The workingman's advocate. [volume] (Chicago [Ill.]) 1864-1877, 1876-03-11
MONEY AND ITS SUBSTITUTE

written upon the greenback question. 1t
appears il the March number Of the
Atlantic Monthly, and was written by
Henry c rey Baird. Much of the sub
stance at the article has been published in
and is already familiar to many
Of the best informed greenback men in the
country The entire article ought to be
read to be appreciated, because it covers
so much ground that it is impossible to
condeuse it without leaving out some of
the most vital points; yet it is too long for
publication in a newspaper, as it occupies
fourteen pages in the magazine.
Mr. Baird first points out that bank cred
its have largely superseded money in city
transactions, and that the clearing house
has been invented as a means whereby
this method Of paying debts by means Of
bank checks co aid be made most effective.
In England, it was found that 81 per cent.
If the transactions OF Sir John Lubbock's
bank consisted of checks and bills. Not
quite q per cent. of bank notes, and
little more than ! J per cent, was specie;
from which fact MIR. Baird argues that,
whereas 80 much paper and so little gold
is used in specie paying Great Britain,
it is matter Of little consequence whether
any specie at all is used. He says:
Let us trace out the mode of the creation
and the nature az the instrument of pay
neut by which these great sums were paid,
and see if the baselessness Of some Of its
pretentions cannot be exposed. A new
bank is started in London, in which the
stock subscribed for is paid in almost en-
tIrelv by means of checks drawn against
deposits in the Bank Of England or other
London banks, not actually representing
money i'll hand, Of either gold, silver or
PAPER, but mere credits on the books OF
these banks. A new credit institution Is
thus created, with a capital Of perhaps
Il 600, 900 or G., 600, 900 But no addition
has been made t. the gold or silver coin If
the realm, or to the paper money. The
operation is a mere transfer of the owner
ship OF credits from individuals or corpora
lions to the new bank, and these credits
usually remain with the Bank Of England,
while they continue to be the property Of
Of the new bank. Customers now come
TO the new bank, and ask loans and dis
counts on stocks and bonds, promlss DRY
notes and bills Of exchange Credits are
carried to their respective accounts, and
are called deposits. These last-named
transactions had been mere exchanges IF
credits between the bank and its custom
ers. Some portions Of these deposits are
now transferred, by means Of checks, to
the creditors Of these deposlturs, and
Il these portions, some may remain with
the new bank to the credit Of new parties,
while others are taken To other banks and
are there deposited The checks on the
new hank are met at the clearing house by
checks when the new bank holds against
other banks for a sum perhaps almost
equal to, or IN excess OF. these checks
Only the balance, whatever it may be. Is
paid, and this Is done by check upon
the Bank Of England, where all the other
banks keep their accounts. These trans
actions 60 on from day to day and from
week. Very little money passes, but i'm
mense debts are effectually and completely
paid by the mere assignment of the
ownership Of these bank credits, which are
wholly without intrinsic value. These
bank credits (deposits) perform for the
rich and powerful all of the functions IL
money, and there is hardly any limit be-
yond which they may not be Increased ia
great city like London, where bank loans
are wholly unrestricted by law, and where
the use OF checks and clearing house
causes INT slight demands upon the banks
for money Of any kind On December
81, 1874, thirteen joint stock banks in
London, with capital and surplus Of
f13, 1913, U59, showed loans and discounts
amounting to 600, 504, 80, and held de
posts Of tl00, 605, 0S5 Four of the banks.
the London and Coventry, London and
Westminster, London Joint Stock. and
Union, which IN 1874 had held deposits
amounting to t7,743. 900. held in 1874
tS4, 537, l67. These deposits are the crea
ton Of these four and other banks, a mere
exchange Of credits between the banks and
their borrowers.
Mr. Baird holds that this creation Of
bank money, by initiating bank credits, un-
doubtedly furnishes the means of paving
for labor, and thereby enhances the pros
perity of Great Britain; but he claims
that the substitution of legal tenders for
these bank credits, would promote the
prosperity Of a nation much more rapidly;
and the reasons which he gives for this
opinion, no bulllonist can argue away OF
dlsprove. He builds up an argument in
favor Of legal tender paper money which
no bullionlst will attempt to answer, for
the SIMPLE reason that no satisfactory an
swer can be made to it, The weakness of
all bullion articles must be apparent even
to the most bigoted bullionist who reads
MIR. Balrds atlantic article. Summers
gable will no more compare with the
plain logical conclusions of Baird than the
mouthings of parrot with the brilliant
wit OF Shakespeare. The sole object of
bulllonlsm Is to restrict the current money
OF the realm and initiate bank credits. and
this rascality can no longer be disguised
by the pretended wisdom Of so-calIed
tnanciers, who are employed by the banks
to mlslead the public. 1t is a most sIgni
hcant fact that none OF the bullion papers
have noticed Baird's article. They never
notice anything that is strong, if they can
avoid 1t, and if they cannot avoid it, then
shey misrepresent such opponent 50 out
rageously that the readers of bullion pa
pers can never know the real position of
any greeuback man, from reading bullion
papers
WE hope all our readers will carefully