Government would issue too much money
and cause inflation?
No. It is no more or no less inflationary for the private banks to
create $1 billion of new money than it is for the Government to create
$1 billion of new money. Furthermore, as an agency of the Government
the Federal Reserve System, decides in any case the total amount of
money to be created.
91. What are the sources of revenue of the Federal Reserve?
By far the largest is interest on its holdings of U.S. Government
securities. This accounts for almost 99 percent of Federal Reserve
income.
92. How much of the Federal Reserve earnings must be returned to the
Treasury?
No law or regulation specifies how much of the Federal Reserve's
earnings must be returned to the Treasury, but in practice the Federal
Reserve spends all of the income it cares to spend, pays dividends to
member banks on their "stock" and sets aside a large amount as
"surplus." The remainder is then returned to the Treasury. It usually
returns an amount several times the amount of its expenses.
96. Why is the Federal Open Market Committee one of the most powerful
groups of men in our country?
Because in many ways their power is equal to that of the President in
deciding how the world's greatest economic mechanism will operate. By
regulating the supply of money, the Committee can control the general
level of interest rates. This in turn is one of the major determinants
of the level of business activity in the country. The Committee, then,
has the power to offset any action taken by anyone to stimulate or
restrain the country. This indeed is power.
125. Do private banks enjoy a special relationship with the Federal
Government?
Yes, a very special relationship. The business of banks is to lend
money. The profit comes from the difference between the cost of
creating money and the price they charge borrowers for that money. Now
the cost of creating money is negligible. Congress has delegated the
power to create money to the banking system without a charge. The
banks do not pay a license fee or a payment charge for their reserves.
Thus the raw materials the banks use cost them nothing. Also the
Government subsidizes the private banks in other ways. The banks
receive free services from the Federal Reserve. Check-clearing is one
example. Further, the Federal Government provides private banks with
protection from competition and the hazards of failure. New national
banks are not chartered unless the Federal officer in charge of such
matters thinks the new bank will succeed and will not "weaken"
substantially any already existing bank. Then again, the FDIC has set
rigid standards for a bank to receive insurance. No new bank whether
National or State chartered can very well succeed unless it obtains
insurance. A basis for this insurance is that time new bank will not
face, or cause, "undue" competition.
Another interesting document:
SPEECH OF HON. IRA S. HASELTINE, OF MISSOURI,
IN THE HOUSE OF REPRESENTATIVES, MAY 13, 1882,
ON THE BILL TO ENABLE NATIONAL BANKING ASSOCIATIONS
TO EXTEND THEIR CORPORATE EXISTENCE.
MR. HASELTINE said :
MR. SPEAKER : I propose the following amendment :
" That all the interest-bearing indebtedness of the United States now
due or optional with the Government, and all other interest-bearing
indebtedness as it shall hereafter become due, shall be paid in lawful
money of the United States.
" SEC. 2. That all money now in the Treasury, and all revenues of the
United States Government not otherwise appropriated, shall be applied
in payment of the interest-bearing debt.
" SEC. 3. That the Secretary of the Treasury be, and he is hereby
authorized and required to issue non-interest-bearing Treasury notes
of the United States of the denominations of one, two, five, ten,
twenty, fifty, and one hundred dollars, which shall be made lawful
money and a legal tender at its face value for all taxes, revenues,
and debts, public and private, within the United States, which may be
necessary in addition to the aforesaid money and revenues to pay the
said interest-bearing debt now due, and also the interest-bearing debt
now optional with the Government, and all other interest-bearing debts
as they shall respectively become due.
" That the Secretary of the Treasury is hereby authorized and required
to issue Treasury notes made a full legal tender and lawful money in
denominations convenient for currency, and in quantity equal to any
contraction which may be caused by the withdrawal of national-bank
notes.
" SEC. 4. That all acts and parts of acts in conflict herewith be,
and the same are hereby, repealed."
Mr. Speaker, this amendment provides for paying into the circulation
all money and revenues not otherwise appropriated, and issuing
legal-tender currency to take the place of interest-bearing bonds now
due, or optional with the Government, and also to take the place of
national-bank currency. It provides against any contraction by the
withdrawal of bank paper and saves to the people from $12,000,000 to
$15,000,000 per annum. The adoption of this amendment would provide
for the payment of the interest-bearing debt and supply the people
with money which is preferred to gold.
Mr. Speaker, Hon. Peter Cooper, the great American philanthropist and
political economist, who in moral and patriotic grandeur is second to
no man of his time, in his late petition to Congress protests against
the passage of the bill under consideration as reported by the
committee, and presents the argument for a just and enlightened policy
so clearly and forcibly that I deem it due to the cause and in the
interest of good government and humanity to give his petition entire,
etc. (See " Congressional Record.")
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