The nonpartisan leader. [volume], September 05, 1921, Image 13

About The nonpartisan leader. [volume] (Fargo, N.D.) 1915-1921

Image provided by: State Historical Society of North Dakota

                
N
*5.
Magnifying the
UngerPrint
Tthe
HE proved oil producing area in
United States is estimated
as only 4500 square miles. When
you contrast this with the area of
the United States—3,026,789 square
miles—the proved area is but a finger
print on the map.
Yet from this 4500 square miles must
come the raw material to drive all
of our motor driven machines, and
practically all of the oil to lubricate
the machinery which makes possible
the happiness and prosperity of the
nation.
To magnify this finger print is the
task in which the Standard Oil Com
pany (Indiana) is engaged.
By reason of the Burton Process, which
largely increases the amount of gasoline re
coverable from a given quantity of crude oil,
and dozens of other methods developed in its
laboratories and refineries, the Standard Oil
Company (Indiana) has multiplied the quan
tity of finished petroleum products available
for the use of men wherever they may live.
The development of the Burton Process has
done more to promote the manufacture of
automotive machinery than any other single
discovery since the usefulness of gasoline as
a fuel was made known. Because of it there
is a plentiful supply of crude oil available
today, and gasoline is selling for a low price.
Without it the price of this fuel would be
beyond the reach of the average man.
The use of this process is not confined to
the refiners of the Standard Oil Company
(Indiana) alone, but is being made available
to others under conditions which are just
and equitable to all.
The Standard Oil Company (Indiana) has
a
just pride in the work it has done, and is
doing, to so increase the quantity and qual
ity of its products as to make possible the
use of labor-saving machinery throughout
the world.
Thus is the Standard Oil Company (Indiana)
doing a big work in conserving the natural
resources of the nation, and in helping others
to do likewise.
Standard Oil Company
(IndianaJ
910 So. Michigan Avenue, Chicago, I1L
Mention the Leader Wher Writing Advertisers PAGE FOURTEEN
(Continued from page 7)
the issue of federal reserve notes by
$16,000,000. In other words, federal
reserve banks now hold a little more
than one dollar of gold for every dol
lar of notes they have issued. The re
serve banks have destroyed the paper
money which circulates among the
many and hoarded gold in their own
vaults. More than 40 per cent of all
the gold in the world is now in the
United States, and all of the gold in
the United States is now the property
of the federal reserve banks, except
that part which the government holds
for redemption of gold certificates.
How did the reserve banks become
the owners of all this gold in the short
period of seven years? In the begin
ning of the year 1914 the reserve
banks had no gold. NOW THEY
HAVE PRACTICALLY ALL OF
THE GOLD Not only do they have
the gold, but THEY OWN THE
GOLD. Where did they get the
money with which to buy this gold?
The total capital and surplus of the
reserve banks, according to their last
statement, was only $315,000,000, and
yet with this shoestring capital these
banks own gold to the amount of two
and a half billion dollars. HOW DID
THEY GET THIS GOLD? This
problem puzzled me for weeks. I
sought all kinds of advice, legal and
otherwise, only to leave the persons
whom I questioned as puzzled as
I think I have found the only possi
ble solution. The reserve banks have
purchased the gold with their own
notes, for the reserve act empowers
them to do this. But of course they
had to have some gold to start with.
I therefore assume that in the begin
ning the national banks purchased
their federal reserve stock amounting
to 6 per cent of the capital and surplus
of each bank, with gold. We will as
sume that the federal reserve banks
started with $100,000,000 in gold.
With this gold reserve, the reserve
banks could then issue $250,000,000
(two and one-half times the amount
of gold held) of reserve notes. With
these bright, new, crisp notes the re
serve banks could go out in the mar
ket and buy $250,000,000 of additional
gold. Then, having a new supply of
gold, the banks could issue two and
one-half times the amount of new
gold held in freshly printed reserve
notes. In other words, the reserve
banks could now put out an additional
issue of $625,000,000 of notes. With
this fresh supply of notes, the banks
could buy more gold, and then issue
fiotes with which to buy more gold,
and so on ad infinitum.
CANT TURN A WHEEL
UNLESS THEY SAY SO
The war forced the allies to ship a
large part of their gold to America.
The reserve banks bought this gold
with their own fiat paper money. The
only thing to interfere with the proc
ess, as I have described it above, is
that the reserve banks must also keep
a gold reserve against thfiir deposits,
but I know of nothing to stop them
from investing their deposits in gold,
so that deposits also may have been
used to purchase gold. What WE DO
KNOW is that the reserve banks have
all the gold in the country. This gold
is held in the vaults of the banks in
the form of bullion, not money.
Bank Power Absolute—People Helpless
The federal reserve board and
the banks connected with the re
serve system now dominate abso
lutely the fiscal policy of this na
tion. We can not turn a wheel
without their consent. They may
give credit or they may withhold
it. They may make interest rates
high Or they may make them low.
The federal reserve board fixes the
interest rate. The board fixes this
rate by taking a vote on what the rate
shall be. The federal reserve rate now
stands at 6 per cent, which means that
the member banks must charge 8, 9
or 10 per cent to their customers.
interest enters into every turnover
of goods. The price of a suit of
clothes, for example, contains a good
many interest charges taken from the
farmer who grows the wool, from the
buyer who buys the raw product, the
manufacturer who cleans, cards and
weaves it into yarn, then into cloth,
the manufacturer of the suit of
clothes, the jobber who sells it to the
retailer and the retailer who sells it
back to the farmer. Perhaps interest
is taken as many as five times on the
average: At 8 per cent the interest
charge on a $30 suit of clothes would
amount to about $5 and on a $60 suit
of clothes about $10.
And now let us note an incon
sistency so stupendous that it
would be ridiculous if it were not
tragic. The excuse for deflating
the currency made by the federal
reserve board was that the defla
tion of the currency was the only
way to deflate prices. The first
thing the federal reserve board
did was to raise the price of inter
est. The banks set out to deflate
everybody else but not themselves.
Instead of lowering the interest
rate in order that deflation might
be uniform, the reserve board ac
tually and violently increased the
price of interest.
USING THEIR POWER
AGAINST UNION LABOR
A period of depression is precisely
the time when the debtor needs help7
most and on the easiest possible terms.
Instead of extending this help by low
ering the interest rate, the reserve
board raised the rate, thus forcing the
"debtor to pay more interest at a time
when there was less business or less
values with which to pay that interest.
While riding in a Pullman coach re
cently I was told by a Pennsylvania
manufacturer that 500 banks in his
territory had entered into an agree
ment to lend no money to manufac
turers under their jurisdiction until
those manufacturers had established
open shops in their plants. As to the
fact of this statement I know not, but
it was made to me just as I have stat
ed, it.
The cold-blooded and deliberate pur
pose of the reserve board to deflate the
farmers and the wage-working class
in order to get cheap raw materials
and cheap labor, was not intended to
crush the business men and the manu
facturers generally, but it has caught
the manufacturers and caught them
hard.
The great monopolies and trusts
of course can stand it. They will
lose temporarily, but they will
gain in the end. The processes of
deflation exterminate the weak.
The strong survive, and then when
the process ends and another
period of inflation begins, the
trusts and monopolies command
the field, for competition has been
wiped out or lessened.
What may one do against such
odds? Well, one may protest. In
the struggle for liberty brave men
choose to fight, whatever be the odds.
The individual may do nothing alone,
but groups of individuals may do
much. The individual farmer is help
less, but under the banner of such a
militant organization as the Nonpar
tisan league the farmer may become
invincible. He must be as loyal to his
brother farmers as the bankers are
loyal to each other.