CHAPTER IX

THE TRAGEDY OF DRASTIC DEFLATION

YOUR money masters, the Federal Reserve Board at Washington and the twelve tentacular Federal Reserve Banks in their regional satrapies, staged in 1920 the greatest financial debacle in human history. They were, and they are, as much your money masters, as was ever a slave-holder the master of his human chattel. Your labor and the produce of your labor--in whatever capacity you worked--were, and are today, as completely under their control as was ever the labor and the production of the labor of slavery before Lincoln's Emancipation Proclamation chiseled chains. So long as you exist in the U.S.A. and the Federal Reserve System exists, the lash of these money masters will writhe over your back and you must cringe under its sting. Make no mistake about that. No sceptered king nor bedizened kaiser ever wielded a tithe of the power which rests in the cunning brains and in the ruthless edicts of these money masters.

Here are the facts. Read first these quotations from their own lips and from their own pens which prove that these Federal Reserve oligarchs deliberately staged the greatest financial debacle in all human history. Nothing in human history approaches it for cold-blooded, wanton, ruthless slaughter of values.

"Credit must be brought under effective control."

"The Board (meaning the Federal Reserve Board) will not hesitate to use every statutory power to regulate currency and credits."

"Our present task therefore is to proceed with the deflation of credits as rapidly and as systematically as possible."

If for "deflation" you read "destruction" you get the real intent and the real meaning of these ichor-veined assassinators of real values. Don't let these word jugglers and these money jugglers confuse you with their lacquered language. When they say "inflation" what they really mean is increase of values and when they say "deflation" what they really mean is destruction of values.

The tragedy was staged in 1920--about fourteen months after the World War was closed--but it didn't get going good and strong until the summer and fall of 1920. After the summer had arrived, after grain and cotton were in the ground, after cattle and sheep were on the ranges, after merchants' stocks were on the shelves, after factories had run at full capacity and after all producers and merchandisers were hopelessly committed and couldn't retrace their footsteps, the lash fell. Or to change the figure the trap wasn't sprung until every foot was within its iron ring.

The first proof of a murder is the corpse and here are the corpses of murdered values just as they were struck down by the Federal Reserve bludgeon. Look at them.

New Orleans 1920 No. 3. Chicago Corn Middling Cotton January 1.47 .40 May 1.98 .40 June 1.83 .40 July 1.53 .39 August 1.53 .33 September 1.29 .27 October .87 .20 November .80 .17 December .73 .14 1921 January .65 .14 February .63 .13 March .61 .11 April .55 .11 May .60 .11 June .60 .11 July .60 .11 August .55 .12

Here you get from January, 1920, to August, 1921, when these value assassinations culminated, a corn debacle of 92 cents a bushel and a cotton debacle of 28 cents a pound. If you had known that this value assassination was en route and had "gone short" 1,000,000 bushels of corn you could have robbed the corn growers of this land of $920,000, couldn't you? And some "high financiers" did that very thing. If you had known that cotton was going to shrink at least 28 cents a pound and had "gone short" 10,000 bales (500 pounds to the bale) you could have robbed the cotton growers of this land of $1,400,000, couldn't you? And some high financiers did.

Take a look at some more value murders.

Wheat No. 2 Red Winter Wool 1920 Chicago Ohio Grades January 2.63 1.23 May 2.97 1.16 June 2.89 1.00 July 2.80 .90 August 2.47 .87 September 2.40 .83 October 2.20 .72 November 2.05 .69 December 2.01 .54 1921 January 1.96 .54 February 1.91 .54 March 1.67 .52 April 1.38 .52 May 1.56 .50 June 1.43 .49 July 1.22 .49 August 1.23 .49

A destruction of $1.40 a bushel on wheat and of 74 cents a pound on wool ought to satisfy the most murderous destructionist of values, oughtn't it? You can make your own computations as to the millions coteries of "bears" could make--and doubtless did make--out of these value assassinations.

Have some more views of values on the toboggan.

Penn. 1920 Steers at Chicago Crude Oil January 15.93 5.06 May 12.60 6.10 June 15.03 6.10 July 15.38 6.10 August 15.35 6.10 September 15.25 6.10 October 14.68 6.10 November 14.57 6.10 December 12.09 6.10 1921 January 9.84 5.79 February 9.31 4.18 March 9.56 3.00 April 8.71 3.18 May 8.42 3.35 June 8.09 2.65 July 8.40 2.25 August 8.77 2.25

When you grease the toboggan with $2.81 a barrel on oil and $7.16 a hundred on steers you can slide a good many millions of dollars into the maws of foresighted "short sellers," can't you?

This panorama of value murders could be continued for pages of tables. They all tell the same story. Granulated sugar dropped in the same time from .15 cents a pound to .05 cents a pound; copper ingots from .19 cents a pound to .11 cents a pound; cotton yarn from 72 cents a pound to 25 cents a pound; pig iron from $37.75 per ton to $18.20 per ton; hides from 40 cents a pound to 14 cents a pound and so on down the line.

These are the corpses strewn all along America's highways of production. What was the bludgeon which hit all these commodities on the head and drove them into the pit of loss? It was the persistent, wanton, ruthless and cold-blooded calling of loans and refusal of bank credits and contraction of currency by Federal Reserve oligarchy. They said they'd do it and they did it--aplenty. Here is the bludgeon, look at it.

Their total of all loans and discounts including "bought paper" in all of the twelve Federal Reserve Shylockeries stood around from $2,700,000,000 to $3,000,000,000 from January to October, 1920, when the bludgeon pounded hard. Here is the bludgeon. Look at it in action.

1920 October $3,099,672,000 November 2,983,103,000 December 2,974,836,000 1921 January 2,622,174,000 February 2,500,013,000 March 2,356,160,000 April 2,180,178,000 May 1,995,051,000 June 1,782,951,000 July 1,661,036,000 August 1,527,255,000

And from May 28, 1920, to January 25, 1922--when the slaughtered were piled the highest--the twelve Federal Reserve Shylockeries hammered and battered down their bank credits in the leviathan sum of $2,005,149,000, or from $2,938,031,000 to $932,000,000! And incidentally the circulation of Federal Reserve notes contracted in the same period by the stupendous sum of $923,020,000! So that from May 28, 1920, to January 25, 1922, the Federal Reserve oligarchy--at their will or at their whim or for hidden purposes--contracted bank credits and currency by the titanic total of $2,928,169,000, almost $3,000,000,000, almost 3,000 million dollars. That was the pile driver battering your values down into the mire of loss.

Take now a look at the financial corpses so slaughtered. Here they are. Look 'em over and don't overlook the hands that killed them.

In 1921 there were 19,625 business failures as compared with 6,451 in 1919, or an increase of 13,174--more than three for one. And the liabilities reached the stupendous total of $627,401,000, an increase of $514,000,000 over 1919, more than five for one. In the so-called panic year of 1907, the high tide of business failures, liabilities were only $197,000,000, as against $627,000,000 in 1921. Why, if 1907 was a "panic year," 1921 was a pandemic year!

And here is another destruction meter, absolutely infallible--the suicides. In the first six months of 1921 there were 4,527 men suicides, as against 1,810 for the same period in 1920; 1,982 women as against 961; 214 boys as against 88 and 293 girls as against 137--7,016 suicides for the first six months of 1921 as against 2,996 for the same period of 1920. The enormous increase in men suicides--over two and one-half for one--tells its own story. They came from all classes, bankers, merchants, farmers, laborers and professional men. None know how many of this enormous increase, the largest since statistics have been kept, were driven to desperation and to death from hunger, from unemployment, from the loss of life's toil or from the failure of enterprises in which they had spent their lives. No statistics can summarize human emotions, but they can tell and they do tell of the greatest holocaust of suicides ever ravaging this land--undoubtedly due to industrial tragedies staged by the cold blooded butchery of production. This much is certain. Never before in a given time in this land has there been such a holocaust of failures, of suicides and of unemployment. Never before in this land were such sacrifices laid on the twin altars of Moloch and of Mammon. And they precisely correspond in time with the Tragedy of Drastic Deflation!

During all this time and particularly beginning with the late summer and early fall of 1920, individuals, associations, committees and organizations representing farmers, planters, cattlemen, manufacturers, bankers and merchants--in short, representatives of all industries--were entreating and beseeching Governor Harding of the Federal Reserve Board and his associates to be more mild and more lenient and more reasonable in their drastic tragedy of destruction. They might as well have besought a cyclone or entreated a tornado or prayed to an earthquake. Cold-bloodedly, relentlessly and wantonly loans were called, extensions were refused, renewals were tabooed and bank credit put on the chopping block. The very people whose toil and whose labor and whose real wealth were building the magnificent palaces wherein these Shylockeries were housed and were paying the exorbitant salaries of these money despots were being ruined by their servants! The Federal Reserve System at that very time had a loaning ability of over $2,000,000,000 more than it then used and not only wouldn't use it, but contracted its loans by $2,005,149,000 and currency by over $932,000,000. Instead of aiding production, it throttled it. And instead of aiding the producers of commodities to carry them it forced producers to market them at most ruinous losses! Instead of dropping the curtain on this Tragedy of Drastic Destruction, it ran it to its close! It staged the greatest debacle of blasted credit, number of failures, magnitude of liabilities, suicides and unemployment ever witnessed in this land. It did it deliberately, ruthlessly and as per program too.

Go back over these figures, all taken from official records--all undenied and undeniable--and ask yourself if ever before in human history the industries and credit of a successful nation and successful in the greatest War ever waged, too, were so butchered? These figures indict and convict the Federal Reserve System, as it has been maladministered, as the arch betrayer of a people's trust. It indicts and convicts them as juggling with the symbols of value to the destruction of real values. No sane man can read this record, frozen into Government statistics, and defend the oligarchs who made it. It never was "deflation." That is just a sonorous euphemism to disguise sandbaggery. It was destruction to scores of thousands and to hundreds of thousands of the real producers of real wealth. Billions of dollars of real values were annihilated, not by the trend of the markets, but by artificial "bear" markets artificially created by the throttling of credit. You can't withdraw literally billions of credit and currency--almost three billions of them--the very life-blood of commerce from industry and have it thrive any more than you can tap a man's jugular vein and have him live! That's what really happened in this Tragedy of Drastic Destruction.

And upon whom did this Tragedy bear the hardest? Upon those least able to endure its fearful pressure--the farmers. Bear in mind that farming is not only the largest industry in the U.S.A., but it is the only absolutely basic industry--the keystone upon which rests the entire industrial superstructure.

Here is what this Tragedy of Drastic Deflation did to the farmer as measured for the years of 1919, 1920 and 1921.

Value in 1919 $13,500,000,000 Value in 1920 9,000,000,000 Value in 1921 5,675,000,000

In each of these years there was practically the same acreage under cultivation, 350,000,000 acres. In 1919, farm products were worth $39 per acre, in 1920, $26 per acre and in 1921, $16 per acre. Here is where the Federal Reserve credit crusher pulpified the finest--at the very foundation of all industry! The production of these basic farm products--the real foundation of all this Federal Reserve splendor--was practically the same in volume for these three years, but the Federal Reserve credit crusher crushed it from $39 to $26 to $16 per acre measured by its purchasing value! That's the Tragedy of Drastic Deflation in its final analysis battering down the money value of America's basic industry almost two-thirds! But the profits of the Federal Reserve System--and its exorbitant expense account and its lavish salary rolls--kept off the toboggan down which slid all the others!