PEACE
AND PROSPERITY
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GIFT or
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PEACE
AND PROSPERITY
VIA
Justice and Practical Sense
"The square deal." — Roosevelt.
"Honesty is the best policy." — Franklin.
"Godliness is profitable." — Bible.
"Who would be free, himself must strike the blow."
"Speech without action is a moral dearth, and to
advance the world is little worth." See "P. S."
Copyright,
JOHN B. ALDEN, Publisher,
NESHANIC, N. J.
PREFATORY
Most of the important problems of statesmanship are
simple ones, readily understood by any man of ordinary
intelligence; and right action, and wise action, "boiled
down," are matters of simple right and justice, and of
common sense directness to the end aimed at.
Of the world's economic problems two of the most
vital, far reaching — far and big almost beyond imagina-
tion— are finance and transportation.
This little book deals in outline, only, with transporta-
tion, but the just and "sense" foundation is clear; the
superstructure can be comparatively simple; the "Men
Who Pay the Freight," and the "Labor" that will do the
work, will "automatically," given opportunity, work out
the details.
The financial problem is dealt with more at length.
Most, if not all, that is essential is easily within the com-
prehension of almost anyone who will give the matter
study.
The right solution of these problems means freedom,
prosperity, culture, the essentials of "wealth" for the
masses.
The wrong solution means commercial antagonism,
never-ending economic war, ''chains and slavery" (sub-
tile, but binding, killing, as the web of the spider to the
fly) for the millions — means luxury, enervating, demora-
lizing, corrupting, boundless wealth for the few.
J. B. A.
NESHANIC, N. J., 1919.
CONTENTS
PAGE
Transportation: National Ownership; Private Op-
eration 5
Will the U. S. Automatic R.R. Regulator Work?. . 12
Text of Bill Before Congress 13
Transportation Incidentals 19
Water and Air Transportation . . . .... .21
Financial Justice and Industrial Savings .... 23
The Industrial Savings Act 26
Senator Sheppard's Argument . . , . ... 52
Is "Silence" the Only Answer? 58
A Big Issue for Nineteen Hundred and Twenty? . 59
The Nutshell of It All 62
Sample $10 Bill Postal Savings Bank "Money" . . 63
Land-Rent, Money-Rent and Rural Credits ... 65
A Tremendous Mistake 67
A Square Deal in Milk 68
Milk "Tanks" . 72-90
Financing a Square Deal in Milk . . ,,. ... 77
Working Capital Fund 81
Other Ways and Means 85
Local Transportation . . . UJ 86
A River of Milk 88
Why Stop at Milk? tfj . . m . 92
"Beat the Meat Trust" M . . 92
The Economic Millenium 92
Self -Help the Best Kind. . . . ., . . . .93
Post Scriptum 95
THREE CENTS WORTH OF PATRIOTISM?
Have you that much? "Sure thing?"
A 3-cent postage stamp will do a lot ! Your Congress-
man wants — and needs — to hear from you. The Grafters
—the "Interests"— "hearts right there" (song of "Tip-
perary") are with him every day, and one of them is
liable to loom larger in his eyes than a hundred (or a
thousand?) farmers, or other "common voters" — unless
he hears from them once in a while. Just a postal card
like this:
"Dear Congressman Blank. I vote to unshackle
the Postal Savings Bank. Make it free as the Post
Office — and universal — open to the intelligent and
thrifty American, as well as to the ignorant, timid
"Dago." And loan the money to any honest man
who will give good security and pay the most inter-
est— not to bankers only, at a ridiculous 2*4 per
cent."
That postal card will "touch the spot." He wants it —
needs it. Send it quick — better, of course, write in your
own way and language.
A "PEACE" ARMY OF EIGHTY MILLIONS
Even the "shackled" Postal Savings Bank has, already,
over 600,000 depositors, with over $140,000,000 to their
credit. (See latest official report.)
"Unshackle" the bank, and make every P. O., every
letter carrier, its servants, as they now serve for money
orders, registered letters and Parcel Post, and there would
in a few months be an "army" of eighty million deposi-
tors.
Existing Savings Banks (see World Almanac) have
now over llJ/3 million depositors, nearly $500 each, aver-
age— that ratio would give the "unshackled" Postal Bank
about forty billion dollars.
TRANSPORTATION
National Ownership; Private Operation
"Uncle Sam's Automatic Railroad Regulator"
Will not the plans following give us economic peace
and prosperity instead of incessant economic war, or
commercial antagonism, such as we have had these many
years — always since railroads were invented?
Take the railroads out of politics altogether?
Give practically unlimited financial strength, and least
possible cost of capital?
Give efficiency of operation in the utmost degree?
Give immaculate justice to investors?
Give equal justice, together with the lowest possible
cost of transportation, to the Man Who Pays the
Freight ?
Give the greatest possible measure of contentment, and
of zeal in service, to railroad employees?
Give justice and economic service in the highest con-
ceivable measure to all producers and all consumers
whose cost of living, and compensation for labor, are in-
timately and always affected by transportation cost and
service ?
We start with things as they are :
Approximately twenty billion dollars of capital now
invested in railroads, costs under present conditions — has
cost, always, on the average — over 6 per cent, per annum
(possibly over 8 per cent.?) over twelve hundred million
5
6'' ~:''$EACE A^D PROSPERITY VIA
dollars a year. This cost, inevitably, is passed along,
through the man who pays the freight, to producer and
consumer.
Incidental, with this excessive cost of capital, we have
always had — always will have — a large degree of finan-
cial demoralization — uncertainty, poverty, bankruptcy,
manipulation by capitalists and speculators, resulting,
to smaller, innocent, ill-informed investors, in loss to
them, and gradual transfer of their capital holdings to
big financiers — building up multi-millionaires.
Let Uncle Sam supply all this twenty billion dollars
capital by government ownership {not "government
operation" — see further on) and abundant capital can
be had at a cost not to exceed 3 per cent, per annum, a
saving of fully six hundred million dollars a year in
capital-cost, such saving, not for benefit of "capitalists,"
but for producers and consumers, in reduced cost of
transportation. Probably the saving would be near, if
not quite, a billion dollars a year — at least one-half of
present capital-cost.
"Money for 3 per cent.?" Yes, at that, or less, all
Uncle Sam can find profitable use for — certain as gravi-
tation— not by "fiat," but by common-sense, square-deal,
free trade in finance ; justice to thrift and industry. Un-
shackle our present Postal Savings Bank and in less than
one year it will have over eighty million depositors, with
such resulting stimulus to thrift, industry and enterprise
as the world has never seen, with scores of billions of
dollars in deposits. For particulars as to this see "The
Industrial Savings Act" already before Congress, with
speech of Senator Sheppard explaining and illustrating
how and why.
This "Postal Bank" reference is not essential to the
"Automatic Railroad Regulator" idea. If you choose to
let "Money Interests" finance government ownership at a
higher rate, it can be done and still save one-half in the
JUSTICE AND PRACTICAL SENSE 7
cost of capital, but such excess cost is needless, and un-
justly fastens that much more perpetual tax on cost of
transportation.
With government ownership (not operation), thus,
would come the greatest conceivable financial efficiency
and strength.
Now let follow the highest conceivable efficiency of
interested, alert, intelligent personal initiative, Private
Operation, under a one-unit system and universal con-
trol in manner as follows:
Private Operation, not by "capitalists," inevitably in-
terested to get in "dividends," and by direct and indirect
ways, devious and otherwise, all that can be made out
of transportation, but:
Private Operation by those "Who (now and always
will) Pay the Freight" (human, included) and whose
vital interest it is to secure the highest possible effi-
ciency of service at the least possible cost.
These Men Who Pay the Freight include the great
mass of the ablest business men of the nation, manufac-
turers, merchants, farmers — men who are always "on
the spot," at every great terminal, at every small country
station — always with eyes open to know what ought to
be done and how to do it, "self -interest" always "prod-
ding" them, "keying them up" to "get results" at least
cost — meaning for them, highest profit.
Organize these Men Who Pay the! Freight precisely
as stockholders are always organized, giving each a vote
in control and operation according to the amount of his
interest — a vote for EACH $100 in freight he pays annu-
ally ( smaller patrons might have one vote).
These Men Who Pay the Freight, automatically and
vitally interested to secure best results, would elect (com-
monly elect the men now in service — thereafter inter-
ested to serve Freight-Payers instead of Capitalists) —
would elect:
8 PEACE AND PROSPERITY VIA
(a) Local Transportation Boards (say of three
tor five) at each station or city.
(b) Line, or Division Boards of Directors, chosen
by patron Freight Payers on that line.
(c) General Board of Directors, having control
over all roads and interests the nation over.
These Boards of Directors would employ and direct
and control as similar Boards do now.
But these new Boards are under the "Men Who Pay
the Freight," and are interested to SERVE, to reduce
cost, not to get "dividends" — "profits" for capitalists.
The only "Capitalist" interested is Uncle Sam (the
"genus" name for Liberty Bond Holders — and of the
eighty million or more Depositors in the Unshackled
Postal Savings Bank) and "Uncle" wants a "dividend"
of only 3J/2 per cent. (l/2 per cent, above the 3, cost, the
same as the Allies pay). Freight charges must inevit-
ably be high enough to cover cost of operation and of
up-keep, and this small dividend. Any Railroad Earn-
ings above these essentials would come back to Freight
Payers, in reduced cost of freight — and thus come to all
Producers and all Consumers in increased price for pro-
ducts, or in reduced Cost of Living.
So organized, the entire National Transportation ser-
vice would be One Unit, one management, no waste or
superfluity of equipment in one place, poverty, strangu-
lation in another — no cut-throat competition between
Lines, no favoritism to special shippers, no opportunity
for "graft," no "side" Refrigerator, Express, Despatch
or other vampire "systems."
The eyes of Men Who Pay the Freight are every-
where, watching for waste, steals, blunders, inefficiency
— or watching to reward and promote Efficiency.
Every manufacturing shipper, every merchant who
has something to sell, seeking larger market, each with a
pro rata vote in control according to his railroad patron-
JUSTICE AND PRACTICAL SENSE 9
age, will be interested to extend railroad lines into new
territory, to double-track, or quadruple track, improve
terminals, wherever such improvements or extensions
can be made to earn over 3y2 per cent on additional capi-
tal, which Uncle Sam is always ready and able to supply
when it can be of service to his people.
"Increase Uncle Sam's debt another twenty billion dol-
lars— and "then some more" ! Not necessarily this
amount — pay the just value of the property — a different
problem to be solved when we come to it.
It will not, in fact, be any real "increase" of debt at
all — practically a big decrease — because these Men Who
Pay the Freight now, virtually owe it and are daily pay-
ing it to railroad stockholders and bondholders in the
form of freight charges; the form of debt is changed,
only, to Uncle Sam — practically cut in half my reducing
one-half the interest-cost. There is "solid" money-earn-
ing asset for every dollar 'of this debt.
"Out of politics !" Completely out of politics.
We all know how sinister and dominating the influence
of railroads in politics has been in the past. "All the
traffic will bear." "The public be damned." Bribery and
blackmail, favoritism, secret rates, cut-throat, wrecking
competition, strangulating regulation.
With the railroads completely turned over to "Gov-
ernment ownership and operation" with so-called
"statesmen," politicians, in charge, and with about two
million employees, to help "regulate" the roads, (or
regulate politics and the Government) what riot of
inefficiency and disservice, might we not anticipate?
The "national ownership" here purposed has for one
of its special, most important objects the forestalling and
preventing the inefficient, demoralizing kind of "govern-
ment ownership" which threatens to come, if it is to be
a choice between that and the "exploitation" of all com-
merce by "capitalists."
10 PEACE AND PROSPERITY VIA
Don't talk of "regulation" by government! We have
had enough of it — incessant, endless "war," the "inter-
ests" regulating government, or vice versa, meantime
commerce suffering!
But, with Government simply owning the roads, re-
ceiving its "first lien" 3^ per cent, dividends, and the
"self-interest" of "Men Who Pay the Freight," the mass
of the ablest business men of the nation supervising the
"OPERATION," there would naturally result absolute
economic peace and prosperity — utmost efficiency of ser-
vice, least possible cost of service.
The same principles apply, obviously, to telegraph, tele-
phone and other public service utilities, though these may
not be equally instant with the transportation problem.
The nation, state, or municipality can "finance" (no
"subsidy" — nothing akin, self-support being assumed)
the patrons (who always do pay, directly and indirectly,
the bills, and pay dividends on capital) controlling "oper-
ation," each patron with a vote having weight in propor-
tion to patronage, thus "automatically" guaranteeing the
utmost efficiency of service, and utmost economy in cost
of service.
Even milk service in big cities, the city financing, milk-
users controlling as one unit the buying and distribution,
might easily cut cost of milk to babies and all others fully
one-fourth, probably one-third, possibly nearer one-half.
What about Labor in relation to this transportation
problem ?
Can it also be made to "automatically" serve efficiency
and economy in railroad operation ?
Let us try.
Labor is "worthy of its hire" — according to scripture.
It pays to have Labor at least contented — pays better
to have it interested — enthusiastic.
JUSTICE AND PRACTICAL SENSE 11
Under this plan, Labor would be serving millions of
"Freight-Payers," neighbors whom they know and re-
spect, instead of serving a limited few "Capitalists" who
(they think) seek to exploit Labor, and there would
naturally be less tendency to antagonism.
Let us organize the "self-interest" and power of
Labor precisely the same as we have organized the self-
interest and power of the Men Who Pay the Freight.
Give every employee a vote with weight in proportion
to his earnings — as stockholders always have weight in
proportion to investment — as freight payers are given in
present plans weight in proportion to the freight they
pay; so will a man have influence in some measure in
proportion to his merit, growing influence as he grows,
which will interest and stimulate him to grow.
Let Labor elect at least one advisory representative to
each Board that has to do with railroad operation, and so
always be consulted — the "higher up" men of the future
are the "small" men of today. Give them a chance to
"grow," and watch them grow — fast!
And from the lowest section hand to the highest
"Manager" or President let every employee have at least
some compensation contingent on time of service, faith-
fulness, efficiency, success, as shown by results. All this
is necessarily a question of detail, to be largely learned
and developed by experience. The free, continual con-
sultation of Labor will help enormously to wise solu-
tions of these problems.
12 PEACE AND PROSPERITY VIA
WILL "U. S. AUTOMATIC R. R." WORK?
It will work, certainly as gravitation !
It mobilizes to the full the power of "self-interest"
and personal initiative, and puts to the front, in charge,
the best brain and energy of the mass of business men of
the nation.
"The Men Who Pay the Freight" are of practically
unlimited resource of capital and skill — they are the sort
of men who "find a way or make it."
"Big Business" is in the "same boat" with "little busi-
ness/' the one with no possibility of advantage over the
other — "pull together" is inevitable, and "get there" is the
goal for all.
Of course no "machine" was ever made, the "first trial"
of which did not show room for improvement — some
"adjustment" here and some "oil" there. The "School of
Experience" is the "best ever" for teaching the way to
success, and here we have the school of experience.
"The Men Who Pay the Freight" are "practical" men,
who take hold of "things as they are." Railroad Trans-
portation is "a going business" and the men now in charge,
heretofore representing, working for, the "owners" who
have not yet been paid for the property, but will be paid,
fairly, the value they can help to prove to be in the prop-
erty. The "owners' self-interest" makes sure their "help"
and not hindrance in this "private operation." The work-
ers' "self-interest" urges all to "make good" and hold
their positions, or win promotion to better ones. The
new Board of Directors elected by the Men Who Pay the
Freight take over the "machine" as it is, with practical,
experienced "crews" in charge, and will simply "speed
up" and adjust, improve, strengthen, enlarge, multiply as
"practical men" know how to do, continuing existing
management, present employees, except as experience
shows change desirable.
JUSTICE AND PRACTICAL SENSE 13
TEXT AND COMMENT THEREON OF
A BILL
To secure the utmost financial strength, and utmost
economy in capital-cost, by National Ownership of Rail-
roads and other means for freight and passenger trans-
portation, by land, water, or air, together with the utmost
efficiency and least possible cost of service by means of
Private Operation of the same.
NOTE. — This Bill as presented is meant to be sug-
gestive, rather than final; some points are even tenta-
tive. Committees of Senate and House should natu-
rally improve some details.
It is prepared especially with the hope that it may
be put before "practical" men, merchants, manufactur-
ers, farmers — all "Men Who Pay the Freight," pay for
up-keep and waste, interest on R.R. bonds, all divi-
dends on capital stock, whose vital business suffers
when service is poor, or prospers when service is effi-
cient— who of necessity pass along to producer and
consumer, with some additions, all excess cost of trans-
portation. Surely these are the men qualified to discuss
and solve the transportation problem. Why not put
this before the "Men Who Pay the Freight" and give
them a chance to talk and suggest ?
Sec. 1. There is hereby created the U. S. National
Transportation Corporation, the capital stock of which
shall be measured and limited only by the need of service
and the ability to use profitably, all said capital stock to
be subscribed for, owned and permanently held by the
U. S. Treasury.
NOTE. — National credit is to be used in very large
amount, but in place of other credit already existing,
vastly more expensive to taxpayers ; every dollar of debt
14 PEACE AND PROSPERITY VIA
will represent live assets earning substantial profit for
the national treasury.
Sec. 2. All the members of the Cabinet of the President
of the United States shall, ex oficio, be directors of said
corporation, hereinafter referred to as ownership direc-
tors.
(fl) Said ownership directors shall by majority vote
have veto power concerning any matter relating to the
business of the corporation, and by unanimous vote shall
have initiative power and final authority to order, in any
such matter.
(b) Said ownership directors shall employ and com-
pensate in its discretion such service as it deems neces-
sary, including the service of the existing Uv S. Com-
merce Commission, for the adequate oversight of all mat-
ters affecting the corporation and the performance of du-
ties, compensation for such service to be at the expense
of the U. S. Government.
(c) It shall be the special duty of said ownership di-
rectors to see that charges for Freight and Passenger
Transportation shall be maintained adequately high to
cover all expense of operation, of up-keep, and to pay into
the U. S. Treasury a semi-annual dividend of one-half
of one per cent, per annum in excess of the cost to the
U. S. of money borrowed for investment in the capital
stock of the corporation.
(d) Said ownership directors shall cause to be issued
and sold to the U. S. Postal Savings Bank, or otherwise,
on the best terms possible, U. S. bonds ample to buy,
build, equip and supply all legitimate capital needs for the
most efficient and profitable transportation service of the
nation.
(e) It shall be the further special duty of said owner-
ship directors to see that charges for transportation shall
be uniform and just to all shippers and passengers, with-
JUSTICE AND PRACTICAL SENSE 15
out favoritism to any individual or to any locality; also
to see that all purchases and contracts having to do with
buying, building, equipping, maintaining or operating shall
be in like manner without favoritism or special advantage
to any one.
Sec. 3. The operation of the entire transportation sys-
tem provided for by this Bill shall be as one unit, and
not as many competing or co-operating lines or systems,
and shall be in charge of Boards of Directors, subject to
the oversight of the ownership board as already provided,
to be chosen as provided in Sec. 4 hereof, as follows :
(a) A National Executive Board in control over all,
hereinafter called the Operating Board.
(b) Division Boards in charge of such lines or divisions
as the Operating Board may for convenience and effi-
ciency in operation designate.
(c) Local Boards in charge of each station, city or lo-
cality as the Operating Board may designate.
(d) The powers, duties and compensations of the Divi-
sion Boards and Local Boards, and the number in each,
not less than three, shall be such as the Operating Boards
may fix.
Sec. 4. The members of each of said Operating Boards,
Division Boards and Local Boards shall be chosen by
election in January of each year, as follows :
(a) The Ownership Directors shall first cause to be
ascertained and recorded as accurately as practicable,
from the records of local railroad stations, and by notices
and advertisements to railroad patrons, the names and
addresses of all who in the calendar year 1918 have
paid freight or passenger transportation in excess of $10
each, and the amount so paid, the same to be claimed as
having been paid by the payor, and allowed as paid by the
local transportation authorities, such payors of transpor-
16 PEACE AND PROSPERITY VIA
tation to be referred to hereinafter as Men Who Have
Paid the Freight.
(b) Such Men Who Have Paid the Freight shall each
be allowed one vote, and an additional vote for each $100
additional transportation paid in said calendar year 1918.
and after January 1, 1920, each of the Men Who Have
Paid the Freight shall have votes in like manner accord-
ing to the amounts paid in the preceding calendar year.
(c) All votes of Men Who Have Paid the Freight, and
all votes of members of said Operating Boards, Division
Boards and Local Boards shall be in writing or printing,
by written signature, and may be by mail, and inability
to write shall be deemed waiver of the right to vote, and
all records of votes shall be preserved at least one year.
(d) Men Who Have Paid the Freight may each vote
for his choice of three (or more, if so designated) per-
sons to act as Local Directors, or may concentrate his
several votes on one person. The persons so chosen as
Directors shall each have weight of vote in his Board
according to the number of votes by which he is chosen.
If more than three (or the designated number) have
been so chosen as Directors, those so chosen shall bal-
lot repeatedly among themselves till the properly re-
duced number of Directors is reached, and the weight of
vote of each Director ascertained by the number of
votes concentrated upon him.
(e) Local Boards of Directors thus chosen, all of
them along the line of the division of which they are a
part, shall thereafter meet at some central point which
the Operating Board, or in first instance the Owner-
ship Board, may designate, and shall in a similar man-
ner ballot for and elect a Division Board, the number
of members of which shall be determined by themselves,
till finally determined by the Operating Board. Each
member of said Division Board shall have weight of
JUSTICE AND PRACTICAL SENSE 17
vote according to the number of concentrated votes he
has received.
(/) All the various Division Boards so chosen shall
thereafter meet as appointed by the Operating Board, or
Ownership Board, and shall in a similar manner elect
Directors of an Operating Board, each member of which
shall have power and weight of vote according to the
number of votes concentrated in his election.
NOTE. — This choosing of Directors is a simpler
matter than describing it. It is a mathematically exact
way of placing power in the hands of those whom the
voters esteem the most capable and trustworthy. The
plan is based on the principle of the "proxy" and of
"weight" according to "money invested," common in
corporate business generally. The result will be that
dominant "natural leadership" will lead; two or three
men, or possibly even one, will sometimes have more
"power" or "weight" than all the other members of
the Board — because voters have so willed it. But
"minority representation" is there, also, with its due
proportionate influence.
Sec. 5. The Operating Board shall have, subject to the
superior powers of the Ownership Board, as specified,
complete power of control and management of every-
thing relating to the functions of the U. S. National
Transportation Corporation, shall employ, direct, and
compensate in its discretion all service necessary. It
shall have the fullest power of eminent domain which
this Act can legally convey, to take over land, water and
ether property important to the corporation, with rea-
sonable promptness thereafter justly paying therefor
with capital supplied by the Ownership Board. This is
intended to include the right to take coal, iron and other
mines and water power, rolling mills and other factories
necessary or important to the best economic transporta-
tion service of the nation, but not for exploitation of
18 PEACE AND PROSPERITY VIA
such property. It shall have the right to fix and alter
charges for transportation, without favoritism to any,
with equal rights to all patrons, without unjust advantage
to one locality over another, or to one class of freight
over another; provided, however, especially that trans-
portation charges shall always be maintained adequately
high to provide for up-keep of all the property of the
corporation and for paying semi-annually into the U. S.
Treasury of a dividend of one-half of one per cent, in
excess of the cost to the U. S. Treasury of the money
invested in the capital stock of the corporation.
Sec. 6. In the event of the death or disability of a
member of the Operating Board, Division Board or Lo-
cal Board, the remaining members may choose his suc-
cessor to act during incapacity or till the next annual
election.
Sec. 7. The existing Railroad Administration shall con-
tinue until the Director General shall receive notice from
the Operating Board that it is ready to take charge, when
the property shall be as promptly as possible turned over
to it.
Sec. 8. As soon as practicable after taking over the
property as specified in Section 7, the Operating Board
shall proceed to carefully inventory and estimate the
value thereof, and the former owners shall also estimate
its value, and the two opposing interests shall attempt to
agree upon value, and failing to agree each interest shall
choose a referee and those two referees shall agree upon
a third, and the majority shall determine the value. In
case the two referees shall fail to agree upon a third, the
President shall make such choice. Upon the value being
so determined and the decision being approved by the
Ownership Board, said Ownership Board shall cause to
be issued and marketed U. S. Bonds and make payment
to the original owners. In the meantime rental shall be
paid to the original owners in accordance with existing
JUSTICE AND PRACTICAL SENSE 19
contracts made by the railroad administration, from the
operating income of the railroads.
TRANSPORTATION INCIDENTALS AND OBSERVATIONS
The greatest of all the forces that "do things" in hu-
man life are "self -interest" and "individuality" — the one
"does it," the other "does it differently," and contrast and
competition of the "different" incite men to "get there"
lively.
Nine-tenths of the world's work, if not nearer ninety-
nine-hundredths of it, is thus done by self-interest — life's
luxuries and necessities brought to our doors without
hurry or worry on our part.
Mixed with all this thought of "self" there may be,
and is much of thought of justice and honor, and of the
spirit of "altruism" — which, if strongly impregnate
about doubles the "horse power" of the "ego" — but the
prime force that never ceases to inspire and push is
"self-interest."
Here "hitched up" with the strongest financial re-
sources and power the world has ever seen — the meas-
ureless credit of "Uncle Sam," we have the "self-interest"
and "individuality" of the great mass — practically all —
of the business men of the LL S., manufacturers, mer-
chants, farmers. Each is compelled by the nature of the
"hitch," when he works for "self-interest" to work also
for the interest of all.
The aim is necessarily the most efficient transportation
service, the least possible cost — and all benefit, no pos-
sible favoritism, to individual, to locality, to class of
freight.
Local Boards of Directors, of villages or larger towns,
or great terminal cities, are chosen by the local patrons,
Men Who Pay the Freight — chosen from among them-
selves, neighbors who know each other. Those most
interested, alert, the men who "get things done," inevita-
20 PEACE AND PROSPERITY VIA
bly come to the front, and each is given power measured
by the confidence he commands, not "equal powers'* (al-
ways fiction, not fact, for some one "dominates" in al-
most any effective board).
In small places the Local Board will probably be
three — and a dominating alert one will do most of the
work, or have oversight of it. In larger places Boards
will be larger. Their numbers, their powers, duties, com-
pensations will be decided by the great Operating Board
of the National Organization, which controls and orders
everything, as a General Staff controls a great army.
Once a year all the Local Board members meet to-
gether and elect a superior Division Board (which will
be under the National Operating Board) each mem-
ber being given "weight of vote" according to the con-
centrated "weight of votes" he receives. And these
various Division Boards likewise meet and elect in the
same manner, with same "accumulated weight of vote,"
the National Operating Board, the number of members
and the compensation being fixed by vote of the Division
Board members. The National Operating Board powers
and duties are fixed by the law organizing the corpora-
tion.
Each Local and Division Board inevitably has its
"interests" — to get the most and best service at the least
practicable cost for its locality or line. It is always
"on the spot," has knowledge and initiative — and "can
get anything it wants" in reason, when it shows that
"what it wants" will "pay" the cost of the capital "what
it wants" involves, and "something more" for safety of
"Division" and for the national system.
If capital costs (say) 3l/2 per cent, and a local ele-
vator, cotton, or potato warehouse, a gigantic hay press,
a creamery, a new "feeder" trolley freightrpassenger line
— anything that will bring business to the road, enlarge
markets for shippers — if any or all can be made to
JUSTICE AND PRACTICAL SENSE 21
"earn" 10, or 7, or even 4 per cent, (perhaps) "Uncle
Sam is rich enough" to give us all we want — if it pays!
And the records show "what pays." While the whole
national system is "one unit," accounts are kept so it is
easy to tell where and how much "income" exceeds cost
of investment, or vice versa.
At the great city terminals, of course, is where the
"one unit" idea counts most and shows most effectually
— no more "competition," all one "happy family" seeking
the best possible "least-cost service" of commerce and
travel.
No more "vampire" "inside," express, refrigerator
or other "systems," no favored "contractors" for better-
ments, extensions, to suck the life-blood profits from
Uncle Sam's Railroad. The national Operating Board
has its own engineers, a great army of tested officers who
can organize and superintend forces that can do anything
that can be done by "somebody else at a profit" for the
Corporation. If sometimes the Corporation buys, "out-
side," locomotives, rails, or anything else, it knows from
its own "cost records" in its own shops what it buys is
worth, and will buy for its own "convenience" and not
as a "favor" to a big "client" or "capitalist."
WATER AND AIR TRANSPORTATION
Of course the "Men Who Pay the Freight" want all
possible profitable economic facilities for transportation
wherever freight or passengers want to go, and river and
canal will be used heavily, all as "one unit" with the rail-
roads— including coast and Panama Canal — and why not
also allow Cuba, West Indias generally and South
America — and why stop even there ?
For foreign transportation generally a separate "Amerr
can-Foreign Transportation Corporation" might well be
organized along the same lines as that of this Inter-State
Corporation, to be "financed" by the nation and "operated"
22 PEACE AND PROSPERITY
by the "Men Who Pay Foreign Freight" — vitally inter-
ested to secure the greatest possible efficiency of service,
and least possible cost of service — small shippers (com-
paratively) having the same benefit of low cost as the
large shippers who transport millions of tons — low cost,
obviously being passed on for benefit of producer and con-
sumer.
As "ships and more ships" under its own control are to
be counted as vital for the future prosperity and PEACE
of "Uncle Sam" and the world generally, this "American-
Foreign Transportation Corporation" might (with per-
haps independent private American Citizen transporta-
tion) be given the monopoly of one-half the total foreign-
American transportation, the other one-half fairly being
left open to competition of the other nations of the world.
Air transportation is, of course, a matter of future
development. The "experimental part" of it will doubt-
less be pressed at the expense of the U. S. Army, Navy,
and Post Office ; the U. S. A. A. R. will "take a hand in
the game" only to the extent that it can be done with
early anticipated profit in view.
FINANCIAL JUSTICE AND
INDUSTRIAL SAVINGS
"For Uncle Sam and World Peace."
"UnsJiackle the Postal Savings Bank."
The first quotation above was the title of a portion of
this paper issued as an appeal to immeasurably help win
the world war by a bit of plain financial justice to indus-
trial patriots. The war is won but "godliness is profit-
able" for time of peace as well as time of war, so we still
give the quotation place.
To get anywhere we must always "start where we are"
— start with things as they ire.
We now have a Postal Savings Bank — we start with
that.
Every other savings bank in the world makes the pre-
tense, at least, of security for depositors the largest prac-
ticable returns for their money, with absolute security,
and perfect availability. Uncle Sam's Postal Savings
Bank is "shackled" by the opposite rule — it attempts to
get as much money as possible from depositors for the
least interest possible.
There were at one time about seven hundred thousand
depositors, almost entirely limited to poor, but provident,
ignorant, timid foreigners — so limited by the fact that no
intelligent American will deposit in the Postal Bank under
present dishonorable restrictions.
These seven hundred thousand timid, ignorant deposi-
tors have placed about one hundred and forty million dol-
lars in the Postal Bank, for which they get the ridiculous
23
24 PEACE AND PROSPERITY VIA
(wicked) rate of two per cent, (only) interest. What is
done with their money? Instead of giving Uncle Sam
the benefit of the money, the benefit of the low two per
cent., ninety-five per cent, of the money is turned over to
bankers for two and a quarter per cent. — and the bankers
loan it to Uncle Sam for four and a half, or loan it, pos-
sibly, to farmers or others for productive purposes at 6
per cent, or MORE, plus commissions to somebody.
Is this the "square deal"? Is this, if technically "hon-
est," honorable? Is it "godly"?
Shall you and I "stand by consenting," like Saul at
Stephen's stoning, while such wrong is done? And if a
bank accepts the benefit of this "2-per-cent. money," does
it not more than "hold the clothes of them that stoned" —
hold some of the contents of the clothes of then* that}
are stoned? Do editors, who join the "conspiracy of
silence," speaking no word of protest, or of exposure of
wrong — are they guilty of "hush money" in accepting
"financial advertising" and "keeping still"? One hesi-
tates to believe honorable bankers and editors consciously
"guilty" — "they know not what they do" is sad truth
often applying.
And what about the "wrong" — (and the economic
folly!) of excluding from any use of the Postal Savings
Bank the scores of millions of intelligent, thrifty, patrio-
tic Americans by limiting interest to 2 per cent, and by
limiting the right to deposit at all more than a petty sum
instead of inviting "without limit" as commercial banks
always do? "Limit 2 per cent.," when the market price
for money is from twice to five times two !
We now propose :
"A Bill to amend the Law relating to the Postal Sav-
ings Bank, in the interest of justice to depositors, also
in the interest of farmers, and other small industrial bor-
rowers of money, and in the interest of the nation at
large."
JUSTICE AND PRACTICAL SENSE 25
In the interest of depositors — of borrowers — of the
nation at large; is there any other, any special limited
class, or favored few, whose "interests" shall dictate and
distort the plan and purpose of the law of the Postal
Savings Bank ? Patriotism says no !
Justice stupendously stimulates patriotism. "Hyphen-
ated" depositors in, and producing borrowers from, an
unshackled Postal Savings Bank would be few, and
quickly, "automatically" cured!
In the interest of Depositors :
The "Unshackled" Postal Bank we are attempting to
rebuild on a basis of mathematically exact justice. The
first man to rightly claim "justice" from it and all con-
cerned, is the man who has the money — the depositor,
whether he has brought his hard-earned hoard of $10 or
$1,000,000. He is "inalienably" entitled to get for the
use of that money the most that anybody will give for it,
with ample security, just as the farmer is entitled to get
the same for his wheat, or the workman for his labor.
In the interest of Borrowers:
The man who wants to borrow money has no "rights'"
in the case till he is able to offer satisfactory security, then
the borrower who will give the most, whether he is bank-
er, barber, butcher or farmer, has the right to get it — the
amount he will pay for its use is, presumably, the legiti-
mate measure of his need, or of his ability to use at high
profit.
But, given a "square deal" to both depositor and bor-
rower, no fear but in this rich nation, there will be plenty
of money to "go round," at a fair rate of interest — both
better and fairer than either (average man) gets now.
"Cheap money" never can exist, as it is imagined by
many, except as it is made cheap by some "hocus pocus"
and injustice to somebody, in the end the taxpayer, which,
ultimately means more the man who labors than anybody
else.
26 PEACE AND PROSPERITY VIA
The "cheapest money" possible will come about pre-
cisely as will cheap wheat or cheap shoes — by the pro-
ducer's increasing ability to get larger "crops" for his
labor. When we "all get rich" (or more of us) money
will go begging for borrowers at a fraction of present
rates of interest.
The "justice for the farmer" (and all who labor)
we seek via an unshackled Postal Savings Bank is that
he shall have the right and ability to borrow money as
cheaply as anybody, even the banker, on equal security.
Here is provided the "square deal" — so universally
popular with patriotic Americans — "free trade" in finance,
money, and credits, not special privilege to bankers, farm-
ers, or any other class.
The following Bill, here slightly amended, has already
been presented to Congress, in two successive sessions,
introduced by Senator Morris Sheppard of Texas. It
will be again introduced, in Senate and House, till it gets
consideration. As its plans are much broader in scope
than those of the original Postal Savings Bank, it is
given the title
THE INDUSTRIAL SAVINGS ACT.
"Section 1. Be it enacted by the Senate and House of
Representatives of the United States of America in Con-
gress assembled, That the 'short title of this act shall be
The Industrial Savings Act."
"Sec. 2. All the members of the President's Cabinet
shall, ex oficio, constitute a board of trustees for the ad-
ministration of this act, hereinafter to be referred to as
the Industrial Savings Board."
These officials broadly represent all the basic economic
interests of the nation. They are appointed by the Presi-
dent and confirmed by the Senate. They guide and shape
the policy of the bank established by this bill, within the
JUSTICE AND PRACTICAL SENSE 27
very definite limits which it provides. They will not have
time for the work in detail, but they will fashion general
policies, choose and supervise competent heads and prin-
cipal employees, who will do the work, under the safe,
businesslike rules of the Civil Service Commission.
'Sec. 3. For the proper and efficient organization and
conduct of the business of the Industrial Savings Board
it shall appoint, under the rules of the Civil Service Com-
mission, a first chief, a second chief, and a third chief,
having such powers and duties as the board may desig-
nate ; also such other assistants, attorneys, and other em-
ployees as the board may consider necessary. The com-
pensation of the persons so appointed and other expenses
of operation under this act shall be such as the Industrial
Savings Board may authorize, and shall be paid from the
profits of the Postal Savings Bank."
This section takes the Postal Savings Bank out of poli-
tics, and provides that expense of operation shall be paid
from the profits of the bank by depositors and borrowers,
instead of being taken from the pockets of taxpayers by
appropriations from the Treasury. The wisdom and fair-
ness of this section would seem to be beyond question.
"Sec. 4. The Industrial Savings Board shall, as soon as
possible, take over the control of the existing Postal Sav-
ings Bank, the details of its administration to continue in
connection with the post offices throughout the country,
under the direct supervision of the Postmaster General
acting for the board.
"Sec. 5. As soon as arrangements can be made therefor
every post office, postmaster, and all letter carriers and
other post office employees shall hereafter be made to
serve the people through the Postal Savings Bank as they
now serve them for letters, money orders, registered let-
ters and parcel post, without limitation, the manner of
such service being as in this act provided, and all limita-
28 PEACE AND PROSPERITY VIA
tions on the amount of deposits in the Postal Savings
Bank are hereby removed.
"Sec. 6. Postmasters and other employees in the service
of the Postal Savings Bank at the time of the transfer of
said bank to the Industrial Savings Board shall continue
in office until it is found from experience that any one of
them is inefficient, when such employee may be removed
according to rules and regulations which the board shall
establish, with the approval of the Civil Service Commis-
sion, and the successors of those who may be removed
shall be appointed under the rules of the Civil Service
Commision."
The Post Office Department is already one of the most
enormous, best organized, best equipped, and best con-
ducted business plants in the world. In connection with
the enlarged Postal Savings Bank it is proposed almost
to double, or more than double, its utility at an increase
of expense remarkably small when results are considered.
This act will establish within the Post Office Department
the largest, strongest and mose useful financial institution
in the world.
There is to be no limitation as to the amount anyone
may deposit. Letter carriers, rural and city, must accept
deposits for the Postal Savings Bank, and deliver receipts
as they must accept and deliver letters, money orders and
parcels. Also they may, if desired, take certificates of
deposit and checks to the bank, cash them, and return the
proceeds to the owner. They are agents both of the bank
and the people. What a service this will be to the masses
of the people, who need not leave their homes or other
places of business in order to deposit their savings or draw
funds as they may need them! The Government thus
maintains a perpetual open door to thrift and economy,
the great permanent foundation of general prosperity.
See also Section 18.
Every existing bank in the United States, in good
JUSTICE AND PRACTICAL SENSE 29
standing, as well as every post office and letter carrier,
may receive deposits and make payments, and the banks
may make loans, for the Postal Savings Bank, as provided
further on in this bill.
Taking our population in 1910 (now, of course, largely
exceeded) and the deposits in the existing Savings Banks
of the State of Connecticut (which are far from being
"unshackled" as here provided), as a basis of comparison,
the nation would have in the Postal Savings Bank 54,-
074,000 depositors (instead of a beggarly 600,000 as
now) and $27,987,000,000 deposits instead of only about
140 millions as now.
These big figures are, in fact, less than half as large
as should be the reality, for reasons which will appear
further on.
Note that, incidentally, here is legitimate "government
guaranty of deposits," simply because "Uncle Sam" is
"custodian," as he is for money-order money, and one is
"dead sure" of getting out what is put in. No "runs" on
"Uncle Sam's" Postal Savings Bank "for fear," as is
possible with all other banks.
"Sec. 7. Of the funds which are now or may hereafter
be deposited in the Postal Savings Bank, not to exceed
25 per cent, of the balance of deposits at any time, may,
in the discretion of the Industrial Savings Board, be in-
vested in the bonds of the United States, bearing 3 per
cent, interest, or bought in the open market at the lowest
obtainable price or bought at such price from the Treas-
urer of the United States. Any portion of said bonds
may, in the discretion of the board, be sold in the open
market at the highest obtainable price or sold to the
United States Treasury at such price. In times of war
the bond investment specified may be increased in any
amount up to 90 per cent, of the balance of deposits, and
the rate of interest on bonds increased to 4 per cent., or in
the discretion of the Industrial Savings Board."
30 PEACE AND PROSPERITY VIA
This section affords financial preparedness for the na-
tion on a scale hitherto unparalleled. The investment in
United States bonds is an opportunity, not a requirement.
The Postal Savings Bank will naturally tend to absorb
all available United States bonds on the market, and thus
tend to reduce the interest rate the United States will
have to pay for loans. The right to sell any portion of
the bank's United States bonds in case of need provides
a liquid reserve power that is not excelled, if indeed it is
equalled, in the financial world, since the bonds of the
United States have a world market well-nigh without
limit.
While the sale of U. S. bonds will be, as now, open
to individual buyers, and such sale should be in amounts
of billions of dollars, it is here contemplated that the
great mass of small buyers will prefer that their own
Postal Savings Bank shall buy and hold the U. S. bonds
for them, their personal individual holdings being Certifi-
cates of Deposit in the Postal Savings Bank, which are
always instantly available at par (as deposits in solvent
banks always are available) and which pay depositors ap-
proximately the same rate of interest as the U. S. bonds.
Indeed, Certificates of Deposit in the Postal Savings
Bank should earn depositors even higher rates of interest
than do the U. S. bonds, because much of the bank de-
posits, being loaned "to highest bidders" offering good
security, will command higher rates of interest than the
U. S. need, or should pay.
"Sec. 8. No other investment of the funds deposited
shall be made, but with the exception of a working re-
serve, the amount of which shall be determined by the
Industrial Savings Board, the balance of the funds shall
be loaned at the highest obtainable rate of interest on
what, in the discretion of the Industrial Savings Board,
is considered as adequate security, in manner as follows
and as in this act further provided:
JUSTICE AND PRACTICAL SENSE 31
(a) Preference shall be given —
(1) To small loans over large loans.
(2) To short-time loans over long-time loans.
(3) Loans adequately secured by readily market-
able collateral over loans on real estate or
other less-readily marketable security.
(b) In accordance with the above the board shall, from
time to time fix the rate of interest to be charged accord-
ing to the supply of and the demand for loanable funds,
the profit and security of the depositors being the basis
of decision, the maximum rate for loans not to exceed 5
per cent, per annum.
(c) The borrower shall always be required to protect
the market value of his collateral, as is customary with
other banks making similar loans, either reducing the
loan or providing additional security in case of falling
market.
"Sec. 9. That the Industrial Savings Board shall give
clear and ample publicity to its rulings as to character of
securities required for loans and the terms of such loans,
under the following limitations :
(a) Loans not to exceed 95 per cent of the market
value of United States bonds or the bonds of States.
(b) Not to exceed 90 per cent, of the market value of
such other securities as are now admissible investments
under the existing laws of New York or Massachusetts
for savings banks or as are estimated by the Industrial
Savings Board as of equivalent good standing.
(c) Not to exceed 85 per cent, of the market value of
wheat, cotton, or other non-perishable products, so called,
in safe, adequately insured public storage, under regula-
tions as the board may prescribe.
(d) Loans against marketable collateral shall be made
at any Bank of Issue and Redemption provided for un-
32 PEACE AND PROSPERITY VIA
der Section 15 of this act, in accordance with rules and
regulations made by the Industrial Savings Board."
These sections contain conservative and practical pro-
visions insuring the safe and proper conduct of the bank.
The borrower must protect the market value of his col-
lateral, and no collateral is accepted at its full market
value. All borrowers are on an equal footing — the bank-
er, the merchant, the farmer, the millionaire, the man of
limited means. If any preference is shown at all, it is to
the small loan over the large one. The farmer is enabled
to borrow money on non-perishable products, properly
stored, to the extent of 85 per cent, of their value.
"No other investments shall be made." The bank is to
take no risks on rise or fall of market prices. It will loan
only against good security, the borrower taking all mar-
ket risks.
The laws of New York and Massachusetts are referred
to above merely as examples of laws defining security.
All the provisions of these laws may not be found applic-
able to the Postal Savings Bank, especially those relating
to local bonds. The savings bank laws of all the States
and of foreign countries should be studied and their best
features adopted and covered by rulings of the board.
"Sec. 10. Not to exceed 50 per cent of the deposits in
hand at any time may be loaned for such length of time,
not to exceed 50 years, as the Industrial Savings Board
may specify in its regulations, and with or without amor-
tization, payments, as the borrower may prefer, to an
amount not to exceed one-half the appraised value, on
unencumbered real estate in States and Territories where
laws for the protection of creditors are by the Industrial
Savings Board deemed adequate and fair, in manner as
follows :
(a) Through any national bank or other incorporated
bank or corporation whose business is dealing in or guar-
anteeing real estate mortgages and which is subject to the
JUSTICE AND PRACTICAL SENSE 33
examination and control of the United States Treasury
or of the banking department of any State which in the
estimation of the Industrial Savings Board adequately
protects depositors, loans may be made to an amount at
one time outstanding not to exceed ten times the capital
and surplus of the bank or corporation, which shall be
required to guarantee the prompt payment of the princi-
pal and interest of the loans made through said bank or
corporation.
(b) The bank or corporation shall be entitled to a com-
mission of 5 per cent of the interest paid on such loan by
the borrower (or such less per cent as the board may pre-
scribe), who shall not be subject to any other charge ex-
cept the necessary expense of examination of title and
drawing papers, which charge may be fixed by rules of
the Industrial Savings Board, all terms and commissions
to be uniform throughout the United States."
Note that loans on real estate are to be made through
banks and other financial institutions of established stand-
ing which guarantee principal and interest, .for a small
commission on the interest paid. The borrower pays the
expense of examining title, drawing papers, and so forth.
Savings banks generally lend more than 50 per cent of
their deposits on real estate, while building and loan asso-
ciations invest in this way nearer 100 per cent of their
funds. The banks through which real estate loans may
be made have established machinery and facilities for
making loans. They have the necessary knowledge of
local conditions and personalities. Self-interest will pre-
vent them from making excessive or risky loans, and they
can probably do this business at less expense than that
with which the Postal Bank could itself organize and
conduct a safe loan board. If they are compelled to fore-
close, they will be entitled to such costs and fees as the
courts allow.
The commission in the great cities allowed agents for
34 PEACE AND PROSPERITY VIA
collecting rents is from 1 to 5 per cent of the rent —
commonly 2 per cent for large buildings. The monthly
collection of rents is certainly more onerous and expen-
sive than the collection of interest on mortgages once or
twice a year. Interest is the rent of money. The com-
mission runs during the life of the loan and is payable
annually.
Let us illustrate. A bank with $100,000 of capital will
first loan its own funds to such extent as it pleases, under
legal limits ; then it may loan for the Postal Bank to any
amount not exceeding $1,000,000. Interest on loans of
$1,000,000 at 5 per cent is $50,000 a year ; 5 per cent com-
mission on such interest is $2,500 a year. Thus its loans
for the Postal Bank produce a perpetual income of $2,500
a year, with trifling, if any, additional rent or clerk hire.
How many times, under present conditions, are the banks
compelled to quit lending because of lack of loanable
funds? Here there will never be such lack.
Note further that this commission of 5 per cent is
double that allowed for dealings on the New York Stock
Exchange, and still further that it is annually renewed
during the life of the loan, instead of being paid but once,
as on the New York Stock Exchange.
"Sec. 11. Personal loans without requirement of col-
lateral security by the Postal Savings Bank may be made
in manner as follows:
(a) The borrower to make written statement showing
his assets and liabilities ; the amount of loan not to exceed
$1,000; the length of time, which shall not exceed one
year ; the purpose for which the loan is to be used, which
shall be in accordance with the stated purpose of this act;
which statement shall be attached to the borrower's ne-
gotiable note.
(b) The principal and interest of the loan to be guar-
anteed prompt payment by a bank or corporation, as in
JUSTICE AND PRACTICAL SENSE 35
Section 10 of this act, which shall be entitled to a com-
mission of 5 per cent of the interest paid thereon, or less,
as the board may direct, the borrower being subject to
no other charge, and the total of such loans at one time
outstanding not to exceed five times the capital and sur-
plus of the guarantor.
(c) The limit of the loans specified in (a) of this sec-
tion, if after two years' trial is deemed too small for the
best results, may be extended by the board from time to
time to larger specified sums, the terms to be uniform
throughout the United States."
These personal loans are to be made without collateral
through the banks, other financial institutions, and so
forth, which guarantee principal and interest, for an an-
nual commission of 5 per cent on the interest. The bank
through which the loan is made may exact what security
it pleases.
These personal loans should amply meet the wants of
small farmers, mechanics and even merchants, for short-
time loans to provide for planting and marketing crops,
or other temporary needs.
Here is the possibility of $1,250 additional income a
year for the bank with $100,000 capital. Remember that
the bank has the opportunity first to utilize its own capi-
tal on the "pick" of the loans. So we have an annual
profit for the bank in question of $3,750 for handling the
funds of the Postal Bank, the borrower getting his funds
at 5 per cent or less. Now observe further, that this
profit may be doubled by the commission received by the
bank on the deposits it receives and maintains for the
Postal Bank under Section 20.
As agents for the loan of Postal Bank funds there
will be legitimate profit for commercial banks of prob-
ably $100,000,000 a year in return for honorable, highly
useful economic service.
If the Postal Bank can earn its depositors 4 per cent,
36 PEACE AND PROSPERITY VIA
commercial banks, with greater initiative, and warrant
to take risks, which the Postal will not take, can earn
their depositors even more — and they can always serve
the worlds of commerce and manufacture as the Postal
Bank can never do.
Nothing is more profitable — economically profitable —
than simple, even-handed justice, which is here proposed
for depositors and patrons of the Postal Savings Bank,
and for the benefit of the nation in times of war or of
peace.
"Sec. 12. To induce the largest possible savings and
serve the greatest possible convenience, security and
economy of use to depositors and to the Postal Savings
Bank, the Industrial Savings Board shall cause to be pre-
pared and issued certificates of deposit of the size and
form, but different in color and appearance, of customary
bank currency, the said certificates being of the following
tenor and in manner indicated:
(a) Issued (year?) — January, February, March,
April, May, June, July, August, September, October,
November, December.
Day— 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16,
17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31.
The United States Postal Savings Bank has received
from (here the depositor will write his signature or not,
as he pleases, thus identifying his signature on the back
when he passes the same) $10 (or other specified sum)
and will pay the same, together with all net interest
earned hereon, the interest compounded semi-annually,
on surrender hereof properly indorsed. If no signature
is written, payment shall be to bearer. Interest shall be-
gin on the first day of the month indicated by cancella-
tions in the margin, and shall terminate the last day of
the month preceding payment, also shall terminate five
years after date of issue, but any certificate may at any
JUSTICE AND PRACTICAL SENSE 37
time be surrendered in exchange for a new issue of
current date.
Issued and payable at Washington, D.C., but pro-
curable or cashable through any post office or authorized
bank.
(b) Certificates in this form shall be issued in denomi-
nations of $1, $2, $5, $10, $50, $100, $1,000, and larger,
as the Industrial Savings Board may order.
(c) Certificates similar, but bearing no interest, shall
be issued in denominations of $1, $2, and $5 and $10.
(d) To encourage the beginning of deposits, and also
serve the convenience of those who desire them in pref-
erence to coin money, certificates payable to bearer, with-
out interest, shall also be issued in denominations of 5
cents, 10 cents, 25 cents, and 50 cents, of size and form
similar to United States fractional currency issued in
1862 and later.
(e) An additional form of Certificate of Deposit of
similar purport to (a) shall be a Registered Certificate,
issued in multiples of $100, the principal payable at any
time on surrender, properly indorsed, the interest to be
remitted semi-annually, all details, including manner of
registration, being according to regulations of the Indus-
trial Savings Board.
(/) Simple printed instructions for their use may ap-
pear on the front or back of each of the various certifi-
cates.
(g) These certificates shall not be legal tender nor in
any way indicated as "money/' but may pass from hand
to hand by mutual agreement as is done in the case of
"certified" or other bank checks.
(h) Checking accounts may also be permitted by de-
positors who carry an average balance over $500, at
cities designated and in accordance with regulations made
38 PEACE AND PROSPERITY VIA
by Industrial Savings Board, interest on daily balances
to be paid on such accounts semi-annually."
You give the Postal Bank $10 in gold, or what will
get the gold, and you prefer this certificate to gold be-
cause this earns compound interest. Printed tables will
tell you its value at 4 per cent or other interest for
any number of days, months, or years. The bank loans
your gold, "on call," on security of municipal bonds, at
4 per cent ; or on wheat or cotton for a month or a year
at 5 per cent; or on farm mortgage, 5 years, at 5 per
cent, to the highest bidder in each case. Whoever gets
the gold, of course, deposits it again in the Postal Bank
and takes a certificate like yours, and the bank of course
loans the gold again, and so on, perhaps ten times over,
so that $10 gold is earning possibly 50 per cent per an-
num, and the Postal Bank still has that gold to loan to
the next man! This shows how banks have got rich in
the past ; how depositors will hereafter get, not rich, but
each what his money fairly earns. Nobody wants to keep
that gold any more than you want the man's yardstick
when you buy 10 yards of muslin. If you get certificates
of deposit, drawing no interest on their face, the bank
loans the gold, just the same, and so earns increased in-
terest on your $10, $100 and $1,000 certificates.
This "automatic money mobilizer" does away with all
necessity for the clumsy, antiquated "individual ac-
counts" bookkeeping methods, and will reduce bank ex-
penses in that respect to one-fourth or one-tenth of
present cost and be far more convenient for depositors,
and just as safe as present clumsy method.
Instead of clipping coupons twice a year as in U. S.
bonds, the depositor simply pays out part of his hold-
ings, those he retains growing in compound-interest
value.
These certificates of deposit, each virtually a "certified
check" (certified by Uncle Sam) will be good anywhere
in the U. S. just as gold certificates are good anywhere,
JUSTICE AND PRACTICAL SENSE 39
though the gold is in the U. S. Treasury vaults. Thus
they will serve "for exchange" and tend to do away with
the present cumbersome and vastly expensive "exchange"
system.
Postal Banks will almost never pay out real "money"
at all, but pay out, instead, because preferred, only its
own certificates of deposit, which serve every possible
purpose of real money, and every dollar of which earns
interest for depositors every day it is outstanding.
These certificates will make the money in your pockets,
cash drawer, or safe, draw interest for you while you
hold them, for the next man when you pay them over —
will buy anything which gold will buy — will buy gold
itself. Nobody, but bankers (as basis for larger credits,
and for foreign exchange) wants gold, which in posses-
sion earns no interest, but will prefer these certificates
which in possession do earn compound interest.
Everybody, even pro-Germans and pacifists, will gladly
turn over to the Postal Bank, in exchange for these cer-
tificates, every dollar he has, every dollar he gets in the
future, that it may earn him 4 per cent or other interest —
all will "flock" to deposit earnings in the Postal Bank
as hungry men coming to a feast (no need for "Barnum
circus" advertising methods, semi-hysterical, undignified
appeals to patriotism to buy "Liberty Bonds," buy "War
Savings Stamps") which by approval of all Postal Bank
depositors will have preference to the extent of Uncle
Sam's need for Postal Bank investments.
Every banker knows, as do most of the well-informed,
that of all the so-called "money" in existence, nearly
one-half of it is not at one time in any bank. Some of
it is foolishly "hoarded" by those "afraid of banks," but
most of it is just "idle money," in your pocket and mine,
earning nothing, "no good" at all till we pay it out for
something we want. Ever since banks were invented
bankers have been trying to "corral" this elusive outside
money, "going to waste" just as much as water running
40 PEACE AND PROSPERITY VIA
over the dam instead of through the turbine is wasted
(dam foolishness?). This simple device of a negotiable
Postal Bank certificate of deposit will naturally and
certainly as the law of gravitation, as the law of mag-
netism draws bits of iron, "chase" this "money" out of
your pocket and mine, even out of knot-holes, stockings,
tin cans and other hiding places, into existing banks, ap-
proximately doubling the foundation resources of banks.
There it will be loaned, redeposited and loaned again, in
a way bankers know how, till the near two and a half
billion dollars of now "idle money" is multiplied to
thirty or more billions of available useful "credits"
— perfectly good, not so much because always "pay-
able in gold," as because based on solid property
assets, earning or growing into money or what brings
money. This will practically nearly "double the money
crop," and as doubling the crop of wheat, or cotton tends
to "cut the price," so should this tend to reduce interest
(the "price" of money) to Uncle Sam, when he wants
to borrow money to fight with, or to you and me if we
want to borrow to build a silo, buy a farm tractor, or
build a home.
Obviously a feature of infinite value incidental to this
plan is its incitement to thrift and saving — universal,
far-reaching.
The present gold basis of all money will in no way be
altered. Of course, actual gold will be called for only
as limited commercial exigencies compel its use, because
gold in possession earns no interest, while certificates of
deposit in the Postal Bank in possession earn compound
interest.
Take emphatic note that nothing is here suggested in
the line of "fiat money" nor even of "inflation" of cred-
its.
Every bit of paper is to be on "a parity with gold" —
certificates of deposit are made so good they are to be
preferred to gold.
JUSTICE AND PRACTICAL SENSE 41
The essence of "inflation'' that is vicious, is so-called
"money" not based on reality, or credits not based on
solid security, but on "speculative" values, rather than
on the earning, creating power in the investment made.
Here is proposed only ("inflated"?) credit to Uncle
Sam, based on his power of taxation of over 100 mil-
lions of patriotic, money-earning, wealth-creating Ameri-
cans— and loans to such "creators" of wealth only as are
wanted for legitimate use and to borrowers who are able
adequately to secure the loan — by, for instance, the
pledge of Liberty Bonds, or of wheat, or cotton, or
farms, or other things that are safely, on the average,
fire, flood, and earthquake proof.
"Sec. 13. The Secretary of the Treasury is authorized
hereafter to deposit any money in the Treasury, in the
Postal Savings Bank (without requiring security there-
for) as he does in other banks of deposit, and shall, so
far as practicable to do so, make disbursements from the
Treasury in the form of certificates of deposit in the
Postal Savings Bank."
"No security" is required for deposits of Treasury
funds, because in the Postal Bank they are in the cus-
tody of the Government the same as when in the Treas-
ury itself.
Thus the U. S. Treasurer need not (but may do so)
any more offer bonds for sale, but can simply issue them
to the Postal Bank in exchange for certificates of de-
posit which he will pay out — the workman will prefer
them to money for wages, the farmer for grain or stock,
the mine owner for coal, and so on.
The U. S. Treasury may continue to deal with com-
mercial banks the same as now, but with the Postal Bank
also.
"Sec. 14. All banks in the U. S. may hereafter de-
posit their funds in the Postal Savings Bank, and certi-
42 PEACE AND PROSPERITY VIA
cates of deposit issued therefor may be counted as part
of their legal reserve."
Of course banks may continue so far as they desire
to carry gold and other "reserves," and those having
foreign relations, especially, may naturally do so to an
extent, but these certificates of deposit represent such
assets in the Postal Bank, and therefore serve the same
end, and they earn interest for the depositing bank, while
the gold they carry in reserve earns nothing.
Thus the Postal Savings Bank becomes a gigantic
"ally" rather than competitor of existing savings and
commercial banks — becomes one vast "reservoir" (not
many thousand separate, competing banks) into which
everybody, other banks included, pour deposits, and
draw them out again, with interest, as wanted.
"Sec. 15. That at the county seat of every county in
the United States, or similar civil divisions otherwise
called, and in, such other cities as the Industrial Savings
Board may specify, post offices shall be designated as
Postal Savings Banks of Issue and Redemption.
(a) Such banks of issue and redemption shall issue
and record as required by the Industrial Savings Board
certificates of deposit as described in Section 12 hereof,
in exchange for bankable funds as per regulations made
by said board, and may redeem the same, whether issued
by itself or by other similar banks of issue and redemp-
tion, either in money or in new certificates of deposit,
as the applicant may desire.
(b) Each depositor in said banks shall record his sig-
nature and address in duplicate with the bank on a rec-
ord provided, as is customary in commercial banks, so
that indorsements of signatures on backs of certificates
may be verified when desired.
(c) These banks of issue and redemption shall supply
minor post offices in their region, and letter carriers, with
JUSTICE AND PRACTICAL SENSE 43
facilities for serving all who desire to do business with
the Postal Savings Bank, requiring such security as may
be necessary from those handling the funds of the bank
or its patrons.
"Sec. 16. The Industrial Savings Board shall desig-
nate 12 or more districts covering the United States, in
a central city of each of which it shall cause to be organ-
ized a district bank which shall act as clearing and re-
serve bank for all the banks of issue and redemption
within the district, in accordance with rules and regula-
tions of the Industrial Savings Board.
"Sec. 17. The Industrial Savings Board shall further
cause to be organized in the city of Washington, D. C.,
in the Post Office Department, a national central Postal
Savings Bank, which shall act as clearing and reserve
bank for the 12 district banks, and may have direct deal-
ings with and oversight of all tha county banks of issue
and redemption as the Industrial Savings Board shall
order.
"Sec. 18. Every smaller post office and every letter
carrier may, in accordance with regulations made by the
Industrial Savings Board (adequate bonds for safety be-
ing required), as convenient, keep in hand limited
amounts of certificates of deposit, secured from the local
county banks of issue and redemption, to be given to
known applicants in exchange for bankable funds to be
forwarded to the county bank of issue and redemption,
and may also redeem small certificates of deposit as can
conveniently be done. Such post offices and letter carriers
shall also give proper receipts, to applicants, for bank-
able funds or for certificates of deposit, to be sent to
the county bank of issue and redemption to be exchanged
for money or other certificates of deposit, and deliver
the same to said applicant in exchange for their own re-
ceipt originally given to the applicant.
44 PEACE AND PROSPERITY VIA
"Sec. 19. Each county bank of issue and redemption
and each district bank shall keep in hand such working
balance as the Industrial Savings Board shall direct, the
county bank forwarding any surplus to its district bank,
and the district bank any surplus to the national central
bank, and each of said banks shall make loans as author-
ized by the Industrial Savings Board, the county bank
drawing for funds when necessary on its district bank
and the district bank drawing on the national central
bank, as the Industrial Savings Board may direct."
Briefly, these sections provide that Postal Banks shall
be established in every county seat, other post offices in
the county to be branches of tke county-seat bank, under
regulations of the board. The United States is to be
divided into 12 or more districts, with a central Postal
Bank for each district, which shall act as a clearing and
reserve bank for the banks in the district and which may
have supervision over the county banks.
"Sec. 20. Existing savings and other banks in the
•United States which desire and will submit to satisfac-
tory examination and supervision of the Industrial Sav-
ings Board and are found of standing satisfactory to
the board, may be made agents of the Postal Savings
Bank, to receive deposits and pay certificates in accord-
ance with regulations made by the board, and shall be
allowed as compensation for such service a commission
to be authorized by the board and not to exceed 5 per
cent of the net earnings of the deposits, for which regis-
tered certificates (only) are issued, which said existing
bank secures through its agency, such commissions to be
uniform throughout the United States."
The provisions of this and other sections permitting
any bank in the United States in good standing to be-
come a deposit and loan agent of the Postal Bank would
tend to strengthen rather than to injure by competition
JUSTICE AND PRACTICAL SENSE 45
any and every such bank. Their depositors would not
leave them for the postal, because they can supply the
postal certificates when preferred to their own. As pri-
vate enterprise and initiative have certain advantages
over public institutions, due to more accurate knowledge
of local conditions and opportunities and better means
of keeping in touch with them, the agents by offering
slight additional interest inducement may secure en-
larged deposits for themselves. To applicants for loans
the agent may always loan his own funds instead of
loaning the postal funds if he desires.
Note the profit to existing banks in this connection,
illustrated in note under Section 11. Commissions for
deposits are allowed only on those for which registered
certificates of deposit are issued, as it would be too com-
plicated and difficult to keep accounts in connection with
other deposit certificates. It is believed depositors gen-
erally will prefer the registered certificates for all larger
and long standing balances, and agent banks will of
course work particularly to secure such deposits.
"Sec. 21. In lieu of the principle of amortization
(which may be applied when the borrower desires) loans
secured by real estate or other collateral may be made
as follows:
The mortgage or other paper shall be drawn to secure
any sum due from the borrower not exceeding the
amount named therein for any time not longer than the
longest time therein specified, the borrower thus being
permitted to adjust the amount of his loan from time to
time according to his needs and opportunities/'
Under this plan, while the borrower would naturally
make application for the largest loan which the pledged
property would be sufficient to secure, his certificate
being passed, he would actually borrow not the most, but
the least, sum that would serve him, and borrow only as
46 PEACE AND PROSPERITY VIA
it was actually needed, and would repay it as fast as he
could, so as to stop interest, knowing that he could at
any time borrow again if he should have need or find
profitable use for the money. This elasticity of loans
would be of almost incalculable value to the borrowers,
to the bank, and to the community, stimulating enter-
prise, thrift, economy, providence, and would certainly
be more desirable than iron-clad, unalterable amortiza-
tion loans.
"Sec. 22. The Industrial Savings Board shall test the
safety and practicability of making small and short-time
loans to farmers and other producers in manner as fol-
lows, and in accordance with such other regulations as
may be specified by the board:
(a) After the total balance of deposits in the Postal
Savings Bank shall have reached the sum of not less
than $1,000,000,000.
(b) The board shall select not to exceed 10 counties in
various parts of the United States to make trial for a
period of not less than one year, after which time, if in
the opinion of the board the plan is successful, the
method may be extended to many or all other counties.
(c) All persons desiring to borrow, without collateral
security, any sum not to exceed $500 for a time not to
exceed one year, each shall make a statement showing
the amount of his assets and liabilities with their nature,
in form and manner specified by the board, the amount
of the loan desired, its length of time, and the purpose
for which it is to be used, in accordance with this act,
which statement shall be attached to the applicant's ne-
gotiable note.
(d) These applications shall be referred for approval
or rejection to a committee of three persons elected by
the applicants for such loans within the county and also
to a committee of three persons elected by the deposi-
JUSTICE AND PRACTICAL SENSE 47
tors in the Postal Savings Bank within the county hold-
ing registered certificates in manner provided here fol-
lowing: Loans to be allowed must be approved by not
less than two-thirds of the weight of vote of each com-
mittee and also approved by one or more experts ap-
pointed by the Industrial Savings Board.
(e) The two said committees to be elected in manner
as follows: The postmaster to prepare printed ballots
and send the same with return envelope to himself and
send to each applicant for loan, and to each depositor in
the county bank of issue and redemption having then,
and three months previously, outstanding registered cer-
tificates of deposit. Each such elector, applicant, or de-
positor, shall be entitled to three votes, which he may
cast for three, two, or one person of his choice. The
persons so chosen, each having weight of vote according
to the number of vote by which he is chosen, shall upon
notice of the postmaster meet and choose three of their
number to act as the committee, such electors balloting
repeatedly as may be necessary to reduce the number to
three. The committee thus elected, each member shall
have weight of vote according to the cumulative number
of votes by which he is chosen.
(/) The members of the committee chosen shall have
compensation for services in passing on loans at the rate
of 20 cents an hour, the time to be approved by the
county seat postmaster.
(g) Applicants whose loans are accepted shall give
the bank negotiable notes for the amounts and time
approved, the same to be discounted by the bank at 10
per cent per annum, the applicant being given the pro-
ceeds less his pro rata of all expense of passing on the
loans. After the end of one year, when all of the loans
shall have matured, any profits to the bank on the total
of the loans in excess of 5 per cent per annum shall be
paid as provided by the board in rebate to those \\ho.~e
48 PEACE AND PROSPERITY VIA
loans shall have been promptly and fully paid, so that the
net cost of the loan to the borrower may possibly be re-
duced to approximately the same as the interest rate on
secured loans.
(h) If after ample test such method of loaning is
found safe and profitable, the amount to be loaned to
each applicant may, by rule of the Industrial Savings
Board, be increased beyond $500, the increase to be uni-
form throughout the United States, and not to exceed
$1,000. If some counties prove to be habitually un-
profitable, while other counties prove to be habitually
profitable, the board may withhold, temporarily, or
longer, permission to make such loans from the unprof-
itable counties."
This section, as it specifies, is intended to be tentative
and experimental. It is believed that generally through-
out the United States practically all deserving wants of
borrowers will be amply taken care of under Sections
10 and 11. But the possibility of use being made of this
section will have a healthy influence on banks acting as
loan agents under said sections, and this plan of passing
on loans, the depositors approving or rejecting, the bor-
rowers assuming limited mutual responsibility, may in
time be extended to real estate and other secured loans.
"Sec. 23. Commercial and savings banks may make
deposits in and draw upon county banks of issue
and redemption to such extent as said county banks may
be able conveniently to serve them, but may, without
limitation, deal direct with the district banks and na-
tional central bank as per regulations of Industrial Sav-
ings Board, and certificates of deposit in the Postal Sav-
ings Bank may be counted as part of the legal reserve
of all depositing banks."
If any bank should prefer to keep gold or other form
JUSTICE AND PRACTICAL SENSE 49
of so-called money as a reserve, it can do so; if such
other form of reserve than certificates of the Postal
Bank makes it any stronger, then it will have what ad-
vantage there may be in the increased strength.
Certificates of deposit in the Postal Bank are not
legal tender but each is a certified check, certified by the
United States Government, and is good anywhere. Cer-
tified checks of banks are not legal tender, but do they
not serve amply every commercial want except in rare
technical legal quibbles? If what is offered is good —
as gold is recognized as good even when not coined — it
does not need to be legal tender. If it is not good —
accepted by custom — it is at best a promise and com-
monly in some measure a deception, and in the end the
man who labors is the man who loses most by the fraud.
Of course, the law of inviolability of contract will con-
tinue, and the debtor must always make good according
to his contract, whether it is formal or by implication.
Postal Bank deposits will always be good while the
United States Government is good. These certificates
legitimately meet the popular demand for "guaranteed
bank deposits," because "Uncle Sam" is custodian of the
deposits, as he is for money-order funds.
"Sec. 24. The board shall cause to be prepared and
printed for the general public simple tables showing the
value of $10 or other sums at compounded interest for
days, months, and years at various rates of interest, such
as will be useful to depositors."
This will be a matter so simple that any intelligent
person can know the value of the certificates he owns.
What are the net earnings of the Postal Bank will
quickly be known, will be steadily the same, or only
slightly or gradually varying from month to month, and
will be published continually in papers and periodicals.
Of course, it will be the smaller certificates, $10 and
50 PEACE AND PROSPERITY VIA
less, which do not on their face bear interest and are al-
ways worth par, which will mainly pass from hand to
hand. Larger interest bearing certificates will pass prin-
cipally in the same manner as the ownership of United
States bonds passes, the market value of which is known
every day.
"Sec. 25. Needless expensive records and statistics
shall be avoided, but the Industrial Savings Board shall
provide for such as may materially serve the interest of
depositors and enable the board to annually report to
Congress such information and recommendations as may
be of service to Congress."
"Sec. 26. To the extent that the mails shall be used
in facilitating the business of the Postal Savings Bank,
either by the bank itself or by its patrons, the In-
dustrial Savings Bank, shall provide special stamps for
free use of the mails, keeping records so that approxi-
mately the actual cost of such postal service shall be paid
by the Postal Savings Bank to the Post Office Depart-
ment."
These provisions are matters of simple sense and jus-
tice, and encourage the most liberal use of the Postal
Bank. Such use will be principally local, or within the
county, and the actual cost of postal service for each
transaction nearly infinitesimal ; but whatever the cost is
it will be paid by the bank at the expense of the bene-
ficiaries, the depositors, and borrowers, and not of the
taxpayers in general. This principle is maintained
throughout the Industrial Savings Act.
"Sec. 27. The sum of $1,000,000 is hereby appropri-
ated for any necessary expense, in the discretion of the
Industrial Savings Board, in the rapid development of
the Postal Savings Bank, the sum used to be considered
only as an advance and to be repaid to the Treasury, with
JUSTICE AND PRACTICAL SENSE 51
interest thereon at 3 per cent per annum from the profits
of the Postal Savings Bank, which is to be made self-
sustaining without subsidy or other charge against tax-
payers/'
"Sec. 28. All provisions of an act to establish postal
savings, etc., approved June 25, 1919, and of amendments
thereto not inconsistent with this present act, shall con-
tinue in force, and all other provisions are hereby modi-
fied or repealed, as are all other acts of Congress incon-
sistent herewith."
"Sec. 29. To the extent that certificates in Postal
Savings Banks crowd out of use forms of paper money
now in use, causing the depreciation of the market price
of bonds of the United States used to secure their circu-
lation, below par, the Treasurer of the United States
shall purchase or redeem such bonds at par, issuing, so
far as may be necessary to do so, other bonds of the
United States bearing higher rate of interest and market-
able at or above par."
This provision also is a matter of simple justice to
bankers who have invested in such bonds because of the
currency advantages they gave. The United States re-
ceived par for the bonds and the consideration for the
use having in part terminated, the Government should
pay par for them.
Never have justice, patriotism, necessity, and business
sense united more emphatically than in this Industrial
Savings Act. It establishes a new and immense reservoir
of capital on which all people and all institutions posses-
sing requisite security may draw on terms of exact equal-
ity— a reservoir from which fresh streams of credit will
issue to expand and multiply the channels of production,
manufacture and distribution. The element of personal
rivalry will not be known. A man, although he may
offer perfect security, will not be told at the Postal Bank
52 PEACE AND PROSPERITY VIA
that he can not be accommodated, because he has not
been depositing there or does not belong to a certain
business clique. The fact that this tremendous volume
of credit is loanable at not more than 5 per cent will
bring down and regulate interest charges everywhere.
It will mean the economic independence of the American
masses. The American people possess the means of cre-
ating this beneficent institution. They should demand
its immediate erection.
Unshackle the Postal Savings Bank. Let the people's
bank serve the people.
SENATOR SHEPPARD'S ARGUMENT
In the U. S. Senate, August 14, 1917, Hon. Morris
Sheppard of Teaxs presented the "Industrial Savings
Act," with the illustrative and explanatory notes (both
here slightly revised and somewhat extended) and the
following introductory argument:
"No step could be more vital to the successful conduct
of the war than the conservation of the financial re-
sources of the nation. The nations engaged in the pres-
ent world conflict are straining every energy to obtain
funds with which to continue the struggle. The most
powerful aid yet rendered by the United States to its
allies has been in the way of enormous loans.
As a part of its war program the United States Gov-
ernment recently called on its people for a loan of $2,000,-
000,000 at 3^2 per cent. Another loan is to follpw and
still another as the war goes on. To-day no one may see
the end. Congress has already authorized the Govern-
ment to negotiate loans to the extent of $7,000,000,000.
In addition, taxes are being imposed which reach into
the billions and these are to be followed by others as
the necessities of the most stupendous war of history
develop. Furthermore, the cost of living has soared to
appalling heights.
JUSTICE AND PRACTICAL SENSE 53
Any method, therefore, by which the financial re-
sources of the American people or the American Gov-
ernment may be husbanded and multiplied will be of infi-
nite value. In fact, it will be one of the determining
weapons of the war. Men say that the aeroplanes will
win the day, but behind the aeroplane must be money.
Men say we must have modern guns and an ample sup-
ply of munitions and other equipment of the latest and
most effective type. Behind all these must be money.
Men say, and say properly, that our soldiers must be
carefully equipped and properly fed ; but before this can
be done money must be had and in quantities never be-
fore realized by the human mind in this connection.
Hand in hand with man power goes dollar power. In
fact, at every stage in the prosecution of the war a sup-
ply *of funds is an essential prerequisite.
Now, it is a well-recognized fact that the principal
form of money to-day, both in war and peace, consists
in paper evidences of credit, based on the confidence of
ultimate payment in metallic money — mainly gold. The
existing banking system, in mobilizing metallic money
and in erecting thereon a tremendous structure of credit,
has made modern civilization and development possible
and is rendering a service to the world as indispensable
as it is valuable. Efficient as it is, however, the present
banking system in the United States had mobilized only
about half the actual money in the United States at the
opening of the present war. Since the war began about
$1,000,000,000 in gold has been driven to the United
States to aid in financing the enormous purchases made
here by other countries. Most of this billion dollars will
be attracted back to these countries after the close of the
war by the higher premiums which they will pay for the
means of reconstruction. This makes it all the more
necesary that we should mobilize all the actual money
in the United States, or as much of it as possible, in or-
der to be the better prepared to meet the strain on our
54 PEACE AND PROSPERITY VIA
credit system which will undoubtedly follow the disap-
pearance of this foreign gold. Since it came here our
credit system has expanded in the usual proportion. That
proportion is about 7 cents of gold to every dollar of
credit. When it goes, part of our credit structure will
lose, and perhaps suddenly lose, its foundation. Therein
lies danger.
In permitting about two billions of actual money to
remain outside the banks, outside the channels of credit,
we are allowing a Niagara of power to be wasted.
How may that money be drawn from the hiding places
and made to serve the country by enormously increasing
its credit facilities and its financial power? The banks
have failed to get it, although our American bankers and
financiers are among the earth's ablest and best. Evi-
dently some other form of banking must be tried, in addi-
tion to, and in connection with, that we already have.
Banking in one sense is the manufacturing of credit, and
credit in the modern, practical sense means a promise to
pay, based on metallic money, chiefly gold.
The answer is, let the United States become a perma-
nent banker for the American people. Unshackle the
Postal Savings Bank. Let the people's bank serve the
people.
Recently the United States asked the people to lend
it $2,000,000,000 at 3y2 per cent. The response was im-
mediate and inspiring. The people deposited that amount
at once with the Government, because of absolute confi-
dence in the safety of the transaction. Why not keep
the Government depositary open permanently to the peo-
ple? Instead of paying $l/2 per cent interest on multiplied
billions at stated periods, why not give all the people, so
desiring, an opportunity to redeposit the interest due
them, and thus to a great extent stop a drain on the
Treasury and on taxation that promises to be tremen-
dous? Most of the subscribers to the war loan will re-
deposit the interest in some bank, anyway.
JUSTICE AND PRACTICAL SENSE 55
Do you say that this is putting the Government into
the banking business ? The Government has already en-
tered the banking business. Since we established the
Postal Savings Bank only a few years ago, 700,000 de-
positors have placed therein $125,000,000 (since grown
to over $140,000,000) . And this has been done in spite
of the fact that these depositors get only 2 per cent in-
terest, while the ordinary private savings bank pays 3 per
cent, and sometimes more — in spite of the fact that a
number of restrictions are thrown around the postal de-
posit which the private banks do not impose at all — in
spite of the fact that the Government redeposits these
$125,000,000 in the commercial banks at 2% per cent,
the banks lending it to the people at anywhere from 6
to 12 per cent, and at times more.
The Government practices an enormous injustice on
its (near) 700,000 depositors. It pays them only 2 per
cent for what is worth at least twice that much, keeping
in mind the average interest rate on money. But the
Government has demonstrated two facts of lasting sig-
nificance. It has shown that the cost of mobilizing money
through the Postal Bank is not more than one- fourth of
1 per cent, and it has earned in this way over $2,000,000
of profit on the limited business already done.
Nearly half of the population of the State of Victoria,
Australia, is represented by depositors in the Govern-
ment savings bank of that State. Over half of the peo-
ple of the State of Connecticut is represented by deposi-
tors in the savings banks of that State. It is not un-
reasonable to suppose that the same or a greater ratio
would be maintained as to depositors in a United States
Postal Savings Bank offering 3^ to 4^ per cent interest.
This means that the unshackled Postal Savings Bank of
the United States would have from forty-five to fifty-five
million depositors, and with the same ratio of deposits
as is maintained by the savings banks of New York
City to its population, the United States Postal Savings
56 PEACE AND PROSPERITY VIA
Bank would have deposits of anywhere from twenty-
seven to forty billions of dollars. Incidentally let it be
remarked here that with deposits of forty billions the
United States Postal Bank could have financed the entire
$7,000,000,000 bond issue recently authorized by Con-
gress by an investment of less than one-fifth of its de-
posits, an operation that would have been considered
entirely safe and conservative under the strictest stand-
ards. At the same time the Government would be earn-
ing the interest due the people with the money they had
deposited, and would be paying them a higher return than
they must now pay by onerous taxation. What kind of
business judgment is it that prevents us from taking a
step so simple, so just, so logical as that of unshackling
the present Postal Bank?
Savings banks in the United States easily earn 3, 3^,
and 4 per cent for depositors. Their loans are made in
accordance with laws specifying the nature of the secu-
rity with such minuteness that the duty of making the
loans is almost a purely ministerial one — simply that of
tracking the law. Shall it be said that similar laws could
not be enacted for the United States Postal Banks?
Are not the 700,000 depositors of $140,000,000 in the
Postal Savings Bank entitled to what this money will
earn on security recognized and defined by law — security
recognized as of the safest sort — such security as every
savings bank gets for loans, earning an interest rate twice
as high and more than that now paid the depositors in
the Postal Bank?
At this point let us summarize what has gone before:
1. The response to the call for the recent Liberty Loan
shows the readiness with which the people will deposit
funds with the United States. It is also an encourage-
ment of the savings habit that will be worth as much to
the people as the amount of the loan.
2. Why not make the opportunity of depositing with
JUSTICE AND PRACTICAL SENSE 57
the United States permanent and unlimited? The peo-
ple would then have a depositary which could never fail,
which would hold their absolute and lasting confidence.
A perpetual encouragement of thrift and saving among
the people would then be offered — the most powerful that
could be imagined.
3. Existing banks have gathered for use in the de-
velopment of the country only about half the actual
money in the United States. Allow deposits to any amount
in the United States Postal Savings Bank, and the
remaining billions of money now scattered throughout
the land in private and secret places would be assembled
and would form the basis of a mightier credit structure
than has yet been dreamed. The resulting impetus to
business, to economic advancement, and to general pros-
perity could not be estimated.
4. Let the deposits thus assembled be loaned under
laws defining the security, as is now so successfully done
in the mutual savings institutions of the various States.
Let the interest thus earned be returned to depositors,
less expense of management, which expense has already
been shown to be not more than one-fourth of 1 per cent.
5. Money at 3^, 4, and 4j/2 per cent would then be
comparatively plentiful, where first-class security could
be furnished. Interest rates throughout the country on
funds for necessary and legitimate processes of produc-
tion and growth would fall. Rural-credit systems would
be made possible. A new reservoir of mobilized money
would be added to that already established by existing
banks, and the financial resources of the country would
be developed to the highest point. Existing banks may
utilize this reservoir by making loans of a portion of the
funds comprising it, which loans they guarantee, receiv-
ing a small commission on the interest, and by acting as
agents for receipt of deposits.
6. The nation would be prepared not only for finan-
58 PEACE AND PROSPERITY VIA
cing the war, for financing the people on the lowest pos-
sible terms, for securing to them an adequate and safe
return on their savings, but for the problems that will
follow the war, for the shock which the withdrawal of
immense quantities of basic money will produce.
7. Why should not a citizen receive for his savings all
that such savings will earn when loaned on the best se-
curity? Why should not a citizen, possessing proper
security, have ready and fair access to the assembled
savings of the people for the essential processes of home
building and production of life's necessities? These pro-
cesses, properly safeguarded, afford in themselves the
best security known to men.
With these preliminary observations I now direct at-
tention to the bill I have introduced for the unshackling
of the Postal Savings Bank."
Is not Senator Sheppard's argument, above presented,
and even more fully in the notes accompanying the bill,
here reprinted, absolutely convincing — unanswerable?
No attempt, or pretense, has ever been made in the
Senate or elsewhere, to make intelligent answer to it. The
committee to which the bill was referred has never given
it any hearing or consideration — it has been simply
"buried"— "pigeonholed" !
"Silence" seems to be recognized as the only "safe"
way of opposing it. Discussion must certainly result in
victory for justice to industrial wealth-creators : the "man
with the hoe" and the tractor, the plane, the hammer, etc.
JUSTICE AND PRACTICAL SENSE 59
A BIG NINETEEN HUNDRED AND TWENTY
ISSUE?
"Hindsight," Foresight, Shortsight
How near will be the "fit" to 1920 election will be the
following, most of which appeared in a national paper
just after the election of 1916?
It would be next to "silly" to point to a fundamental
error of both parties in the recent election campaign were
it not that doing so points to the wise course for the
future.
Instead of keeping the country on the ragged edge of
uncertainty for several days, one party winning, the
other losing by a narrow margin, either party, had it been
guided by the courage of statesmanship instead of largely
by the cunning of partisanship — either party could have
won victory overwhelmingly by the adopting and hon-
estly, vigorously exploiting one little neglected "plank" —
the shortest, strongest to carry voters ever forming a
part of a political platform: "Unshackle the Postal Sav-
ings Bank" !
Not one voter in one hundred (perhaps one thousand
could be safely said) knows what that means, but nine
voters out of ten, when obvious facts are pointed out —
justice, the square deal on one side, wrong, cunning,
short-sighted greed on the other — nine voters out of ten,
if not nearer ninety-nine out of one hundred, would
stand on, stand by and fight for that "plank."
Those five words point not only to an economic issue
of prime importance, larger, more far-reaching, infinitely
more beneficent than even the Federal Reserve Bank bill
60 PEACE AND PROSPERITY VIA
(not antagonistic to that), but they point also to a moral
issue — one of plain equity for benefit of millions — and
"the people" are always unhesitatingly, vigorously right
when a moral issue is plainly put before them.
Here is an issue that appeals to both conscience and
pocket of every man whose "profit" is not in "chaos"
(there are some such) rather than in general prosperity.
We now have a Postal Savings Bank — a puny, sickly,
"ham-strung" thing which some would like to see
"killed," but it is so strongly guarded by the good will
of the people that no "politician" — much less a "states-
man"— would dare propose the law's repeal.
The heads of this Postal Bank occasionally issue a
"bragging" bulletin telling of the great "success" of the
bank — nearly 600,00 depositors, approaching $100,000,000
deposits — covering the entire United States, this!
Two, single, almost "unknown" savings banks of New
York City each has larger deposits — over $100,000,000
— and the total savings deposits of that one city are about
$2,000,000,000 (two billion). "Success!!"
What does our present (our — you and I voters — are
"partners' in this ignominious "use" made of "Uncle
Sam!") Postal Bank "do to" its depositors?
It pays them two per cent interest (the last Congress
ignobly provided that no interest should be paid on some
millions of deposits!). And it cunningly, plausibly
"manipulates" those deposits so that 95 per cent of them
are turned over to bankers only for two and one-quarter
per cent interest — to bankers only, who loan that money,
commonly at six per cent, on the average to farmers at
over eight per cent !
An "unshackled" Postal Savings Bank would, accord-
ing to precedent of one such state bank (in Australia),
have about 45,000,000 depositors, instead of a petty 600,-
JUSTICE AND PRACTICAL SENSE 61
000, as now, and instead of less than $100,000,000 depos-
its now, would have over $40,000,000,000, according to
actual precedent in New Ybrk City and many a smaller
city.
Don't imagine that an "unshackled" Postal Savings
Bank is "antagonistic" to bankers, or to any worthy body
— or imagine that bankers generally are charged with the
"iniquity" of "manipulating" the present "shackled" Pos-
tal Bank law.
Bankers with brains, foresight, conscience and patriot-
ism (generous supply of all four cordially recognized)
will, it is believed, see, not antagonism but co-operation
and help in the unshackled Postal Bank. Bank prosper-
ity goes naturally with industrial prosperity, which this
will enormously stimulate. "Patriotism" — this will pro-
vide resources of probably $5,000,000,000 to $10,000,000,-
000 for the United States Government at 3 per cent, in
case of need, without perceptibly trenching on commer-
cial funds. "Conscience" — it is not believable that honor-
able bankers approve of the way the Government is
"used" to take advantage of the timidity and ignorance
of trusting citizens (present or prospective) by loaning
their petty savings at two and one-quarter per cent (as
now under present Postal Bank law) when thousands of
individual bankers would be glad to handle the whole of
them, adequately secured, at nearly double that interest.
For those who have assumed the recent "Federal Farm
Loan Act" sufficient financial legislation in that line, these
points are made:
(a) This act will "mobilize the money" necessary for
the success of that act.
(b) However efficient (many doubt) that act may be,
it does not at all obviate the moral necessity of wiping
out the ignominy and shame of "manipulating" the petty
62 PEACE AND PROSPERITY VIA
savings of about 600,000 present depositors in the Postal
Bank, so that they receive only about one-half the inter-
est their money is worth in the open market.
(c) Nor does it right the wrong and injustice to prob-
ably 80,000,000 would-be depositors in or borrowers from
the Postal Bank, now excluded from it by their very in-
telligence— they "know too much" to be "fooled" by a
contemptible "two per cent."
THE NUTSHELL OF IT ALL
Make every post office, every letter carrier, servants
of the Postal Savings Bank, as they now serve for money
orders, registered letters and parcel post — equally as open
to all, without limit, as for letters and parcels.
Of course the Postal Savings Bank will give deposi-
tors, not the ridiculous two per cent interest, as now,
but whatever the deposits can be safely made to earn, as
in other savings banks — three and a half to four per cent
— or possibly nearer to seven per cent, as in average
building and loan associations.
Of course the Postal Bank will loan its deposits, not to
bankers only, as now, at the wicked two and one-quarter
per cent interest, but to whoever (for legitimate use) will
give adequate security, and the most interest, as in other
banks.
JUSTICE AND PRACTICAL SENSE 63
Sample "$10 Bill" of proposed Postal Savings Bank
"Money," provided for in Industrial Savings Act, the
words "For Uncle Sam and World Peace" being printed
in large type, over the face of the bill — size and form of
ordinary currency.
(Face of Bill)
Issued 1918 Jan. Feb. Mar. April May June July Aug. Sept. Oct. Nov. Dec.
THE UNITED STATES POSTAL SAVINGS BANK
HAS RECEIVED FROM
(Here the depositor will write his signature, or not, as he pleases, this
identifying his signature on the back when he indorses and passes it.)
TEN DOLLARS
(or another specified sum)
and will pay the same, together with interest earned
(probably 4 per cent, per annum or more), the interest
compounded semi-annually, on surrender hereof properly
indorsed.
If no signature is written on face, indorsement is needless and pay-
ment will be to bearer. Interest shall begin from the first day of the
month indicated by cancellation in margin and shall terminate the last
day of the month preceding payment; also shall terminate five years
from date interest begins, before which time this may be exchanged for
a new issue of current date. For other details, see the other side.
Issued at Washington, D. C., but procurable or cashable at any Post
Office or authorized Bank. Signed by authorized representative of
"TNCLH SAM."
64 PEACE AND PROSPERITY VIA
(Back of |10 Bill. Poatal Bank "Monty")
If you have written your signature on face hereof, for payment or
transfer, indorse it here as you do a back check.
You may get certificates like this, in exchange for any
bankable funds, wherever you can get postage stamps ; get
any denominations wanted: 25 cents, $1, $5, $10, $50,
$100, $1,000 or larger; you can cash them at any post
office or wherever you can cash bank checks ; but you do
not need cash, for this will buy anything gold will buy,
or buy gold itself — is better than gold because it makes
your money, in pocket, cash drawer or safe, draw interest
for you while you hold it, for the next man when you
pay it over.
Money deposited in Postal Savings Bank, for these cer-
tificates, will be loaned :
In times of peace not to exceed 25 per cent of balance of depoait*, to
the U. S., if wanted, at 3 per cent per annum.
In times of war any part, or all. up to 90 per cent, if wanted, to the
U. S., at 4 per cent per annum.
Otherwise, loaned to anybody Riving good security, satisfactory to
U. 8. Treasurer, always to the highest bidder, preference being given
to the smaller borrowers, $100 to $10,000.
Certificates similar hereto, of denominations of $5 and
under, but drawing no interest, will be issued, and re-
issued, if desired — though they earn the holder no inter-
est, on their face, they do earn interest, for all depositors
holding interest-bearing Certificates, because the money
they represent is loaned for interest.
These certificates LEGITIMATELY meet the popular demand for
"guaranteed bank deposits," because "Uncle Sam" is custodian of the
deposits, as he is for money-order funds, and thus
This Unshackled Postal Savings Bank will have over
80 million depositors — loyal backers of "Uncle Sam" ; 100
billion dollars or more, for war or peace — justice, econ-
omy, efficiency far beyond Liberty Bonds (marketable
only at a discount! — no discount ever on these Certifi-
cates) or W. S. S.
JUSTICE AND PRACTICAL SENSE 65
LAND-RENT, MONEY-RENT AND RURAL
CREDITS
Land-rent is the annual price a tenant pays for the
use of another man's farm or other real estate.
Money-rent is the annual price (interest) a man pays
for the use of another man's money.
When a man rents a farm and he deals, not with the
owner, but with an agent or broker, the agent gets a fee
or commission of, possibly, 5 per cent of the first year's
rent. In the big cities, for big high-rent buildings the
agent gets, commonly, only 2 per cent of the rent — we
have heard of as low as 1 per cent instead of 5 per cent.
The Federal Farm Loan Act provides for twelve banks
to act as "agents" in "renting money" for farmers. These
banks are to get a "commission" for their services, as fol-
lows, under terms of the law as originally enacted :
If the bank gets the money at 4 per cent, the farmer is
to pay 5 per cent — that is 1 per cent commission, which
is 25 per cent added to the cost of the "money-rent" ; not
of the first year only, but a perpetual annual commission
during the entire life of the loan, whether five years or
thirty-five years. When the banks get money at 3 per
cent, as they will in normal times (after the war), the
farmer will pay a perpetual yearly "fee" of one-third
the "money-rent" during the entire life of the loan.
In the "Robber Lair" of Wall Street, on the Stock
Exchange, a broker will get for you $10,000 in railroad
bonds for a commission of one-eighth of 1 per cent, or
$12.50 — not annual or perpetual, but just one payment of
$1.25 per $1,000.
The Federal Farm Loan Act (for short F. F. L. A.
herein) is here; it actually improves conditions as they
were and it is wise to "make the best of it." We have
heard of no Congressman, or other friend of the act,
66 PEACE AND PROSPERITY VIA
who considers it as "final" or "ideal," only the "best
that could be got at the time." This paper is not to an-
tagonize, but to suggest improvement.
The Industrial Savings Act proposes to give the bank
acting as "agent" in "renting money" for farmers, not
25 per cent or 33^ per cent, but not to exceed 5 per cent
of the interest; and the "Board" which is to administer
the act may reduce that but may not increase it. The
chief reason for the difference in "commissions" to banks
under the two acts is that the F. F. L. A. establishes
special banks which can do no other business, whereas
the Industrial Savings Act uses the facilities of all exist-
ing banks in good standing to which the 5 per cent com-
mission becomes mostly that much extra "income" with
almost nominal "outgo."
In "mobilizing" money" for farmers, the Industrial Sav-
ings Act uses the facilities of existing banks and those
of the entire Post Office Department. It unshackles the
Postal Savings Bank and according to precedent in New
York City and many another smaller city, that alone would
soon mobilize probably over $40,000,000,000— ample to
finance farmers and oil all wheels of industry and com-
merce.
Study the Industrial Savings Act and see the many
ways in which it improves on — supplements — the Federal
Farm Loan Act, which it does not antagonize, but will
help by mobilizing the money necessary to its success.
Another point of very great importance in regard to
the Industrial Savings Act is that it is in no respect
"class legislation" but serves equally all classes — workers
of every kind, merchants, manufacturers — everybody.
JUSTICE AND PRACTICAL SENSE 67
A TREMENDOUS MISTAKE!
The greatest mistake, probably, made by the majority
of the worthy host of those who seek human betterment,
is the assumption that ''legislation is necessary."
It is rarely true!
Without one new law to be passed by the nation or
any state, honest workers have it now in their power to
work their economic will, within the limits of what is
wise and right. It is one particular object of this book
to demonstrate this.
Just ORGANIZE ! Standard Oil and the Steel Trust
exist in spite of, not because of, legislation. Organize as
they do, not "for talk," but for "business." "Conven-
tions" and "Leagues," for agitation and "hot air," not
their method.
Farmers and consumers, when they will, can equitably,
wisely, legally organize strength far beyond the power
of those giant forces.
"A Square Deal in Milk" is "a practical parable"
showing one way to organize.
Emphasizing the thought "legislation not necessary,"
it may seem out of keeping to put in the very front the
demand for honest legislation for the Postal Savings
Bank, and legislation for "Transportation : National Own-
ership ; Private Operation."
It is not necessary in the case of the Postal Bank, for
"A Square Deal in Milk" shows plainly one way of "mo-
bilizing money" and utilizing credit possibly fully as
effectual— it is "not necessary" but it is RIGHT, and
the people are entitled to have it — and it is in their power
to exact it, when they will to do so by the means of even
"three cents worth of patriotism" for each. Read on,
and you will so admit.
68 PEACE AND PROSPERITY VIA
A SQUARE DEAL IN MILK
Evolution of the Industrial Republic
(Both Producer and Consumer of all products of in-
dustry should note that the details of this "milk deal"
illustrate what is practical in other lines as well. Milk
prices quoted were prevailing prices at the time paper
was written, and illustrate principles as well as would
current quotations.)
About two hundred New Jersey farmers center about
a village railroad station forty miles from New York
City. The great suburban cities of Elizabeth, Newark,
Jersey City, and others, lie nearer, and Philadelphia is
a little farther away. Their milk product goes to all of
them, selling to consumers rarely as low as 8 cents a
quart, generally for 9 cents, or even more.
In the month of June the farmers are receiving only
2l/2 cents a quart, in July 2^4 cents, in May and August
3 cents. The cost of freight is under l/^ cent a quart.
To these farmers the extraordinary difference between
the price to the producer and the price to the consumer
seems out of reason, and they decide to make an effort
to reach a direct SQUARE DEAL WITH CONSUM-
ERS in manner as follows:
A "Producer and Consumer Corporation" is organ-
ized, which we call "The New Jersey Industrial Repub-
lic." The farmers subscribe the necessary capital stock
to start the business, $10.00 up to $100.00 or more each;
50% of the capital stock is set aside to be sold to con-
sumers when they want it, the ownership of stock being
strictly a "privilege" and not a "requirement'' from
either producer or consumer. The corporation sells to
consumers at the customary retail price, 8 or 9 cents,
more or less. Any profits are divided monthly between
JUSTICE AND PRACTICAL SENSE 69
producer and consumer after allowing 10% per annum
dividend on capital stock.
To illustrate: A farmer producing 80 quarts of milk
a day, or 2,400 a month of thirty days, at the price of
3 cents a quart, gets $72.00 a month. Two hundred far-
mers with that average is 480,000 quarts, and $14,400
monthly for the farmers, wholesale price. A consumer
using 2 quarts a day at 9 cents pays $5.40 a month, and
there are 8,000 customers of that average to use the
product, paying $43,200 monthly retail price. Assuming
the average price to be 3 cents wholesale, 9 cents retail,
and expense of delivery 3 cents (it is believed that
the cost can be reduced to less than this), leaves 3 cents
a quart profit to be divided, or $14,400 dividend, monthly.
Allowing 10% per annum on $20,000 capital equals
$166.67, and leaves $14,233.33 monthly to be divided
between producer and consumer, which is a little under
25% on the gross business done, or $17.78 extra a
month, $213.36 a year, for the 80-quart farmer; $1.33 a
month, $16.00 a year, for the 2-quart consumer. While
the increase to the farmer is only about 24 cent a quart,
it adds probably at least 100% to his profits — indeed it
is unlikely he makes 1/4 cent on 3-cent milk. The con-
sumer "rebate" gives him a price of about 6^4 cents a
quart instead of 9 cents. If cost of delivery can be
reduced to 2 cents a quart, or even less, as thought pos-
sible, increase of profits, or savings, is substantially more,
for both producer and consumer.
The capital stock "privilege" figures out in a similar
way. As the corporation sells strictly for cash, $20,000,
possibly even $10,000, working capital, is thought ample
for the business, which, to begin with, the farmers have
to supply, an average of $100.00 each. As the capital
stock is to have a dividend of 10% per annum before
any dividends to producers or consumers, its ownership
(with proportionate voice in control, of course) will be
a "privilege" all right, to those who know it, and that
70 PEACE AND PROSPERITY VIA
privilege will be in proportion to the business each does
with corporation; a 40-quart-a-day farmer will have
a right to own one-fifth as much stock as a 200-quart
farmer. A consumer who pays $5.40 a month for miik
will have a "right" to own stock in similar proportion
to the farmer who gets $72.00 a month for milk. But
the small consumer's "right" is for so small an amount
of stock that few of them are likely to "claim" it — more
of them would be likely to invest if the stock could be had
in blocks of $100.00 or multiples. So in practice the capi-
tal stock is likely to be mostly in the hands of the farmers
until the business is well established.
If $20,000 working capital is not ample, and $40,000
is required, please note from the foregoing monthly
"dividend" illustration that only about $167.00 goes to
capital compared with over $14,200 to producer and con-
sumer.
If the necessary capital is not taken in small amounts,
it may be sold in larger (10% dividend-paying stock will
not go begging) , but :
It is an essential fundamental principle, guaranteed
by its original charter and printed on the shares of
stock, that the corporation always reserves the right
to buy at par at the close of any fiscal year from the
holder any portion of his own shares in excess of what
he has a "right" to own by reason of his dealing with
the corporation.
Example: If total capital stock is $50,000, and the total
amount paid producers, plus the total amount received
from consumers, is $500,000, that is a ratio of ten to one,
and a producer of $800 worth of milk would be entitled
to own, by purchase, at par, $80.00 in capital stock ; a con-
sumer of $60.00 worth of milk would be entitled to own
$6.00 in stock, and so on. Any shares in "excess" of that
ratio the corporation has a right to buy, at the close of any
JUSTICE AND PRACTICAL SENSE 71
fiscal year, and to sell at par to those who own less shares
than they are entitled to purchase.
This provision will inevitably keep the power of con-
trol of the corporation in the hands of producers and
consumers, making the "cornering" of capital stock
and control and manipulation of the business by "capi-
talists" impossible.
Also, the large 10% dividend to capital guarantees its
ample supply, and is no detriment to the producer or
the consumer who has a right to own his just pro rata
of stock; he simply pays from his one pocket into his
other pocket that handsome 10 per cent.
Organization being completed and capital paid in or
subscribed and subject to call, the first move is to buy
or build a suitable creamery, and thoroughly modern and
scientific equipment, and to put it in charge of a compe-
tent, experienced manager. Milk will be "tested" for
solids, cream and cleanliness, and must reach specified
standards to be accepted at all, and receive the lowest
wholesale price. For tests showing product above the
necessary standard, graduated premiums will be paid,
milk above a specified high standard to be kept separate
and retailed as "certified" (or under other special name)
at a higher price. As the corporation will sell only for
cash, farmers will receive their pay when they want it,
instead of the middle of the month, for the previous
month, only, as is customary under existing conditions.
As the "two hundred farmers" are the only patrons of
an existing creamery, they naturally buy it, instead of
building a new one, probably taking over the present em-
ployees— possibly also making an equitable and mutually
satisfactory co-operative capital-and-sales arrangement
with the present creamery owner.
The next move is to get the milk to the consumer at
the least expense possible and get his money (of course
72 PEACE AND PROSPERITY VIA
it already has a market, which is taken over). Let us
see if modern, "scientific management" can not greatly
improve upon existing methods. Now, the usual way is
for a man and a one or two horse wagon to spend a large
part of a day in distributing possibly 80 quarts, or even
200 quarts, driving "miles and miles," crossing and re-
crossing the tracks of dozens or scores of other milk
men, delivering "on credit" in most cases, collecting, if
he can, monthly, or when he can — and paying the farm-
ers (sometimes) once a month.
The N. J. Industrial Republic Corporation, though it
may to an extent temporarily continue antiquated meth-
ods, will invest soon in modern, scientifically equipped
motor milk trucks. A milk tank is built on the principle
of a gigantic thermos bottle (in different shape), except
that instead of the vacuum the space between the inner
and outer walls will hold ice water. The tank will be
divided into three compartments, one large, for standard
milk, two smaller for cream and certified milk — its total
capacity will be at least a ton of milk, probably over 2,000
quarts. There will be an air pump, worked by the motor,
which will put air pressure into the milk tanks (scientific
equipment will wash and cool the air) which will con-
tinually aerate the milk, forcing, to the last drop, the milk-
through accurate-measuring meters and faucets. The
outside air and dust has no possible access to the milk.
The tanks are of course cleansed with scalding steam,
then cooled with ample running water whenever the milk
supply is renewed. On top of the tank an ice-chest will
serve to keep cold the cold water with which the between-
walls space is filled when the milk supply is taken in —
the ice water entering by a tube at the bottom, the warm-
er water gradually being drawn out at the top.
Two men and a boy will be the "team" to run the
equipment, a chauffeur, a man to draw the milk and take
the pay, and the boy to expedite service of customers.
The truck will be almost continually on the move, high
JUSTICE AND PRACTICAL SENSE 73
gear or low gear as need to be, serving every house it
passes, instead of one house in ten or forty as do the
one-horse wagons — from early morn till late eve. It
will have a regular route, and time so accurate, that cus-
tomers will know when to expect, and be prepared to
be promptly served — 'they will know it is to be prompt
service or "get left." The corporation will supply metal
or printed milk checks, $1.00 ( ?) value at a time, giving
with each $1.00 value a "dividend check" to be redeemed
in cash or in milk checks once a month.
Is it not clear that the corporation can by such equip-
ment and methods supply better milk, give more satis-
factory service, and at a fraction of the cost of delivery,
than is possible by old methods ?
How and where to find "consumers" to serve in a
"compact body" instead of by present "scattering" and
"guerilla" methods, is the next question.
It would seem natural to begin as near the producer's
home ~s possible, with the county town, and gradually
move toward the larger cities as the ground is thoroughly
covered, and the corporation resources grow.
The county town of about 8,000 population — say 1,600
families, estimating 2 quarts of milk a day to the family,
requires say 3,200 quarts a day. They are now served
by probably thirty or forty or more men, most of them
producing their own milk, the marketing of the milk
rather than the value of the "milk route" being the prime
consideration. Two or three of the corporation's "milk
trucks" (instead of forty wagons) can cover the ground
and do it better. The natural and expedient thing would
seem to be for the corporation to buy out those forty
"milk routes," the forty owning farmers coming into the
corporation as "partners" with the original two hundred
"charter members." The forty will be so greatly advan-
taged by the improved efficiencies and economies of the
corporation, that small, if any, "bonuses" for "good will"
will be necessary to buy the "milk routes."
74 PEACE AND PROSPERITY VIA
Evidently the "county town move" by the program
outlined makes small market for the product of the
original two hundred "charter members" — it is simply
necessary, in order to get that market, to "move on" to
one or more of the big cities, and start ten or fifteen more
milk trucks to market their 16,000 quarts of milk a day —
developing from the corporation's existing market. In-
deed, moving to the county town not only takes in the
forty local milk-dealer farmers, but by the "efficient" ex-
ample incites several hundred other milk producing farm-
ers centering about the town to want to join the corpora-
tion. And there is no reason why they should not join,
but every reason why they should. The absolute equity
and common-sense of the plans of the corporation serv-
ing mutually all parties in interest, makes it natural and
reasonable that all producers and consumers within
tributary territory centering about great cities should
join the corporation. One great corporation, on the sim-
ple, equitable plans indicated, would be far better than
scores or hundreds of smaller corporations, which would
almost necessarily to some extent compete with each
other, and overlap, as do the one-horse milk men now.
When the corporation does enter the big cities, it
should always be done systematically, completely cover-
ing such territory as it covers at all, at least offering
to buy out on fair terms any "milk routes" in the terri-
tory to be covered. The consumers' right of "rebate"
of an equitable share of the profits on the milk he buys,
and 10% dividend on any capital stock he chooses to
own, makes every customer an active ally, to influence
other customers to come in — and obviously an approxi-
mate "monopoly" of all business within certain territory
is essential to the least cost of delivering the milk — which
is now a larger item than the original cost of the milk
itself.
The one, practically sole, object of the "two hundred
farmers" was to market their milk product at better prices
JUSTICE AND PRACTICAL SENSE 75
— possibly a few of them might have "dreamed," with a
faint warming glow in the region of the heart, of altru-
istic service of certain city consumers, giving them better
milk, and helping them to "cut the cost of living."
But if the corporation can serve them so well in the
matter of milk, why stop at milk ? Why not buy as well
as sell? Feed (to make milk) in car-load lots, would be
the first, natural step — then fertilizers the same way —
then farm and home supplies generally. To make the
largest possible purchases, and consequently the lowest
possible cost for each, the "milk consumers" will natu-
rally join the milk producers, in buying supplies, which
all alike use. The natural consequence is that the cor-
poration not only buys and runs the local creamery, but
it buys the leading local general store, probably putting
the merchant himself in charge, gradually buying other
stocks of the other local stores, cutting out wasteful com-
petition, vastly reducing by "monopoly" for the benefit of
all, the cost of all farm and home supplies.
By this arrangement (the local merchant now "har-
ried" by endless competition of little stores, now inter-
ested, fairly compelled to get from customers the highest
possible prices for all they buy) — the corporation, and
every member and patron of it, makes it to the interest
of the local mercliant to secure for them the least cost
possible, and the best and most economical service pos-
sible for everything they buy. The merchant-manager's
compensation, , and that of every assisting employee,
should be, in part, a small commission on the total
amount of business done, also a small per cent on any
saving in expense of doing the business — thus stimulat-
ing all to do the largest business possible at the least
possible expense.
And gradually by similar co-operative common-sense,
"efficient" methods, the farmers will market all their
products as well as milk — and serve equally well the city
consumers with all the products of the farm — and both
76 PEACE AND PROSPERITY VIA
producer and consumer uniting in the purchase of enor-
mous quantities of the products of the factories will get
them as well as milk at least possible cost.
As the producers have for their convenience and econ-
omy their own local general store which will serve sub-
stantially all their local wants for supplies of all sorts,
so they and the consumers within the "compact" terri-
tory where milk is supplied, will naturally establish their
general store, in this the local consumers probably hav-
ing dominating control of details as the farmers prob-
ably have at the country end. Here all kinds of farm
produce will be supplied, and also substantially all sorts
of other supplies for home consumption. Of course, the
"country store'* and the "city store" (the scores and
hundreds of such stores which will naturally in time
be established) will buy their merchandise together, thus
using such enormous quantities that they will be able to
get lowest possible cost prices — often taking the entire
product of factories. The milk product of two hundred
farmers, average eighty quarts a day ; consumers averag-
ing two quarts of milk, 8,000 families are served. As-
suming an average of $400.00 a year to a family, the
8,200 families require $3,280,000 a year in "home sup-
plies." Of course that group of two hundred farmers
soon multiplies to two thousand or twenty thousand, and
the consumers grow proportionately to eighty thousand
or eight hundred thousand, and the "supplies" wanted to
$32,800,000 or $328,000,000.
Notice that the distinguishing characteristic of this
proposed Industrial Republic Corporation is, that it is
not organised to make money out of "outsiders" but to
sen>e "insiders" and save waste among themselves.
All "outsiders" have opportunity, and urgent induce-
ment to become "insiders" on the same terms as the origi-
nal organizers — thus doing away with the inevitable
JUSTICE AND PRACTICAL SENSE 77
stimulus to "competing" organizations, which prosperity
always incites, under existing conditions.
Thus a "Square Deal in Milk" and a combination of
business common sense, equity, and "scientific efficiency"
will naturally lead to a general very great "cutting of the
cost of living" — besides many other incidental benefits
which will logically follow — as it is proposed to show in
other pages.
FINANCING A SQUARE DEAL IN MILK
We have all heard of the man who "lifted himself by
his boot straps." Never mind the joke on "self help";
if there is to be an "uplift" of the producers and the
consumers, they are the ones to do the lifting — and they
are abundantly able to do it, without outside help, as
we shall see by applying a little common sense to the
matter of financing this milk deal.
It always requires some capital to conduct any busi-
ness. It is estimated that $10,000 capital will be ample
to launch this enterprise successfully, after which fur-
ther capital will naturally be attracted to it for the
growth of the business to any extent desired.
Take note of the leading facts :
The two hundred farmers produce an average of 80
quarts of milk a day each, which equals 16,000 quarts a
day, 5,840,000 quarts a year (cows do business Sundays
and holidays) which at 3 cents a quart to the farmers
brings them $480 a day, $175,000 a year.
Consumers averaging 2 quarts a day, 8,000 families
use the product which at 9 cents a quart taxes them
$1,440 a day, $525,000 a year.
This business is now actually being done, but through
several hundred "middle-men" in several different cities,
in which consumers are widely scattered. By "bunching"
the consumers, and dealing direct, it is estimated at least
78 PEACE AND PROSPERITY VIA
3 cents a quart can be saved in expense of delivery, which
equals $480 a day, $175,200 a year.
Instead of 3 cents saving, estimate even 2 cents and
there is $116,800, over ten times the required capital,
saved in a year, the $10,000 in less than five weeks.
Another present fact: when farmers sell, as they do
now, to dealers, it is the custom for them to get their
pay (sometimes) on July 15th for the month of June,
only, and so through the year giving dealers 45 days
''credit," down to one day, an average of 22l/2 days. Call
it 20 days only at $480 a day, which equals $9,600, pretty
close to $10,000 capital the farmers now actually supply
in form of credit to dealers. But if they sell direct to
consumers, farmers get cash; estimate even 6 cents a
quart (above expense of delivery) and $19,200 is accu-
mulated (as good as "capital") even in 20 days.
It is evidently a very simple matter to raise the neces-
sary capital ! This is on the basis of the farmers supply-
ing all the capital, which they would have to do till con-
sumers are "shown" (like the "man from Missouri")
when they will certainly demand their "right to their
share" of the capital stock — the ownership of capital
stock, to have "10 per cent dividends" being a "privi-
lege" and not a "requirement."
The natural way of raising the $10,000 capital would
be as follows:
The milk product is 16,000 quarts a day ; capital want-
ed $10,000. That is in the ratio of 16 quarts of milk a
day to $10 capital. So the farmer who produces 80
quarts a day would subscribe for $50 in capital stock,
and all other farmers do the same in the same ratio of
milk and dollars. Each would simply deliver milk and
let the corporation collect and keep the money until the
subscribed capital is paid for; in less than half a month,
at 6 cents a quart, the capital would be paid in, and the
farmers from that time on would get their money as often
JUSTICE AND PRACTICAL SENSE 79
as they choose to collect, instead of part of it at the end
of forty-five days.
If some farmers were ''too poor" to put up their little
proportion of capital, their "right to purchase" capital
shares would go to other farmers (or to outsiders) who
could spare the money and would be glad to get the 10
per cent dividends.
If "10 per cent" dividends is thought "paying too
high" for money, it may be answered it is only "from
one pocket into the other," if each invests his share —
as he has a right to do whenever he is ready to do it.
Further, 10 per cent on $10,000 capital is only $1,000 a
year, while the yearly dividend to producers and con-
sumers of 16,000 quarts a day is estimated (3 cents a
quart) at $175,200— so the "10 per cent" dividend "cuts
a very small figure!" If capital is to be $20,000, or
even $50,000, ratio would be increased accordingly.
Let us look at some other facts and figures of interest
to producer and consumer.
Each of these two hundred farmers buys every year,
of stock, feed, fertilizers, farm machinery, etc. — make a
very low estimate of $300 a year, which equals a total
of $60,000. He buys also of home supplies, food, cloth-
ing, etc., say $400 a year, which equals a further total
of $80,000 or gross $140,000.
The 8,000 families of milk consumers buy also, of
home supplies, say $400 each, or a total of $3,200,000 a
year.
As in previous pages noted, it is most natural common
sense for these producers and consumers who find co-
operation in milk so satisfactory, that they co-operate
also in regard to other home supplies.
The consequence is, that the farmers establish a co-
operative store to handle that $140,000 a year of needed
things for themselves (and possibly two or three times
as much for their neighbor farmers) and the cor-
poration also establishes for the 8,000 consumers' fam-
80 PEACE AND PROSPERITY VIA
ilies possibly as many as eight stores, one for each 1,000
families, convenient of access. These nine stores, serv-
ing 8,200 families, buying a total of $3,340,000 a year,
will naturally buy together, and divide purchases among
the several stores, thus getting for each the lowest pos-
sible cost. (These stores could deliver a large portion
r»f the milk at a good profit, even for a margin of one cent
a qnart.)
Of course these nine stores each requires some capital
to carry stock of standard goods such as are daily want-
ed, say $2,000 each, for small stock, or $5,000 if capital
is plenty, which equals $18,000 to $45,000 for store
capital. This capital may be raised in same manner as
the milk money capital, each producer or consumer hav-
ing the "right to subscribe" in proportion to his dealings
with the corporation.
But let us look ahead a little bit :
After one, or two, or three years it is the most natural
thing in the world that the 200 farmers and 8,000 con-
sumers have grown by gradual accretion from one
pleased neighbor to another, to 1,000 farmers and 40,000
consumers, and indefinite expansion may be anticipated.
So it may be sensible to expand the capital stock of
the Producer and Consumer Corporation from $10,000
to $100,000 or even more. It does not need to be paid in
except as wanted, or is expedient to use.
But the prime object of the organization is not to earn
big dividends on big capital, but to save producers
and consumers in the cost of their purchases — save their
legitimate earnings from the wasting clutches of need-
less "middle men." So instead of trying to attract capi-
tal by offering big "10 per cent" dividends, let us see if
we cannot find a better way, and get capital for the cor-
poration as cheaply as we can.
Start in the natural way with the two hundred farmers
JUSTICE AND PRACTICAL SENSE 81
whose milk the corporation buys, and who have not been
used to getting their pay daily but used to getting a
part of their due at the end of forty-five days — and
even of that money most of them have saved a little
and it is lying in bank unused, and drawing no interest
— as banks usually do not pay interest unless money is
left some months, and each farmer knows he is "liable
to want to use" the money, and so deposits subject to
call, and gets no interest. It is a low estimate that these
two hundred farmers average $200 each of "idle money"
in banks and pockets, which equals $40,000 "idle money."
And the 8,000 milk consumers will perhaps average as
much ($1 .500,000 more idle money) , though more of them
will have savings banks accounts, where, however, only
"undisturbed" balances draw interest — and they get less
interest than this corporation can earn for them.
Let the corporation instead of keeping expensive and
laborious "ledger accounts" with each farmer who de-
livers milk, pay them daily in Profit Sharing Certificates
in form similar to following (we give idea, not technical
words) :
FRONT OF WORKING CAPITAL FUND CERTIFICATE
"There is due of
for supplies, cash, or other value received by the
corporation the sum of
TWO DOLLARS (or as specified)
with annual interest, compounded semi-annually, as
follows: after one month from date, 3 per cent;
after three months, 4 per cent; after six months, 5
per cent; payable on surrender hereof properly in-
dorsed, on conditions printed on the back hereof.
Signed by president and treasurer of the corporation
and countersigned by clerk issuing this certificate."
82 PEACE AND PROSPERITY VIA
BACK OF WORKING CAPITAL FUND CERTIFICATE
"The other side is on following conditions: On
presentation, properly indorsed, it is payable from
the assets of the corporation (only) in advance of
any dividends to capital stock, or of any profits to
producers or consumers; certificates payable in or-
der of presentation ; the corporation has the right to
defer payment temporarily, in an emergency."
The farmers put these in their pockets the same as
money; when they want money they present certificates,
and get it; or they pay them, instead of money, for
goods at the corporation store; or they pay to any one
they have occasion to pay, and he collects, or pays out
in the same way. Whoever has a certificate that is twenty
days old is likely to hold it, if convenient, ten days more
and get the 3 per cent it has earned (a small matter, but
that much, and "many littles make the muckle," which
gratifies human nature) ; a certificate that has been held
two months is likely to be held another and then get its
4 per cent; and so on. By this means the $40,000 or
more "idle money" of the farmers will gradually accu-
mulate in these Profit Sharing Certificates.
To the extent the corporation can use "capital" to ad-
vantage, it may sell these certificates to any of its pro-
ducer-consumer members who have "idle money," little
or much, in sums to suit — $10, $100, or $1,000; if
"takers" choose to invest, for a definite time, making
them payable after three months, or after one year, from
date, the corporation may well pay */2 per cent more
interest on them. Thus the consumers' $1,600,000 "idle
money" will gradually accrue in this form.
The corporation's many thousand little sources of in-
come aggregate a large total, and while the big city banks
will not pay interest on the petty balances of individuals,
the corporation on its large aggregate balance can read-
JUSTICE AND PRACTICAL SENSE 83
ily get 3 to 4 per cent from some of the big solid city
trust companies on its daily balances.
But it can do better than that, on most of its money,
for itself and for its producer-consumer constituents.
Instead of their paying (through the corporation) "10
per cent" dividends for the use of capital, they will pay
an average of probably less than 4 per cent to their pro-
ducer-consumer patrons, for the many thousand dollars
the corporation invests in "store" stocks carried, and
selling thousands of dollars a day, in its several producer-
consumer stores.
To the extent the corporation gets "capital" in this
way beyond its need to use, as above, it may invest a
part of it, such as experience shows to be safe from be-
ing "called for," in more permanent form, where it will
earn 6 per cent or more — which earnings go, of course,
to increase the "monthly dividends" to producer-con-
sumer patrons.
For instance, if farmers are to get 4^ cents for milk
instead of 3 cents, as now, a farmer who has eight cows
(his own, paid for) is very likely to want to increase his
herd to twelve or fifteen cows. The extra cows at $75
each will call for $300 or $600. A "15 quart cow" is
ready sale, any day, at auction for about $75 ; a 20 quart
or a 30 quart cow commands price in proportion. He
buys his eight extra cows, then sells the whole herd of
sixteen to the corporation for a price safely below real
value (to make the corporation absolutely secure) say
for $800, with the right to keep them, to feed and care
for them, at his own cost, and re-purchase them, paying,
say by two cents a quart on their milk product which he
delivers to the corporation, the re-purchase price netting
the corporation its investment plus 6, or other, per cent
per annum, which the "highest bidder" will pay for
money supplied in this way.
Not one farmer in ten now has a silo, which is a great
promoter of milk production, and a great source of
84 PEACE AND PROSPERITY VIA
economy in production, so that every farmer wants a
silo, and could well afford to pay even 10 per cent per
annum for money to build rather than do without, and
the majority of them want and need larger and better
buildings and other farm improvements that would earn
them big interest on the cost. Probably our "two hun-
dred charter member" farmers could profitably borrow,
and give good land mortgage or other security for
$100,000, possibly $200,000 or more.
And without doubt many of our "eight thousand char-
ter member" milk consumers are situated so they could
use an aggregate of great sums of money, profitably, for
which they could give good security.
In this form of certificates for ''idle money" the petty
sums of thousands of individuals are made always ''avail-
able" because largely invested in "liquid" assets and
solid securities, or are in bank drawing interest, and yet
earn, or save, producers and consumers more than they
get now — better, all things considered, than savings
banks, or building and loan associations do or can pay
them.
The sum of it all is: Producers and consumers have
their own "economic fate" in their own hands, whenever
they choose to exercise the little common sense and will-^
power needed to "get together." No need whatever to
wait for "legislation" — which often only muddles and
"mixes things up" and makes them worse — makes sal-
aries and jobs for politicians and "favorites" — always
distracts from efforts at "self help," which is already
simple and easy. No need whatever to growl and whine
about the "35 cent dollar" and the rapacious "middle-
man." Just reach out and take the 100-cent dollar, pro-
ducer and consumer "shaking hands" direct — and "snak-
ing" the needless "middleman" so far as we do not em-
ploy him as "chauffeur" to deliver milk, as store-keeper,
clerk, etc., etc. Don't worry about what the "middle-
man" will do; he has shown his ability to take care of
JUSTICE AND PRACTICAL SENSE 85
himself — he will turn producer, and "hustle out" some
of the shiftless farmers and mechanics by his industry,
vigilance, skill and general "get there" ability.
OTHER WAYS AND MEANS
The details of this Square Deal in Milk are, of course,
capable of almost infinite variation and possible improve-
ment.
For instance: Instead of limiting dividends on capital
to 10 per cent, all the profits might equitably be distrib-
uted in that manner, in which case, if retail prices were
maintained as now, and " working capital co-operative
fund" heavily built up at possibly 4 per cent, average,
dividends on capital might mount to several hundred per
cent. As each patron has the "right to own" capital stock
in proportion to his patronage, the amount of capital
stock would be so minutely divided there would be only
a petty amount for each, and each, if at all inclined to
"thrift," could easily own his share, so there would be
no injustice to anybody — only dividends from one pocket
into the other pocket.
But instead of maintaining needlessly high retail prices
and turning consequent profits back in dividends, retail
prices might, in preference, be lowered, or prices to
"producers" might be correspondingly increased.
After the Industrial Republic Corporation has devel-
oped to so large a growth as to be a virtual "monopoly"
(for the benefit of all, therefore no hurt or wrong to
anyone) in its field, instead of itself being regulated by
"supply and demand" market prices, a natural way to
fix prices to both producers and consumers would be as
follows :
A producers' committee (say of three — "too many
cooks spoil the broth") could be elected by votes of all
who sell to the corporation, each with a vote having
86 PEACE AND PROSPERITY VIA
weight in proportion to his sales, as in the case of capi-
tal stock ownership.
Also a consumers' committee could be similarly chosen
by votes of all who purchase from the corporation.
These two committees could fix prices to both pro-
ducer and consumer by majority vote, or in a case of ?..
"tie" could appoint referees in the usual manner.
LOCAL TRANSPORTATION
It is a present custom of our two hundred milk-pro-
ducing farmers, that once a day each hitches up a one-
or two-horse wagon and drives to the station with his
milk. Sometimes two or more farmers "club" and haul
with one team. But it is a general rule that from one to
two or three hours of a busy day is "spoiled" by carting
milk. Two hundred farmers X ll/2 hours = 300 hours at
25 cents an hour = $75 a day, counted in milk, even at
3 cents a quart = 2,500 quarts of milk "spilled!"
Instead of this the corporation will invest in the neces-
sary number of (2-ton?) motor milk trucks, built for the
purpose, which will be run all day (perhaps double-shift,
two "teams" of men — the truck does not get tired, —
16 or 20 hours) which will not only collect the milk
which is shipped to the city twice a day, at least, but will
carry to the farmers their feed, fertilizers, store supplies,
meat from butcher, etc., and even their mail from the
post office, two or three times a day — the vaunted R. F.
D. is "child's play," and outrageously expensive, com-
pared with this "self-service" of the corporation! (Some
people seem to think that somebody else — "Uncle Sam"
— pays for the expensive R. F. D. carrier. Of course
it comes out of the taxpayer, especially the small tax-
payer.)
Experience would soon show what is the cost of run-
ning the motor truck, per hour, and per mile. Each pa-
tron's distance from station is measured and known, and
JUSTICE AND PRACTICAL SENSE 87
a tariff of rates is made safely profitable, per package,
per 100 pounds, extra time off the road, or for needless
waiting, etc., so that each patron will pay his just share.
And as the corporation does this "cartage," not for
"profit," but for "service," a systematic account is kept
of receipts and cost of running, and once a year a divi-
dend of such profits as the "Truck Service" shows is
divided between the "chauffeurs" (for keeping down cost
of gasoline, tires, etc.) and the patrons, in equitable por-
tions based on what each has paid or done.
88 PEACE AND PROSPERITY VIA
A RIVER OF MILK
The Big-City End of "A Square Deal in Milk"
How big a "river of milk" would three million quarts
a day make, flowing at two miles an hour (fair speed
for a river) ? Quite a stream ! New York City ought
to have for its health, perhaps would have if cost, de-
livered, were what it should be, nearer twice three mil-
lion quarts a day.
Without stopping at all to "bewail" and pity the milk-
starved, dying babies, or to criticize the semi-idiotic (not
to say cruel, wicked) business methods now used to
serve city milk consumers, let us read once more "A
Square Deal in Milk" and get familiar with the country
end, and then proceed to make rational plans to get :
The best milk
at least cost
to all city consumers.
Start with the fundamental principles and plans of
"Uncle Sam's Automatic Railroad Regulator" ; as the
nation "finances" the railroads, and the Men Who Pay
the Freight "operate" the roads, for "utmost efficiency
and least cost," so let the city finance a
NEW YORK CITY MILK CONSUMERS CORPORATION
and organize, also in a similar way, the Milk Consumers
to "operate" the business, thus putting in charge the ex-
haustless, resourceful power of "self-interest" to "get
results" right and cheap.
Start with one million dollars capital, all to be held by
the city, the members of the "Board of Estimate" acting
c.v officio as "Ownership Board" of Directors, similar in
plan to "Ownership Board" in railroad plans.
Then let the milk consumers of the city, each family
JUSTICE AND PRACTICAL SENSE 89
having one vote, and an additional vote for each addi-
tional $100 a year paid for milk — let these meet once a
year in each election district and each vote for his per-
sonal choice for one director for the Milk Corporation.
The best business men of the city would be candidates.
Hotel men, restaurant men, using thousands of dollars
a year worth of milk, would naturally be specially ac-
tive to see good men elected. The result would be
several hundred, possibly several thousand, "directors"
would be chosen. Let each of these men have weight of
vote in proportion to the number of votes by which he
is elected, and let these men meet and ballot repeatedly
among themselves, as may be necessary, until the num-
ber of directors is reduced to (say) seven, each of whom
will have power and weight of vote in the New York
City Milk Corporation Board of Directors according to
the "cumulative" number of votes by which he is elected.
This would put in absolute charge of the corporation
business, subject to the "veto" power of the "Ownership
Directors," the ablest business men of the city, the really
dominating minds, as estimated by the milk consumers,
in control, "minority representation" being also present
in equitable proportion.
These seven Operating Directors, with the fullest pow-
ers of any business board of directors, subject only to
the "veto" power of the Ownership Directors, will or-
ganize and "district" the city and employ one first class
business manager, with ample salary to warrant "the
best," and such assistant managers and other employees
as will be necessary to conduct the gigantic business —
3,000.000 quarts a day, even at 10 cents a quart, would
be $300,000 a day, over one hundred million dollars a
year.
Note that none of these men will be of "political"
standing. They will be put there by the "self-interest"
of milk consumers, to secure best possible milk service
at least possible cost, and there will be no temptation to
90 PEACE AND PROSPERITY VIA
pay extravagant salaries and give "sinecure" positions to
"favorites."
The Milk Corporation will have a right to the absolute
monopoly of milk service of the city, but may, and will,
permit such other service as will not conflict with the best
service of the public generally. The "going milk busi-
ness" will necessarily be taken over as it is, and "make
the best of the situation."
The first, temporary, move will be to "district" the en-
tire city and "license" and temporarily contract with, the
milk men now serving so that each shall serve exclusively
within the district he contracts for, supplying milk of
specified quality at specified price, amoly and promptly,
to all wanting service. This arrangement should at once
"cut out" probably fully one-half the present labor and
expense of delivery and cut the cost to consumers from
two cents to five cents a quart. "Licensed stores," only,
should be allowed to sell milk on conditions and at prices
specified, each having such ample territory as would war-
rant and compensate "best" service.
"Permanent plans" of the Milk Corporation should
be a vast improvement on this temporary arrangement,
and should still further reduce cost and improve service.
"Rome was not built in a day" and "scientific, up-to-
date service," and "scientific management," could pos-
sibly come about only gradually, but rapidly.
The present big sterilizing plants would be taken over
as soon a possible, altered, improved, enlarged as neces-
sary for most perfect service. Present owners would, of
course, be justly compensated. The present vastly ex-
pensive and clumsy "bottling methods" (to be retained
perhaps in a limited way) would mostly be replaced by
better and far less expensive methods.
Some hundreds (thousands before through with) of
gigantic "thermos-bottle" automobile milk trucks, 2-ton
to 5-ton capacity (2,000 to 5,000 quarts, or over) would
be built — see general plans under "A Square Deal in
JUSTICE AND PRACTICAL SENSE 91
Milk" (page 72). These purified at intervals by scald-
ing steam and cooled by ample water and ice, would
have the various grades of milk and cream "piped" into
them at the sterilizing plants. The big trucks, especially,
would serve hotels, restaurants and stores, "piping," un-
der washed and cooled air pressure, required supplies
into similar "thermos-bottle tanks," not on wheels, at
the stores, etc. There, each local plant, being equipped
with power and heat, streams of water and ice, would
"faucet" or "pipe" the milk to patrons in suitable recep-
tacles of glass, aluminium or tin. Cleanliness and sani-
tation would be perfect, cost of service greatly reduced.
The smaller milk trucks would serve households direct,
taking the place of the clumsy and ridiculously expensive
milk-wagon service.
Next, to get the milk from the distant farms, of best
possible quality and at "just price." Necessarily we must
start with things as they are, and gradually improve upon
them.
Gradually introduce into the country at the creameries
the "gigantic thermos-bottle" idea, also into the cars for
transportation, instead of the clumsy, far more expensive
"40-quart milk cans." Thus milk could always be piped,
aerated, cooled, far more rapidly, more cleanly, less ex-
pensively, reducing cost to consumers, while improving
service.
"The price of milk at the farms/' what of that? A
just, even liberal price must be paid, or adequate supply
cannot possibly be maintained. It is ridiculous folly on
both sides to have "milk strikes" in city or country.
To KNOW what "just price" is, and to help promote
adequate, quality, economic, milk production, the Milk
Corporation should directly own and conduct a number
of "experimental farms" under varying conditions, and
should "tempt" individual enterprising farmers to "test"
plans and "show results" by "prize" or "premium" offers.
It can especially "finance" some of them, helping to en-
92 PEACE AND PROSPERITY VIA
large or improve herds, build silos, buy land for pastures,
drain, develop, improve, in any direction that may pos-
sibly benefit milk supply.
The Milk Corporation starts with a million dollars
capital and the city supplies further as "need" and "re-
sults" warrant. Whatever "per cent" that capital costs
the city (certainly less than half the average cost to in-
dividual enterprises) the Milk Corporation must charge
milk consumers such price as will pay all expense of ser-
vice, up-keep of plant, and such "dividend" to capital as
the city pays in interest. No "subsidy," no "charity" is
desirable in connection with the New York City Milk
Corporation "River of Milk."
Cost of milk delivery through "licensed stores" should
certainly be under 1 cent a quart, and delivery by 2-ton
milk trucks serving every house and apartment they pass
should be under 2 cents a quart; these items added to
wholesale price to farmers should bring highest cost to
consumers, even under present "war conditions," down
to 12 cents and near 10 cents, and when "normal times"
come again, prices would of course be still lower.
"WHY STOP AT MILK?"
"One thing at a time and that well done leads to ex-
cellence" is a good, wise old "copy-book" motto!
Make a "thorough job" of the milk program and when
that is done, just change the one word "milk" in the title
of our corporation and make it "New York City Com-
modities Corporation" and buy and supply all farm pro-
ducts in the same way, build mammoth "abattoirs" and
supply the city's meat and "beat the meat trust" and the
foolishly expensive "private meat shop" methods (bad
as present milk methods), and so on with all "commodi-
ties" in universal use.
The "economic millenium" is not yet here, and will
never come by "just talk," but it is easily within the
reach of ordinary mortals by "practical sense" effort.
JUSTICE AND PRACTICAL SENSE 93
SELF-HELP THE BEST KIND OF HELP
A famous poet credits an ancestor of the writer with
the wise saying (not original, evidently, as he quotes
it):
"If you would be well served,
Serve yourself, and do not leave it to others."
Newspapers of all classes — Republican, Democratic,
Progressive, Religious, Agricultural — are "chock full" of
complaining, arguing, prodding, etc., because of economic
and other conditions, and seemingly nearly everybody
looking to Congress and legislatures to "set right" the
"time . . . out of joint."
But is there, in fact, a cloud or other trouble in the
economic sky which it is not now, without further legis-
lation, easily within the power of those who are inter-
ested to "get together" and dispel, or overcome, far bet-
ter than there is hope for legislators to do for them in
the next hundred years ?
As an example take the greatest, latest "achievement,"
the Parcel Post, against which nothing need be said,
except to point out the easy practicability of something
else infinitely better.
Here are the facts:
After years of clamor by "the people," Congress has
provided that we may ship the little limit of 20 pounds
(the original law) 300 to 600 miles for the sum of a little
over 4 cents a pound = $4.15 per 100 pounds.
Before us lies a routine freight quotation, 100 pounds
400 miles for 28 cents (instead of $4.15) — or the same
in "carload lots" for 13 cents per 100 pounds, and there
is no 20-pound "limit" as to weight of package. Here is
"bloated monopoly" railroad service at about one-thirty-
second the cost of Government service!
The only advantage the Government gives is "local
94 PEACE AND PROSPERITY
delivery." It would be a "cinch" to contract for such
local delivery, an average of three miles, at the railroad's
charge for 400 miles, and thus "deliver," including
freight, for one-sixteenth the charge made by beneficent
"Uncle Sam" ! "Uncle," it is expected, will do the job
"at a loss" !
And it would be hard to name an article in general
use which it is not easily practicable to have brought into
any community within 400 miles of New York at "car-
load lot" cost of freight — shipped with other goods, of
course, to the local stores of the "Industrial Republic" — •
coming, now, in that quantity every day in the week, to
merchants. Thus with the "self-help" of co-operation
Parcel Post becomes almost entirely needless, the self-
help being "on the spot" and far-away the cheaper.
Are we a lot of impotent imbeciles that we can not
get together and serve ourselves, when the service de-
sired is a nearly universal want, and the matter is so
simple as handling packages?
Why not "stop howling" awhile and get together and
serve ourselves?
PEACE AND PROSPERITY VIA
POST SCRIPTUM
"Profitable Patriotism"?! Words of reproach? Op-
probrious possibly, sometimes. It depends on the thing
done.
Again such patriotism is glorious — highest honor.
For, not only is "godliness profitable" in the religious
sense, but also in the economic sense, and so also is "pa-
triotism profitable," to the nation, the state, the com-
munity— to the patriot's children, though he may have
suffered in body and estate.
This book can hardly be "profitable" to the writer, in
money — will probably take dollars where it brings dimes
— nor is it desired that it sould "pay." It has given him
"big" pleasure trying to be of service to other "patriots,"
— the mass of American people.
And "there's billions in it" of real "dollar profits"
(laws of logic and immutable mathematics demonstrate
it) for the "Men Who Pay the Freight." Scores of bil-
lions of dollars for honest, thrifty Savings Bank deposi-
tors, when they force "statesmen," by public opinion, to
give depositors justice, to "unshackle the Postal Savings
Bank," as herein proposed.
We have yet to hear from an editor, economist, legis-
lator, or common "man of sense," in disapproval of any
essential herein proposed (of course, details may be
varied and improved — will be), with "any reason why
not that will hold water better than a sieve" !
But you "haven't noticed" newspaper pages "ablaze
with the fire of agitation for a good cause" — for right
and justice? A few editors have spoken out in hearty
commendation — not one against.
Most editors seem "afraid," want first the "consent of
the governing" financiers and politicians — want to see,
first, "which way the cat will jump" !
JUSTICE AND PRACTICAL SENSE
Editors widely print and laud the bragging bulletins of
our present shackled Postal Savings Bank, which is hard-
ly short of a "contemptibly small iniquity" as compared
to the "real thing" an unshackled Postal Savings Bank
would be.
"A conspiracy of silence" reigns over editors and legis-
lators generally — perhaps no wonder, since "silence" is
the only safe answer to our argument.
"W. S. S." (War Savings Stamps) are "boomed"
abundantly (properly, justly so) but no mention is made
of an unshackled Postal Savings Bank (which would pro-
duce $10 to $50 where W. S. S. produce $1) to which
scores of millions of depositors would flock like hungry
men to a feast, were opportunity given, without need of
being "prodded" to patriotic saving!
Now it is "up to you" to help "wake up" editors and
Congressmen. Write and ask them "why not?" Tell
them:
"I vote for an unshackled Postal Savings Bank."
"I vote for Uncle Sam's Automatic Railroad Regula-
tor."
Get others to do the same.
The "powers that be" v/ill "get busy" when you get
busy !
J. B. A.
If you want this book, or any printed matter we have,
to distribute, you can have! at bare cost thereof.
THIS BOOK IS DUE ON THE LAST DATE
STAMPED BELOW
AN INITIAL FINE OF 25 CFISITQ
/SJJ
9Apr'59GM
28Nov59RHt
; LD
(,0V 17 1959
i.n II. .v>,
IB '197/6
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