The daily gazette., 1875-08-09
|BULLIoNIsM ANDlBANK INFLA-
TION.% ~
Frow tie Oalcaco Inter. Oceo

From tie Chscas0 Inter Ocean.
we print elsewhere u letter from Nj :.
Henry Carey Baird, containing COM
pilation from the London Economist
OF May 10, OF the reports of thirteen
London JOINT stock banks of the date
of December 81, 1874. These thirteen
banks had at the date of the report
212, ,753, $50 capital and surplus. OF
this sum Els, ,545, ,063 was invested in
public securities and1 cal estate, leav-
Tag available for the business of bank
ing R207, ,S96. On the strength of this
small small sum of money they secur-
ed, in deposits, G100,605, ,0e5. What
did they do with the money of their
depositorss They deposited with the
Bank of England ETA, ,586, ,3G6, and
loaned e100, go, ,SS5. That is to say,
after investing in interest-paying se-
curitiies and zeal estate all their capi-
tai except ee07, ,996, they were able to
loan all their deposits except G100, 700,
and still have on hand in cash and in
deposit with theBank of EnglandG14,-
$50, SOFA sum larger by nearly &C.
000, 600 than their entire capital and
reserve > twill be perceived that the
only way to account for the fact of
the thirteen banks having any money
on hand and having and deposit with
the Bank Of England is to assume that
they had endorsed and rediscounted
about a18 ,000, 900 of the notes purpor-
ted to be included iu the sum total of
their "loans and discounts. It Is In
this way that the joint stock banks Of
London are enabled to invest in in
terest paying securities ever penny of
their capital and surplus and bank ex-
clusively on the funds of their deposi-
tors. An examination of these banks
on the 31st of December 1874, would
doubtless have disclosed the fact of
the absence from:.the 100,5C4, 1886 in
loans and discounts, ," as appearing by
the statement, Of bills to the amount
of about ei6, 900, 900. In other words
the joint stock banks of London make
a practice of keeping up their entire
reserve of cash in till and deposits
with the Bank of England, of indors-
ing their customers notes TO the extent
of their entire capital, and borrowing
money on them.
They do not, however, state this fact
to the public, nor make it part Of the
records. Indeed, they are very sensitive
on the subject. In the course of evil
dence given before the House of CON-
mons select committee in 1858, Alderman
Salomons, of the London and Westmins-
ter Bank, said on this point: 81 think
ought to add land / believe it is the case
with all the banks, that the London
and Westminster Bank, from the day of
its first institution until the present day,
has never rediscounted BILL" In the
statement under discussion the London
and Westminster Bank docs not appear
to be chargeable with this offense, but
the aggregate is susceptible of no other
construction than the one we have placed
upon it. 1t follows that the presumption
of Alderman Salomons is entirely un-
warranted by the facts. We showed
recently that one of the banks included
in the statement in question the London
and County Banking Company-cleared
20 per cent. per annum on its capital, to
say nothing of additions to the reserve,
or six times the average rate of interest
in Great Britain. This fact shows the
value of the specie basis system to the
bankers! It is valuable to the bankers
because there Is practically no such
thing as specie redemption! 1t fails in
time Of war and in times Of panic.
Whenever confidence is destroyed, it be-
comes Immediately apparent that specie
payment is fraud, for WHEN any large
number Of bill holders demand gold they
are told that they cannot have 1t, On
this fraud the British banking system is
reared, and we see how the bankers fat
ten off the spoils. They make 20 per
cent. per annum, while their neighbors
make but 8 or A! So all the profits Of
the vast business Of England flow into
the hands Of the few; SO the real estate
Of the Kingdom has been gradually alb
sorbed into the same hands; 30 pauper.
ism and crime increase. The question
Of the day is: Shall we adopt the Brit
ish money systems