Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1878-08-13
From the New York Tribune
About Bonds and Interest.

This bank money costs too much" say many
men who are sensible in other matters. They hud
faut because the Government pays interest on
bonds deposited by the banks, while the people
also pay interest on the money borrowed from
the banks Puting both smounts together, as
'the cost of kecpng bank bills in circulation"
these persons fancy that this sum could all be
saved if the Government would issue greenbacks
instead Of the tank notes. The msappyehensions
here involved are wonderful. VINO pays this
double Interest ?" The Government pays inter-
est on ITS bonds but it would have to pay exactly
rs much If the bonds were held by an, body else.
Should it compel the banks to sell the bonds now
deposited by them, it would still be necessary to
pay the veIy same sum as interest to those who
might buy the bonds The beginning aud end Of
that matter Is that the Government has borrowed
money IRON The ba.ks and pays interest on it,
The Government needed money; the people who
organized National banks had money; aud the
Government borrowed from them, gave them its
bonds, and pays is Interest for their money loaned.
Not cent could be gained, by the Government
by the people, if the banks should be forced to
retire their circulation and sell their bonds to
some other persons. The debt would still re-
honest it will stll pay interest on that debt.
But the people also pay interest. Precisely ;
and why no,' They borrow from the banks, and
pay interest because they can gain something by
doing So For example, man wants to buy a
farm, but lacks $ 900 Of the capital required. lie
goes to the bank borrows the capital needed, paws
$50 $50 yearly, and his land yields him profit
of $500 or $500 yearly. Why should he grudge
the trfe which II costs to employ the capital of
otnersi Sometimes, of course, borrower does
not gain by his operation. But that Is because he
does not wise y invest the capital borrowed; per-
haps he has borrowed more than be can plohtably
use. III so, he has only himself to blame If he is
judicious, he will borrow oay where the of
capital not his own viii enable him to gain more
than he has to pay for its use
Suppose the Government issued all the curren-
cv and the banks issued none where would the
man who wants capital 90 for it Not to the
Treasury. The Government borrows, but does
not lend. Necessarily, he would go to a money
lender; perhaps to the very who now man
ages National bank. Moreover, he would
pay at least as high interest he
pays for money borrowed from Nation.
al bank Nobody will 90 up and down 10
the land lending money for nothing, or for smaller
interest because government has issued more
greeIbacks. He who has capital will still demand
pay for the use OF it, and he who lacks capital will
sull have to borrow 1t as best he The men
who are national bankers will, of course. take
II cir capital out of that business, when they can
no louger issue currency; being acquainted with
the money lendisg business, they Will naturally
become private bankers OF course, they will sell
the bonds now on deposit; they cannot afford to
have monty drawing only /, OF = or per cent.
interest Wnen they can lend 1t private bankers
al OF per cent. Somebody else, perhaps in
Europe, wIh draw The interest from government.
The banker getting back his own capita will
lend 1t as he does now, and the man who needs 1t
aud borrows will pay at eas; As much for it.
Who, then, will be helpedi Not the govern
ment: 1t will pay to some holder of It's bonds ex.
actly the interest which il paws to a National
banker. Not the borrowers they will 20 to the
much for 1t ; they pay now. Possibl, the banker,
for he will then be engaged 10 business which no
knavlsh repudiatvr imperl. lie viii care
nothing for the ere lit of the government, except
A, ANY citizen may care. He will be Lending his
own money, and viii take care to get good secur-
iiy. The race of uev-leuders never m tde gaia
rapidly As III that age when the poor tried to
eNtoit wealth by fortunes from miserable Jews
The more harsh just or brutal the public senti-
meLt or the laws, the higher will be the rate of
interest demanded by those who have money from
those who need 1t. In country of great unde-
vel Iptd resources and many hopeful and enter
prlsng borrowers, the man is a public enemy, and
particularly an enemy OF the borrowing Class, who
tries to disturb the foundations of credit or to I'M
PAIR the security OF capital.