The Labor enquirer., 1884-10-18
PRINCIPLES OF FINANCE.
BY GILBERT DE LA MATYR, D. d.

lCOnLlnueQ from laSJ week.
We will present the salient points of the
Venetian system by quotations from the cele-
brated work of Stephen Colwell on THE
Credit System" .,.-. =
THE DEBT OF THE REPUBLIC, LIRE OUR OWN,
THE BASIS OF THE CURRENCY.
The public loan of Venice, which gave
origin to the bank, was forced but the whole
subseqent history Of the bank and the public
credit Is one of entire confidence on the part
of the people, and admirable prudence ON the
part of the government Venice made the
public debt the chief currency or medium OF
exchange in all the large operations Of trade,
and the public debt was wisely kept at that
amount, which not only preserved its value,
but furnished the full quantity of currency
required for trade, with the means ofincreas-
ing or diminishing the amount according to
the proper demand. This mutual confidence
and prudent management are creditable
alike to the financial skill and intelligence
Of all concerned. The government enjoyed
a loan, free OF interest, equal to the whole
capital of the bank, without having given
any special guarantee or any evidence of the
debt, except an inscription on the books OF
the bank; the people enjoyed a currency
which for centuries stood at high premium
over gold and silver.
THE DEBT SUBSTITUTED FOR CURRENCY.
'The facility OF payment furnished by the
bank, which made it the admiration OF
Europe, honorable at once to the government
and merchants of Venice, and support to
the pride and power Of its people, consisted
in substituting as a medium of paymentthe
debt of the republic, for current COIN
THE DEBT MADE LEGAL TENDER.
1T was established by solemn edict OF the
republic that all payments of merchandise in
gross, and Of bills of exchange should be
made only in bank, and that all debtors
should carry this specie to the bank to re-
ceive credits in bank therefor, and that cred
itors should receive payment in bank by a
simple transfer from their debtors. r.
SUCCESS OF THE SYSTEM.
This system Of payments was so well
adapted TO the exigencies of commerce that
it was maintained in full vigor in the great
commercial city of Venice, for almost four
hundred years.
''The Bank Of Venice enjoyed reputation
Throughout the commercial world which
greatly promoted the success of Venetian
trade. 1t was atower of financial strength to
the republic in the long and expensive wars,
and of course contributed no small share to
the celebrity of the city, as well as to its
power and wealth. There is no evidence
extant that the Bank of Venice ever caused
any arrangements of the social economy
The voice of the best authorities is all the
other way. '-Es *
THIS sYsTEM BEING LEGAL TENDER FOR
DEBTS GAVE IT SUCCESS.
ITO comprehend this extraordinary fact of
a credit on the books of bank, with no
money in its vaults, and not bound to make
that credit good in later times, even by the
payment of interest, or to redeem it in any
way, having been for hundreds of years at a
high premium over gold and silver, we need
only remember that these credits were the
funds in which debts were chiefly paid. If
credits had been convertible at will into the
precious metals, the agio could never have
originated, much less attained so high a
point, for the moment the holders of credits
advanced the price, specie, if legal tender,
would have become the medium of payment
as the cheaper medium.
ALL THE BULLION NEEDED EASILY OBJ,
Tanned.
"Those who had occasion for gold or silver
purchased with their deposits what was re-
quired and, with a slight exception. for more
than four hundred years the precious metals
were at a discount compared with the bank
funds, the demand for that which would nav
bills of exchange being greater than for gold
or silver for any special use to which they
could be applied
These quotations from an unouestioned
authority, exhibit system Of finance in all
essentials, such as we need, They answer
every objection urged by the defenders of the
national bank system.
The Nenetians used all their specie for
foreign exchange. They took their gold and
silver to the bank and received credit there
for, which credit they used for home ex-
changes, The government ussd the specie