The Ottawa free trader. [volume] (Ottawa, Ill.) 1843-1916, 1880-11-27
CURRENCY,

CURRENCY,
The report of the comptroller of the curren
cy states shat no notes of less denomination
than So have been issued to the national bank:
during the past year, but that there has beer
an increase Of nearly $3,500000 Of greenback:
of less denomination than s.. The comptroll
or admits that but for this increase there woulC
have been greater demand for silver dollars
but he is opposed to the silver dollar ant
wants it discredited as much as possible, TIL,
national bank circulation during the year has
been increased about 100000, making tn,
present sum total of national bank circulation
and greenbacks $6SS,0000O0. This increase
however, he says Is no imitation, as it grew lie
ultimately out of commercial movements. A:
for that matter, can there be an Imitation o.
the currency from any Increase of natlona
bank issues9 An Imitation can arise only
from an undue extension of credit, as the ISSUE
of four or five dollars by banks under the OLD
state bank system for every solid dollar in
their vaults. But In the case of the national
banks, S110 Of actual wcalth-governmen'
bonds-equal In value to gold, must be put W
for every dollar of paper circulation they re
ceive,-in effect the same as if they put about
$l.15 in gold (at the present value of bonds,
into their vaults every time they issued dollar
OF paper. There can be no initiation of the
currency, under the present arrangement ex
cept by an increase of the greenback issue
without corresponding retirement of gold
for their redemption. An imitation Of credit
however, which is about The same thing as an
initiation of the currency, is always prac,ica.
bic, whether we have national bank bills and
greenbacks, or no other circulation than gold
and silver. A greenback, after all, is but a
note of hand Of the government, as q national
bank bill is but the well.secured note Of hand
of bank. The banks don't need little cop
pcrplate pictures from the government to en-.
able them to issue these notes, but they can
issue them to the amount of millions in the
shape of bills, drafts, letters of credit, sc.
Enormous monetary mutations are brought
about in this way without an apparent dollars
variation in the sum total Of the so-called cir
culating medium Of the country. Thus mon.
ey seemed never so plenty IN this country as
in 1923 though IN point of fact there had
been material contraction as compared with
several years previously, OF the actual paper
and metallic circulation, and so at present,
been no imitation" Of the currency, there is
evidently an enormous and alarming initiation
of credit taking place, and just .as certain as
time flies the day is coming, and is nearer at
hand than many of the wisest imagine, when
again the bubble will burst and the Jay Cooke
general smashup of 1873 will be repeated.
Thus the actual amount of currency IN USE
or in the country at given time, is seldom a
reliable criterion of the extent of the contract.
ion or imitation at the time. 1t Is amazing
how large a business can DO done with very
little money. AS familiar example, take the
amount of business done between the L.
S. and foreign countries during our long peri.
Cd of suspension. 1t never amounted to less
than 81 900 0O0,0 600 year and often to 81 200,
600. Yet all that business was done in
gold, and at no time during that whole period
were there over SSOOOO,OOO of gold in the New
York, Boston and Philadelphia banks that did
the business, and year IN and year out, the ac
tual sum of gold in those banks seldom varied
ten millions. The whole business was done
with gold drafts and bills, and no actual pay
ments in gold took place except IN small sums
to settle balances.