Coogan Gertrude, Money Creators Who Creates Money Who Should Create It (1935)

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danger, the Central Federal Reserve Banks were ordered to lower their rediscount rates and buy
additional Government bonds. In other words, the steps were taken to increase the reserves of the city
banks. City banks responded by increasing their promises-to-pay (loans). These loans went almost
entirely to finance stock purchases. Loans were made on any and every kind of collateral. It became a
very common practice for corporations to issue rights to buy additional stocks, and for individuals
exercising those rights to borrow the entire amount at their banks, using the stock as collateral. In other
words, banks were creating promises-to-pay and the funds thus created were flowing into the treasuries
of corporations, there either to lie idle as deposit cash or to be used in building plants. Of course, these
loans were unsound.
This was the actual method of financing the terrific stock market speculation of 1928-29; it was not
“prosperity” as many supposed. The rural sections were being deliberately drained of their money by
coercing country bankers into calling their local loans and purchasing very questionable domestic bonds
and international loans. These orders came from the bank examiners acting under the authority of the
United States Treasury which, of course, was dominated by the Federal Reserve policies. Honest
country bankers protested that their communities needed whatever funds existed, but they were told to
either comply with the examiners’ orders or get out of the banking business.
In response to the stimulation of bank loans (promises-to-pay) flowing into the stock market, the price
of securities rose higher and higher. Stocks of corporations which had very little property and whose
earnings were small, sold at from 20 to 50 times their earnings. Conditions grew more dangerous and
spectacular each day.
Thinking people knew that some day the bankers would begin to curtail their privately created money,
loaned at interest—and when they did, the securities markets would suffer a terrific crash. That crash
would destroy billions of dollars’ worth of then existing purchasing power; would cancel the credit
money then in use, and wreck countless individuals and businesses.
http://yamaguchy.netfirms.com/coogan_g/coogan_06.html (7 of 27)5.4.2006 9:08:30
Gertrude Coogan, Money Creators, ch 6, 7, 8
The newspapers and well publicized paid “Economists” repeated deliberate falsehoods telling the
people that America was in a “new era.” We were assured eternally rising prices and all of the old
measurements of stock values were out-of-date. The New York Stock Exchange was an Aladdin’s
lamp. The newspapers did everything possible to fan the flames and 16,000,000 people in the United
States were active participants in the purchase and sale of securities.
The Day of Reckoning
Rumblings began to sound in September 1929. The Hatry failure in London in September precipitated
heavy selling from “informed” sources abroad. Of course, these could not have been the international
bankers who could know the day and hour which would record a terrible collapse. All during
September and up until the third week of October, while some securities were making new highs, there
was heavy liquidation. European sellers of securities were converting into cash and transferring their
balances abroad. Gold began to flow to Europe.
On October 24, 1929, at 11:00 o’clock sharp hundreds of thousands of shares in hundreds of issues were
offered for sale “at the market.” It was a very strange thing that this could have been a mere accident.
It was most unusual that thousands of people decided to sell at the same instant. It was also strange that
they all decided to sell “at the market.” Inexperienced stock traders do not put in “market” orders.
That’s a trick known only to the “wise boys”—the internationalists and their cohorts, the type of
government adviser speculator who says “a speculator has to be right.”
The market continued to crash day after day. The new era was over. The internationalists had squeezed
the money accordion. It was they who had pumped the air into it and it was now their privilege to let it
out. They had no responsibility whatever to inform Mr. and Mrs. American that they had decided to [ Pobierz całość w formacie PDF ]

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