The Wonderful Wizard of Oz
In 1881, James Garfield became President, and then definitely didn’t say:
Whosoever controls the volume of money in any country is absolute master of all industry and commerce . . . And when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate.
But there’s apparently 123,000 versions of him saying it on Google. Garfield was a firm proponent of the sacredness of gold and silver money, but he did say, in 1881:
The chief duty of the National Government in connection with the currency of the country is to coin money and declare its value. . . .
. . . .The refunding of the national debt at a lower rate of interest should be accomplished without compelling the withdrawal of the national-bank notes, and thus disturbing the business of the country.
He doesn’t like paper money at all, but interestingly – and we’ve never seen this point made - he does seem to say that it’s for the national government to issue the money and declare its value. And isn’t he talking about paying off the national debt? Something that only Andrew Jackson has ever done. And is he speaking against the withdrawal of greenbacks? Perhaps we’re out of our depth here. Anyway, for whatever reason, and maybe just another loon, Garfield was soon shot dead.
Into the 1880s, Depression set in again, crops left rotting in the fields. This was a view of American history we weren’t familiar with, constant depressions. Certainly vast fortunes were being made, by people who had gold coins.
The Populists switched from their earlier insistence on greenbacks to support free silver to get some money moving. The real question, though, was always about who controlled the money, whether the supply of people’s money be a function owned by private companies or accountable government.
Across the country, there just wasn’t enough money to facilitate the economic activity there should have been. In 1890, the Sherman Silver Purchase Act was passed requiring the government to purchase and coin silver.
The banking elites are roundly charged, through history, of creating booms, to create wealth, and then creating depressions, to then pick that wealth up cheaply, of fleecing the flock. And in light of this astonishing quote, which is another American Bankers’ Association communication - this time an internal memo in 1891, and the memo was recorded as testimony in the Congressional Record, April 29th, 1913 - it can be seen how such an idea might form. It certainly lends some credibility to the earlier ABA quote.
The memo says:
On September 1st, 1894, we will not renew our loans under any consideration. On September 1st, we will demand our money. We will foreclose and become mortgagees in possession. We can take two-thirds of the farms west of the Mississippi as well, at our own price…Then the farmers will become tenants, as in England.
As in England. It’s crystal clear; grab the thousands of farms they’ve loaned mortgages to, run them through management companies, rent them out to the former farmers and live off their backs in perpetuity. The economic depression will begin on this date and will break everybody.
America’s gold money enabled such on-off control of depressions. The clamour for silver money continued, and most of the money actually circulating was Lincoln’s greenbacks; it’s not hard to see how greenbacks generated such feeling.
History provides more quotes of bankers showing their hand and their hearts when, in 1893, another American Bankers’ Association communication, which became known as the Panic Circular, found its way into many newspapers. It called on its members to start a money panic.
Silver, silver certificates and Treasury bonds, that is to say, all the government’s money, must be retired, and interest-bearing National Bank notes made the only money.
You will, at once, retire one third of your circulation, your paper money, and call in one half of your loans. Be careful to make a monetary emergency among your patrons, especially among influential businessmen. The future of our debt-based money system depends upon immediate action, as there is an increasing sentiment in favour of government legal tender notes and silver coinage.
And a depression began that year, the Panic of 1893, yet another panic, to order, and this really a big one, major companies overstretched, a run on gold depleting gold reserves, and the silver mines, stimulated by the Silver Purchase Act, flooding the market with silver. The Silver Purchase Act was blamed by many for the chaos, of course.
The usual results ensued, 15,000 company failures, 500 banking failures, concentrated in the West. And, as the winter of 1894 fell, and as planned and scheduled three years earlier, thousands of farms were foreclosed upon.
Unemployment reached 18%, 25% in some parts, thousands of newly-built homes were foreclosed on where people could no longer pay their mortgage. The movie image of the empty Victorian haunted house comes from this time.
Soup kitchens opened, people chopped wood to buy food if they were lucky. There were waves of strikes and marches, some resulting in violence, and a major strike that shut down the entire transportation system.
The upshot of it all was for the American government to borrow a shipload of gold from European banking interests, which crossed the Atlantic to save the American economy, and plunge it into enormous debt.
Bill Still’s very enjoyable film The Secret of Oz explains that L Frank Baum’s book, The Wonderful Wizard of Oz, the most famous children’s story of all time, was actually an allegory of this period of American history and the struggles over money. And here’s a good read about it.
Still takes us on a journey – with the odd misquote but a powerfully told story – along the yellow brick road, which represents gold, and Dorothy’s silver slippers, and the Emerald City, whence greenbacks came, etcetara. And Oz is ounce, as of gold.