-+- Frenzied Finance Is Announced -+-
"In the great financial happenings of recent years story tellers have given their version; political economists their theories; reformers their pictures; and historians their tablets. For the first time in the history of High Finance we have the High Priest tell it as it happened..." -- New York Evening Post, June 21, 1904
"Personally I know that one hundred million dollars were lost, thirty men committed suicide, and twenty previously reputable citizens went to the penitentiary, directly because of Amalgamated... [Amalgamated] was created because of my work... the plain people invested two hundred million dollars of their savings, and it was because of trickery and broken promises that the public lost the enormous sums they did." -- Thomas W. Lawson
-+- Mr. Lawson's Dedication -+-
"...that public indignation may be so aroused against the practices of high finance that it shall come to be as culpable to graft and cozen within the law as it is lawless today to counterfeit and steal."
"...that in the minds of all who read this eventful history there may grow up a knowledge and a conviction that the gaining of vast wealth is not worth the sacrifice of manhood, and that poverty and abstinence with honor are better worth having than millions and luxury at the cost of candor and rectitude."
"My profession is business. My writing is an incident. 'Frenzied Finance' was set down during the twenty-fifth and twenty-sixth hours of busy days. I pass it up as the history of affairs of which I was a part."
-+- Foreword -+-
[Synopsis of Frenzied Finance by Thomas W. Lawson. New York: Ridgway-Thayer, 1905]
Herein is the story of Amalgamated Copper and of the "System" of which it is the most flagrant example. This "System" is a process or a device for the incubation of wealth from the people's savings in the banks, trust, and insurance companies, and the public funds. Through its workings during the last twenty years there has grown up in this country a set of colossal corporations in which unmeasured success and continued immunity from punishment have bred an insolent disregard of law, of common morality, and of public and private right, together with a grim determination to hold on to, at all hazards, the great possessions they have gulped or captured. It is the same "System" which has taken from the millions of our people billions of dollars, and given them over to a score or two of men with power to use and enjoy them as absolutely as though these billions had been earned dollar by dollar by the labor of their bodies and minds.
For thirty-four years I have been actively connected with matters financial. As banker, broker, and corporation man, I have, from the vantage point of one who actually handled the things he studied, studied the causes which created the conditions which made possible the "System" which produced the Amalgamated affair. In my thirty-four years of business experience I have seen the great fortunes, which are the motive power of the "System" referred to, come out of the far West as specks upon the financial horizon and grow and grow as they travelled Eastward, until in their length, breadth, and thickness they obscured the rising sun. At short range I have seen the giant money machine put together.
In the course of this book, I shall describe such parts of the general financial structure as will place my readers, especially those unfamiliar with its more complicated conditions, in a mental state to comprehend the methods by which the savings they think are safely guarded in the banks, trust and insurance companies, are so manipulated by the votaries of frenzied finance as to be in constant jeopardy. I shall show them that while the press, the books, the stump, and our halls of statesmanship are full to overflowing with the whys, wherefores, and what-nots of "tariff," "currency," "silver," "gold," and "labor"; while our market systems are perfected educational machines for disseminating accurate statistics about the necessaries and luxuries of life, the water and land carriers, real estate, and other material things which the people have been taught to believe are the only things that vitally affect their savings; that while they imagine they understand the system by which speculation and investments are controlled and worked, and that the causes and effects of this system are at all times get-at-able by them through their bankers and their brokers; there is a tangible, complicated, yet simple trick of financial legerdemain, operated twenty-four hours in each day in the year, and which the press, the politicians, and the statesmen never touch upon -- a trick by means of which the savings of the people and the public funds of the Government, are always at the absolute service and mercy of the votaries of frenzied finance.
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[Synopsis of Frenzied Finance by Thomas W. Lawson. New York: Ridgway-Thayer, 1905]
-+- "The System": Finance & Management -+-
Amalgamated Copper was begotten in 1898, born in 1899, and in the first five years of its existence plundered the public to the extent of over $100 million.
It was a creature of that incubator of trust and corporation frauds, the State of New Jersey.
Its entire stock was sold to the public at an average of $115 per share, and in 1903 the price had declined to $33 per share.
From its inception it was known as a "Standard Oil" creature,
because its birthplace was the National City Bank of New York
(the "Standard Oil" bank), and its parents the leading "Standard
Oil" lights, Henry H. Rogers, William Rockefeller, and James
Stillman.
"Standard Oil" has from its birth to present writing been responsible for more hell than any other trust or financial thing since the world began. Because of it the people have sustained incalculable losses and have suffered untold miseries.
At the lower end of the greatest thoroughfare in the greatest city of the New World is a huge structure of plain gray-stone. The building is No. 26 Broadway.
26 Broadway, New York City, is the home of the Standard Oil. Wall Street and the financial world know that there are two "Standard Oils," but to the public there is no clear distinction between Standard Oil, the corporation which deals in oil and things which pertain to the manufacture and transportation of oil, and "Standard Oil," the giant, indefinite system.
Standard Oil, the seller of oil to the people, transacts its business as does any other corporation. It plays no part in my story and I shall not hereafter touch upon its affairs, but confine my meaning, wherever I use the name "Standard Oil," to the larger and many times more important "System."
The three main men of "Standard Oil" are Henry H. Rogers, William Rockefeller, and John D. Rockefeller.
There are eight distinct groups of individuals and corporations which go to make up the big "Standard Oil":
(1) The Standard Oil, seller of oil to the people, which is made up of many sub-corporations either by actual ownership or by ownership of their stock or bonds;
(2) Henry H. Rogers, William Rockefeller, and John D. Rockefeller, active heads, and included with them their sons;
(3) A large group of active captains and first lieutenants, men who conduct the affairs of the different corporations or sections of corporations in which some or all of the "Standard Oil" are interested;
(4) A large group of captains retired from active service in the Standard Oil army;
(5) The estates of deceased members of this wonderful "Standard Oil" family, which are still largely controlled by some or all of the prominent "Standard Oil" men;
(6) "Standard Oil" banks and banking institutions, and the system of national banks, trust companies, and insurance companies, of which "Standard Oil" has, by ownership and otherwise, practically absolute control;
(7) The "Standard Oil" army of followers, capitalists, and workers in all parts of the world;
(8) The countless hordes of politicians, statesmen, lawmakers and enforcers -- our political structure -- and judges and lawyers.
"Standard Oil's" governing rules are as rigid as the laws of the Medes and Persians, yet so simple as to be easily understood by any one:
(1) Keep your mouth closed, as silence is gold, and gold is what we exist for;
(2) Collect our debts today. Pay the other fellow's debts tomorrow;
(3) Keep the seller waiting; the longer he waits, the less he'll take. Hurry the buyer, as his money brings us interest;
(4) Make all profitable bargains in the name of "Standard Oil," chancey ones in the names of dummy corporations;
(5) Never forget our Legal Department is paid by the year, and our land is full of courts and judges;
(6) As competition is the life of trade (our trade), and monopoly the death of trade (our competitor's trade), employ both judiciously;
(7) Never enter into a "butting" contest with the Government. Our Government is by the people and for the people, and we are the people, and those people who are not us can be hired by us;
(8) Always do "right." Right makes might, might makes dollars, dollars make right, and we have the dollars.
The success of "Standard Oil" is largely due to two things -- to the loyalty of its members to each other and to "Standard Oil," and to the punishment of its enemies. Each member before initiation knows its religion to be reward for friends and extirmination for foes. The "Standard Oil" man is constantly reminded in a thousand and one ways that punishment for disloyalty is sure and terrible, and that in no corner of the earth can he escape it, nor can any power on earth protect him from it.
"Standard Oil" is never loud in its rewards nor its punishments. It does not care for the public's praise [except through phony P.R.] nor for its condemnation, but endeavors to avoid both by keeping its "business" to itself.
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[Synopsis of Frenzied Finance by Thomas W. Lawson. New York: Ridgway-Thayer, 1905]
-+- The Power of Dollars -+-
At no time in the history of the United States has the power of dollars been as great as now. It is possible today (1905), with dollars, to "steer" the selection of the candidates of both the great parties for the office of President of the United States. It is possible to repeat the operation in the selection of candidates for the executive and legislative offices of every State and municipality in the United States, and with a sufficient number of dollars to "steer" the doings of the law-makers and law-enforcers of the national, State, and municipal governments, and to "steer" a sufficient proportion of the court decisions.
I SHALL GO FURTHER AND SAY THAT THERE TODAY EXISTS UNCONTROLLED IN THE HANDS OF A SET OF MEN A POWER TO MAKE DOLLARS FROM NOTHING.
Today (1905) "Standard Oil," the "Private Thing," is the greatest power in the land, and its secret is the knowledge of the trick of finance by which dollars are "made" from nothing.
The "Private Thing" is uncontrolled by any of the restrictions by which the law defines and curbs the corporation whose name it bears. Already I have distinguished between "Standard Oil" which wields all the powers of its subsidiary companies, and Standard Oil, the seller of oil. [See CN 11.10]
Let us suppose that the U.S. government puts forth a particular $10,000. "Farmer Bob" receives, by the sale of his wheat, that $10,000. He then deposits it in The Bank. At this stage enters the Private Thing.
The Private Thing borrows $3,300 of Farmer Bob's money from The Bank. The Private Thing purchases a copper mine with the money, and deposits the title with The Bank as collateral for the $3,300 loan. Then the Private Thing declares that the copper mine is worth $10,000. (The actual cost, $3,300, is kept secret.) The Private Thing issues to himself a piece of paper stamped "10,000 stock dollars." The Private Thing takes the "10,000 stock dollars" to The Bank, and exchanges it for the remaining $6,700 belonging to Farmer Bob.
At this stage there is actually in use among the people $16,700 -- $10,000 which is recorded, known, and legal, being used by Farmer Bob and The Bank, and $6,700 which is unrecorded and unknown to any but the Private Thing and The Bank. Right here is the secret device, the financial trick.
In the next step, the Private Thing sells his $3,300 -- stamped as "10,000 stock dollars" -- to Farmer Bob for his real $10,000. Farmer Bob withdraws the money from The Bank by simply making out a check in favor of the Private Thing. (Farmer Bob is told the "10,000 stock dollars" will yield a higher rate of interest than The Bank can afford to pay.) The Private Thing deposits Farmer Bob's check with The Bank, thereby eliminating its $10,000 debt to The Bank.
At this point, Farmer Bob still has $10,000, but it is "10,000 stock dollars." The Private Thing is the possessor of $6,700, and "Mr. Miner" (from whom the copper mine was purchased) is the possessor of $3,300. The Bank remains where it was at the beginning.
Agents of the Private Thing -- Wall Street and the press -- carefully educate the people to believe that their country is tremendously prosperous. Its "prosperity" is evidenced by the $6,700 added wealth in the form of 6,700 new stock dollars!
At the next stage the financial trick accomplished by the secret device is complete. At the next growing season, Farmer Bob wants to buy $10,000 worth of seed and machinery. But the Private Thing knows that Farmer Bob's "10,000 stock dollars" are only worth $3,300 and will not sell; the true value of the stock dollars is proclaimed, and Farmer Bob is compelled to sell his stock dollars for whatever the Private Thing is willing to pay.
By this operation, Farmer Bob has lost $6,700 of his own making, and the Private Thing has "made" $6,700 in real dollars. The Bank has been the instrument by which the Private Thing has deprived Farmer Bob of his savings, because the Private Thing and The Bank are one and the same.
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[Synopsis of Frenzied Finance by Thomas W. Lawson. New York: Ridgway-Thayer, 1905]
-+- The "Magic" of Finance -+-
The majority still regard the world of finance as the world of magic. "The magic of finance" is one of the artifices with which tricksters, since the beginning of the world, have imposed upon the people.
The average American would consider it a huge joke should his grocer undertake to induce him to buy one-hundred times more sugar than he could use, on the ground that he might find in the sugar bags, when he reached home, gold and diamonds. And so it goes in every business but finance. In that business, the business into which is merged all other businesses, the most hard-headed of Americans are done out of their savings by the veriest "come-ons."
[CN: A more recent version of the racket was seen in the S&L debacle of the 1980s. In that scheme, American savers were robbed, but the robbery was smoothed over by FSLIC "insurance." But who was made to pay to cover that insurance? Not the robbers, but the American people.]
Look up and down Wall Street at the great office buildings. These are huge hives of expensive bees who, from New Year's to New Year's, do not produce a dollar. The hundreds of millions spent each year for the expense of running the "System's" game, and the millions which the game-makers flaunt, are derived from the men and women who produce.
It is the phenomenon of the age that millions of people come each year (or each cycle), of their own free will, to the shearing pens of the "System," so that the "System" may go through their pockets, and they then depart peacefully home to dig and delve for more money that they may have the debasing operation repeated on them in the next cycle.
You may ask if I desire to convey the idea that the great financial institutions and trusts of this country, which have their head centre in Wall Street, are all concerned in a conspiracy to rob the people of their savings. I desire to go on record right here in declaring that all financial institutions which in any way are engaged in taking from the people the money that is their surplus earnings or their capital, for the ostensible purpose of safeguarding it, or putting it in use for them, or exchanging it for stocks, bonds, policies, or other paper evidences of worth, are a part of the machinery for the plundering of the people.
I do not mean to say that all the men who handle and control the different institutions I mentioned have guilty knowledge of the bearing of their actions. They do not know that the relation between their own minor institution and the general financial structure constitutes the former an agency for the "System," which controls and has organized the general financial structure into an instrument for converting the money of the public to its own purposes. In fact, the "System" has cunningly possessed itself of the financial mechanism of the country and is running it for the benefit and personal profit of its votaries. And so the vast correlated organization of banks, trust companies, and insurance corporations has become an agency for transferring the people's savings to the control of unscrupulous manipulators.
It is only a matter of simple mathematics to ascertain the day when ten men will be as absolutely and completely the legal owners of the entire United States and all there is of value in it, as John D. Rockefeller is the absolute legal owner of the large section of it which he today possesses.
When that day is here, the people will legally be the slaves of these ten men.
The American people have been lulled to sleep by the "System" until they have but a dull appreciation not only of existing conditions but of their coming consequences. It is almost incredible that a people as intelligent as the American people can be so deceived and juggled with. However, when one looks about and notes the degradation and dishonor to which public opinion is seemingly indifferent, nothing is incredible.
The "System" has so far been able to keep the public in ignorance of its doings. On the surface there is nothing to suggest that a set of vampires have captured the high places of finance and are sucking away the life-blood of the nation. Our banks and trust companies all present a fair exterior and apparently are the same safe and honorable institutions they were before the canker fastened on them. Only its votaries know what the "System" is, and their way is the way of silence and darkness. A tie, stronger and more effective than the oath of the Mafia, binds them to its service, and woe be to him who dares divulge its methods. And even if the being be found who will venture an expose' of the conspiracy, he will find it strangely difficult to get his story past the traps and pitfalls which will be placed between it and the public.
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[Synopsis of Frenzied Finance by Thomas W. Lawson. New York: Ridgway-Thayer, 1905]
-+- How The "System" Does Business -+-
Readers should know how the securities of a corporation are manufactured, how "put upon the market," how admitted to the Stock Exchange, how prices are made in the Stock Exchange, how fictitious and fraudulent quotations are created and disseminated, until the very shrewdest members of the Stock Exchange cannot distinguish those which are real from the fictitious in cases outside their own manufacturing. Then there is an elaborate and ingenious procedure by which public opinion is moulded, that is, by which people are made to believe that the prices at which they buy and sell the stocks and securities are bona fide; and this is a procedure as compact and as well understood by the "System's" votaries as are the methods of the bank-breaker or burglar -- who sends his "pals" ahead to "pipe" the lay of the land -- by felony's votaries.
The underlying principle of the several organisms through which the commerce of the country is conducted is the protection at once of the interests of the individuals composing them and of the public with which they do business. Provided this principle is adhered to, no harm can be wrought to either. Most of the contemporaneous swindles through which the people have been plundered were perpetrated through the agency of corporations, and this organism has become a sort of synonym for corrupt practice. Yet the original corporation invention as I have described it was devised to meet a real want of the people, and it has merely been diverted from its proper use by the lawless votaries of the "System."
Honest men in forming a corporation make publicly known the character and worth of the properties or enterprises they are organizing, what they have cost, what their profits are, and what may reasonably be expected by investors. The tricksters and the "System," with whom incorporation is generally but the first step in a conspiracy for plunder, surround the proceeding with an air of mystery and refuse information usually with: "We do our business quietly and in silence, and those who do not like our ways may keep out of this scheme." Their whole procedure is of that high and mighty order which impresses the ordinary mortal with a sense of confidence in the independence of its users and a conviction that their scheme must be so good that they do not care whether they sell or not. This is just the effect it is intended to produce.
The next step is to lead the people toward the shambles. This is done by "moulding public opinion," and for this interesting function the "System" and Wall Street have an equipment of magical potency. Public opinion is made through the daily press, through financial publications of various kinds, and through "news bureaus."
The first step toward "moulding public opinion" is taken when the "System's" votaries send for the dishonest chief of a news bureau, a man usually up in every trick of the trade. To this man the "System's" votary will say something like this: "We are going to work off blank millions of blank stock; it costs us thus and so, and we want to sell for so and so many millions." Nothing is kept back from this head panderer and procurer, for it would be useless to attempt to deceive him. After the quality and amount the "System" intends to work off in exchange for the people's savings are explained, that part of the plunder which is to come to the head news-bureau man is settled upon. The amount varies with the size and quality of the robbery to be perpetrated. In some cases as high as a million dollars in cash or stock or their equivalent has been paid to a "moulder of opinion" for simply so shaping up a game that the people might be deceived into thinking one dollar of actual worth was four, six, or eight dollars.
The head of the news bureau, having taken the contract to lay out and carry through the deceptive part of the scheme by which the people are to be buncoed, now begins operations. First, bargains are made with conscience-less financial editors of the daily and weekly newspapers, whereby for so much stock or for "puts" [1] or "calls" [2] or both, they agree to insert in their paper's financial column whatever yarns are fed them by the bureau man, regardless of their truth or falsehood. To justify the attention paid the subject by each editor, a certain amount of money is spent in advertising, in the newspaper that employs him, the merits of the enterprise. The financial journals are dealt with on the same basis. The news-bureau man then puts his entire staff to work inventing fairy tales of one kind or another to excite the interest and attention of the people.
(To show the extent to which this "moulding of public opinion" is carried, I know in one instance of a high-priced financial scribe being sent to live in St. Petersburg [Russia] for no other purpose than to send certain "news items" to a confederate located in Germany, who would get these items to a reputable English banking-house through whom they were given out in London as news: the whole object of this complicated system being that the news items might be sent back to New York without Wall Street suspecting they were bogus.)
I must not be understood as meaning to say that all financial editors, news gatherers, or news bureaus are (1905) engaged in this, one of the lowest forms of swindling, for such is not the case.
---------------------------<< Notes >>--------------------------- [1] A "put" is the right to sell to a certain firm or individual shares of stock at a stated price for a stated period.
[2] A "call" is the right to buy from a certain firm or individual shares of stock at a stated price for a stated period.
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