Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1874-10-07


acter and nature; an Intermediate agent
between two principals. Here is his rela
ton TO the cotton man: "You have giveI
me $4,000 worth of cotton bills to collect
| understand from your HABITS of bushes.
that these bills will be with me a month
| am responsible to you for this, but
know j shall have IT at my hand" To the
other man he is creator of debts, having
lent him $4,000. WHAT has he done? The
man who sold cotton has purchasing power
He has the power of buying 5000 worth
of goods all over the town. He virtually
says to the banker, IL don't want TO buy
anything for month, and shall not ask
you for the proceeds of these bills for Z
month" But he still has the power Of
buying $4,000 worth, and that power he
transfers to the banker, and the banker Il
the silk merchant TO buy silk. The trans
fer from the banker to the sill
merchant is buying power. 1t consists OF
the bills of cotton which went from his
store, which must be paid for, and are paid
for in silk. This is how / get these great
conclusions: that a man who sells, by the
act of selling can buy, because all trade
and all selling is the exchange of equal
goods. That is the meaning of the word
selling. The banker is enabled TO buy by
virtue of the cotton bills, and he buys silk;
so the silk changes hand by virtue of the
cotton. The banker is merely an interme-
diate agent--a broker. The banker says,
II will find somebody to use your
buying power" The cotton buys the silk.
| There is a tremendous number of cOnclu-
sions to come out of that. What comes
out of this? The explosion of that delusion
which infests the city of London and the
newspapers of England, that banking is an
affair of currency, an affair of money, and
that when there are disorders the cure is in
currency. In the full light of the nine
tenth century, this is believed by every
| trader in the United Kingdom, and sO,when
the crisis comes, they wake the Chancellor
of the Exchequer out of his bed and say TO
| him, "For Gods sake let the Bank of Eng
land issue more notes, and we shall be
saved Banking has nothing to do with
money, except in one single point. / can
not thoroughly explain that now. If you
| tell banker to issue notes, he, of course,
sells them to the public. Every note that
is issued by the Bank of England, or the
United States Government, or by private
individual, is sold. The customers of this
bank are the buyers. He collects their
bills and he pays them in his bills. To
that extent there is a resource in the bank
er who tends upon discount. That extent,
we know, is limited in many'cases. 1t has
disappeared in England from the country
banks. Ia the case of the Bank of Eng
land, that power IF selling notes to the
public is limited to about Els, 100000. By
that means it has the power of lending
upon discount. But otherwise banking has
nothing 70 DO with the currency. It's very
true that the banker is bound to pay his
debts in currency, but so am 1. So are
Barring Brott eTs; so is every trader in the
Kingdom. 1t is perfectly possible that to
morrow morning at 10 O'Clock every credi-
tor in the Kingdom can ask for gold. He
would have 20 take a bank-nOte, but he
can get the money from the Bank Of Eng
land.
Now, what IS the good of all this investi-
CATION? What reference has it to crises?
This: that, as l said before, as banking is
the region for the commercial typhoOns and
hurricanes, il is essential to see the causes
that act upon banking, and it is not from
such rubbish as a certain quantity of bank
notes, certain things in the t3 IN the hun
bred; it is from these ninety-seven things,
and they are goods, are property, are goods I
sold, parted with, and the contract ex-
lItoocu vi DtcCc> Vi " pay llOhcl Oil
demand or at the time specified. That is
the force of banking, and, therefore, gentle
men, if banking is abundant, it is because
many goods have been sold, and the sellers
of these goods do not want to buy much
Let me repeat it. Banking is easy, dis
count is easy, the rate of interest is low, in
the proportion that men have given away
their goods and are not disposed to buy to
porrac nrnHirofr m aytaut Of Of ar moods
Then bankers have much to lend. But
when this is the other way; when the
farmer has spent all his capital in caring
for his farm, and the bad and naughty
weather comes in August, and the corn is
spoiled, then the poor farmer is in very diff
ferent circumstances with his banker
With good harvest he has plenty of time to
wait. When he has no wheat, or little to
sell, he goes into tOwn-perhaps has his
old horse to replace with new One-and
he puts nothing in his bankers hands, and
very possibly he asks him to lend him
money. Look at the effect upon the bank
er. His means are reduced because the
farmer deposited nothing and perhaps
wanted money, andto whom he must lend.
That is abundant means for banking and
poor means for banking.
Mr.. DOdge-The point we would like to |
get at now is this: Can anything be done
10 prevent the panics?
Prof Price-Then l must pass over to
the other side, and take up the silk man.
The banker has 900 to collect for the
cotton dealer, and he collects It by giving |
it to the silk man to boy silk. If the silk |
man is doing good business, there is no |
destruction. When payday comes he has |
sold his silk, and there is no disaster. The |
buying and the selling equaliZe one another.
Suppose the banker lends to a gentleman |
of great estate, 10000 year, whose land |
is capable of a great deal of improvement, |
and who wants to lay out $4,000 upon it. |
The banker is satisfied with the solidity of |
the Squire, and lends him the $4,000 to |
drain his land with. The man goes on |
draining, and what takes place? He puts |
laborers to work. They eat, they drink, |
they wear their clothes out, and so on. The |
work NAV take couple of years. What |
has been going on? A great destruction of |
property, which is not reproduced. If you |
were to set all the inhabitants to making |
holes in the ground, and then to fill them |
up again, the result would be that at the /
end of the year they would all stsrve. You
would want to get your collins ready, be-
cause you have been eating up all your
stores, and when the operation is over you
have nothing at all. Then how is Mr..
Banker in his position. The Squire
cannot pay. His draining has not
been productive. The produce will
come five years hence. But the
the food and clothing Ofthe workingmen has
been used up. Now, this makingofrailroads,
warehouses, beautiful towns, etc, are not
foolish things, but they are things which
destroy and do not replace, and that is DOW
erty. Poverty means that there are no
goods to sell, and when there are no goods
to sell there are 10 goods to buy with. The
bankers resources fail therefore. Then |
come the crises. They are the consequences
of the destruction Of property which is not
replaced. They are the true children of
poverty, and that kind of poverty which
produces crises is never more fostered than
when bankers encourage useful things.
things useful twenty years from this day.
The railroad does not replace its money for
fifty years. If the actual outlay is f1O.-
OO0, 900, this FLO, 1000, 900 spent in food, ETC.,
are not replaced in fifty years. The nation
is poor for fifty years. Now 90 on with