The workingman's advocate. [volume] (Chicago [Ill.]) 1864-1877, 1873-01-18
SENATOR COLE AND z NATIONAL
MONEY No. Ill

ture number. to show that the great con
tract fraud Of the banking system. whether
under national or State Wild cat laws, Is Ill
the pretended redemption clauses Of these
various systems The industrial and useful
classes are given to understand that the
great virtue in currency laws is III provi-
sions for redemption, such 5 pledging
bonds with the national or STE Govern
ments, and the twenty-five per cent. OF
currency required to be kept constantly On
hand for currency redemption CONNER
cial papers are filled with articles in which
the people are instructed, that Vi all evil,
to be stunned as the greatest Of govern
ment crimes is that OF AN irredeemahle
currency yet, strange as it may appear
the damnIng injuries and r1bblries Of tn.
people 10y bankers in e5ery age and every
country, have been either directly under
the most stringent provisions Of redemp-
ton acts, or the result Of such laws, and II
business customs thence originating. Take
the several financial crises that have oc-
CURED IN this country and ia England dur
ING the present century, and they have not
only occurred under redemption laws. but
these laws were the principal agency in
producing such disastrous results. as will
he hereafter fully demonstrated.
We will now endeavor t. point ont def
nitely the enormous frauds contained in
the two redemption clauses Of the national
banking act. First, the bonds pledged. al
though they are security in case Of the ul-
innate failure of the bank. are IF no value
for the redemption Of currency from day
to day, and this is the redemption which
gives commercial value to bank notes. To
show them that the deposit Of United
States bonds are not the fund Tor the re-
demption Of currency daily, we have but
to adduce the fact, that those bonds are
not due for many years hence. and the in
terest is only six per cent. per annum.
payable semi-annually therefore, neither
principal nor interest are adequate for this
purpose Besides, very large amount Of
the bonds pledged are not uufrequentIy
leaned, and the Swner gets the interest
and handsome bonus in addition A
careful examination Of bank management
ami Of bank practices, too discloses the
( that II IS not bank securities nor bank
funds which are used in currency redemp-
ton, but is the funds Of bank customers
or the avajls Of property purchased with
the bank paper. Hence, bank reports pre-
sent something ike the following exhibit,
ia zen from the bank Of EngIand's reports,
viz Circulation, f25. 232. $50 deposits,
&c, 304. 100; securities, t3l 80, $50 bull
lion, t3, $50, 36J. How could the bank re-
deem this large circulation with its own
capital, without the return of its paper by
it's customers, redeeming it to obtain their
own securities
Now, our cause Of complaint is not
that this bank paper or notes are not
good, for they are generally endorsed, as
We have shown, by the paper Of customers
The fraud, then, consists in holding out a
falsehood-in giving the banks enormous
profits, and a monopoly-in issuing all the
currency, when the services which they
through the agency Of the property Of Gus
toners, and to no considerable extent by
the capital Of the banker. If the whole
redemption fund, both Of bonds and TWEEN
ty-ive per cent, reserves, were abolished.
the redemption Of the currency would, un-
der an honest system, be secured without
this bankers redemption parapharnaha
and expense. for the simple reason that
commodities are the only fund which re-
deems paper, and these belong to The PEG
pie that represent them Ii the West,
for instance, sends East hund- ed million
of dollars Of paper representing one hun
bred millions dollars worth OF produce, TO
buy eastern goods, the goods come back to
the backs of the people, and arc paid for
by the money-the products g East to the
mouths Of the people, and they return the
currency tally OF counter, and the account
10 thus balanced between the two portions
of the country and this is the only honest
mode of currency redemption The pay
ment, therefore, Of these enormous sums
in interest and discounts, is, nine-tenths q
it, nothing less than cool-blooded, sys-
tematizsd robbery Of the people. The
effect of these redemption clauses is, the
people are taught to rely upon bank secu-
rites as the only safe mode Of issuing pa
per currency, when the truth Is, that their
attention should be turned in the direction
Of understanding that the true point is not
how much securities can be furnished, but
how much money can be issued and re-
turned through the channels of business to
the issuer The moment that point is over
reached, that moment depreciation will
follow. If the West buys two hundred
million dollars of Eastern goods, and sells
but one hundred millions, bank issues
based upon such an exchange, will soon
fail, and though the bank issue may be re-
deemed, depositors, and through them the
business and labor classes, will be robbed
five or six times that amount.
In our next issue, as Illustrative of our
position, we will review bank redemption
pressure, especially that Of 1857