The representatives of industrialists of all parts of the country, having been given further authority and instructions in regard to the establishment of a chain of credit exchange banks, met to complete arrangements.

Action that in normal times would have been rash, seemed now justifiable in view of unprecedented and alarming general conditions—the present system having not only become intolerable, but fairly broken down.

The smaller industrial plants, and all those ordinarily depending on bank credits or accommodations, no longer able to obtain loans, though offering adequate security, had been forced to suspend operations, throwing millions of men out of work, who were fast becoming uncontrollable, threatening mobs. The larger industries, owing to consequent lessening effective demand, were making rapid and increasing reductions also. Interest and taxes had grown in such proportions that industry could no longer bear the burden.

Since clearing houses at one period illegally with no interference had issued currency to save banks in a financial stringency, the industrialists assumed the same higher right in a crisis both financial and industrial.

Therefore the association was formed not very different from the outline given in Chapter III., except that it was decided to issue secured circulating notes directly for pay-roll purposes, somewhat like the bank clearing house certificates referred to.

These notes were not redeemable directly in gold, yet the dollar was made the VALUE of 23.22 grains of gold (the same as the legal dollar), but exchangeable for any of the great variety of edible, wearable and useful as well as ornamental products of thousands of industries composing the association, AT PAR WITH GOLD!

As ordinarily not one workingman in a hundred had seen or handled any gold coin, but only checks, paper and silver, and having more desire and need for something that sticks to the ribs than for the glittering element, this currency proved thoroughly acceptable, and even preferable to gold.

This banking or credit exchange system was controlled by the industrialists, and operated for SERVICE AT COST, not as a profit-seeking concern.

The association was not at all averse to uniformity in currency, rather preferred it, but held that all concerns issuing money should be free and independent, that is, competive; held that private associations should have such uniform currency printed and furnished them at cost and on equal terms, reserving the right to issue currency (different design), that favoritism or excess by such general agency might be forestalled, (a recourse that absolute, compulsory monopoly would not permit.)

The association members were conservative, particularly in the conservation of things of benefit and value. One of the principles they wished to conserve was uniformity in those things in which a multiplicity of systems, each good in itself, would cause greater misunderstanding and confliction than if any one of the systems were made the sole or universal one. They did not see, as we so clearly see in this day, that such things are easily brought about by private, associated or mutual effort and understanding, without authoritative or positive force, an element which caused so much misery in the buried past.

They therefore became enthusiastic advocates of a mutual banking provision or amendment of the laws of State of their time.

Their association was in itself a mutual banking association, and while the private, emergency issue of currency it had decided upon would probably not be suppressed by government in view of the abnormal conditions prevailing, it was certain that under improved conditions, even though the improvement were made by the association's irregular procedure, a practice contrary to law could not be permanent. Hence it was urgent that the lawbe modified to suit.

The association, before beginning operation, had explained its plan and received [4] assurances of support of a sufficient number of senators and congressmen to make the desired modification, but remembering the failure of a former congress to fulfil its pledge on a similar modification, it planned to greatly increase the number of congressmen in its favor. It proceeded in a business-like rather than in the usual political manner—or rather, played both games.

An election was coming on. After managing to get candidates favorable to its desired modification nominated on all tickets, or nearly all, the superintendant, foreman or owner of every industry had a prepared talk to be given workmen at a propitious time.

The members knew that workers had been horn-swoggled so often that any general oration had no weight with them.

The association began operations, and soon whistles began to blow.

Work! work! The mills have started! was the glad exclaim heard in the workers' rented tenements.

The strange money proved to be as good as the regular kind.

It was here, when the worker had ocular proof and practical demonstration, that the straight talk referred to was given.

The speakers began by reading the following petition for a mutual banking provision, as drawn and circulated by the Mutual Credit League:

AN ACT

To Permit the Forming of Mutual Banking Associations

Be it enacted by the Senate and House of Representatives in Congress assembled:

Section 1. Mutual banking associations may be formed and the Comptroller of the Currency at Washington shall issue permits to such associations under the conditions set forth hereafter.

Sec. 2. The various congressional districts of the United States shall be subdivided into mutual banking districts, consisting of twenty thousand people each, and one mutual banking association may be formed in each and every such district.

Sec. 3. No association shall be formed until one thousand persons in such district shall have notified the Comptroller of their intention to organize such an association and shall apply for a permit to do business, whereupon it shall be the duty of the Comptroller to issue such a permit.

Sec. 4. Members of such associations shall, upon admission, bind themselves in due legal form to receive the money issued by the association from all persons, in all payments, at par.

Sec. 5. The associations may issue their paper money as loans to their members to circulate as money among them and such other persons as are willing to receive it. This money will not be legal tender.

Sec. 6. These loans shall be made only for the purpose of producing, carrying or marketing goods in one or more of the steps in production manufacture or distribution.

Sec. 7. Any person may become a member of any association and may borrow the money issued by the association, by giving his promissory note therefor, and by pledging improved property to the association to secure the payment of said note, or by having his loan insured as hereinafter provided.

Sec. 8. Loans may be made for an amount not exceeding one-half the assessed value of the improvements situated upon the real estate pledged, or in an amount not exceeding one-half the value of goods, chattels, implements and machinery used in productive enterprises, and upon warehouse receipts. Loans upon real estate shall not run longer than two years; other loans shall not run longer than ninety days.

Sec. 9. Loans may also be discounted by the association for those who have no property to pledge upon the payment of a sufficient premium to insure the risk with an authorized insurance company.

Sec. 10. The rate of interest at which said money shall be loaned shall be determined by and shall just meet and cover the losses sustained and the expenses of the association.

Sec. 11. Members, by paying their debts to the association, shall have their property released from pledge, and be themselves released from all obligations to said associations and to the holders of its money as such.

Sec. 12. Wage workers who are willing to receive the money of the association in the payment of their wages may deposit the same with the association subject to check.

Sec. 13. The money of the association shall be issued in denominations of one, two, five, ten and twenty dollar bills; at least one-half of the issue shall be in the first three denominations.

Sec. 14. A dollar in the meaning of the within act is hereby defined to be 23.22 grains of pure gold.

Sec. 15. The check, draft, bill of exchange and travelers' checks may be adopted to facilitate exchanges between the various members of the associations and between the associations themselves.

Sec. 16. Associations may form clearing houses in all cities, and regional clearing houses where most convenient, and a national clearing house in a city near the center of population.

Sec. 17. The Comptroller of the Currency shall appoint examiners whose duty it shall be to examine the books of each and every association twice a year. He shall print the money required and ship it to the association at the association's expense. Any association not conforming to this act shall forfeit its right to do business.

(To be continued in next issue.)