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time decide to change the number of units of currency for which an ounce of gold could be exchanged.
If an ounce of gold could be exchanged for 20.67 dollars in New York, but London increased the
number of shillings for which an ounce of gold could be exchanged, a serious disadvantage would arise
for the American exporter. With an ounce of gold exchangeable for 20.67 dollars, or approximately 85
shillings in terms of London units of currency, what could prevent London from raising the number of
shillings exchangeable for an ounce of gold to 100 or 125, or even 150 ? The number of shillings
exchangeable for an ounce of gold is an arbitrary figure which London gold brokers could alter at their
pleasure.
“Or what if London bankers decide to change the number of units of currency exchangeable for an
ounce of gold in all of the colonial possessions of Great Britain ? In that case, if the American farmer
ships raw materials to Great Britain, in transferring his London credits into dollars, he will get fewer
units of his own currency than the exporters of other countries will receive units of their currencies.
Hence, wouldn’t the American farmer be actually getting less units of currency with which he could pay
his interest, taxes and overhead, and have fewer dollars left to buy industrial products ?”
The community banker realized that the great Liverpool market was the center for the agricultural
exports from all of the colonies, and it would be possible for the London bankers to change the currency
price of gold in the colonies and, hence, give an unfair advantage to the agricultural products from the
colonies.
The large city banker smiled at this apparent lack of faith in the integrity of the London bankers. At the
same time, he was disturbed that any of the community bankers could reason out the proposition so
clearly. Many of the community bankers were shaking their heads in apparent confusion as to just what
was the point of the question raised by the apprehensive community banker.
The large city banker, with a magnanimous gesture, stated that after all, community bankers should
realize that London was the “center of integrity” and that they should be honored to be invited to
cooperate in the great world plan; that when such an occasion as the community banker was attempting
to discuss arose, it would be time enough to worry over that problem. After all, “integrity” was the
essence of banking operations and he felt that a simple community banker had no right to question the
integrity of the London bankers.
The community banker saw that it was hopeless. He realized that he would not be able to stand out
alone. He saw very clearly that the proposition was acceptable to most of the community bankers,
mystified though they were. He therefore knew that if he refused to cooperate, he would soon become
an outcast and take the chance of having the New York City banker establish someone else in his
community who would, over a reasonable time, be able to take his business away from him.
He therefore wisely decided to abide by what he realized would be the vote of the majority, and
although he knew the proposition was contrary to his better judgment and would be a serious
disadvantage to his community and his country, he was politic enough to realize that it was time to keep
those conclusions to himself.
He thereupon rose to tell the great city banker that he agreed and that, after all, London was the center
of “integrity” and that his country could well adopt the plans proposed. He felt that world cooperation
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Gertrude Coogan, Money Creators, ch 1, 2, 3, 4, 5
would be a means of controlling farmers and laborers, which would be an advantage.
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Chapter V
The “Federal Reserve” Snare
Another Snare is Created,
This Time for the Successor to the Community Banker
Many years passed. The successor to the community banker many times regretted that his predecessor
had agreed to allow himself to be controlled by London bankers but, now that his nation was dependent
upon the Liverpool wheat and Manchester cotton markets and London bankers had placed large
volumes of their promises-to-pay for United States in London there was nothing he could do personally
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