The true northerner. [volume] (Paw Paw, Mich.) 1855-1920, 1879-12-26
FINANCE FOR THE PEOPLE.

XIV.
COMMERCE MAKES IT'S OWN CURRENCY.

depo 5ltors IN Danks tnan tnere are IN REV.
England, and every depositor could make his
own money by drawing checks whenever he
wished to buy or pay anything, would there be
any lack of money? But Thomas has put all
his money into land, buildings, or other proper
ty. Richard has spent his in pleasures, and
Henry his in speculation. They all lack money,
not because there is not enough in the country,
but because they have spent all that belonged
to them. One cannot "eat his cake and have
ii too Men who will have speculations or
pleasures, cannot have the money which they
cost. Men who VIII get more land than they
can well hold have NJ right to any part Of the
means which others have earned but not spent.
This Is a common difficulty at the West and
South. Hopeful men have spent so much in
getting lands, buildings and railroads, that they
have not enough left to take care or what fixed
property they have bought.
Men who have not spent their earnings, in
buying fixed property or otherwise, can get
money when they need IT. Farmer Jones sells
Lis wheat for $4,000, pays $4,000 elsewhere.
and $4,000 at the store, and takes for the rest
check on good bank. That is buying
power which he has earned and not vet spent.
In time he goes to bank, deposits his check,
and gives one to Smith for $4,000 to pay for
more land. Now he has left only $500 OF I'M
spent buying power, but has bought land and
paid debts without handling dollar OF money
VIII Smith prefer cart-load OF silver dollars
to a good check for 81, 1900? The dollars are
money, but 1T costs too much to cart them
away. The check transfers the same capital
just as well, and with less risk and trouble.
Less than one-twentieth of all payments in
this city, and less than one-tenth of all pay
men's in the whole country, are made by the
use OF money. Buying power, or capital, is
transferred in every case. But less than one
tenth of it is transferred by all the money-that
Government prints or coins.
The West and the South buy in a year goods
worth 73000,0OO,OO0 from the East. They
send us no money, but products. Merchants
ship wheat, cotton or hogs, and make drafts on
Eastern men for the price. Then the East
sends back goods, and draws ON Western men
for the price. The two sets of drafts meet IN
banks and clearing houses, and pay each other
What money is needed Not a cent, except
to settle the small excess OF drafts on one side
or the other. AS to the vast value which is
equal in both purchases, few lines in the
books OF banks settle it forever. Yet it is said
that more money is needed for the wants Of
trade. AS well say that more two horse
wagons are need to- move the crops from
Chicago to Now-York, when the grain really
goes by rail or water.
Trade makes its own carriages for the trans
fer OF buying power. These do ten times as
much paying now as ali the Government money,
but could as easily do ten thousand times as
much il there were need There is absolutely
no limit to the payments that can thus be
made, without any use OF money, as long as
the value bought at one end Of the route equals
the value bought at the other end. Money ia
used only to settle the small excess OF pay
ments to section or city over payments from
that section or city. Within each section and
city, too, the settlements are made in the same
way, By exchange OF drafts, notes, bills and
checks IN the banks, The little differences
only call for money. This wonderful machin-
cry OF modern commerce expands or contracts
as trade requires II there is much to do. paw
ments without any money will rise in New
York to sl5O,OOO,0OO daily if there is little to
do, checks and drafts amounting to less than
s50,O0O,0O0 daily are exchanged. Yet, whether
trade is dull or active, only small part OF the
$50 100000 in money which lies in the banks is
moved or touched. What need can there be
o. more money to meet the wants of trade" Z.
When Farmer Jones has q great crop of hay, I
does he send of In hot haste for more steel |
yards to weigh 1t with? He knows that the
one set of scales in the village will weigh all /
the loads OF hay he can drive over them. So |
enough money to give the banks safe reserve
Ind to pay small differences 10 all that trade
wants or can use.
But 1t Is said, France has 81 ,000, 600, 900 OF
and therefore we need as much" 1t
would be quite as sensible for Smith to dig up
his corn because he saw Jones digging his po-
tatoes. The two countries differ essentially in
their methods OF trade and finance. Here
banks and savings banks bold the savings Of /
the people, and do nine -tenths OF their paving. |
But in France boarding is the habit more than
IN any other civilized nation. There the vast
mechanism by which we make payments with I
out the use of money is hardly known Must
we abolish railroads because in some other
country people stilI use stages Banks and
clearing houses are the railroads OF modern
finance. A little difference in the development
and use OF that system makes vast difference
in the amount OF money required. Only those
who have but half walked from a Rip Van