Money Power, by Frank Anstey

Frank Anstey
Cobber’s Morning Herald
March 1, 2021

“The Oligarchy of Finance possesses more wealth, more power, more control over the destinies of the human race than any class or caste ever possessed.” T. Quelch.


In 1916 I wrote a series of articles on banking, currency, and “war loan” trickeries. Those articles were rigorously censored, many of the facts being either distorted or suppressed. In 1917 those emasculated articles were published in book form, and at once (Sept., 1917) the military censors organised raids and seizures and declared the book “absolutely prohibited in any form whatever.”           

A few days later (3rd Oct., 1917) “George Pearce, Minister for Defence,” added a new clause to regulation 28 of the “War Precautions.” Any person who sold or gave or distributed or delivered, or carried on his person, or kept on his premises, “or received through the post or otherwise” any copy of a prohibited publication, was liable to six months imprisonment, or to a £100 fine, or both, or if prosecuted “upon indictment” then short of death itself there was no limit to the punishment that might be inflicted. All that was needed to put a man away was to send to him a prohibited publication, and then denounce him for having it in his possession. Under those circumstances few “Shylocks” went into circulation.

Yet “Shylock” did not deal with the merits of the war. It dealt with the economic causes of war, and the inevitable “aftermath.” It dealt with modern wars and their distinctive financial characteristics, and it said nothing that was not permitted to be freely said in every country at war except Australia. As a matter of fact the book contained dozens of statements from financial and other journals in England. Statements freely, made in England without fear of suppression—were here prohibited.

For the time being the military censorship is in recess. The suppressed facts therefore see the light of day, and the material within the suppressed book is once more placed upon the market. Five more years of history have brought more facts necessitating much re-arrangement, especially in connection with recent economic events within Australia. Therefore, for the majority of readers this book will be as new in material and structure as it is in title.

“The War to End War” has finished these two years. The “New World After the War” and the “Green Fields of Perpetual Peace” are no longer unveiled to the gaze of admiring audiences. All the mirages have disappeared, and in their place come the pressure of governments squeezing from the masses the wherewith to meet the demands of the oligarchy of bondholders whom the “War for Democracy” has made more powerful than ever.

The burden of “Interest” is equivalent to an indemnity imposed by a foreign conqueror. It continues to increase, not merely from the process of fresh borrowings; but from the heavy blackmail imposed by the “High Financiers” at every renewal of the old mortgages.

This blackmail is not restricted to war loans. It is applied to all the pre-war debts of the States. Their renewed mortgages are only renewed at doubled or nearly doubled rates. Apart from wages and material, these increased interest charges upon the old obligations increase the maintenance costs of public utilities by millions of pounds per annum. These additional millions per year are paid away for, nothing in return—no service, no product. Moreover, the more prices of products fall the more and more products must be sold to meet the demands of “Interest.”

Financial Capitalism is determined that Interest shall be met by scraping down the wages of Labor. Thus, responsible statesmen declare that “wages would have to be reduced”—but nothing is said about Interest. Thus the daily press carries on persistent propaganda in favor of lower wages; but declares that the high rates of interest are “SACRED,” therefore Labor must be broken on the wheel that these “Sacred” obligations may be met. For these sacred purposes we have the rapid co-ordination of the police and military forces: unified command carried to the point in some States of placing both agencies, the bayonet and the baton, under one man, one ordre militaire.

In order that forty millions may be annually paid to the Bondholders at home and abroad, the standard of life for the workers is to be systematically reduced—that’s the situation.

In a foreword to “Shylock” I used these words: —

“This movement of ours talks of the instruments of production, distribution and exchange. Of the first two we hear much and read much. Upon the last we are silent in speech and policy. Yet in the modern world the last is fundamental in industry, in statecraft and in war.”

Thus Capitalism controlling the “instruments of Exchange” controls the Governments or diverts their philanthropic endeavours into channels harmless to the Capitalist system. Thus the Russian Communist Government as a first step took possession of the institutes and instruments of exchange and whatever else was left for future decision, these were not. It needs not belief in the Russian Government or in the principles for which it stands to see, as a fact apart, that the control of the instruments of exchange has been the basis of its statecraft, its propaganda, and of its titanic struggle against the world effort to destroy it.

All Governments, whether Liberal, Labor, Socialist, or Communist, all alike have got to face the problem of “financing” whatever they do—whether they call it reform or revolution. No change in the mere machinery of Government; no change in the industrial ownership or workshop control will be of permanent value while an annual tribute of £40,000,000 continues to be torn from production to fatten foreign and local bondholders. While that exists even the Socialist State would be but a mere collecting agent for the holders of the £800,000,000 blister on Australian industry, and so long as Great Britain stands upon her legs and her navies float upon the seas, so long must Australia’s obligations to British financiers be met, irrespective of the character of Australian Governments or the composition of her industries. Repudiation, so easy to say, would impose upon the country economic difficulties and boycotts as burdensome as the load of interest from which it was sought to escape. On the other hand, any policy, Labor or otherwise, which is based upon further indebtedness and further additions to the load of interest only pushes the country from bad to worse. And the futility of the effort is not neutralised by nicknaming it “progress” or “reform.”

Yet the nation may do as did Lincoln: “Rose resolute; and like the sea called stream Tore new channels where he found no way.”

It is in coping with the problems of Finance that the world has got to find its regeneration. All reorganisations of industry, all social projects, and all efforts to climb out of the pit of misery into which the burdens of war surely push the people are dependent upon the first. No mere policy of alleviation will meet the position. Revolution in method, not in words, is the sole alternative to a long period of grinding poverty for the mass.

This impulse, this essential action cannot come from one man, or a few. It will come from the miseries, the dissatisfactions, the passions of the masses. The duty of leaders is to be ready for it, and when it comes guide it along the right channels.

Note the helplessness of governments, their aimless drift on the stream of events, their frenzied efforts to meet the rising tide of their responsibilities by piling debts higher and higher, and making heavier and heavier the burdens on production. “After us the deluge”—that is their unsaid prayer and their public policy—so that Australia in the path of the world’s cyclone drifts unruddered to the crisis. Therefore, here is a bird’s eye view of the world, a record of facts which capitalist journalism, as far as possible, excludes from public observation. Here is the mechanism of financial piracy seen in the past and present—as it was, as it is—as it operates in America, England, and Australia. Here is a record of barefaced buccaneering, piratical legislation, and Capitalist methods of waging war at a profit and of robbery in times of peace. Here are the facts which men who would act must know—the situation as it is, and the methodical foundations upon which must rest all policies of effective reconstruction.

FRANK ANSTEY. March, 1921.


For a thousand years England waged war at home and abroad—by sea and land—wars of aggression and defence—wars on Spanish Main and coasts of Barbary—wars against Armadas of old Madrid and fleets of the bold Van Tromp—wars in Normandy and Flanders—wars of Roses and Roundheads—wars inside and outside, civil and foreign, somewhere, always—and yet she emerged from that thousand years of bloody strife free of debt, no harpies within her borders to gather interest from the blood of sacrifice. Give your life or give your money—that was patriotism in the days when patriotism meant “love of country,” and not a blood-sucking money lender’s parody.

But times changed. Dutch finance, a Germanised throne, and capitalised industry were the marks of the transformation and kings no longer went forth to battle, and money no longer freely served the nation that protected it. Money—Finance—began to look upon war as a rich gold mine yielding fat dividends for ever and ever without end.

The Jew Medina came in the train of William the Dutchman. He gave Marlborough £6,000 a year for the first tips of victories in France or Flanders. All the tricks bound up in rising and falling prices, lying reports from the seat of war, the pretended arrival of couriers, the formation of financial cliques to work the market, cabals and connivings behind the scenes, the whole system of Mammon’s Wheels—Medina worked them to the full. His successors have amplified his methods.

After Medina came the Jew, Manessah Lopez. He amassed a fortune in the panic which followed the false news that Queen Anne was dead. He “bought on the slump and sold on the rise.” Then came Samson Gideon and the Goldsmids—Abraham and Benjamin. These were succeeded by the Rothschilds.

The Napoleonic wars made the fortunes of the Rothschilds. They combined brokerage with banking. Behind the bulling and bearing and thimble rigging on the market there was all the resources of deposits entrusted to their care. “Loan floating” as distinct from lending became a new occupation. “Oh! all ye people; all ye who love your king and your country come into the good thing. Subscribe to the loan!”—the deed was done. It was incidental that fortunes were skimmed off in all sorts of flotation charges and devices. When the war was over the money market was “tightened,” credit restricted, prices depressed. The public sold their bonds, the riggers bought, confidence was restored, the public bought once more. Perpetual game of inflation and restriction, colossal fortunes made not by honest trade but by financial trickery and market fakes, instruments of the spieler, tick-tacks of the racecourse, garbed in respectability, sheltered by the Law, and hosannahed by the Church.

The Empire of “High Finance” became more and more intricate and extensive. The dynasty of the Rothschilds became more and more powerful. Around its throne gathered satraps and satellites—compatriots and puppets worked its will and shared the spoils. Its dominion was over nations. Its influence and its interests were as much in Berlin as in London. Its titles and distinctions were gathered from every flag. Thus, in 1914, Alfred Rothschild, director of the Bank of “England, could wear the “Order of the Crown of Germany.” the “Grand Cross of Austria,” and be Austrian Consul-General in London. His son Alfred, born in Germany, was a member of the “Imperial Yacht Club of Germany” and attaché of the German Embassy in London. For such men as these there were neither internment camps nor deportations nor any exhibitions of anti-German hostility. They had behind them the approbations of the British press, the smiles of “British” royalty, the guns of British militarism. These Rothschilds and their clique of friends and satellites personified “Finance”—“Loan Power,” “Banking Power”—they were safe.

The English financial newspaper, “The Economist,” had an editor named Frank Hirst. He did not say the things the proprietors thought he ought to say, so he had to go. Then he wrote a book on the economics of war and in that he said:

“The magnitude and appalling character of the influence on the welfare of the whole nation exercised by the Stock Exchange, is entirely due to the fact that the securities dealt in on its floors represent in paper form the bulk of the business of the nation.”

This “Paperisation” of industry is the feature which distinguishes “Capitalism” from all other economic systems. The existence of an enormously rich class, the employment of masses of men to maintain a few in idleness, the ownership of the country and of its industries by a few individuals do not constitute Capitalism, because rich men, slaves and serfs, and dominance of industrial resources by the few existed long prior to Capitalism. The fact that a man is rich, or employs labor, or owns an industry does not make him a Capitalist. To say it does is to say that Capitalism is older that the Pyramids.

It is the cutting up of industry and countries into stocks and bonds and scrip that make the Capitalist System relatively modern and definitely distinctive. When an industry is floated into so many shares of one pound or ten pounds, that business is “capitalised,” and it commences to run its course in a capitalist manner. That is to say; Quick rich comes no more entirely from the profits of industry, but from the market manipulation of shares. The actual business is henceforth only a thing to monkey with, and boom or stiffen to the spielers’ needs. Shares must be bulled or beared, let out or pulled in, and every time they come in they must come loaded with the spoils of speculation. Between the rise and the fall, the inflation and depression, the price at which the victims buy and the price at which they are squeezed out dry, the riggers of the market draw to themselves the savings of the trustful.

Profits are piled up in bank credits, re-invested and re-invested until the field of industrial activity is exploited to its limit. Money, in the language of the market, becomes “plentiful” and “cheap.” In other words, the industrial outlets are diminishing, and the rate of interest, the “reward of Capital,” is falling. It will fall to zero. Something must be done—it is done. International hatreds are stimulated. People prepare for peace by grinding the axe of bloody slaughter. Armaments are demanded, loans are raised, and the right to levy perpetual tribute on the nation is given in return. Even this is insufficient to mop up profits as rapidly as their accumulation.

So war comes. Any pretext suffices. War must come. It is the product of the predacious instinct in every age and clime. But there is a difference. Under every other economic system, war placed the yoke of slavery on the conquered foreigner. Under capitalism, war is made the Instrument of the enslavement of men of kindred race and blood.

War borrows millions of the piled profits—interest rises. More millions of loans—higher and yet higher interest. Much rubbing of hands on the Stock Exchanges—3½ per cent. yesterday, 4½ to-day, and 5½ or 7 to-morrow. Men may rot on battlefields, but Money gathers an ever-increasing harvest of rich, ripe fruit, and when existing credits are exhausted, fictitious credits are created and new methods of barefaced loot are perpetrated, and when the war is over Money flows back into industry at the higher rates of interest created by the war.

Thus, because the interests of rival robbers are at the base of war, human rights, social rights, the political and industrial rights of the masses are never written in the Peace terms of warring capitalist States. They are always written in terms of coal, iron, oil, steel rails, locomotives and timber concessions. Give us, sell us, or buy from us, always in terms of property and profit.

It is not necessary for revolutionaries to affirm these facts. They are admitted by the candid of every faction. In the introduction to his book on the “Franco-Prussian War,” Count Von Moltke—Junker, Imperialist, and Warrior—said:

“The great conflicts of modern times break out contrary to the will and wish of nominal rulers. The Stock Exchange has acquired an influence so great that it is able to call armed nations into the field to fight in its interests. Blood flows in order that the demands of High Finance may be liquidated.”

To the capitalisation or paperisation of industry is added the capitalisation of the living masses. War stimulates the process. The nation sinks further and further into debt. It is mortgaged. It is cut up into stocks, bonds, and debentures at so much per cent. It is sold in pieces upon the market-places of the world, and the right to bleed is sold to the highest bidder—Yankee Doodle, Jap, Jew or Gentile.

To carry out these vast flotations and speculations in war or in peace, it is necessary to control vast credits. To control credits it is necessary to control the banks. Whosoever controls the banks controls industry. This control is exercised in every country by a small group—the inner circle of great Capitalists.

This group is designated “The Money Power.” It is the latest product of Capitalism. It is its offspring, and yet its master. Industrial capitalism is observable and understandable. Financial capitalism lurks in vaults and banking chambers, masquerading its operations in language that mystifies or dazzles, and this power that holds the “monopoly of the instruments of exchange,” is the overlord of every other monopoly.

The key to the power of this group is combination and concentration. It controls banks, trust companies, insurances—the main depositories of the peoples’ savings or the reservoir to which they flow. It controls all credit. It advances or withholds credits, builds up or destroys. It controls the daily press; finances the dope propaganda; wields an unseen sceptre over thrones; cabinets and populations; and is the dominant “behind the curtain” power in the governments of modern States.

Such is the modern “Money Power.”

Mammon the Overlord.

“The Money Power preys upon the Nation in times of peace and conspires against it in the hour of its calamity. It is more despotic than Monarchy, more insolent than Aristocracy, more selfish than Bureaucracy. It accumulates by conscious fraud more money than it can use. It denounces as public enemies all who question its methods or throw a light upon its crimes. It can only be overthrown by the awakened conscience of the Nation.”


New York Reception, 1906.


To understand the operations of the “Money Power” in the United States is to understand it the wide world over. In the U.S. it is bold, brutal, barefaced. In other countries it is cloaked, polished, hypocritical, but everywhere an oligarchy of financiers working to the same despotic end.

Describing the workings of the System as it existed in the United States twenty years back, W. J. Bryan said in the U.S. House of Representatives:—

“A bank invests 100,000 dols in 2 per cent, bonds. It deposits the bonds in the Treasury and receives 90,000 dols. in bank notes. This is a return of so much of the capital expended for the purchase of bonds, so that the bank is only out 10,000 dols. On that sum the bank receives 2,000 dols. interest. If a private citizen buys a bond he can only draw interest. If a bank holds the bonds it can not only draw interest upon it, but draw 90 per cent of its value in national notes.”

In that year (1900) the Yankee banking corporations lobbied through Congress an amendment of the National Note Act, and got an increase of notes from 90 to 100 per cent.

In 1902 the banking corporations secured a further amendment of the National Note Act.

By this amendment the banks could secure national guaranteed notes not only on a deposit of Federal bonds, but upon deposits of municipal bonds, railway stocks, bonds of Steel, Beef, Standard Oil, and other “approved” securities of specified corporations.

Between 1902 and 1907 the banking corporations deposited such securities and drew notes to the extent of 250,000,000 dols.

Armed with these and other resources, the men controlling the great trusts and the principal banks of America organised, a scheme of complete dominance over the industrial and financial life of the American Nation. They waged a war of extermination against every competitor.

Against this policy President Roosevelt set his face. He prosecuted and secured against Standard Oil verdicts that loaded the Trust with penalties to the extent of 29,000,000 dols.

At once the Standard Oil banks (under Rockefeller), the Steel Trust banks (under Morgan) and the Beef Trust banks (under Armour) entered into an offensive alliance. This Triple Alliance dominated the financial world of America. It had a majority on the Clearing House Association of all the big cities.

The New York Clearing House Association commenced proceedings. It commanded every independent bank to come to heel and take orders. Those who refused were expelled from the Clearing House (October 20, 1907) on the ground that such banks were no longer worthy of public confidence. Such action destroyed confidence in the blackballed banks, and caused a run. Charles Barney, of the Knickerbocker Bank, and Howard Maxwell, of the Brooklyn, committed suicide; all others capitulated.

Within three days (from October 20 to 23, 1907), every bank in the United States had been brought to heel, taught obedience and mobilised for action. The representatives of banks expelled on the 20th, having duly made submission, were re-admitted to membership. Every bank received its orders, its ammunition and the hour of action.

Next day (Oct. 24, 1907), the strike of the Bank Trust against the nation commenced. Every bank, from the Atlantic to the Pacific, refused to pay out gold; refused to pay anything but a paper currency of its own creation—a currency with which every bank throughout the United States had been previously stocked—the incontestable proof of preparedness.

The paper notes of the American Money Trust were designated “Clearing House Certificates.” They were of all denominations down to two dollars. Every bank at the preconcerted signal paid out in this currency. With it wages were paid and business conducted throughout the United States.

On October 25 (1907) Pierpont Morgan declared on behalf of the Banking Association of America that:—

“We will continue to trade in a paper currency, and pay no more gold, until we get from President Roosevelt the necessary guarantee against adverse legislation. The people can take paper money or leave it—they will get nothing else. The mills, mines, and other industries controlled by ourselves or allied interests will slacken down or close until we get effective guarantees against anti-trust prosecutions.”

This was the ultimatum of the Money Trust to the subject nation.

Speaking in the United States Senate, Senator James Mills said:—

“This reckless and remorseless brutality comes from men who speak our language; who were born under the same skies and nurtured in the principles of a common faith. It comes from the cold, phlegmatic heart of avarice—avarice that seeks to paralyse labor and increase the burden of the nation’s debt—avarice that refuses to be satisfied without the suffocation and strangulation of all the labor in the land.”


The banks held the country by the throat. If any depositor moved legal process, the great magnates could carry him from court to court for years. If the Government enforced the law of cash redemption, the Banking Trust threatened to close its doors. Only a revolutionary seizure, that Congress was not prepared to enforce, or the press to endorse, could defeat the conspiracy of the Financial Thuggery.

Throughout the United States the newspapers of the Bank Trusts set out to prove that paper money issued by private bankers was as good as gold, or better. The President of the Bank of California said:—

“These ‘Clearing House Notes’ are based on a deposit of the highest class ‘A’ security. Currency that represents good security is good currency. The laboring man is working for a living. These notes are available for him, if married, in the payment of household bills, rent, etc.; and, if single, for such enjoyments as he may seek. He gets value for his labor—what more can he ask? He can get no more with gold money than he can with this paper.”

The banks refused to pay gold, but they enforced payment in gold. To refuse to find it was to have bank facilities withheld and be ruined. By this process every ounce of gold was bound to find its way to the bank vaults and stop there. Mercantile houses and producers were unable to meet their obligations. Immense quantities of goods were hurriedly shipped to Europe in order to secure gold.

When the banks went on strike it was not a period of falling trade or industrial depression.

“The Economist,” of December 21, 1907, said: “There never had been such prosperity in the history of America.”

The “Contemporary Review” (January, 1908), said: “It was a time of exceptional prosperity.”

Never were the gold reserves of the banks so large as when they refused to pay out.

Lord Welby, of the British Treasury (“Contemporary,” January, 1908), said: “The stock of gold in the United States is enormous.”

In this last fact is the answer to those who assert that a paper currency will drive gold out of a country. “The Economist” (November 9, 1907), pointed out that, while the private banks in the United States inflated their note issues in ten years by £67,000,000, the stock of gold increased £175,000,000. The international balances had been favorable to the United States, and gold flowed in to settle those balances, irrespective of the internal currency.

The inflowing gold was cornered by the Money Trust, and its emission to the general community was barred.

The inability of the mercantile community to meet the gold claims of the Bank Trust, or to secure credit, brought about widespread industrial collapse. More and more mines, mills and factories fell into the hands of the Trust at depreciated values. Hordes of men were out of work. The United States Attorney-General denounced the conspirators as—

“Pirates, whose operations are worse than those of the notorious Tweed gang.”

In these circumstances there went up from all sides, even from the Anti-Trust journals, demands and appeals, urging President Roosevelt to “come to terms.”


The London “Standard” (December 7, 1907) reported what followed. It said:—

“Mr. Pierpont Morgan is in virtual control. He has made it too ‘strenuous’ even for Mr.

Roosevelt. Mr. Roosevelt sent an invitation to Mr. Morgan to come to White House and discuss the situation. Mr. Morgan consented to go only when Mr. Roosevelt sent him a personal letter promising a different attitude towards financial interests in the future.”

The President capitulated, forwarded his apology, and made the desired promises. Morgan met Roosevelt on November 16, 1907. The agreement was:—

1st. That Roosevelt drop his Anti-Trust campaign.

2nd. That no effort be made to collect the Standard Oil fines.

3rd. That no further action be taken against Trusts or Combines controlled by Morgan, Rockefeller and Armour.

4th. That portion of the Sherman Anti-Trust Act be suspended.

5th. That gold previously paid into the Federal Treasury for bonds be left on deposit in the private banks.

The terms were accepted. The New York “Herald,” in its issue of November 25, 1907, said:—

“Roosevelt has received his lesson. We shall hear no more of his attacks on the Trusts.”

The London “Daily News” (December 6) said:

“The Trust magnates hardly seem to have moved a finger, vet they have made their power felt throughout the civilised world. They have made no sacrifice, but, on the contrary, will emerge wealthier men than before. They have brought the most powerful Government in the world to its knees; they have forced it to suspend certain laws, and made it promise to interfere with them no more.”

In the Morgan-Roosevelt compact, Morgan agreed, on behalf of the banks,” to withdraw Clearing House Notes and resume “full and free payment of cash.”

The Morganites refused to keep their part of the agreement, and on February 3rd, 1908, the cables announced that Roosevelt had issued against the Banking Trust “the most impassioned document ever issued from White House.” To this Pierpont Morgan replied that—

“The banks will take their own time to resume specie payments, and will continue to use their own notes so long as it suits their convenience.”

His only promise, said Morgan, “was that the banks would not tie up commercial houses with a demand for gold.”

In short, Morgan was master, and continued to issue paper currency in defiance of the law. To buttress his power, Senator Aldrich, of Rhode Island, introduced and carried through a bill to legalise the hitherto illegal operations of the trustified banks.

In May, 1908, under the guidance of Senator Aldrich, an Emergency Currency Act was pushed through Congress, and under that Act the Government was instructed to issue to the banks when required Government guaranteed notes to the extent of 500,000,000 dollars, upon a deposit of public bonds or upon a deposit of “private bonds, trade bills, or other securities.”

So, long before the war a Capitalist Government, acting on the advice of bankers, was instructed to issue note currency based, not upon gold, but upon bonds, bills, and other securities.


During the six years, 1910 to 1916, the Yankee banking corporations, under the triple mastery of Morgan, Armour and Rockefeller, organised and perfected an additional scheme of robbery and domination. It replaced the old Clearing House Certificate swindle, and rested securely on the legal sanction of the speaking-tubes of the Trust in politics.

The preliminary to the new move was the organisation of the Monetary Commission, under the chairmanship of Senator Nelson Aldrich.

While this commission was sitting, Woodrow Wilson, then (1911) prospective candidate for the Presidency, chanced to say in New York:—

“The greatest monopoly is the Money Monopoly. The financiers are more powerful than the nominal rulers.”

The New York “Times” asked Wilson what he meant by “Money Monopoly.” The following morning (June 17, 1911), the New York “World” came out and said:—

“The day the ‘Times’ asked Governor Wilson what he meant by the ‘money monopoly,’ the newspapers announced that Mr. Morgan’s Bankers’ Trust Company had bought from the Equitable Life Assurance Society its holdings in the Mercantile Trust Company, and that by this transfer the aggregate assets of the banks dominated by J. P. Morgan and Co. exceeded 1,000,000,000 dollars. This 1,000,000,000 dollars is not Mr. Morgan’s money, but it is in the hands of the Morgan interests, which say who can borrow it and who cannot borrow it.

“When Mr. Morgan took over the Equitable from Thos. P. Ryan, he paid more than 2,500,000 dollars for stock that can legitimately earn only 3514 dollars a year; but what he really bought was control over the Equitable’s 400,000,000 dollars of assets and 80,000,000 dollars of surplus.”

This control of banks and insurances by a few men constitutes the Money Trust. It is here in Australia as in America.

Morgan testified before the Pujo Committee that there was no such thing as a Money Trust; that he did not control anything; that he had no wish to control anything. Yet the committee, reported that, by his control of banks, insurance and other companies, he controlled not less than 25,000 million dollars, could say where it should flow and from where it should be diverted.

The Nelson Aldrich Monetary Commission presented its report.

It was based upon an investigation of the banking and currency systems of all countries.

It epitomised the most recent innovations in banking, and the most advanced policy in currency.

It directed attention to the statement of the Japanese Minister of Finance, that “in point of the perfectness of organisation the National Bank of Belgium stands highest.” It directed attention to the special discount system; to the fact that notes were issued, not upon gold, but upon all classes of securities, and to the statement of the governor of the National Bank of Belgium, that “the necessary limits of currency are the requirements for transactions and the movement of business.”

Upon the information contained in these reports, with additions born of their own experience and interests, the Money Kings proceeded to reorganise (in their own interests) the currency and banking system of the United States.

Maurice Patron, in his report to the Commission on the Bank of France, had said:—

“It is difficult to understand how, in certain countries, an undertaking of such universal interest should be left to private enterprise.”

But the Money Kings were determined that the system should be in their hands, extending their security, power and profit. Increased facilities to the trading public were merely incidental.


Everything being ready, the new system was given a legal existence by the Federal Reserve Act of 1913.

The Act creates an overlordship of five Financial Magnates, with the Secretary of the Treasury and the Comptroller of the Currency as ex officio members.

The banks of the U.S. are grouped into 12 regions.

In each region there is one great “Central Bank.”

Each “Central” is authorised to issue to all member banks a paper currency known as “Reserve Notes.”

This currency is not issued against gold. It is issued to member banks (not the general public) upon securities of every description, upon “drafts and bills arising out of commercial transactions”; in short, upon the securities previously deposited with the banks by the public as security for loans.

The currency is not even limited to note issues. The Federal Reserve Banks may issue to member banks unlimited credit and cheque currency upon general securities without reference to a gold base. Alexander Noyes, writing in the “Yale Review,” said:—

“The Federal Reserve Banks furnish credit to member banks on securities previously deposited with member banks by the borrowing public. The currency, whether furnished by the member banks to the public, or by the Federal Reserve Bank to member banks, is in the form of cheques. Note issues are only a fraction of the total currency issued by Reserve Banks. Cheques and notes are the circulating representative of deposited security.”

Against the fractional note issue—not against the mass of cheque currency—the “Reserve” Banks are supposed to hold 40 per cent, of gold, but this is conditioned by the provision that “lawful money” may be regarded as “gold in reserve.” “Lawful money” consists of silver dollars, silver certificates, the 20 dollar notes known as gold certificates, and the United States notes popularly known as “greenbacks.” The applicant for redemption can exchange one sort of paper for another, or get a load of silver, but he cannot get gold. The 1915 report of the United States Treasury, entitled “Paper Currency and Loans,” says:—

“Silver dollars are legal tender to any amount…silver dollars are not redeemable.”

Page 36 of the same report says of “greenbacks”—i.e., United States Notes—“the law of non-redemption has not been repealed”—the “green backs” are still “lawful tender” —legal money for all persons and purposes.

The responsibility for the ultimate redemption of the various note issues of the United States is not upon the private corporations, but upon the American Government. For the vast territory between the Atlantic and Pacific the only place for the redemption of the “Reserve Notes” and other paper issues is at one spot—the Treasury, Washington—and even there redemption in gold is conditioned by the proviso “if available.” If not available, redemption is met by other forms of “lawful money”—“greenback” paper, silver metal, etc.

In June, 1914, the “National Bank Notes” (private), “Federal Reserve Notes” (private), “United States Notes” (public “greenbacks”), “Silver Certificates,” and “Gold Certificates” in circulation totalled 2,752,000,000 dollars (page 48 of the 1915 United State Treasury Report).

On August 1st, 1914, the U.S. Government brought into operation the Emergency Currency Act of 1908 and on August 4th Congress passed through both Houses an amendment raising the issue from 500 to 1000 million dollars.

This was in addition to and apart from the note issues of the Centrals, just as the British Government’s note issue of August, 1914, of £100,000,000, was apart from and in addition to the issues of the Bank of England.

In both countries they were issues to banks only.

In both countries the banks could take all the bonds, deeds, liens, receipts, bills, and other securities lodged by the public as cover for loans, and upon those pledges get legal tender currency with which to trade and make further loans.

But in neither country were those facilities available to the average citizen—they were for bankers and brokers only.

In the United States the “emergency” legal tender notes were issued to the banks on the basis of 90 per cent, on bonds, 75 per cent, on warehouse receipts for cotton or tobacco, 75 per cent, on commercial bills and 66 per cent, on deeds.

Thus in the United States there is the cheque currency of the individual bank redeemable by the “Reserve Note” of the “Central,” redeemable in its turn by the emergency legal tender note of the Government.

Under this last Act even the pretence of redeeming in gold at Washington entirely disappeared.

On the 30th September, 1919—in addition to silver certificates, gold certificates, United States notes, National Bank notes, emergency notes—there were “Federal Reserve notes in actual circulation” 2,655,000,000 dollars.

Thus the Yankee Trust magnates, not only during the war, but prior to the war, developed a paper currency by Capitalists, for Capitalists, buttressed by the Capitalist State.

Thus a Government that functions in the interests of the great banking corporations, is an instrument of great monetary value to the capitalists who own and control that Government.

Money Trust Armies.

In every country there is a powerful group of capitalists, firmly entrenched in society, well served by politicians and journalists, whose business it is to exploit the jealousies of nations and practice the alchemy which transmutes hatred into gold.

Diplomacy is the tool of the vast aggregations of capital in oil trusts, steel trusts and money trusts. Where-ever combinations of capital are competing the reactions are exhibited in the relations of their Governments. For the service of the rival monsters the working classes are regimented in conscript armies—armies and fleets are the material arguments behind financial diplomacy.

Finance is the arbiter of war and peace, the master of despotisms, the unseen power in democracies.

Brailsford, in “War of Steel and Gold.”


The moment war broke loose in Europe the much-extolled “British System of Finance” fell to pieces. The bottom fell out of the “Money Market.” The Stock Exchanges closed. The banks were unable to meet their obligations.

The “Daily Chronicle,” of August 5, 1914, said:

“Credit based on gold has come to an end.” The “Statist” admitted a “Complete breakdown of the banking system.”

The British Government came to the rescue.

It called together the heads of the great banks and representatives of the Stock Exchange.

It asked them to devise a scheme whereby they might be saved at the expense of the people.

This Finance Committee consisted of Lord St. Aldwyne, Lord Revelstoke, Sir John Bradbury, Sir Walter Cunliffe, Austen Chamberlain, each one a chief of a bank tottering to ruin.

This committee instituted a process of salvation based upon the guarantee of the British Nation.

The credit of the State, ever powerful where gold is a failure, saved the situation.

The guarantee of the British Government gave a security which privately controlled gold was incapable of giving.

The first step of the Government was to issue to the private banks millions of £1 and 10/- notes, to enable the private banks to meet obligations to depositors.

The banks were closed four days to give the Government time to print and issue the notes essential to the salvation of the banks.

When the banks re-opened they paid their obligations in notes manufactured and guaranteed by the British Nation.

These notes had written across their face, “legal tender for any amount.”

These notes were not “Bank of England” notes. They were issued from the Treasury. They did not carry any promise of redemption in gold.

Lloyd George, speaking in the Queen’s Hall, London, said:—

“Have you any of those little £1 notes?

“They are only scraps of paper.

“What are they made of?


“What are they worth?

“The whole credit of the British Empire.”

With these notes the banks met their obligations.

These notes took the place of gold and were subsequently issued by the Government to the banks to the extent of hundreds of millions.

The Government further arranged that private banks might re-discount at the Bank of England all internal bills and securities upon which they (the private banks) had advanced, and that all settlement, whether between the Bank of England and the private banks, or the private banks and their debtors, should be postponed until 12 months after the war.

“The Investors’ Review” (August 22, 1914) reported that the country was operating on pure credit money with the mechanism of exchange in excellent condition.

In other words, the country was working on a paper currency, guaranteed by all the resources of the British Nation.

It was a proof of the correctness of the statement made by Stoll, in his book, “The People’s Credit,” that—

“Banking credit is really national credit, because in every crisis it is the Government that is compelled to step in and provide notes and discount facilities to save the banks.”

If any Government had attempted in times of peace to enact such a currency for the development of the country, the public would have been told that such a measure was madness, but to save the banks it was sanity.


The money kings who controlled the banks and discount houses of England were not satisfied to be merely saved from disaster. The hour of the nation’s trouble was their peculative opportunity. With the connivance and acquiescence of the British Government they organised and perpetuated upon the British race the most gigantic swindle of modern times.

The “Clarion,” of August 7, gave warning. It said—

“The democracy is uninformed, and without guidance, at a time when the greatest and most barefaced piece of thimble-rigging is about to be perpetrated.”

The institutions controlled by the Money Kings held hundreds of millions of bills for goods delivered to Continental houses, including Germany. These bills, as far as Germany was concerned, could not be met because of the war, and could not be met in the case of other Continental houses because the war had disastrously affected them.

On August 13, 1914, the British Government guaranteed all bankers, discount brokers and other holders of worthless commercial paper against loss.

It did more. It monetised those bills. It issued to the banks certificates to the extent of those bills. The certificates authorised the directors of the Bank of England to discount the useless bills and issue notes in place thereof.

The Bank of England directors consisted of the Governor, Sir Walter Cunliffe, and 24 “financiers,” who were also directors of assisted institutions.

The London “Economist” (Aug. 29th, 1914), said:—


The “Economist,” in another article, said:—

“This loss must be enormous because the Bill of Exchange Act declares that when a bill payable after sight is negotiated, the holder must present it within a reasonable time, otherwise the drawer and endorser are discharged from obligations. The banks are the holders. The war renders it impossible for them to present ‘in reasonable time.’”

Thus, had not the Government come in to load the loss upon the British Nation, the money kings would have had to carry their own baby.

By the 2nd of September, the Government through the Bank of England had discounted German and other bills to the extent of £95,000,000. Later on (Dec, 22nd, 1915) Lloyd George admitted, in reply to a question, that the total State aid to financiers and financial institutions totalled £200,000,000.


By what is known as the Fourth September Banking Scheme the corporations induced the British Government to endorse a colossal scheme for plundering the public while the attention of that public was rivetted on the German foe. Stripped of all verbiage, gloss, glamor and mystification, it amounted to this:—

All bad debts contracted by banks between the 4th August, 1914, and a year after the end of the war, will be made good by the British Government, and added to the National Debt.

This dose was hard to swallow. The “Economist,” in its issue of September 12, said:—

“There is much to be said for compensating banks, discount and accepting houses for their losses, but in equity one person who has been ruined through no fault of his own has just as much right to be relieved at the taxpayer’s expense as another person.”

But this public plunder was for banking corporations only.

On Sept. 11th, 1914, the “Clarion” said:—

“That notorious highwayman, Dick Turpin, and the Heathen Chinee, were not in it with these thieves of to-day. Why, the game of ‘Under which thimble the pea’ becomes a standard of high and honorable conduct compared with the chicanery going on under the very eyes of the fleeced ones. The people of England have been robbed, and are about to be further robbed on a larger scale than any recorded in history.”

The “Clarion” spoke true. Not the robber scheme of August 13 nor that of September 4 could satisfy the felonious hunger of those who stayed at home to rob while others went abroad to die. Not enough that they had loaded the living with debt and fashioned new chains of servitude for the unborn. The tigers had tasted blood. All the retainers and hangers-on of the Kingdom of Finance must come into the feast.


On the 3rd October, 1914, the London “Economist” announced that the Stock Exchange operators were “waterlogged with unsaleable securities,” and that the Government would stand by them as it had by the banks. They could deposit their scrip at the Bank of England and draw in Government notes 60 per cent, of the face value of such scrip as at the time of the closing of the Stock Exchange.

With these “credits” and Government notes, obtained by a deposit of their unsaleable securities, they were able to resume business and patriotically lend to the Government at interest the currency that the Government had created.

The “Investors’ Review” (19/9/20) stated that—

“Credit is being created against unexisting assets in amounts of unprecedented magnitude at the time when the ordinary uses for it are unusually restricted.” “These things are done,” said the “Investors’ Review,” “to support the money market.” It added:—

“These credits are called into being either in the form of notes or in the shape of advances by the Bank of England under Government guarantee.”

Thus the British Government advanced credit to men whose credit was dead upon securities that were valueless. Then, because the ordinary channels for the investment of money were “unusually restricted,” the Government found a field of profit for the profit-mongers by borrowing “the credit called into existence by the Government” from the very men to whom the Government had given credit upon “unexisting assets.”


The nation needed food, clothing, guns and ammunition to carry on the war.

If a legal tender currency note was good when, issued to bankers for compensation, or to stockjobbers as a circulating representative of unsaleable securities, it was equally good if issued to the industrial community as a circulating representative of the nation’s obligation to those who supplied the requisites of war.

The “Fortnightly Review” (March”, 1915) said:

“The Government rushed to the aid of bankers, bill-brokers, Stock Exchange magnates, great shipowners and mercantile houses, guaranteed marine insurance, and used the financial power of the nation to save the wealthy classes from ruin.” But the British Government that issued legal tender notes for the salvation, use and profit of the private banks would not issue legal tender notes for the salvation, use and profit of the nation.

The Government issued interest-bearing bonds and debentures, and the financiers subscribed to the war loans.

But the “financiers” had no credit outside of that guaranteed by the Government. They had no currency outside of that furnished by the Government. How could they subscribe to the loans?

They did it by lending to the British Government the legal tender currency notes that the Government had previously given to the banks and financiers as compensation for commercially rotten bills and waterlogged securities.

As a result, there went into the vaults of the private banks debentures and bonds armed with the privilege to suck for ever millions per annum from a people struggling oh the battlefields of Europe to maintain the national life. And while they were struggling, the bonds of slavery for the survivors were carefully stored for suckage in the vaults of the vampires.

There might have been some justification for saving the banks and great financiers from ruin, on the ground that their ruin would have involved all in a common disaster.

But there was no justification to furnish insolvent institutions with a currency to enable them to loan that currency to the Government that gave it, and to make a profit from the war. It was pitiless robbery.

But the Kings of Finance must not only be saved, their power of robbery must be extended, their riches augmented, and the toiling multitude ground in the mill of financial servitude.

The “Round Table,” of November, 1914, said:

“The British Government has given the private banks most generous aid. It has liquidated their bills and securities by giving them credit on the Bank of England. Upon these credits they can draw, and with these credits contribute to the War Loan.”

The “Round Table” went on to say:—

“One can observe, therefore, the curious process by which the Government leads its credit.”

And it might have added:—

Yes! and the curious process by which it borrowed it back, with a perpetual blister of interest upon the struggling masses.

The “Investors’ Review,” of October 24, 1914, said:—

“Out of this great mass of credit, created under Government guarantee, the means comes with which to subscribe to national loans.”

The “Round Table,” in an article on “How Wars Are Financed,” said:—

“There must be sufficient time between the instalments of loans to allow the proceeds of the first to be expended by the Government, to pass into the hands of private persons and to filter back to the banks before the next instalment is called. If this condition be fulfilled, the nation can go on fighting for ever, as far as finance is concerned.”

Thus currency went out in wages to soldiers and makers of requisites of war, passed along the channels of trade back to the banks for the next instalment. Thus the circle was complete. To the onlookers, there was a never-ending procession of cash. It was financial legerdemain. By it nations were deluded, defrauded and enslaved. Thus thousands of millions were loaned, yet as much remained in the vaults of the great banks as before the first penny was floated. With every new war loan the “rate of interest,” the rate of blackmail, upon the struggling nationalities was increased.

The only real limit on loans is the capacity of the people to carry the ever-increasing load of interest.

And from these instrumentalities created by the Government the snide financiers piled their fortunes.

One would have imagined that with these advantages the banking corporations would have been well satisfied, but they were not.


Another plunder, scheme was hatched. Through the early months of the war the great banks and loan agencies were putting the screw on the public, refusing banking facilities to men with undoubted securities, and compelling the general public, in urgent need of currency, to sell their holdings on a falling market, and the corporations were buying those holdings with the credit created and donated to them by the British Government—vast millions of British Consols held by the general public fell into their hands.

The British Government had borrowed hundreds of millions by private arrangement, but it was about to float its “First War Loan” in the orthodox float loan manner.

The Financial Houses having inside knowledge of the “conditions” under which this “First” £350,000,000 loan was to be floated, got their corner on 2½ per cent. Consols.

The “Economist” (October 10, 1914) said:—

“Funds wherewith to subscribe to the War Loan can be obtained by pledging investments for paper money.” This privilege was for the great financial houses only. The Bank of England is a bank for banks, and not for the general public. The average citizen could not take his securities to the Bank of England, draw notes, and with these notes subscribe to a new loan. The financial establishments had that special privilege.

The credit restrictors and market riggers had combined to force the price of Consols below £60. Then they bought. Then the Government floated the loan. Consols at once jumped to £65. At that price they were converted into First War Loan £ 66/13/4 at 3½ per cent. Multiply the price (£60) at which the Consols were gouged out of the public by three, you get £180 of Consols turned into £200 War Loan, and Consols earning £4/10/- transformed into an earning power of £7 per annum. The profit on this first deal was measured in millions, and the “Nation” said:—

“It was a barefaced confidence trick, and the Government was a fraudulent trustee of the public interests.”


The Second War Loan (1915) was for £600,000,000 at 4½ per cent—the First Loan performance was repeated.

There was the same withholding of bank credits to the public, the same organised depreciation of Consols, the same organised purchase, the same inflation after possession, the same conversion after possession into high-priced securities. The process of public robbery was repeated on even a more gigantic scale than on the first loan.

The general public, who had not already been gouged out of their Consols, could not convert unless they possessed means to subscribe to the loan floats. They could not pledge Consols for credit at the Bank of England. Bank of England facilities were for bankers and brokers only—not for the general public.

The “Fortnightly Review,” August, 1915, said:

“Advantage has been taken of the opportunity for nimble stock exchange dealing by a class of men who do not think it unpatriotic to utilise a great patriotic occasion for their own sordid ends.”

Dealing with this second loan float, the “Economist” (June 26, 1915) pointed out that the patriotic robbers had added another 20 per cent, to the interest rate on Consols, and that “holders of the 3% per cent, loan will now receive interest at the rate of £5/4/9 per cent.”

And for this crowd of harpies men were rotting on battlefields.

In this case the previous loan bonds were deposited in the Bank of England, and upon these deposited securities credit was given to the extent of 95 per cent, of par value.

It was a paper cheque currency based on bonds, and with this cheque currency the subscriptions were made to the loan.

The “Financial News” reported that:—

“The Bank of England lent 95 per cent. of face value against deposit of bonds.”

The “Quarterly Review” said:—

“The war loan bonds are made on the basis of the most easy borrowing from the Bank of England.”

With currency based on previous war bonds the financiers contributed to the 600 million loan.

Oswald Stoll, in his book, “The People’s Credit,” said:—

“Three banks and two insurance companies answered for £100,000,000. They were able to invest such an amount because the Government had backed them by the credit of the whole people. Saved from bankruptcy, they were permitted to place a tax of millions per annum upon the nation that had saved them.”

“The ‘Times’ History of the War” (page 251, vol. 7), says that the joint stock banks (saved from ruin a few months previously by the paper currency of the nation) subscribed over £200,000,000 to this June loan.

And upon this currency, issued by the nation, they draw interest in perpetuity.


In 1916, after the exhaustion of the proceeds of the “Second Loan,” the war was financed by the banking houses to the extent of one thousand millions for which the Government paid six per cent. The “Nation” said:—

“A huge proportion of this money is mere inflation, representing no real savings on the part of the bankers and financiers who have manufactured it.”

In other words, in exchange for the Treasury Bills and Exchequer Bonds of the Government, they boldly issued valueless cheques; valueless because they represented no real assets—merely manufactured money. Moreton Frewin, writing in the “Overseas Magazine” (Feb., 1917), described it as:—

“The most wonderful tale of grand larceny in all the world’s history.”

The “English Review” of March, 1917, described. Mr. McKenna, the Chancellor of the Exchequer, as—

“A mere puppet in the hands of the bankers. He did whatever he was told.”

Mr. Frank Hirst, editor of the “Economist,” wrote—

“These are the men who, without virtue, labor or hazard, are growing rich as their country is impoverished; they rejoice when obstinacy or ambition adds another year to the slaughter and devastation; and laugh from their desks while they are adding figure to figure and cipher to cipher.”

For this and similar statements, Hirst was dismissed from his editorial chair. After that the journal ceased to expose the plunderers, and by various methods other journals were silenced.


The year 1917 brought to England the “Equality of Sacrifice” Government, under Lloyd George.

From this came the Third War Loan, designated “The Great Victory Loan.”

Under this all previous financial swindles were outclassed and eclipsed. All previous 2½, 3½, 4½ per cent, loans were converted into 5 per cents.

The holders were under no obligation to subscribe to the new loan. They simply gave notice of their intention to convert.

For every £100 of second loan they got £105/5/3 in the third loan, so the actual interest was 5¼ per cent.

Conversion (apart from new money) covered: the first and second loans, and reached close up to 1000 millions.

“Stead’s Review” said: “That means the Government will have to pay stockholders £10,000,000 more a year additional blood money—upon old loans.”

The new money raised was in addition to the above operations, and was almost entirely floated upon the cheque manufactured currency of the private corporations.

Thus to the currency created by the State for the salvation of the banks, loaned back to the nation at perpetual duplicated interest, there was added the inflated cheque currency of the private corporations loaned to the State, representing nothing beyond the State securities acquired by the issue of such fraudulent currency.

Never had the Lords of High Finance gathered such a harvest. Their loot surpassed in its immensity the greatest scheme ever evolved from the cutest group of Yankee grafters. Never in the wildest dreams of avarice did they imagine that they could get a British Government to function so heartily, extensively and exclusively in their interests. With them, as with the German Junkers, the toast was “To the Day,” and their day, the day of peculative opportunity, was while the nation bled on battlefields.

“The Money Power garbs itself in militarism, nationalism, sectarianism and all the other hypocritical guises which Capitalism finds useful to its purposes. These serve as pretexts to instil fresh warmth into dying hatreds. These are the bulwarks behind which Capitalism gorges and digests in security.”

EMILE ZOLA in “Verite.”


“Control of banks, trust companies and insurances by a small group of financiers means their ability to lend a large portion of those funds to industries in which they are interested. They appropriate an ever increasing proportion of the products of industry. They dominate the economic situation and become more powerful than the nominal rulers.”—Louis Brandier.

The banks, insurance companies, trustee agencies, and mortgage companies of Australia are controlled by a few men. They control the three per cent, agencies in which the people put their savings and the six per cent, agencies from which the people borrow. They dominate all loans, flotations, and conversions. They command the channels of investment. They direct currency into channels they desire, cut it off from where they wish, depress or inflate values and make fortunes on the fluctuations. They are the inner circle of all rings, trusts, and combines, and the actual owners of scores of enterprises masquerading under the names of original proprietors. They own daily and weekly newspapers to defend their interests, and by their power to give or withhold advertisements they dominate the policies of nine-tenths of the Australian press.

This financial thuggery operates in three distinct but associated sections—the Sugar, the Metal, the Overseas.

Sugar, Tobacco, and Gas Monopolists constitute the junta dominating the economic life of the two States of N.S.W. and Queensland. The principle members are: James Burns, Rob Philp, Adam and James Forsyth, J. T. Walker, J. R, Fairfax, of the Burns, Philp combine—Knox, Kater, Mackellar, Bennie, Buckland, Cowley and Reg Black, of the Sugar Trust—Hugh Denison, Todman and Dixon, of the Tobacco Trust—Levy, Cohen, Moses and Myles, of the Sydney and North Shore Gaslight Monopoly. Linked with these are Sam Hordern, David Fell, Allen Taylor, J. R. Robertson and the Vickery family.

These men control the 250 branches of the Bank of N.S.W., the 200 branches of the C.B.C., the 130 branches of the A.B.C., the 34 branches of the Bank of Queensland, and £80,000,000 of public deposits. As a pup to the Bank of New South Wales is the Commercial, of Tasmania, controlling the southern and centre portions of the island State, and two and a half, millions of public deposits.

The Sugar, Tobacco, and Gaslight Monopolists share with the Melbourne Metal Gang in the control of the £42,000,000 assets of the Australian Mutual Provident and in the investment of its £6,000,000 annual revenue. They control the Australian Mutual Fire, the Mercantile Mutual, the Perpetual Trustees, the Permanent Trustees, the United Insurance, the Reinsurance, and the Queensland Insurance. They are also the controllers of the Australian ends of the English Indemnity Mutual, the Liverpool and London, and of N. C. Rothschilds’ Alliance Insurance.

These men do not spend their time controlling the savings and insurances of the people from feelings of benevolence or mere personal pleasure. They do it because it gives them control of other people’s money, and these monies they can hold from, or divert into, any channel they wish; can finance themselves into any enterprise in which they are interested, and withhold from everything that threatens their established interests. With those deposits markets are rigged, values inflated or deflated, and big scoops secured in products, properties and general securities. Their immense holdings in industrial monopolies are the direct result of their control and manipulation of public savings. By their control of banks and insurances they control not less than £200,000,000 of money, and by their control of these depository agencies of the nation the Sugar, Tobacco, and Gas Monopolists of Sydney share with the Metal Gang of Melbourne and the English group of financiers in the complete domination of the economic life of Australia.

The Sydney junta control Australian Wireless, Australian Drugs, Sydney Ferries, Sydney Exchange Company, Sydney “Bulletin,” Sydney “Sun,” Mort’s Dock, “Fresh Food and Ice,” and the two great breweries of New South Wales—“Tooth’s” and “Toohey’s.” Scores of industrial and mercantile concerns running under the old titles are the exclusive property of the Money Power, the original proprietors having been bought out, crushed out, swamped, smothered, merged or amalgamated. Thus the junta of great capitalists cloak their extensive and growing ownership from the public gaze.

The Sydney junta dominate the coastal and harbor traffic of New South Wales. They are the “North Coast,” the “South Coast,” the Newcastle and Hunter River steamers, the Abermain, Bellambi and Wallsend collieries, and all the linked up colliery, financial and shipping interests of the Vickery family, of David Fell, and of the linked up Timber Trust interests under Alien Taylor.

The junta control Belalie Pastoral, Brindley Pastoral, Clark’s Limited Pastoral, Pastoral Finance Co., and the woolbroking firms operating under the trade names of “Harrison, Jones & Devlin,” and “Pitt, Son & Badgery.” They sit on directorates of the most diverse industries—beer, banking, sugar, gas, and wool—and the industries they do not directly personally control are subject to their will by reason of their control of the credit institutions necessary to the existence of every industrial organism and of every trader in the land. Thus under the guise of the freest democracy the most odious oligarchy holds unbroken dominion.

The Metal Gang constitute the junta dominating the economic life of the States of Victoria and South Australia and the northern portion of Tasmania.

The economic body of the Metal Gang is Broken Hill Proprietary. It disposed of “Block 10” for £912,000 in shares, and “Block 14” for £432,000. For the mining block occupied by British Broken. Hill it got £600,000 in shares and £400,000 in cash. To that extent shareholders in the “Proprietary” were enriched, and to that extent the subsidiary blocks were loaded to earn dividends upon 2,000,000 shares that did not represent one penny of actually invested capital.

The economic lords of Broken Hill are also masters of Mount Lyell, Mount Morgan, Mungana, Hercules tin, and the metal outputs of Cobar, Chillagoe, Cloncurry, Moonta and Wallaroo. They control Amalgamated Zinc, Electrolytic Zinc, and, excepting the English Sulphide Corporation, they control all smelting and refinery works connected with the metallic productions of the country; they are Emu Bay Rails, Silverton Rails, Port Pirie Smelters, Port Pirie Wharf Company, Elder Shenton, Elder’s Metal, and all adjuncts and accessories of the metal industry.

The banks controlled by the Metal Gang are the “Commercial,” the “National,” the “Victoria,” and linked with these is the Bank of Adelaide and its metaliferous interests. The “National,” during the war, swallowed the “Colonial” and its branches; while the “Commercial” absorbed the branches of the “National” of Tasmania, and strengthened its hold over the northern portions of that State. The Metal Banks have 340 branches in Victoria, 160 in South Australia, 30 in Tasmania, and by these instrumentalities control banking deposits to the extent of £60,000,000.

The “Commercial” was the most notorious off the defaulting banks of 1893. It declared a 12 per cent, dividend and then closed its doors upon 30,000 depositors and millions of deposits. It then appropriated one-third of the deposits as “preference” capital and gave receipts on the indefinite future for the two-thirds balance. Other banks followed the “Commercial” example and thousands of depositors were left penniless, compelled to sell their deposit receipts and their compulsory shares for a fraction of their face value.

The directors of these fiduciary institutions had cross loaned to each other enormous sums of other people’s money. Many of them owed £100,000, others £200,000, some £300,000, yet while they were pushing other people to the wall, they conspired with each other, met in secret, and wiped off their mutual obligations for a few pence or one farthing in the pound. They kept their assets, gave each other clean receipts, and got through the legislature of the State an Act of Parliament making it an offence for any person or newspaper to give publicity to their scandalous secret “compositions.”

They not only wiped off each others’ debts to the institutions they controlled, whose depositors’ money they had borrowed, upon whose remaining assets they had foreclosed, but from the foreclosed funds they again “borrowed” to purchase the scrip and deposit receipts of the thousands they had ruined. Thus these “financiers,” trusted custodians of other men’s money, emerged from the struggle more wealthy than ever, gorged with loot gouged from the fingers of the slaughtered depositors. Those men, their families, their progeny, are shining lights in the Austral world of finance to-day, and their road to fortune is part of the smothered history of the country.

J. B. Hobart, a banking manager for twenty-five years with the banks in Australasia, wrote, after his retirement, a book entitled “Banking—What It Is and What It Does,” and in it he said that banking was “a monopoly wielding a sword over the destinies of all,” that the banks were used “in the furtherance of monopoly and in carrying babes for other monopolies.”

As with the Sydney Sugar Banks, so the Melbourne Metal Banks control insurances, gas and beer.

Thus they are the Melbourne Gas Monopoly, United Breweries, Foster’s Brewery, Swan Brewery of Perth, Lion Brewery of Adelaide, and through the Bank of Adelaide they link up the South Australian Brewery Co.

They are Swallow & Ariell’s, Wunderlichs, Dunlop’s Rubber, Australian Knitting, Australian Paper, Amalgamated Pictures, and the “Evening Herald.”

They are Johns & Waygood, John Robinson & Co., the Kauri Timber section of the, Timber Trust, the Northcote section of the Brick Combine. In nine cases out of ten when an industrial concern is transformed into a big joint stock company, the Metal Gang become controllers and share price fluctuators on the Stock Exchange. They interlock with Arch Currie, the Howard Smith, Huddart Parker and “Melbourne Shipping” companies and their associated collieries—the Caledonian, Hetton, Seaham and East Greta. They are the “Portland” Cement, Portland Downs Pastoral, the Malvern Hills Pastoral and the woolbroking firm trading under the names of the non-existent “Goldsbrough, Mort.”

The Metal Gang share with the Sugar, Tobacco and Gaslight Monopolists of Sydney in the control of £42,000,000 assets, and the £6,000,000 annual income of the Australian Mutual Provident. They are the Colonial Mutual Life, and Colonial Mutual Fire, and controllers of the Australian end of the “Atlas,” the “British Dominions” and “London & Lancashire” Insurances.

They are the Union Trustees, Equity Trustees, National Trustees, Trustees’ Executors, Melbourne Trust and Freehold Assets. They control nine-tenths of the Life, Fire, Loan and Trustee agencies headquartered in the three States of Victoria, South Australia and Tasmania.

Here, again, we see men exercising control over a diversity of occupations—mines, mills, factories, sheep stations, banking, beer, gas, insurance, rubber tyres—masters of industry, not by reason of their expert knowledge, but by reason of their control of the financing institutions. Thus a Melbourne capitalist newspaper in a complimentary personal reference to one man could say: “He holds the reins of our greatest industries…He is the power behind the throne of several State administrations.” By control of these banks and insurances the Metal Gang control over £200,000,000 of public money, divert it where they will, finance whatever they wish, and absorb more and more to themselves.

The principle men in this group are: Sir John Grice, R. G. Gasey, Arch Currie, Bowes Kelly, Ed. Miller, W. L. Baillieu, W. G. Sharp, Duncan McBryde, the Robinsons, Harvey Patterson, T. L. Webb, Monty Cohen, W. D. & J. S. Reid, J. H. Riley, H. V. McKay, F. G. & J. Clarke, Ed Fanning, Fred Thonnemann, James Harvey, W. M. Jamieson.


The grip of British Capitalism upon Australia consists, not only of mortgages upon Australian Governments, not only on the oversea ownership of Australian resources, but upon the control of nearly one-third of the total depository power of the Australian people per medium of the British banks and British insurances trading within Australia.

The English banks are the “Australasian,” the “Union” and the “E. S. & A.” (including the absorbed “London”)’. Their 500 branches are mainly in the States of New South Wales and Victoria. Their headquarters are in Melbourne.

They control the English Life, Fire and Marine Insurances trading in Australia. They control English owned territories in all States. They control a large portion of our coal, meat, and wool resources. They are the dominant factor in the export and import business of this continent. Around the English banks are gathered the old Imperial Land Grant companies and others of kindred type. There is the Van Dieman’s Land Company of 1824. The A.A. Company of New South Wales (1824), with all its coal beds and collieries. The South Australian Land Company (1836), the Scottish-Australian Investment of New South Wales (1840), the N.S.W. Land Agency, and the Peel River Land and Mineral of N.S.W. (1852). This last, and the A.A. Company, are practically one company owned and controlled by the same men.

These Imperial Land Grant and associated land and mineral companies cover millions of acres, represent scores of millions in value, and from their coal, meat, and wool resources pour out millions of revenue per year for their oversea owners. Linked up with these are the estates of the “free old English gentry” who squatted upon Australian soil during the early part of last century.

The descendants of those families are a peculiar caste. Their spiritual home is England, their outlook, their education, their adopted mannerisms, their social and business relations are all English. Like the Anglo-Indian, Australia is to them another India, an accidental birth-place, a place of occasional temporary residence from whence their money flows.

Thus all the financial and industrial relations of these men are with English banks and English companies. Thus they are constantly changing from Australia to England and vice versa, and those on the English end of company directorates one year are found on the Australian end next year, and later on back again. These men seldom enter into the public life of Australia, but the corporations with which they are connected are the heaviest subsidisers of local reactionary propaganda.

The wool, the meat, the coal resources of Australia controlled by the English group are financed by the English banks, handled by English companies, shipped through and by English companies, insured by English companies, and the directorates of the banks and of these companies are interwoven, interlocked, interchanged. Moreover, as more and more Australian-founded houses fall into the maws of the English group, so the export and import business of Australia approaches more and more to an absolute monopoly headquartered in London. The old trade names are retained to hide the absorption, but whatever remains un-absorbed is subordinate and subsidiary to the paramount power in Australia’s oversea trade. It was to the English companies that an Australian Government during the war gave legal control of Australian exports, and in 1920 it was Mr. Andrew Williamson and P. A. Keating, of the English companies, who organised the London capitalists’ testimonial to an Australian Prime Minister, and the same gentlemen at the same time endeavoured to dictate to the Labor Premier of Queensland, the legislative conditions upon which he could secure a loan.

“Dalgety’s” is a mere trade name. Its control is shared by directors of the English banks and members of the old “free English gentry” squatter families. It buys and sells wool, hides, sheep, cattle. It imports, exports, finances and ships commodities. It is the Australian end of Shaw-Savill, the Aberdeen, the White Star, and Nippon Yusen steamers. It is the Australian end of the “Phoenix” and “British and Foreign” insurance. It is the Australian selling end of Nobel’s Explosives, Chilworth’s Gunpowder, Kerol Disinfectants, Quibell’s Sheep Dips, Kemp’s Branding Liquid, Wolseley Shearing Machines, Wolseley Separators, Gane’s Milking Machines, and Dalgety Motor Cars Limited.

John Sanderson & Co. operate in wool, stock, insurance and shipping; link up the “Blue Funnel” section of the P. & O., the P. & O. Branch Service, and with the growing control of the P. & O. over Australian shipping comes the “P. & O. Banking Corporation” with its new measures of economic conquest.

The main P. & O. service is represented by Macdonald, Hamilton & Co., and the head of the P. & O., the British India, the E. & A. and Orient Lines is Lord Inchcape. This combination purchased the coastal fleet known as the A.U.S.N. and organised the overseas boycott of the Commonwealth-owned ships, stripped the coast of shipping, and compelled the Commonwealth Government, in order to meet the local shortage, to withdraw half their fleet from the deep-sea trade for which they were specially constructed. Inchcape is also co-director with James Burns and Rob Philp, in the Burns-Philp Shipping and Sugar combinations.

The Gibbs, Bright combination appears on the surface as shipping agents only, but their buying, selling and financing is done by subordinate corporations. Thus “Australian Pastoral,” “Australian Estates and Mortgage,” “Caledonian and Australian Mortgage,” “Trust Agency and Loan Co.,” are merely “Gibbs, Bright & Co.” under various aliases. G. B. & Co. are the Australian end of the E. & A. Line to Asia and the C. & D. Line to Europe. They are the controllers in Australia of the “British Traders’ Insurance,” “Union Insurance,” “Ocean Marine Insurance,” “Law, Union and Rock Insurance.” They are the “Sulphide Corporation” of Broken Hill and the smelting works at Cockle’s Creek. They link up with the importing houses of Briscoe & Co. and James Service & Co., and control the Royal Bank, dragging it in as an adjunct of the British financial group. As with Dalgety’s and the English Banks, so is the mutual control of Gibbs-Bright & Co. and the English Banks interwoven and interrelated.

The New Zealand Loan is an English firm linked up with Gibbs, Bright. It buys and sells agricultural and pastoral products on commission. It controls Cooper’s Sheep Dip and is the Australian end of the Palatine Insurance. The N.Z. & A. Land Company, consisting mainly of territory in N.S.W. and Queensland carrying 1,600,000 sheep and 40,000 cattle, is N.Z. Loan under another name. So is the N.Z. Land Association, with £500,000 assets in all States, and the North Queensland Mortgage Co.

The Australian Mercantile Loan operates on similar lines to Dalgety’s. It supervises estates for absentee owners, and controls the Marine Insurance of London and the N.S.W. section of the English Northern Assurance.

Australian Chilled and Colonial Consignment control the English-owned portions of Australian meat production, and these through their Nelsons and Hamiltons interlock with the English banks and wool houses.


All these establishments advertise that they “make advances” and “finance meat, wheat and wool” consigned to them for sale or shipment. The money for this “financing” is got from the banks and the loaning of bank money is mainly to these subsidiary institutions. These subsidiaries charge their customers 2 or 3 per cent, higher than they (the subsidiaries) pay the banks. The actual producer has therefore to find two interest charges—one for the loan agency and another for the bank in the background. As the directors of the banks and the loan agencies are the same people they catch two profits from the one deposit, so usury works in more ways than one—straight out and round about.

The same facts apply to the English Import Houses—Briscoe & Co., Patterson, Laing & Bruce, S. Hoffnung & Co., Farmer & Co., Robert Reid & Co. with its aliased “Buckley & Nunn,” and W. & A. McArthur with its “Rich & Co.” are all English owned, all associated with English banks, insurances and shipping, all do the same subsidiary financing of smaller men with deposits from the banks at higher rates and double profits.

In these English controls of coal, meat, and wool, these English banks and insurances, these English import and export agencies, we have the same men, sometimes interchanging from one directorate to another or from one end to another, but always the same men and always in these directorates inter-related, interwoven, interlocked.

Thus we have Lord Geo. Hamilton and C. G. Hamilton, John and Leslie Sanderson, Harold and Montague Nelson, O. D. and E. W. Parker, F. G. and Charles Parbury, E. V., G. M. and R. Reid, Vicary Gibbs and the Bright family, the Living-stone Learmonth, Fairbairn, Austin and Armytage families, Sir Wm. McMillan, S. M. Bruce, Maurice Glynn, F. C. Fanning, Geo. Slade, Blackwood, Vesey Holt, Falconer, Lawley, Hegan, Keating, Braddon, Doxat, Cockburn, Andrew Williamson and Sir Frederick Green.

These men, their companies, their banks, their insurances, have their arranged “sphere of influence.” They control the main volume of international traffic, and the agencies associated therewith. The Metal and Sugar banks have the financial organisation of internal trusts and combines—beer, sugar, tobacco, gas, jam, bricks, timber; the control of woollen and rubber factories, control of the production of metals and industries based thereon. They have a divided ownership in coal and coastal shipping; but by harmonious mutual arrangements they divide between themselves the traffic and the treasure.

These three committees of financiers—the English, the Sugar, the Metal—constitute Australia’s Trinity of “Economic Masters.”

They control the banking system of Australia.

They control the Life, Fire, and Marine Insurance.

They control the savings of the people.

They control all Mercantile Loan Agencies.

They control the principal industries.

They control nine-tenths of the institutions that receive deposits and negotiate advances.

By their control of the institutions to which flow the savings of the people they are enabled to “finance” every industrial scheme in which they are interested. They can say who shall have credit and who shall not. They can boom or paralyse. They can inflate or restrict. They are the economic masters of the country. They are the financial backbone of every Ring, Trust, Combine, and price-raising conspiracy. They stand in the same relation to the democracy of Australia as “Standard Oil” and the Steel Trust in America. By their process of amalgamation, fusion and absorption a compact financial oligarchy becomes more and more the dominant fact. Thus there is built up in secrecy and silence a Black Masonic Order of Plutocracy, cemented in all its parts by the lust of power and the cohesive power of plunder.

Aye, fight,

And spill your steaming entrails on the field;

Serve well in death the men you served in life,

So that to them the war a profit yield.

In peace           ..          ..          to your toil,

In war  ..          ..          ..          to the teeth of death.

So will they smite your blind eyes till you see,

And lash your naked backs until you know

That wasted blood can never make you free

From utter thraldom to the common foe.

Then you will find

That workers’ interests, world-wide, are the same,

And ONE the ENEMY they must resist!


In the year 1893, during the Australian bank smash, the capitalist Governments of the States rushed eagerly to the assistance of the afflicted corporations.

The Queensland Government, of which a majority were bank directors, substituted a State-guaranteed note issue for the discredited notes of the private institutions. The new issues threw the responsibility of redemption upon the Government, and relieved the banks of any liability to meet the notes in gold.

In Victoria the Government took upon itself to guarantee the ultimate redemption of the private note issues, and relieved the banks of their responsibility.

The banks foreclosed upon the deposits of their customers, and gave the customers receipts for deposits they could not get. On May 16th, 1893, the “Argus” urged the Government to issue notes upon the security of these depreciated receipts, and in its issue of June 9th, it urged that the banks should be provided with Government notes to enable them to meet their liabilities. Government notes for private banks were regarded by the “Argus” as good currency, and it buttressed its arguments with the statement that the Bank of England issued £16,000,000 in notes outside any gold basis.

In order to quieten the clamors of the burgled public, the Victorian Government appointed a Royal Commission on Banking. Its exposures were illuminating. Its proposal for a State banking system was pigeon-holed. One of the witnesses was Gilmour Brown. He had been a bank manager for over 20 years. He told the Commission that the capitalist banking system was “a disgrace to civilised communities”; that “it placed in the hands of a small committee a power greater than that of Government”; that the Bankers’ Association of Australia was “a close corporation bound together by the cohesive power of plunder,” and that:—

“They levy direct taxes on the enterprise, industry and production of the community greater by far than that levied by the Government. They control our reserves, our rate of interest, our credit, and possess a more absolute jurisdiction over our livelihood, our savings, our monetary future, than the Government.”

Nat Levi: “You mean it is a Trades Union.” Gilmour Brown: “It is a currency monopoly—a corner in credit.”

The bankers rushed into private conference in Sydney, and came out with proposals of their own which they wished the Royal Commission to adopt. They wanted a State Note Issue issued to private banks, and their eighth proposal asked that notes should be issued to the banks upon a deposit of 80 per cent. Government bonds, and 20 per cent. gold. In other words, after they had invested their money in interest-bearing bonds they were to be permitted to get Government-guaranteed notes upon bonds which the Government had itself issued. Their ninth proposal was that when bonds and gold were exhausted, they should get Government notes, not upon any security of their own, but upon trade bills and other securities lodged with the banks by the general public. They wished, in short, to make the State Treasury a “re-discount agency” (for the banks) and Mr. Gyles Turner, on behalf of the Bankers’ Conference, informed the Commission that:—

“Paper money issued by the Government on good security is as good as the Bank of England.”

But the Bankers’ Conference did not mean that the Government should issue notes to every citizen who had good security. It meant issued to banks only, for them to lend out, and for them to draw interest upon. That was their idea of State aid.

In April, 1905, Russell French, of the Bank of New South Wales, in the “Insurance and Banking Record,” put forward proposals for a “Federal Bank of Issue.”

This “Central” was to issue Government-guaranteed notes to private banks.

Those banks were to get a supply of Government notes up to 40 per cent, of their capital.

There was to be no deposited security. The only security for the notes was to be a first lien upon the assets of the banks in case of failure.

If the banks wanted notes in excess of 40 per cent, of capital, they were to get them upon such securities as the Commissioners might approve—bonds, bills, deeds, etc. But not an ounce of gold was to be supplied by the banks.

For these privileges the Government was to be generously permitted to share in the profits of the issue, and—provided it put up a 40 per cent. gold cover—the Government was to be permitted to issue a volume of notes on its own account. But the banks were to get notes without cover.

Thus, with the bankers in Australia, as with those in America, England and elsewhere, gold is a non-essential, and legal tender notes of the nation are excellent and desirable, so long as they are issued under terms and conditions that treat the banking corporations as a privileged class. Even a National Bank of Issue is a favored institute of the corporations, provided it be made a fortress for the defence of the great monopolies.

Now, these proposals of bankers, of bankers’ conferences, of banking journals, these reports of Royal Commissions, these conspiracies, smashes, and organised robberies of the people were parts of the historical records of the country, and the Labor Manifesto of 1910 referred to capitalist controlled banking as “One of the frauds by which Capitalism bleeds the people,” and it was under these conditions and in the-presence of these facts that the Labor Party in 1910 swept into power.

Almost the first act of the Labor Government was the introduction of the “Australian Notes” Bill—an application to all Australia of the Queensland Note Scheme, as originated by the Tory Government of that State in 1893.

But the adoption of this Tory expedient of ‘93 could not be Labor policy—else, between Tory policy and Labor policy there is no difference.

The Labor Government was confronted with an empty Treasury, and half a million deficit. It needed to raise money quickly. Instead of interest it paid the price to the banks in a Government-guaranteed note, legal tender for all their obligations. For this first instalment the Government got gold, and upon this gold issued a twofold volume of notes for its own use. So one to the banks and two for the Government meant three notes for one of gold. These notes flowed through the channels of trade to the reservoirs of the private banks, so that the banks became possessed of Government notes far in excess of any gold supplied.

On June 23rd, 1910, I said:—

“The issue of notes by the National Government to the Associated’ Banks of Australia is neither a step forward nor a decent substitute for the sixth item of the programme of our party; it is a side-step and a subterfuge. It will not diminish the power of monopoly, but strengthen it. It will put behind the private banks a credit they ‘do not now possess. It will rid them of their obligation of note redemption, and place it upon the .Government. It will make the notes legal tender for the Associated Banks, but not for the National Government—the Government must redeem in gold. It is a device acceptable to the Money Power, but for Democracy it is a deception.”

Yet the measure of the Government was justified provided it was only an emergency measure to meet the deficit, and a temporary measure to give it time to put its declared banking and currency principles into practice.

Those principles applied to banking mean a system of public ownership superseding all private traffic in the instruments of exchange.

But the principles were put into the dust-bin, and the Tory note issue scheme of ‘93 was maintained as a permanent policy.

Then came the establishment of the Commonwealth Bank. The Labor programme declares that the C.B. shall exercise the functions of “Issue” and “Reserve”—it exercised neither.

A “Bank of Issue” is the 6th declaration of the Labor Party’s programme. The Labor Government in its C.B. Act deliberately enacted that the Bank should not be what the Labor programme said it should be—a Bank of Issue—and whosoever protested was said to be “a disgruntled member of the Party.”

Yet without those powers of Issue and Reserve the C.B. is an emasculated institution. It is not the reservoir of the national gold supplies. It is not the tap from which flows legal currency available to all upon conditions common to all. It is not the Bank of the Nation, endowed with supreme powers. It possesses no more power than any ordinary trading bank.

It is a mere addition to the list of banks enrolled “beneath the peculants banner of the Associated Ranks. It is as much a part of the Capitalist System of Exchange as any private institution in the land.

Thus the Labor Government ignored the felonions bank history of all countries—“one of the frauds by which Capitalism bleeds the people.” It ignored the confessions of bankers, the evidence of Royal Commissions, the Party platform, its own manifesto. It gave a Commonwealth Bank, but it left it stripped of those prerogatives stipulated in the platform; prerogatives that would have made it the supreme banking power in the Nation, that would have made all other banks (while they existed) subject to its will. There was no protest from Labor conferences, Labor Unions or Labor press. All alike were under the spell of the fetish that unity in action demands deafness, dumbness, blindness in the presence of every violated principle. Yet if a movement when it gets power does not function for the purposes for which it was created, if it deserts what it was pledged to defend, if it abandons principle after principle, then unity in action is valueless, and the hopes of men are an ever retreating mirage. It was under such conditions that Labor confronted the war.

The Commonwealth Labor Party elected in 1914 had got as far as it was prepared to go.

The political chiefs steeped in Imperialism and softened by nose-rubbing with gentry of social and financial distinction had become Liberals in action.

They were not prepared to put into operation even those items of the Labor programme that came within the Constitution.

And the political chiefs, substituting their own inclinations for the principles of the Labor movement, followed the lines mapped out by every reactionary Government in the world at war.

In Great Britain, when the war cloud burst, the administrators of the capitalist State hastily called to its council the representatives of the great banks and stock exchanges.

In Australia the Government did ditto. The representatives of the Australian banks and the presidents of the stock exchanges of Sydney, Melbourne and Adelaide were called together to draw up a financial policy.

These Bankers and Brokers were constituted a behind-the-curtain Government.

They anticipated a loss of public confidence, a run on the banks, a collapse of the banking system and “a serious outflow of gold” to oversea ports. Upon these anticipations and assumptions the Bankers and Brokers acted, and later on, Feb. 28th, 1917, Mr. Butchart, of the London Bank, made this admission:—

“Soon after the outbreak of war, the chief bankers of Australia agreed among themselves to abandon the principle of convertibility of credit instruments into gold, and to effect settlement in paper money.

Bank directors decided—not the elected Government of the country. The real Government— the Government of Bankers and Brokers—laid down the law.

And while acting, the Bankers and Brokers’ Committee drew up a scheme, which became an official document, an agreement between the bankers, the brokers, and the Commonwealth Government.

Banks were to get a supply of Commonwealth notes to meet their own obligations, on the basis of three notes to one of gold. Where they had only one million of gold to meet calls they were to be provided with three millions of national guaranteed notes, legal tender settlement for all their debts and obligations.

The “Economist,” commenting on the position in Australia, said (Oct. 10, 1914):—

“There is to be a sufficiency of paper money to advance to the private banks such paper money as they may require. The banks welcome the scheme as one calculated to relieve any pressure on their resources. It makes it easier for the stronger banks, as it relieves them of the responsibility of coming to the support of their weaker brethren.”

Thus the sustaining power of the banking corporations in Australia, as desired by their own representatives, was to be not gold, but the credit, the guarantee, of the Australian Nation through its Government.

The Bankers and Brokers’ Committee agreed that the Commonwealth Government should meet its preliminary military expenses by an issue of notes—one-third to the banks in exchange for gold withdrawn from circulation, and two-thirds for the use of the Government. These two-thirds passed to the soldiery and their families, passed along the channels of trade to the reservoirs of the private banks, so that eventually the banks, in addition to notes in circulation, possessed many millions of notes in excess of all gold furnished to the Government.

The Committee of Bankers and Brokers agreed that the States should be financed by an issue of four Commonwealth notes to one of deposited gold. As the States had no gold, the banks deposited gold in the Commonwealth Treasury, and drew four times the amount in notes. As the States drew the bulk of their credits by cheque the notes remained with the banks as “legal tender” reserves, as a foundation for a further superstructure of book credits and cheque money—new supplies of interest-earning loan power. These were the three main planks of the Bankers and Brokers’ programme, accepted and endorsed by the Government.

The Labor Manifesto of 1910 had referred to private controlled banking as “one of the frauds by which Capitalism bleeds the people,” yet it was to those bleeders—not Labor principles—that a Labor Government in 1914 turned for guidance.

The Labor Manifesto of 1914, drawn up by William Hughes, contained these words:—

“The Labor Party through its note issue had created the very instruments by which credit could be sustained and the wheels of industry kept moving.”

That being so, there was no need for the Government to borrow from and pay interest to institutions and persons whose credit was sustained by instruments which the Labor Party had created.

But the Labor Government did financially what W. L. Baillieu, Bowes Kelly, Sir John Grice and the rest would have done if they were in power. They had no need to be in power—the Labor Government acted on their advice. The “Argus” was so pleased that it said, July 16th, 1915:—

“The fact that the Federal Treasurer (Mr. Fisher) has conferred with leading bankers, and others versed in financial operations is a guarantee of sound finance.” It was “sound finance” because it was born of the advice of the bitterest enemies of Labor, and of everything for which the Labor movement was supposed to stand, and for this advice of Bankers, and Brokers the people, of Australia were told by a Labor leader that they were “under an undying debt of gratitude.”

The intimation that the Credit of the Nation-stood behind the Banks, that legal tender currency of the Nation would be, if necessary, issued’ in liquidation of the called-up obligations of the banking corporations, was sufficient for the public. There was no lack of confidence, no run, no collapse, and the Commonwealth Notes, drawn by some of the Banks in accordance with the scheme, in anticipation of a run, were not needed.

The notes issued by the Government for industrial wages and soldiers’ pay filtered through the channels of trade to the reservoirs of the Banks. The cheques paid by the Government to contractors and suppliers went to the Banks, who presented for collection at the Commonwealth Bank, and drew more notes. Thus the “legal tender reserves” of the Banks began to grow.

In proportion as the stocks of legal tender currency accumulated in the bank vaults, so did the old-time necessity of maintaining a ratio of gold to liabilities diminish. Commonwealth Notes performed the function. They were legal tender. They met all obligations. They acted for the Banks as if they were “gold in reserve,” and upon this basis—upon the paper notes of the Nation—the Banks erected an additional superstructure of credit for loans and profiteering.

Thus it came about that the original scheme—the scheme whereby the credit of the Government, and the Nation behind it, was pledged to uphold the credit of the private corporations—was no longer needed. The Bankers no longer feared runs and collapses. They no longer needed protection and preservation. The national instruments, “the instruments by which credit could be sustained,” had become their property—a vast accumulation in the vaults of the financiers. Henceforth they wanted interest-bearing loans floatable on the notes previously issued by the Government.

The loan-floating methods in Australia were mere copies of those in England and America. In root principles of barefaced plunder they were all the same. The Melbourne “Herald” of Sept. 22nd, 1920, describing the system in the United States, said:—

“Banks subscribed to the loans simply by writing deposits on their books to the Government’s credit.”

So did they in Australia. Against these imaginary “deposits” the Government drew cheques, paid their debts, and whosoever presented those cheques were credited with a fresh deposit. “Around, around the gooseberry bush,” from each turn of which the banks skimmed off fresh profits in bank charges and gathered into their possession £46,000,000 of interest-bearing bonds.*



                                                                                                1914                                        1920

Within Australia  ..              ..              ..              ..              ₤7,307,000                              ₤37,136,000

Overseas               ..              ..              ..              ..               4,427,000                               20,249,000

                                                                                                ————–                             —————

                                                                Total                       ₤11,734,000                            ₤57,385,000

                                                                Holdings Increase – ₤45,651,000


                                                                                                1914                                        1920

Within Australia  ..              ..              ..              ..              ₤5,037,000                              ₤34,610,000

Overseas               ..              ..              ..              ..               2,033,000                               28,520,000

                                                                                                —————                            —————-

                                                                Total                       ₤7,070,000                              ₤63,130,000

                                                                Holdings Increase – ₤56,060,000


It was, in brief, the application to Australia of the British Financiers’ “Seventh Scheme” of public plunder.

Thus the banks created a currency of their own—an enormous cheque currency, inflated by hundreds of millions—a vast ocean of cheques, so that the note issues of the Government were mere specks upon the sea of bank-created paper.

Upon this subject the Melbourne “Herald,” in the article quoted, said:—

“Credit inflation is still a mystery to the mass.”

It might also have said that behind the veil of this mystery the banking corporations carry on their spoliations, and levy annual toll upon all the productions of the country. That the banks have large hidden reserves, hidden under the heading “liability to depositors”—to themselves—is well known. Their disclosed reserves, and reserves allotted to increased capital account, increased from 1914 to 1920 by £13,000,000; their oversea assets in excess of oversea liabilities by £25,000,000. Within Australia the bank holdings of Government bonds increased by £30,000,000, and their holdings of Government notes increased by another £30,000,000. These notes were not themselves interest fruit-bearing, but they were instruments of profit—they were an army of reserve, they held the fort, the base, the line of communications, while the cheque currency of the banks sallied forth and came back loaded with the loot of piratical expeditions.

To this feast upon the vitals of the nation the public were invited. The vultures of High Finance could tear off more in a few bites than a million flies, but this offer of general participation not only gave to the vultures an air of generosity, but it surrounded them with a multitude of petty partners, who felt they had a personal interest in buzzing in defence of the birds of prey.

Thus the loan loots were made “popular,” “democratic,” subscribed to by all classes—old maids, widows, orphans, everybody—until available savings disappeared into the pool, trans-formed into bonds whose future values depend upon the operations of the riggers of the market for money.

And when this source was dried, the workers, the widows, the old maids, the petty traders, were told that they could make yet more money from their bleeding country. They could take their bonds, their homes, their land, and mortgage them to the banks, and the banks would advance their paper money at four per cent., which they could reloan to the Government at five, and they could continue to pay four until the paper money was returned. But no money passed—not even paper money. There were merely figures in a book, designated “deposits,” and those figures in a book, borrowed by the Government, drawn upon by cheques, represented not cash in the banks, but the mortgaged properties of the general public, mortgaged to the banks for figures in a book at four per cent. Of the £40,000,000 loan of 1918, the Melbourne “Argus” of March 18th said that the banks, by this process “made fluid” private property, and the term “private property” included private holdings of previous issues of Government bonds. So that the banks created book credits and cheque currency representing nothing but the prior debts of the Government. With these book credits and cheques the banks bought fresh supplies of interest-bearing bonds, both on their own behalf and on behalf of “approved customers.”

The “Banking Record” of September, 1919, said:—

“The £90,000,000 increased deposits within Australia was created by bank advances of paper money on meat and wheat and other primary products, and by bank advances of paper money to enable customers to take up war bonds.”

For “paper money” say “figures in a book, a pile of cheques and a few notes for small change purposes,” and you get to the vitals of the subject.

On the 7th September, 1920, the Melbourne “Argus,” in an article on the “ignorance of legislators,” said:—

“The banks create deposits every time they make an advance or discount a bill.” In other words, “deposits” have, for the most part, no relation to the popular conception of “deposits”—two-thirds of so-called “deposits” are “loans,” overdrafts, discounts, advances of bank-created paper against “approved” securities. And for these securities the borrowers are “put in credit,” charged interest and designated “depositors.” The term is delusive. Under it are hidden all the “secret reserves” of the corporation, masquerading as “liabilities” and as bona fide obligations to the public. And under it are hidden the corruptive powers and practices of the gentlemen controlling the Fiduciary Institutions.

And to these private manufacturers of paper credits, the owners of meat and wheat, of farms, and homes, and workshops, the owners of actual property and actual forms of capital are compelled to pay interest for a circulating representative of their own capital. . Only those escape it who are themselves within the ring. By their monopoly privilege the banking corporations make their dividends, pile up their reserves, control all industries, and levy perpetual toll upon the energies of the people. The “Australasian Manufacturer,” published In Sydney, which claims to have “the largest paid-up circulation of any periodical in Australasia,” said in its issue of February 2nd, 1918, that it “advocated the establishment of a form of banking more in harmony with the needs of modern industry,” and it quoted with approval the following statement from an editorial in the London “Daily News”:—

“The question for us all to ask is whether this private monopoly of the national credit can be permitted to continue? Can we start the future with a “corner” in money? Or must we not see that money, like political power, must be democratised? If money is only a symbol representing the whole credit of the community, why should that symbol not be at the command of the whole community, whose credit it represents?”

The banking directors have not only power to create and inflate credits. They have the much more deadly power to withhold credits from men whose security is beyond question. Thus they can destroy values which their inflated currencies have created, and their outside partners can be financed to purchase the systematically depreciated stocks. Thus the press of October 7th, 1920, could report:—

“Bankers are frankly opposed to the creation of fresh credits…pressure, exercised by banks for reduction of overdrafts makes unloading of stocks imperative. As might be expected, it is the smaller houses that are likely to be the first to feel the pinch most acutely.”

And to these alternating inflations and squeezings, the people of all countries under the rule of plutocratic banks are periodic victims.


Registered in Australia; also Banks of Australasia, E.S. & A. and Union registered in England. (Does not include N.Z. Banks.)


                                                                        1914                            1920

Debts due to Banks      ..          ..          ..          ₤153,812,000              ₤221,196,000

Gold     ..          ..          ..          ..          ..             50,615,000                 37,552,000

Government Notes       ..          ..          ..               7,070,000                 63,130,000

Government Bonds       ..          ..          ..             11,734,000                 57,385,000

Bank Premises              ..          ..          ..               5,164,000                   5,913,000

Notes and Bills of other Banks  ..               2,469,000                   4,835,000

                                                                        —————-                        —————-

Total Assets     ..          ..          ..          ..          ₤230,864,000              ₤390,012,000

Liabilities          ..          ..          ..          ..          ₤197,473,000              ₤344,792,000


                                                                        1914                            1920

Debts due to Banks      ..          ..          ..          ₤33,565,000                ₤52,682,000

Gold     ..          ..          ..          ..          ..           14,205,000                 16,223,000

Government Notes       ..          ..          ..             2,033,000                 28,520,000

Government Securities  ..          ..              4,427,000                 20,249,000

Bank Premises              ..          ..          ..                501,000                      538,000

Notes and Bills of other Banks  ..                684,000                   1,926,000

                                                                        —————              —————

                                                                        ₤55,415,000             ₤120,138,000

Liabilities Overseas       ..          ..          ..          ₤29,471,000                ₤72,090,000


                                                                        1914                            1920

Gold in Banks               ..          ..          ..          36 millions                    21 millions

Government Notes       ..          ..          ..          5 millions                     36 millions

                                                                        ————–               ————–

                                                                        41 millions                    56 millions

These notes were to the banks as “gold in reserve.” And upon these 16 additional millions—Government paper—the, bank erected, as per “Banking Record,” a superstructure of 90 millions additional credits loaned out at interest to Government and people. The Government note issues thus became more profitable to the banks than interest-bearing bonds.

Money lending contains the root idea of capitalism.

In money lending there is no thought of production.

In money lending economic activity has no meaning.

All undertakings in the field of industry are dependent upon the consent of the banker.

The Stock Exchange activities of the banks are becoming more and more the controlling force in every department of economic life.

—Werner Sombart in “The Jews and Modern Capitalism.”


There was a time when notes were the only paper currency, but the banks have evolved a currency of their own in the shape of cheques.

At the period of most of the much quoted note currencies, cheques were unknown. They did not come into much use in the United States until after the Civil War of 1860-65.

Notes are more used on the continent of Europe than in England, simply because they are more popular.

 The Governor of the Bank of England told the Monetary Commission that the reason so few notes were used in England as compared with continental countries, was because cheques were more widely used.

Notes in the past were the entire paper currency.

To-day they are only a fractional part of the currency.

Paul Warburg, one of the foremost of American bankers, told the U.S. Monetary Commission that:—

The days are long past when notes were anything more than a fractional part of the paper currency of a State.

Therefore if all arguments against past note issues were correct they would have no application to present-day conditions. They would only furnish an argument against the manufactured book deposits and cheque issues of the private banks, but since the old-time note issues are so often quoted they can be handled from the standpoint of the times at which they were issued.


Amongst the quoted examples of currency failure is the case of the early colonists in America. Those people led a very primitive existence. They had to struggle against warlike tribes. Banking methods were crude. They were crude everywhere. Gold was scarce. A medium of circulation had to be secured. The system varied in different colonies. In some colonies there was failure—in others, unqualified success.

The colonies of New York, New Jersey and Pennsylvania were on a paper currency. Then credit stood undiminished. Pennsylvania currency was based on deeds, bills and warehouse receipts. It enjoyed the highest degree of prosperity on a paper currency.

In 1773 the British Government prohibited a paper currency in the colonies. This suppression was one of the causes of the revolution that broke out in 1775.


This war was fought by the American colonists under the greatest difficulties. The so-called “Congress” was not a Government. It had no Constitution, no assets, no taxing power. It issued a currency to carry on the fight. The ultimate redemption of that currency depended on the issues of war. The currency served the purpose. It fed and clothed and armed the soldiery. The struggle for independence was successful. Every penny of the paper currency was honored by the American Government.


When France rose against monarchy and proclaimed her First Republic, the nations of Europe fell upon her like wolves. Gold disappeared—a paper currency had to be created. The notes were based upon the forfeited estates of the nobility and of the religious houses. Those notes bought food and clothes and arms for the soldiery of France, sustained them in the field, helped them to defend the Republic and defy the world. With that money the soldiers bought land from the Government, bought material for home making, and laid the foundations of the power of France.

The Assignats were first issued in 1790. England kept factories going turning out counterfeits, as she did during the American revolt. In 1796, when Assignats were replaced by Mandats, there was a counterfeit circulation to the extent of £600,000,000. Yet the industries, of France expanded, her soldiers conquered, her mothers gave birth to children more rapidly than battlefields could devour them. Every paper note was redeemed in land or products. The long Napoleonic war did not add one penny to the interest burden of the people of France.


1694.—Bank of England started.

1696.—Bank failed.

1697.—Bank re-started.

1698.—Co-operative Bank started.

1708.—Co-operative Banks suppressed.

1715.—John Coleman Bank issued notes on security at 3 per cent.—principal repayable at 5 per cent, per annum.

1741.—John Coleman Bank suppressed.

1793.—War against French Republic commenced.

1797.—Bank of England suspended gold payments. Bank of England notes increased under Government guarantee from 9 to 27 millions.

Doubleday, in his “Financial History of England” (page 137), says that the Pitt Government lent several millions of this paper currency on goods or personal security, the whole of which was faithfully repaid.

There being no law against private note issues, the private banks increased their notes from 7 to 50 millions.

These notes depreciated—Government guaranteed notes did not.

“The private banks caused great loss to the public through the depreciation of their notes” (Melb. “Age,” Aug. 10th, 1910).

Allison, in his “History of Europe,” says that the non-interest bearing, irredeemable notes issued under Government guarantee, receivable in Government revenues, remained at par with gold, and that the purchasing power of the Government guaranteed notes was twice that of notes issued from joint stock and proprietary banks.

England was on a paper money basis for 24 years (1797 to 1821), and on this basis she conducted 18 years of war.


Some States established State-owned banks. Some were failures, some were successful. The State Bank of South Carolina, established in 1812, lasted 58 years, and went out of existence because of the Federal note tax of 10 per cent.

For the most part banking was conducted by private corporations, with right of unlimited issue of their own notes. Many of them had no capital, and repeatedly went insolvent. There were 1700 private banking companies, and the notes were poor in make up and easily counterfeited. The money of these banks got known as “Wild Cat,” “Red Dog,” and “Stump Tail” money.

It was against the unrestrained paper issues of these banks that Daniel Webster (1837) made his much-quoted statement about the evils of paper money.

It was in September of that year (1837) when J, C. Calhoun and Webster were raising in Congress the question of the United States Bank Charter—vetoed by President Andrew Jackson—that Calhoun made the following statement in the presence of men conversant with the contemporaneous facts:—

Never in normal times, never when received for all debts, dues and obligations to the Government; never when associated with a bank kept free from the manipulators of institutions hostile to its existence has a paper currency depreciated. That statement went uncontradicted.

In that same debate Daniel Webster said :—

I have ever been the enemy of those banks that force their own paper money into circulation.

John C. Calhoun described the system in existence thus:—

The right of making money, an attribute of sovereign power, a sacred and important right, is exercised by private banks, not responsible to any power whatever for their issue of paper.

The Melbourne “Age” (Aug. 10th, 1910) said:—

“In America in 1837 almost all the banks of the country closed, causing enormous loss through these notes. Again in 1857 the same thing occurred. The American Congress then stepped in to protect the public against this ruinous private note issue by the banks.” Yet this chaotic private system is quoted nearly a hundred years later as a proof of the failure of a nationalised currency.


War declared, April, 1861. Federal Government unable to borrow either in America or Europe.

December, 1861, private banks suspended gold payments, but enormously increased their note issues.

December, 1861, Government issued £12,000,000 “Demand Notes.” They were receivable for all debts due and obligations due to or from the Government. These “notes” remained at par value during the whole period of their existence.

First issue of United States Notes (greenbacks), March, 1862. Banking opposition in the Senate refused to permit Bill to pass unless interest on pre-war loans was made payable in gold. To meet this the Government had to collect import duties in gold. Merchants with greenbacks had to deliver to bank at depreciated value to get gold to pay the Government for duties. The Government gave it back to the banks as interest. On third issue further restrictions imposed on paying power of greenbacks. Value further declined. Depreciation was the result of a conspiracy on the part of the financiers. Yet greenbacks kept the armies of the North in the field, fed, clothed and armed the soldiery. When the war was over the Government accepted greenbacks as full payment for all debts, dues and obligations and they at once went to a parity with gold. The total issue of greenbacks amounted to £90,000,000, of which £70,000,000 are yet in circulation. They are no more legally redeemable in gold to-day than when first authorised. The original Act has never been cancelled or amended. The United States used a paper money base for 17 years (1862 to 1879), and on that base conducted years of war.

In 1863 the American banking power compelled the American Government to issue notes to the banks (instead of non-interest greenbacks) upon the security of deposited bonds.

The original Enabling Act (February, 1863) used these words:—

Act to provide a currency, secured by a pledge of United States stocks and bonds.

The banks subscribed to the bonds with paper money and then got a fresh issue of notes upon the security of the bonds. These Government guaranteed notes took the place of private bank notes.


This issue was so successful that it is never mentioned by the critics of a national currency. Their objection is not to a paper currency. It is an objection to a paper currency nationally controlled. (For details See “FOREIGN DEBTS below)


The Melbourne “Age” (Aug. 10th, 1910), said:

“Times have been known in this State when private bank notes were being sold at

12/6 in the pound. One member said that he had seen them sold at a shilling apiece.”

Commonwealth Government notes are not redeemable at any bank, private or public; nor are they, since the war, even redeemable at the Commonwealth Treasury. The notes now in existence are in excess of the total gold supply of the country, and, relative to population, are three times in excess of the greenback issues of the American Civil War.


In times of war private property that is liable to be destroyed by the enemy, and public securities resting for redemption on the existence of a Government liable to be swept away, will both diminish in value in proportion to the proximity of the danger, and will recover value in proportion as the danger retreats.

As the enemy takes on the role of invader, so all fixed irremovable forms of wealth, public or private, begin to depreciate, while gold, jewellery and other easily removable forms of wealth rise in value. When England feared the Napoleonic invasion, gold rose to £ 5/15/- per ounce. On the day of Waterloo it was £ 4/13/6. After the victory it receded to the Mint price of £3/17/10½.

In war time gold is a deserter. It is the first to get out of the war zone. It is the first to seek neutral territory or a dug-out. It can only be kept in the firing line by the strong arm. of the Government, and then seeks devious ways of escape. European statisticians estimate that when war broke out in 1914, over 100 millions of gold went into hiding. All countries in times of national stress are driven to resort to paper currency. The crime is in the fact that banking corporations are permitted to turn national issues into instruments of public robbery and bondage.


In the principal countries of the world the great financiers have established central depositories for gold. In many countries the great central bank is named after the Country of its location— “Bank of France,” “Bank of England,” “Bank of Belgium,” etc. In the United States the central is named “Federal Reserve.”

In some countries the “Central” is a private corporation controlled by the directors of associated banks; in others it is a private corporation controlled by the Government; in others it is a public-owned institution controlled by private bankers; in others it is an institution both owned and controlled by the Government.

But no matter the name, no matter who owns or controls, in every country the “Central” Bank exists as a buttress to the private banking system. Behind the system behind the “Central” stands the capitalist-dominated State, ever ready at the word of command to furnish State aid, pledge the “credit of the nation,” and issue additional currency manipulated by the capitalist controllers of the system.

Under this system gold disappears as an internal currency. It is no longer money. It is a stored product, not for internal use, but for international traffic and in several countries this transformation took place prior to the war.

Baron Brencard told the American Monetary Commission that the Bank of France is the Bank of Gold Reserve for all companies and corporations throughout the Republic, and “the gold of France is mobilised, ever ready for international economic service.”

Lord Swaytheling told the Commission that the difference between the Bank of France and the Bank of England was that the former could pay out silver instead of gold, could refuse gold for export, or export heavily, and extend the note issue for internal purposes, and by these means “directly control international financial and economic relations.”

The Bank of England differed in its methods, but Sir Walter Cunliffe, when Governor of the Bank, told the U.S. Monetary Commission that:— “Private banks holding drafts on the Bank of England must present such drafts direct to the Bank of England to be paid to the credit of their account in the Bank of England.”

Every private bank can settle its adverse balance with other banks by a transfer of its credit in the Bank of England, but in the Bank of England the credit remains.

It is, therefore, impossible for a private bank to draw off gold supplies without the consent of the Bank of England, and consent, even when granted, is often made fictional by increasing the price at which gold is supplied.

On the other hand, the liability of the Bank of England to other banks is diminished by its holdings of cheques and drafts on other banks. With these instrumentalities the B. of E., whenever it wishes, can draw off gold from other banks. Thus

gold control by the Central B. of E. is absolute.

The German Imperial Banking Act of 1909 brought the Reichsbank—the “Central” of Germany—into line with those of France and Belgium.

The U.S. Monetary Commission reported that in consequence of the new powers conferred upon, the Reichsbank Bank—

It holds the gold reserves of Germany out of which all foreign obligations can be settled and places those gold reserves wherever they will be of the greatest economic service. The desire to supplant Britain in the markets of the world led to the adoption of methods that would have made the average Labor Government shiver with timidity. Under the German “Junkers” the Reichsbank continued to act as “Central” for private banking companies, but those private banks were prohibited from establishing new branches. The Reichsbank established 500 branches of its own, and in several provinces of the German Empire it was the sole giver of credit in important spheres of economic life—retail trade and agriculture. It advanced notes on houses and other forms of immovable property, and if the credit was wanted for the development of exportable products the charge for credit was nominal—no more than sufficient to cover bank expenses. The Reichsbank also advanced currency to the Government on a deposit of bonds, a security representing the Government’s power to tax the entire wealth of Germany. The Reichsbank issued currency for bills on London and elsewhere. This made the Reichsbank the almost exclusive holder of credit in foreign States, and gave it a dominant power over the character and quantity of its imports.

By those means Germany built up credits in the countries of its principal operations. By those means it enabled the importer of the raw material of German industries to purchase on the favorable terms that those credits abroad permitted, and by those means it gave without cost a substantial subsidy to the great manufacturing interests of Germany.

Japanese financiers in their banking system followed upon German lines.

The American Monetary Commission reported that:—

The chief medium of exchange in civilised countries is the cheque.

For counter change and wages either gold or notes must go into circulation.

Gold in circulation renders effective mobilisation impossible.

Gold mobilisation is imperative if America is to hold her own in the international trade struggle.

Therefore gold must come out of circulation and be replaced by a note currency.

Upon that report the American Money Trust acted, and in 1913 organised its “Reserve Banks.” In 1915 the total note issues of all descriptions were 2,752,000,000 dollars, against a total gold reserve in the Washington Treasury of 200 million dollars. The gold stocks in the private “Reserve” banks amounted to 700 million dollars, but the liability for ultimate redemption was on the Washington Treasury. On the 30th September, 1920, America’s gold stocks had gone up to 3,000,000,000 dollars, but commodity prices were as high as in the countries whose gold stocks had been depleted. None of this gold was in circulation. It was in “reserve” and of these “reserves” the private corporations controlled four-fifths and their circulating currency for their citizens consisted entirely of paper. In addition to silver certificates, gold certificates, United States notes, National Bank notes, the “Federal Reserve” notes in actual circulation on 30th Sept., 1919, amounted to 2,655,000,000 dollars.

Thus in the United States, as in Europe, gold was withdrawn from internal circulation and mobilised as one of the instruments of the international trade struggle.

In all those countries gold passed to the Central Reserve Bank—whatever its name—and credits were created in the books of the Central, and to the extent of those credits the Central settled the foreign obligations of subsidiary banks or the obligations of one subsidiary bank to another. If the individual bank desired Notes, it deposited with the Central, bonds, deeds, commercial bills or other paper securities.

In America the New York Reserve Bank is the Chief Central of the twelve regional centres. Within its grasp is mobilised the main gold supplies of the United States, and these are mobilised not to liquidate the note currency of the country—that responsibility is upon the Government. They are mobilised under Capitalist control for the international economic conflict.

The less gold used for internal purposes, the more is available for establishing a gold fortress for international operations or for building up credits, or liquidating obligations in foreign markets. A gold-producing country is therefore in the most favored position for the task of mobilisation, and an internal paper currency permits gold to be put to its best economic use. These things are not theories; they are facts, recognised and applied by the High Financiers in their predatory operations.

The bankers of the world no longer believe that a paper currency need be convertible into gold, or that it can be so converted. They only want the public to believe it. They only want Governments to function in their interests on the general superstition. They know full well that a currency convertible into all the commodities that gold will buy, is good currency and sound money, but they keep that fact in the background.

The bankers know that an adequate gold currency is impossible, yet they levy toll upon paper that represents nothing more than the borrower’s security. They know that the solid assets of the borrowing public are adequate backing for any medium of exchange that may be issued, but they keep that fact in the background. They have adopted a paper currency in the form of cheques, and these to-day are redeemable, not in gold, but in the paper notes of the nation.

This system, which the nation by its note system has made possible, should be administered for national advantage—not private gain—and what the Capitalist “High Financiers” do for their own profit should be done for the profit and progress of the nation.

Trade and Industry are wholly at the mercy of the world’s money controllers. By means of the monopoly privileges accorded to the banking profession, these men exercise a greater influence over economic conditions than any potentate, ruler or government. They are the world’s real autocrats.

KITSON in “The Money Problem.”


On March 16th, 1916, Sir Denison Miller, Governor of the Commonwealth Bank, stated in the New Zealand “Evening Post” that—

“Banking has its own language, not understood by the people, and not intended to be understood by them.”

Mr. Frank Hirst, editor of the “Economist,” told the American Monetary Commission (document 579) that the Bankers not only mystified the public, but obfuscated themselves with obsolete terms.

Sir Edward Holden, of the London and Midland Banking Company — one of the men selected by the British Government in 1915 to negotiate the 500 million dollars loan in New York—lectured before the Bankers’ Institute of Liverpool (December 18, 1907). He said:—

1st: “Banking is little more than a matter of bookkeeping—the transfer of credit from one person to the other.”

2nd: “Securities create credits.

3rd: “Credits are transferred by means of cheques.”

4th: “The transfer of credit is to circulate it—make it current.”

5th: “Currency is Money.”

6th: “Money mainly consists of cheques.”

7th: “Bank notes are only a fraction of the total currency.”

8th: “Money is redeemed every time it is exchanged for commodities or services.”

These admissions were made and these facts made public in order to buttress the end in view. Sir Edward Holden stood for the private cheque currency of the private Banks, backed, sustained, and redeemed by legal tender notes of the Nation issued to the Banks for securities deposited. Sir Edward Holden argued, as Pierpont Morgan has argued in America, that legal tender notes issued to the Banks on the basis of securities, is sound money.

In 1913 Sir Edward Holden urged the appointment of a Royal Commission “to devise means whereby the Bank of England may be empowered to issue to subsidiary banks legal tender paper money guaranteed by a deposit of securities.” On February 7, 1914, in a circular letter to the London press, Sir Edward Holden urged that— “the backing of such an issue should be bills of exchange, such as are dealt in by bankers every day.”

This is designated the “Re-Discount System.” It is a system enabling the bankers to get the use of a national guaranteed currency, not upon their own securities, but upon the securities entrusted to their care by their customers, and by such means the Government is made to function in the interests of the banks.

When the war broke out (August, 1914), all pretence of a gold basis disappeared, and the scheme described in previous chapters was put into operation. In principle it was identical with that outlined by Sir Edward Holden.

If such financial operations are sound for the banks it follows that a national currency issued from a National bank upon deposited securities is equally sound, and is an imperative necessity for purposes of national reconstruction.


Sir Robert Giffen, the author of “Financial Essays,” said—

“As long as the attention is rivetted on, not the real currency paper, but upon its assumed basis—gold—correct conclusions upon currency questions are impossible.”

The writer on “Currency” in the “Encyclopedia Britannica,” said—

“The idea of the intrinsic value of money is discarded by all persons conversant with the working of the modern mechanism of exchange.”

Professor Atkinson (Aug. 11, 1914), said—

“It is a fallacy as common as it is vicious to assume that the world’s credit is based upon gold.”

The London “Economist” (May 22, 1915), said—

“‘Cash at Call’ is a fallacy, and the outbreak of war proved it.”

In short, the investment of gold, with an economic halo, is one of the tricks by which Financial Capitalism deludes and exploits the people.


Sir Felix Schuster, president of the Smith’s and Union Bank of London, said—

“The theory of banking is one thing—the practice is quite another. Banking has evolved far beyond the theory on which it is supposed to be conducted.”

And in a speech, reported in the “Banking Record” (September 21, 1914), he said—

“The currency of the country is supplied by cheques instead of, as the Bank Act intended, by Bank of England notes.”

The financial writer, McLeod, says—

“Cheques are currency in the same way as notes.”

Hartley Withers, in his book on “War and Lombard Street,” said—

“Modern currency is the ‘cheque’ which can be multiplied to an extent which is only limited by the security which customers may be able to provide.”

The essence of a sound currency is that every credit issued shall be based upon deposited securities, upon bills that represent products, deeds that represent property, and bonds that represent the taxable wealth of the community.

Frederick Temple, in “Interest, Gold and Banking,” says—

“The growth of the cheque system has had the effect of transforming the character of banking.”

Oswald Stoll, in “The People’s Credit,” says—“Modern currency takes the form of cheques, with Government notes for wages and small change.”

These cheques are redeemable, not in gold, but in the paper notes of the nation.

The £1 Note is the unit of general circulation.


“Value, like hate, love, esteem and ambition, is a pure abstraction. It is vague, indefinable and indeterminate. It is an attribute of the mind. It is not a substance. It cannot be fixed, or measured or standardised.”

“Value being the accidental varying relationship of one article to another, no single article can be standard.”—Professor Bowen.

“A standard of value is impossible in the very nature of things. If a quantity of, gold were placed beside a number of other things, no human sense could discern their value.”—McLeod.

“Writers who have abandoned the ‘standard of value’ theory still cling to the term, ‘measure of value.’ Value is an ever-varying relationship and therefore cannot be measured.”—Walker.

Values are ideal and can only be expressed in terms of numbers.

“‘One dollar’ or ‘one pound’ is the unit of calculation and comparison. It is a number.”—Kitson.

A material standard of value is impossible. Value can only be expressed by numbers: 1, 2, 3. It cannot be expressed by a substance. You cannot measure the depth or the value of a glass of water by placing a sovereign inside or alongside of it.

A paper currency exists. We cannot do without it. It is issued by private Banks. Its convertibility into gold is a fiction. Yet upon that fiction the Banks trade, charge interest, and declare their annual dividends. Modern money is not capital, not property. It is a convenient representative of wealth in all its forms. When the manufacturer, the owner of capital, goes to the Bank for money, he mortgages his capital, and pays interest for a circulating representation of his own property.


The “Round Table,” in its article on “Lombard Street in War,” says—

“The amount of securities deposited in British Banks are worth over £1,000,000,000. Against these securities cheques are drawn. Behind these cheques there is not one ounce of gold—the only security is the security deposited by the drawer of the cheque.

In Australia the securities deposited in the Banks are worth £240,000,000. Against these securities bank credits are created and against those credits inscribed in a book, cheques are drawn and interest charged. In addition to floating mortgages upon the gold in their possession, the Bankers have issued—at interest—rights to draw cheques upon the Banks to the extent of over £220,000,000. Behind these cheques there is not one ounce of gold—the only security is the security deposited by the drawer of the cheque.

“LOANS” are given by means of credits.

CREDITS are given in the books of the Banks to those who deposit securities.

CHEQUES are the paper instrumentalities by which credits are transferred and wealth monetised. Every transaction is a transfer of claim on deposited security.

NOTES are cheques of fixed denomination guaranteed by Government, used for wages and counter purposes; used by private banks for the liquidation of their own indebtedness.


The internal currency of a country has nothing to do with “foreign exchange.”

Oversea credits are secured by the sale in the oversea markets of commodity values, irrespective of the character of the commodity containing those values. Twenty shillings’ worth of wool or wheat sold in the overseas market produces as much overseas credit as twenty shillings’ worth of tin or gold. Dollars, francs, pesos, sovereigns, go abroad as metal, not money—so much per ounce, and on that commodity basis secure credit in the currency of the country in which they are sold. Money does not function as money outside of its own territory. Foreign payments are not made in local money, but in foreign money realised by the, sale of goods or bonds on the foreign market. “Paper currency does not interfere with the movements of produce or the profits of those engaged in international trade.” (Encyclopaedia Britannica). If it did, international trade would be at an end, because all countries are on a paper basis. “Only in countries where banking is in a relatively backward condition do the precious metals play any great part, either nationally or internationally.” (Evidence of Sir George Paish, Editor of “The Statist,” before an American Monetary Commission, Document 579). Exchange rates rise and fall under a gold standard. They rise and fall between London and New York with the same standard, and between London and Melbourne not only with the same standard but the same monetary unit. It is not the character of the local currency but the ratio of imports to exports that affect the financial relationship of nations.

“Foreign Exchange” does not increase or diminish the wealth of a country, or increase or diminish the totality of its income.

If you want a post office order, a bill, a draft, a credit on New York, you can only buy it from somebody in your own country possessing bank credit in New York. You buy on the local market and pay in local money. Whether you pay much or little does not make the country richer or poorer. The post office, the bank or individual having credit in America pays your American debt in American money, in exchange for your local money. The price, “the rate of exchange,” is paid on the spot where you live, to local people, in local money. If the cost is 20/- where it was previously only 10/-, then the rate of exchange has gone against you. In other words, prices have risen, and around this plain fact the financiers have built a shelter of mysterious words. Plain facts may be rendered obscure, but they are not altered, by surrounding them with curious signs and symbols, or by the flying of different coloured rags over different pieces of earth. The buyers and sellers, the gainers and losers, are all within the State.

The Exporter of Products becomes, in exchange for his goods, the owner of foreign money in a foreign market. It is useless to import it. All he can do is sell his claim to foreign money to some local bank for local money. The bank thus becomes the possessor of oversea credits.

The Importer of Goods must pay his debts in the foreign market in foreign money. It is useless for him to export local money. He is therefore a buyer of foreign credit, and he buys it from the local bank with local money. The buyer of a post office order on New York or London is a buyer of foreign credit with local money.

The Local Bank is the local market, and on that market the exporter of goods sells his claim on foreign money, and the importer of goods buys a claim on foreign money wherewith to pay his foreign obligations.

If the importer of goods can buy from the local bank 20/- (4 dollars 86 cents) in New York, or 20 shillings in London for 19/8, the price of foreign money, “the rate of exchange” is said to be “favorable.” If he can only buy 15 shillings (3 dollars 65 cents) in New York or 15 shillings in London for twenty local shillings, the price of foreign money “the rate of exchange” is said to be “unfavorable.”

So far as the terms “favorable” or “unfavorable” are concerned, the exporter has no existence. The terms only apply to the importer, the buyer of foreign credit.


If the bank has abundance of oversea credits, it will reduce the amount of local money which it will give the exporter of goods for his oversea money. In his book on “Foreign Exchanges,” Mr. Spalding, a member of the British Institute of Bankers, said:—

“In theory the importer gets the advantage of the cheaper rate at which the exporter was compelled to sell his bill. In practice, a, proportion or the whole of the premium goes to the banker”

In other words, “favorable” exchange seldom means “favorable” to anybody except the banks. They surround their operations with a veil of “meaningless phrases which have filtered down to us through the dust of antiquity” (Spalding), by “a language of their own, not understood, and not meant to be understood by the people” (Sir Denison Miller), until at last, as the Editor of “The Economist” told the Monetary Commission, “the bankers not only mystified the people, but obfuscated themselves with obsolete terms.”

This smoke screen of senseless words and phrases is not without utility. It protects the “Monopoly of the Instruments of Exchange” from popular comprehension and attack. Thus Labor can expend its energies upon nationalised fried fish shops and bakeries, while leaving untouched the nerve centres of capitalism, without which capitalism cannot exist, without which national reconstruction on any other than capitalist lines cannot take place.

The “Money Market” speaks of “paper money,” “depreciated currency,” “unfavorable exchange,” as the special products of revolutionary governments, or of their reactions upon non-revolutionary countries. It refers to Russia as the latest awful example. Yet French bankers must pay £2 French money (50 francs 44 cents) for 20 shillings in London, or for 14 shillings (3 dollars 40 cents) in New York. And English money is so called “depreciated” as compared with the Yankee dollar, the Argentine peso, the Dutch florin, the Japanese yen, and the Hong Kong paper dollar. The Yankee financial houses, as a result of enormous exports of goods to England, have so much English money in London that they want no more. So for 14 shillings American money (3 dollars 40 cents) they want 20 shillings English money, and for 4 dollars 86 cents (20 shillings American money) they want a credit of £1/8/7 in London. But that has nothing to do with the character of England’s internal currency. It arises from the fact that England has relatively few goods going into America to build up credits in America to pay for goods from America, and it displays the anxiety of a large class in England struggling to sell out their English credits for credits in America.


In a like manner the extraordinary rise in exchange prices in Russia after the 1917 Revolution reflected, not the character of its currency, but the anxiety of the Russian moneyed class to sell out their Russian interests for credit in London, or anywhere in the world outside the ambit of the Revolution. Whether the Russian noble gave 200 roubles or 2000 roubles to somebody in Russia who had 20 shillings in London, did not make Russia richer or poorer. There was an exchange of owners, but wealth did not move beyond the borders. Yet the journals of the Banking Ring distort facts that apply to England and France as well as Russia into a special fearful meaning for the revolutionary country.

Every day the Banking Ring of each of the principal countries cables to London the amount of local credit local bankers are giving in exchange for £1 London credit. In London these rates are mobilised, tabulated, and cabled to all countries, to appear in the financial columns of the daily press of those countries.


Australia is not quoted on the “Foreign Exchange”—Canada appears, but not Australia; Canada is recognised as a national entity, but Australia is regarded as a mere appendage of financial London, without distinct economic existence. Whatever the trading relations between Australia and America, they do not affect the “rates of exchange” between the two countries. Australia must pay the rates ruling between England and America, plus bankers’ charges between Australia and London.

London is, so far, the web centre of international finance.

In London are assembled the actual chiefs or the representatives of the great financial houses of the world.

These have their investigators, ambassadors, news gatherers in all lands. Upon the basis of early information as to the forthcoming surplus of exportable products and securities, upon the estimated volume of London credit that will as a consequence be at the disposal of each State, upon the knowledge of the inevitable influence of such credits upon the Exchanges, the Money Kings conduct their market operations and international speculations. In these speculations upon the Exchanges, in these struggles for the rise or fall, immense fortunes are won or lost, and the “Money Market” becomes a market in money as clear and definite as a Pig Market is a market in pigs.” But at no time or place are the prices of goods sold abroad affected by the internal currency or policy of the exporting country. The realised foreign prices on the foreign market are the means by which imports are paid and debts settled, and the values of goods sold are not affected by the economic structure, the monetary system or the internal social relations of the exporting State.


The Basic Policy of a reconstructed Australia must be the transformation of all interest-bearing obligations into non-interest-bearing obligations.

No change in the mere machinery of Government, no change in Industrial Ownership, no change in methods of Industrial Control can be of permanent value while every year a £40,000,000 indemnity to the Bondholders is extracted from industry, and the more the price of products fall the more must be extracted from industry to pay an indemnity increasing with every renewal. So long as Capitalist Britain exists, so long must Australia’s obligations to British financiers be met, irrespective of the character of Australian Governments or the constitution of her industries. Yet the removal of the Annual Suckage from production is vital to all schemes of reconstruction—Socialistic or otherwise.

The British Government appointed a Committee of Inquiry on Taxation. That Committee put to Mr. Blackett the British Controller of Finance, this question:—

“Is the reduction of the National Debt vital, or can the country bear the present burden of interest, trusting to its industries and businesses to avoid danger?”

The Controller replied:—

“Some scheme of quick redemption is imperative. The burden of interest must be reduced or industry will break beneath the strain.”

Further questioned the Controller said: “I do not know how it can be done, unless it be by a heavy impost on wealth.”

Yet in so far as wealth consists of industries where capitalist combination permits the fixation of prices, the tax is merely passed on to the general public—taxation is augmented, not diminished, In so far as the wealth tax falls upon an industry where for any reason the tax can not be passed on the strain on industry is increased and collapse hastened.

Therefore, capitalism is incapable of furnishing a solution to its own problems. It knows no way of doing that which its own experts regard vital to the safety of the State without destroying itself as a System.

Neither can Laborism, or any other ism, find a way by policies which simply make additional increments to the Nation’s indebtedness. Not even by nationalised banking if that be used as a buttress to the Capitalist System. Everything will depend upon the elimination of the Capitalist mentality in control, and the systematic utilisation of the institutes and instruments of exchange for a definite national objective—the elimination of the vampire suckage of interest from the products of industrial effort.

A pile of evidence, apart from that of revolutionary writers, can be gathered in defence of nationalised banking.

The Japanese Minister for Finance (Marquis Katsura) said to the American Money Commission:—

“Without a National Bank authorised to emit currency, to control the gold resources and collect foreign bills, national finance and the economic system cannot be consistently developed.”

When the Financiers and their political agents speak of a National Bank, the most they mean is a great “Central” to function in the exclusive interests of the Financiers. When they speak of an “economic system consistently developed” they mean the development of a system in which the financial magnates are the Unseen Caesars and Czars; but there is no reason why radicalised Labor should mean the same thing. Maurice Patron, in his report on the Bank of France to the American Commission, said:—

“It is difficult to understand how an undertaking of such universal interest should be left to private enterprise.”

And document 494 of the same Commission states:—

“A National Bank, if it is to be a truly “‘national’ institution, must control credit or

fail in its duty.”

The German Monetary Commission of 1909 reported :—

“The banking system should not be treated from the standpoint of private economics. It is growing further and further out of the sphere of legal regulations. A Bank to-day is not merely a business, it is a public office.”

On the same Commission Von Wangenheim, President of the Bund der Landwirte, said:—

“The battles of the nations (sometimes followed by the battles of the national armies) are to-day fought on the financial field of the great credit banks. Such vital processes, which may be decisive of the existence or non-existence of the State, and of the distinctive civilisation of its people, ought not to be committed to the dividend interest of private banks.”

The Swiss Minister for Finance (M. R. Comtesse) in his report to the American Commission, said:—

“A National Bank, supreme over, and ultimately absorbing, all private institutions, represents the most powerful bulwark for our credit, the security of our people, and the resources of our country.”

The nationalised banking system utilised for national purposes and not for the sordid ends of stock jobbers and speculators is “the most powerful agent a civilised country can possess, both for the stability of its internal affairs, and for the equitable and guarded conduct of its international affairs,” and the principles which it is necessary for the nation to courageously apply are those used every day by Capitalist bankers for private gain.


The Bank of the Nation, if it is to properly perform its national and economic functions, must be a “Bank of Issue.” “Issue” will consist of book credits, transferable by cheque, or drawable in “notes.” “A Bank is the holder of security pledged for the return of a credit medium,” drawn and used.

The Government, like the individual, must deposit securities for credit furnished and currency supplied.

Bills that represent products, deeds that represent property, bonds that represent the taxable wealth of a country, constitute a sound base for a sound currency.

The Bank of the Nation must advance a currency to Nation, States, and subordinate Governments upon deposited bonds—to the commercial community on its trading bills—and to the industrials on homes, farms and factories.

So far as the securities consist of State or Commonwealth securities the “National” Bank has not only the remedy against depreciation, but a profit at its disposal. When money is “cheap” and plentiful, securities can be sold and the currency contracted. When money is short and securities are being offered for currency, the bank can buy, expand the currency, incidentally make a profit, and automatically regulate the market. Notes issued from the Treasury have no such method of automatic redemption.

It is not possible to make notes or gold circulate in excess of public requirements. Whatever of gold or notes be not required for circulation will be left on credit with the bank. Therefore, excess coinage of either gold or notes is a waste.


The Labor Platform declares that the Commonwealth Bank shall be the “Bank of Reserve”—the storeroom of the Nation’s gold.

The traffic in gold and the exportation of gold should not be left in private hands—the days of private traffickers should end.

There should be an immediate abandonment of free trade in gold.

The mobilisation of gold for international purposes is an economic necessity.

Mobilisation should be the exclusive privilege of the Bank of the Nation. It should be the only buyer, the only exporter.

Mobilised for action, the gold stocks of Australia would be placed wherever they were of greatest economic service.

That which the financial magnates of America, Japan and other countries have established for their own protection, should be established in Australia for the service of industry and the progress of the Nation.

An internal paper currency permits gold to go where it will be of the most economic service. Instead of being useless in expensive local storage, it can be used to pay off foreign debt, and save interest or be an instrument of credit overseas. Locally it has no economic utility. It only serves as a blind to a fraudulent system of finance.


A nationalised banking system and nationalised “instruments of exchange” are essential to the proper handling of foreign obligations. Banking is a public function—it should be a public property. The Bank of the Nation should be the sole operator in foreign bills, and all international financial operations should be its exclusive province. It must take to itself the power of collecting on all bills payable in foreign States, and by those means build up Australian national credit in the country of its principal indebtedness.

Against general exports it must issue internal credits. The private banks, with the aid of Commonwealth notes, “the instruments of credit created by the nation,” financed wheat, meat, and metal pools with profit to themselves. The Bank of the Nation can facilitate a policy of reconstruction and increased production by the same processes, and make a profit for the nation.

The Franco-Prussian War of 1870-71 loaded France with a £200,000,000 indemnity to the German conqueror. Defeated and disgusted, France swept out the Third Napoleon and established the Third Republic. On a higher plane she re-enacted the financial and economic principles of the Revolution of ‘89.

From the Bank of France there was issued a paper currency, during the first year after the war, of £65,000,000—the next year another £65,000,000. Money was lent to the peasants to rebuild their homes, retill the soil, re-stock their farms—to manufacturers to rebuild and restart the destroyed factories—to returned soldiers to start new enterprises or re-establish the old. The disbanded army of destruction became an army of production. .Wealth poured forth from field and factory and mine—prosperity returned.

Against the exportable surplus products of her people, France issued an internal currency, and took the right of collection in foreign States. Direct exports to Germany totalled £147,000,000. The Bank of France collected and paid off the indemnity to that extent. Exports to England £27,000,000, invested in bills on Germany (or short dated German loans raised in London), remitted to Germany for collection and reduction of indemnity. The balance was £26,000,000 of French gold shipped across the border, replaced by paper currency for internal use.

By September, 1873, the indemnity to Germany had been paid to the last penny. By that means the annual interest of many millions was saved, and the debt was transformed from a foreign to a local one. Thereafter that which otherwise would have gone abroad in interest was used in redemption of obligations to her own people.

But in the intervening fifty years the financial oligarchy in France has enormously increased its secret authority and refuses to sanction the enactment of the old methods or of any method that does not carry interest to the Money Trust. Thus the people of France, as of all countries, must smash the system or bend more and more beneath the yoke.

In 1914 the Government of Egypt authorised the Bank of Egypt to finance the local cotton crop by an issue of £6,000,000 notes decreed by the Government to be legal tender. Those notes were issued upon the security of public bonds deposited in the Treasury, and while this was being done by a Capitalist Government for a Capitalist Bank, a Labor Government and a Labor Party in Australia rejected a similar proposal (currency based on bonds) as an absurdity, as one incapable of application for the benefit of a Nation.

With the Egyptian notes and the superstructure of credits based thereon, the Egyptian Bank paid Egyptian producers for their cotton. When the crops were sold in London, the Bank collected English currency and with such currency paid the interest bill of the Egyptian Government. That which Egypt did, and that which France did in ‘71 to meet the German indemnity, can be done to meet the war debts of to-day, and the instrumentalities with which they were financed can be used for the liquidation.

It is true that a nation engaged in the task of freeing itself from the foreign financial yoke and from the annual suckage of interest will not have large funds available abroad for heavy importation of foreign goods. It must produce more and more of its own requirements within its own borders, but such necessity is not a national disadvantage. On the contrary the nationalisation of the “instruments of exchange” and their utilisation to free the country from the foreign bondholder, in so far as they put an embargo upon imports and compel additional internal production and self-maintenance better fit the country to cope with its difficulties. Whenever the private banks, as in the latter part of 1920, wish to build up their own credits in London, they have no hesitation in refusing to finance imports.

By the authorisation of the Bank of the Nation to be the sole collector of foreign bills in foreign capitals, it will not only hold in its hands the means for the liquidation of foreign obligations, but the settlement of the foreign obligations of all subordinate Governments in Australia will necessarily fall into its hands, and the consolidation of debts will of necessity be a fact by reason of its exclusive position.

The private banks of the majority of the great Capitalist States are organised in one way or another to control foreign credits. Speaking of the Bank of France, Lord Swaytheling told the U.S. Monetary Commission that it “directly controls international financial and economic relations.” That is done by Capitalist Governments and Capitalist Banks to uphold their Capitalist Nationals in the international struggle for markets and it can be done by a nationalised banking system for the rehabilitation of the nation, and for the freedom of that nation from the foreign financial yoke of usury.


The indebtedness to persons and corporations within Australia must be met, not merely as a matter or right, not merely because Australia should render to those within her own borders that which she is compelled to render to the foreigner, but because such obligations could not be ignored without an internal economic crisis, reacting disastrously upon the mass of citizens.

Yet the removal of the load of indebtedness and of the annual burden of interest is fundamental to the task of reconstruction.

The internal indebtedness of Australia to persons and corporations within its own borders is round about £400,000,000. The Australian press represent that as so much fluid capital drawn from Australian industries. Assuming that to be so, it no longer fructifies by investment in the development of economic resources. It is tied up in bonds, hangs as a millstone around existing industry, drives up the rate of interest, and makes recovery more difficult. It is therefore the business of a nationalised banking system to furnish means for the rapid transformation of those bonds into fluid forms of capital, so that it can flow once more into the channels of industry, fertilise the productive forces of the country, and reduce the percental burden upon the annual output.

The liquidation of internal bonds can be secured by the same methods as those adopted by the private banks to provide subscriptions to those bonds. The “Argus” (March 18, 1918—“Banking Record,” September, 1919) said that the private banks “made liquid” private property by writing deposits and creating credits in their books against property “to enable the owners to take up war bonds.” The term “private property” included private holdings of previously issued war bonds. Those bonds were deposited in the banks and the banks made them “liquid” by writing “deposits,” manufacturing credits, and issuing cheques for the new loan. In short, the banks did for themselves and their “approved customers” what a Labor Government had said could not be done by that Government for itself by the instrumentality of its own bank. It is, therefore, evident that a nationalised banking system can write “deposits,” create “credits,” and issue cheques against bonds lodged for redemption. Thus as bonds come in, cheques go out, interest ceases, and credits flow once more into the channels of productive enterprise.

By these instrumentalities of “Issue” and “Reserve”; by control of foreign bills utilised for the liquidation of foreign debts; by the creation of internal credits against deposited bonds, the internal debts and the annual burden of interest upon production can be lifted, and the stream of credit now bottled up in bonds can be made to flow along the channels of new production. Only upon these lines can any system of economic reconstruction be consistently and successfully developed.


The existing banking system is the nerve centre of predatory capitalism. With banking made a socially owned and controlled function, the capitalist nerve centre is cut, the situation is changed, the control of the institutes and instruments of exchange by the inner ring of capitalist “financiers”—the source of their power—is gone.

With those instrumentalities in the hands of the nation, every industrial monopoly becomes innocuous against democracy, only capable of existence by the processes of legitimate trade and by compliance with the dictates of the Common Good.

Every joint stock combination within the Commonwealth must be a licensed combination.

The right to trade must be subject to the terms of the license.

The license must carry the right of public supervision, prohibition of inflated capital, of hidden reserves, of excessive profits, or of discrimination between purchasers. The law under which the license is issued should prohibit the use of any Commonwealth instrumentality—telegraphic, telephonic, postal or bank—by any company or combine attempting to trade without a license or in contravention of the terms of the said license.

No Government can be credited with sincerity if it condemns the trusts, rings, and combines with words only, and yet permits them to use the instrumentalities of the Governments in the carrying out of their nefarious plans.

The Commonwealth exercises power against lotteries and against proscribed persons or firms alleged to be engaged in selling or trading in material or information alleged to be inimical to the moral or physical welfare of the citizens of the Commonwealth.

What the Commonwealth cannot do by direct legislation it does by the use of its instrumentalities.

The Commonwealth not only exercises this power against lotteries and gamblers, and traders in noxious matter, but it extends the refusal of its services to all persons and firms declared to be acting as agents, or aiders and abettors to the: firms or persons alleged to be acting in a manner detrimental to the public interests.

The Commonwealth refuses to pass through its Customs the products of any firm upon which it lays its ban. It can interdict all goods which the Government, or its appointed authority, declares to be manufactured, transmitted or sold under conditions injurious to the public. The Nation exercises its right to grant the use of its services to those who comply with its conditions.

The Commonwealth can exercise its powers and use its instrumentalities as much against monopolies and combines as it can against lotteries and traffickers in noxious matter.

Commonwealth Governments have consistently declined to use banking powers against Capitalist combinations, even when Royal Commissions and the decisions of the Courts have proclaimed that the combines acted in restraint of trade, to the public detriment, for their own aggrandisement.

But a Capitalist controlled Government of the Commonwealth is prepared to exercise that power against the Governments of the States and against the decisions of the elected representatives of the people of those States even when those decisions are within the powers permitted by the Constitution.

Thus the States have power to establish State banking and to issue State instruments of credit receivable in all debts, dues, and obligations of those Governments at all the public offices of the States—civil or economic—and the Commonwealth Government has no constitutional power to directly prohibit such instruments or activities of the States.

But what the Commonwealth Government cannot do by direct legal injunction from the Courts it does indirectly by the use of its banking power. Thus under the amended Commonwealth Bank Act of 1920, the Commonwealth Government clothes the private banks with legal authority to refuse acceptance, to deny circulation to the credit instruments of the States. Thus, that which no Commonwealth Government would compel the private banks to do against trusts, rings and combines, it authorised them to do in 1920 against the Governments of the States.

Thus the Bank Act of 1920 is an admission of the tremendous power which the Commonwealth Government can exercise, but so far has refused to exercise, to protect the pockets of the people from the piratical onslaught of distributive combines and industrial monopolies. With a complete nationalised banking system supplanting all private traffickers in credit instruments, the public control of all monopolies and combines becomes absolute. By its control of banking and banking facilities the Commonwealth can compel every monopoly (while permitted to exist) to seek the law, secure its license, and conform to its decisions.

The Private Banking Monopoly is the greatest monopoly on this continent. It is the fortress and buttress and financial arsenal of every industrial and commercial ring, trust, combine and price-raising conspiracy on this continent.

It should not be permitted to exist.

It possesses the power to give or withhold credit. It can withhold or withdraw credit from men whose securities are beyond question. It exercises autocratic control over the products and properties of the people. It is the “Unseen Power.” It should be dethroned. Its powers, prerogatives and perquisites should be the exclusive privilege of the organised Nation, acting through the agency of its own instrumentality—the Bank of the Nation.

Whatever else may follow—in land or industry or augmented local powers—the “instruments of exchange” are essential to their effective functioning. Their control, so essential to the pre-eminence of Capitalist “High Finance,” is equally essential to all processes of industrial and social reconstruction.

The Cheque Clearances of the Australian Banks for the years ending:—

Dec. 31st, 1920           £1,900,000,000

Dec. 31st, 1913….            830,000,000

Increase                       £1,070,000,000


Speaking in the House of Commons on May 12, 1915, Lloyd George said:—

“Distress, misery and wretchedness always follow a great war.”

He knew that history repeats itself. He knew the aftermath of the Napoleonic Wars, of the Crimean War, of the Indian Mutiny. He knew that in Trafalgar Square, on the monument of Havelock, there be inscribed the words: “Soldiers, your grateful country will never forget your sufferings, your privations and your valour.” He knew that the rulers of Empire had permitted the veterans of a hundred battles to perish of hunger on the streets of the Empire they had defended. He knew they would do it again, and so he said:—

“Distress, misery and wretchedness always follow a great war.”

But the unseen rulers do not permit their political administrators to speak the truth too often, so the tune was changed to “Never again the old miseries. After this war fond love and the New Jerusalem.” And the great crowd swallowed the dope.

Then in 1916 came my Lord Inchcape, chief of great nigger-manned fleets, chief of great banking corporations, London director of Burns Philp and Co. Speaking in cold, blunt, brutal language to associate sharks, he told them that after the war “the purchasing power of the workers must be reduced and their standard of life lowered.” It was the Nigger King talking of the future of his herds and hordes. He was reminded that his language was unwise. Thereafter my Lord Inchcape joined in the song, “Paradise after the War.”

In “The Kingdom of Shylock” I pinned attention to the dictum of Inchcape, and I said:—

“The arms of Britain, France and Russia may be as triumphant as those of Rome in the days of its greatest glory—yet the workmen of the combatant nations will emerge from this war such abject slaves of Mammon that they will wish they were dead.

“Out of this war will emerge two classes, bondholders and slaves to the bondholders.

“All who come alive out of the war must be bled dry that interest mongering vampires within the nation may extract from the products of toil hundreds of millions per annum.”

“That is what they mean when they say ‘the standard of life must be reduced.’

“Working men! You shall eat less, have poorer food, shabbier clothes, scantier furniture, fewer pleasures, and know more hardships than ever you knew in all your days and generation.

“Is it not plain? If every year Shylock is to draw hundreds of millions more in interest from investments in wasted lives and bloody slaughter you who remain alive must slave for it and pay for it. All your days shall be made bitter with hard bondage.

That is your future; that is what they mean, when they say ‘the standard of life must be reduced.’

This comment on Lord Inchcape was designated “disloyal,” “unpatriotic,” “retarding recruiting.” It must be suppressed. It was.

Now comes the veil torn aside from all the delusions, illusions and doperies of war. Now, Christmas Day, 1920, can the “Age,” of Melbourne, write:—

“From every side come sickening accounts of Europe’s plight. The Nemesis of an outraged civilisation is upon her. In every country, once hostile or friendly, men, women and children are dispirited and dying…Europe has the ghastly scenes of battle, the sight of ruined homes, fields and factories, the hopelessness of recovery.

There is only one thing in which Europe is rich, and that is fear—fear of starvation…Desolation is now being placed on innocent children, whose starved condition is making them easy victims of tuberculosis. Hunger is causing abnormal, precocious crime.”

These be your guides, O people. They know how to fatten you for slaughter but they know not how to feed you in times of peace.

“The conditions in England are becoming sinister. Unemployment is great and increasing. Life is hard and becoming harder. It is all part of the war price. The instalments are relentlessly falling due—no nation can escape the consequences of the great catastrophe.”

Thus when their purposes are served do the liars reveal themselves. Thus do they admit their promised freedom from militarism, oligarchy and slavery; their promises of “better times,” “New Jerusalem,” “Paradise,” “new world” and “perpetual peace” were so much bird-lime for the trapping of human gun fodder. Now do we read in our daily press “day by day “the European situation grows more tragic. “Day by day the contrast between the starving “poor and the feasting rich grows more intolerable.”

Of the conditions in France, Vaillant Couturier wrote:—

“Men feel a hand settle on their necks which shoves them down to the mud where they have left their weapons. Terrible times are in store for us.”

Of conditions in England the London “Star” said:—

“Myriads of our people are living on the verge of destitution. We are going forward to national bankruptcy.”

This drift to bankruptcy, starvation and chaos is admitted in the memorial of the directors of the Bank of England, signed also by the chairmen of four of the great Joint Stock Banks of England. The memorial describes general conditions, and then adds:—

“The effect of European bankruptcy would be felt all over the world.”

In America the unemployed multiply and wages fall 25, 30 and, 40 per cent. The director of the American Bureau of Foreign and Domestic Trade sums up the position thus:—

“Europe is short of food.

“America is the main source of supply.

“Europe cannot pay.

“America cannot go on supplying for nothing in return.

“Since Europe cannot pay and America cannot continue further credit, European starvation is accentuated and American production slows down. Thus America is drawn into the European vortex and the fallacy of the belief in isolated prosperity is exposed.”

The economic situation now commences to affect Australia. The prices of products, by which we pay our obligations to overseas bondholders, are falling. The metal market collapses. Mines close down, purchasing power diminishes, unemployment increases; all the phenomena of Europe begins to reflect itself locally. Thus Australia, in its turn, like America, is drawn into the European vortex and the fallacy of isolated prosperity is again exposed.

Thus, in spasms of truth, the public can read in the capitalist newspapers that “we in Australia have now to face an appalling reckoning,” that “there is no preparation for the lean days in front of us”—that “the Budget is the latest expression of spurious patriotism”—that “the Government drains the life from industry and confiscates the means by which industry expands,” and finally, that “a dead weight of debt is weighing down the country into a slough of depression.” Such are the prospects which in 1921 confront Australia, in common with the rest of the so-called civilised world. And such are the conditions to which capitalist Governments have reduced, or are in process of reducing, the workers of all lands.

To-day we see that to push Labor back into the pit—to diminish its purchasing power, to reduce its standard of existence, to maintain the Bondholding Oligarchy upon the degraded status of Labor—is everywhere the unspoken programme of the great capitalists. On both sides of the Atlantic—in Europe and America—millions are unemployed, millions starve in patience, millions more, broken in spirit, toil for a steadily diminishing return. The “Masters of Industry,” the “Brains of the World,” the men who could organise so ably for Death and Destruction, have no other conception of “Reconstruction” than that which is based upon the destitution and degradation of the mass.

And the most astounding fact is that everywhere in Western Europe and the United States there is a limpness, a tame submission, that arouses the astonishment even of those who flourish on this resurrected slavery; millions of men who fought on battlefields are tolerating in silence and inaction the starvation of their families. John A. Hobson once wrote that “the most important lesson of modern warfare is the fact that a knot of financiers and profiteers, per medium of their politicians and their pressmen, can capture the mind of a nation, and in the name of patriotism impose a policy of slavery.” This fact we see to-day exhibited in England, Germany, Austria, France, America; and the question is, “Where next?”

But no matter how submissive the multitude, the Master Class policy defeats itself. It overloads the camel. It cannot reduce the standard of existence without reducing purchasing power, reducing the consumption of goods, choking production, reducing producers, destroying values, and rendering its slaves more and more incapable of earning the tax payable to the Bondholding Oligarchy. Thus a writer in the “English Review,” reviewing the situation, can say, “Europe is on its deathbed. European civilisation as we know it is passing away.” Thus no less a man than Lloyd George, Prime Minister of Great Britain, speaking on September 15, 1920, was driven to say:—

“No effort can shore this system up much longer. If there be any who feel inclined to maintain it, let them beware lest it fall upon them and overwhelm them.” Unhappily this warning is not merely for the Master Class. It is for others. It is for the great mob of reactionary workers who have no ideals, no spiritual outlook, no conception of a higher life, no sense of social duty; who are satisfied to be “Bosses’ Men” so long as they are well fed—and often, when they are not. These are the sustainers of the existing system, until, to repeat the words of George, “it falls upon them and overwhelms them.” They are the ripe fruit of the ceaseless daily press propaganda. They will not stand for any change. Thus there can be no orderly “passing away,” no intelligent demolition, no plan of peaceful reconstruction. It must “fall upon them.”

And the warning is for the “great press.” It speaks of “appalling reckonings.” It says, “No nation can escape the catastrophe.” It bemoans the fact that there is “no preparation for the days in front of us.” Yet it furnishes no guidance. One would imagine that such a press, claiming so much loftiness of public purpose, would at least have some national ideal, some method of reaching it, some preparedness with which to meet the coming gale. But it is blank it is barren, and it will struggle to submerge any section proposing anything touching the sacred citadel of the existing system. It speaks of “the hopelessness of recovery.” But rather than give its aid to any method, policy, or principle of reconstruction, it prefers to see the existing system collapse in disorder and chaos. It exemplifies the fact that “dying orders rather than pass peacefully away are impelled towards catastrophes into which they drag as many men as possible.”

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