The Labor enquirer., 1883-12-01

1t, and that amount of real wealth must
be taken from the people by taxation
Abrasion will wear it out within fifty
years, and it must be replaced by draw
ing the amount out of the product of
labor again. In fifty years simple inter-
est at 8 per cent on this sum will be
S, ,000, 600, 900. This must be added to
the original cost, which makes $4,000, :
000, 600 If we compound the interest,
which we must do to reach the real cost
of such q currency to the people. we have
tho enormous sum of more than $18 600,
600, 900, which succ1e currency me0Nng
our demands would cost in fifty years.
If we put the volume at $1,000, ,0OO. 600,
which we regard q below what we shall
need on an average for the next fifty
years, we have cost of more than $685.
OO0, ,0O0, 600, as much as the entire country
is worth with all of its improvements.
These figures show US that the barter
system now is simply impossible.
THE BARTER SYSTEM TOO sLowAND GUNNER
SOME, AS WELL AS TOO COSTLY.
Before the substitution of paper for
specie currency, gold, silver and other
metals, had to be shipped to the place of
making purchase or paying debt. II
q merchant shipped any commodity to
another country or to distant parts of his
own country, he was compelled to invest
the proceeds in some other merchandise
which he could sell at home, and be out
of the use of his capital until the long
transaction was completed.
If he received coin in return, he must
wait for the shipment, both ways, and
bear the expense and peril. The world
has reached state of commerce which
utterly forbids this system of exchange,
and nations have been forced to substi-
tute, largely, a paper currency. Paper
currency is the herald of commercial ad-
yancement. n d
BILLS OF EXCHANGE.
Bills of exchange were the first effort
to substitute paper for coin. The system
of negotiating bills of exchange was first
instituted by the Bank of Barcelona.
There bills are we'll understood to be
drafts drawn in one city or country upon
persons residing in others. A merchant
in New York ships cargo to London or
Canton. As soon as his invoice and in
surance papers are perfected, he can
draw a bill of exchange upon the party
to whom he ships the goods. and obtain
of banker large per cent of the value
of his cargo. His banker has arrange
ments with house in the city to which
his cargo is shipped, so that the exchages
are largely effected without the shipment
of coin either way. 1t is not Necessary
to explain the intricacies of these paper
exchanges. 1t is sufficient for our pur.
pose to note the fact, that on very large
scale, paper currency is substituted for
the barter system, the highest phase of
which is coin exchange.
LETTERS OF CREDIT.
5 Letters of credit. are another form of
paper currency. "A merchant goes from
Philadelphia to Paris to buy goods, He
takes no coin with him, but instead car
ries letters of credit from a bank in his
own city to banking house in Paris,
draws bills and obtains currency there
to pay for his goods. Not one hundredth
part of the medium of exchange in COM
merce is now coin.
CHECKS OF INDIVIDUALS AND FIRMS.
In all large cities in Europe and the
United States more than nine-tenths of
business is conducted by means of checks
either on the credit of individuals or
firms. 1t is stated that the banks of
England have on an average more than
$500, 100000 in checks out marked
good" though they may not have
ST ,0OO, O,0OO, 900 of any kind of money in
the vaults. Our authority is Sir John
Lubbick. When California banks re-
ceiyed on deposit only gold, to avoid the
inconvenience of handling 1t, the check
system was used in payments instead of
coin. A,s...i
BANKS OF DEPOSIT AND EXCHANGE.
Banks of exchange and deposit were
early restored to, to escape the intoler-.
able burden of coin circulation. The
Bank of France was the first Of this
kind in Europe.
The intense activities caused by the
crusades inspired the creation of that re-
markable institution. Itwas established
in III, and destroyed only with the re-
public in 1897, standing firm as rock
for more than 600 years. Its system OF
exchange was essentially the same that
we advocate and we shall notice it under
another head.
The Bank of Genoa was fully estab-
lished in l407, that of Barcelona in i4ol
and that of Amsterdam in 1909. These
banks all had tie same object in view.
Their general principle was that money
deposited in the bank was not to be paid
ont. but that the credit of and in the
hank was to be used in the payment OF
dehts. instead of money. This saved the
loss in the coin by friction, clipping,
sweating boring, and furnished an inya-
riable representative of value. Debts in
considerable amounts were all paid by
crediting the party to whom the debt
was due. and debiting him who owed it,
These credits were made legal tender
and were at premium over coin, Dc,
cause all debts due the government and
the people had to be paid in them.
The present Bank of France succeeded
the Royal Bank which failed about l720
The charter has been renewed several
times. 1t was and is chartered by the
French nation. At first, its capital was
only 45,OO0,OO0, now it is 1872, ,Oeo,o0(
francs. 1t is located in Paris, but has
seventy eight branches in different part
of the nation. No bank but this one
can issue paper money in France. Inc
governors and two sub-governors are ap'
pointed by the nation. There are fifteen
regents and four censors, who Are ap
lpointed by the stockholders. The bank
receives and holds the money OF the
government, but allows no Interest
thereon. It's the disburslng, agent o
the government, and makes advances Z
| it upon treasury and mint bills or bonds
similar to the exchequer bills OF En-
Gland. or interest treasury notes OF Tn,
Tinted States. The notes of the bank
are legal tender for all debts due thu
nation. They are 50 made py law. In th'