IX
Usury in Action
TREASURY DEPARTMENT
FISCAL SERVICE
WASHINGTON 25, D.C.
March 19, 1963
The Honorable Wright Patman, Chairman
Banking and Currency Committee
House of Representatives
Washington 25, D. C.
Dear Mr. Chairman:
During Secretary Dillon's testimony before your Committee on the proposal to repeal certain silver legislation, you mentioned that a few years ago someone determined how much it would have cost the Government at 5 per cent interest to have borrowed the equivalent of United States notes which have been outstanding. ($346,000,000 outstanding since 1863. They are the Lincoln Greenbacks. W.P.) At your suggestion, Secretary Dillon offered to bring the figure up to date for you.
The information which you recalled was possibly that contained in a letter addressed to you from the Treasury dated August 29, 1960, in reply to your request for that information in a letter [p. 52] dated December 13, 1934, signed by the Treasurer of the United States be brought up to date. The 1960 letter stated that if amounts equivalent to United States notes outstanding had borne interest at the rate of 5 per cent per annum, compounded semiannually, the total interest cost through June 30, 1960, would have amounted to approximately $44 billion.
Under the formula of the 1960 letter, the figure as of December 31, 1962, would exceed $49 billion.
United States notes are carried in the statement of the public debt in the Daily Statement of the Treasury of the United States under the heading "Debt Bearing No Interest." For this purpose, however, from the amount outstanding there is deducted the amount of the gold reserve held for their redemption.
It must always be recognized, of course, that the figures with which you have been supplied from time to time are purely hypothetical; not only were the 5 per cent rate of interest and the compounding of interest semi-annually merely assumed many years ago, but more importantly the figures have not taken account of the holding since the year 1900 of the gold reserve in excess of $150 million.
Sincerely yours,
John K. Carlock
Fiscal Assistant Secretary
"Purely hypothetical" though the foregoing letter might be, it demonstrates conclusively the impossibility of the survival of a government of the people when its medium of exchange must be loaned into circulation by private interests, when even the government borrows such money—especially when it is created out of thin air by the flick of a pen. [p. 53]
If the reader is shocked to learn that an apparently benign 5% interest rate, compounded semiannually, could increase a debt of $346 million to $49 billion in 89 years, let him ponder what it would be at 28%—the rate demanded of the Union government by the bankers during the War between the States. Let him ponder what our present National Debt of a virtual half-trillion dollars will be in another ten years—even without the chronic deficits necessary to keep our government alive. [p. 54]
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