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keep his operations confined to his own district. After all, he might issue some long term promises-to-
pay and build some steel plants. He knew of no raw materials which could not be bought in his own
country. Of course, it might take longer to develop his district, but if it were done in that way, the
country would be under the control of its own bankers.
The large city banker hastened to put him right : “You understand that agriculture is a ‘mode of living’
only. It is really not a business, and when we are looking at the long term ‘welfare’ of the country, we
should not take into consideration too seriously whether the farmers in any particular districts are able to
sell their products at prices adequate to cover their costs and leave a reasonable profit. Raw material
prices must always be sacrificed to the promotion of great industry.” With a laugh he continued :
“After all, farmers are an illiterate class, and if they are given reasonable profits over too long a period,
they might grow shiftless. It’s better to keep them in their place and we can do that by controlling their
price levels. You understand if price levels of raw materials are kept down, we can then also keep down
wages for city laborers. Wages constitute an important cost of production of all manufactured goods
and if they are kept low, much better profits will be available to us—the eventual owners of businesses.
Laborers also have a tendency to grow lazy and shiftless if they are allowed too much freedom. We can
very readily control wage levels, in fact, they can be controlled in all of the industrial countries of the
world, by our cooperation with London bankers. You see, London bankers will be placing loans in
many other countries.
“As soon as prices of labor begin to rise, due to the fact that a particular country has enjoyed an upward
swing in the cycle, it will be very simple for London bankers to keep labor also in its place by suddenly
curtailing long term loans in that country. As the operations of that country are curtailed through the
withdrawal of long term promises-to-pay, long term promises-to-pay can be placed in other countries
which have had less of an upward swing in the business cycle. This constant recurrence of cycles in all
of the countries, under the control of London, will tend to make laborers see that it is hopeless for them
to expect to enjoy constant purchasing power and they will be satisfied to accept their inevitable periods
of unemployment and ‘leisure’ whenever we find it necessary to curtail and bring about the downward
phase of the business cycle.”
But another question arose in the community banker’s mind. He courageously asked : “If our price
levels are determined at London, and we curtail our promises-to-pay whenever ordered to do so by the
New York bankers, I presume the London bankers will simultaneously withdraw gold from New York
and return it to London. Am I right in that conclusion ?”
The city banker responded : “Yes, you are right in that conclusion. It will be necessary for you to
curtail and as you curtail we will have to allow London bankers, if they so desire, to withdraw metal
from this country. You understand that London is the great gold market of the world. London sets the
price of gold and, of course, the currency of our country will be transferred into the currencies of
London on a certain gold ratio. For instance, it is proposed that an ounce of gold in New York 0.9 fine
will be worth $20.67. When wheat or other raw materials are sold in Liverpool, it will be an easy
matter to convert the proceeds in terms of gold into United States dollars. To make transfers of gold
from London to New York unnecessary, London bankers will take ample precaution to place sufficient
long term promises-to-pay for America in London to force sufficiently large interest payments to offset
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Gertrude Coogan, Money Creators, ch 1, 2, 3, 4, 5
the value of the raw materials exported to London. If London is to control, gold must always move to
London, for gold is the alleged basis of the promises-to-pay. Gold moving out of London would force a
collapse of the London money structure.”
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