The workingman's advocate. [volume] (Chicago [Ill.]) 1864-1877, 1869-12-25
A New Monetary System,
CHAPTER IV.-SECTIoN III.
BASIS OF THE BANK OF ENGLAND.
BY EDWARD KELLOGG.

The Bank of England is established upon
a basis similar to that of the United States
Endorsed notes secure the bank-nOtes, and
not specie. The bank-notes are not re-
representatives. Of specie. The bullion in the
bank seldom much exceeds the amount of
the deposits. Should the depositors draw
the specie, the only way in which the bank
could redeem its bank-notes would be to
take them in payment for the Endorsed notes
it holds against individuals. If these in
dorsed notes were not good, the bank-notes
would be worthless These Endorsed notes
are secured by the property of their drawers
and indorsers their property, and not the
property of the bank, secures the bank
notes.
The Bank of England first issues 9l4,-
100000, on government 'ecurities. This
is making paper balance paper. 1t gives to
the bank no ability to pay the GA, 1000 900
in bullion If two individuals should ex
change obligations for f14,000,OO0, this
exchange would moi produce bullion to pay
either obligation. The bank-notes for
$4,000, 900 have not fraction Of value,
except in so far as they are secured by the
government bonds, and these bonds are Sc
cured not by the bank, but by the property
and productive industry Of the people Of
England.
All the gains Of the bank by the recent
rise Of interest, were unfairly taken from the
industry of the people, and appropriated to
the stockholders of the bank. The idea
was given out that the bank was compelled
to raise the rate Of interest in order to be
able to pay specie for its obligations. If
the bank had been established upon a pro-
per basis, and had loaned its money to aid
the productive industry of the nation, at a
low and uniform rate of interest, instead Of
making its loans to stockholders and
brokers to reloan at high rates, the recent
crisis, or any former crisis in the monetary
affairs of the country could Eot have hap
pened. Bot the bank IS established upon a
false basis, promising to pay specie which it
has not and cannot have Therefore, in the
recent crisis, it was compelled to lend its
money to brokers and stock jobbers, other
wise they would probably have drawn its
specie, and compelled it to suspend specie
I payments The bank and this class Of
citizens work for one another's interest, and
extort the last penny from the producers of
the wealth, under the pretence that the
money, or the bullion, Is the real wealth of
the nation, and they keep the people con
stantly toiling for the bullion without ever
possessing it, while the owners Of the bull
lion contrive to live in luxury upon what the
labor of the people produces.
To show that the bank is sustained in its
specie payments by reciprocal operations
with capitalists, and that the bank-notes are
secured BY the Endorsed notes Of the people,
and not by the bullion in the vaults, it will
only be necessary to refer to the weekly
reports Of the bank October %, 1917,
bullion, ES,3l2, Col. Deposits, SO, $780,
500. Net circulation. e2O,3I8,175. The
bullion amounted to E275, 818 less than the
deposits and if the deposits had been call
ed for in specie, there would not have been
a shilling in bullion toward paying the
f20,3l8,l75 Of bank notes. These, if
paid az all, must have been paid BY balanc-
ing them OFT against the Endorsed notes of
the people, held by the bank Again,
January p, 1913, the bullion had increas-
ed to EI3.l76,Sl2, the deposits had in
creased to EI0,774,S7O, and the circulation
bad diminished to E19,111,880. De
duet the deposits from the bullion, and
there rmained G2,4Ol, 942 in bullion
to pay f19,i1l.sS0. Deducting the
bullion there remained Gle, 7O9,936,
which, if it had been paid at all, must
have been paid BY balancing off the bank
notes against the Endorsed notes held by the
bank as if two individuals should exchange
notes, and agree to pay them in specie, but
as neither has the specie to pay, agree to
exchange notes again, and thus close the
transaction. The exchange Of the bank
notes, for the indorsed notes Of the people,
is different in this respect the bank pays
no interest to the people, but it makes the
people pay interest on the bank-notes, and
this interest absorbs the production Of labor.
(TO BE CONTINUED