Weekly Chillicothe crisis., 1885-04-30

the sort of expansion and contraction
which took place under State banks.
On the other hand take away the |
profits ON issuing currency and the |
banks will take away the currency it.
fcf. This is the condition of things |
now. 1t comes to this then; ii you make |
| il their interest to do SO the banks will |
put out an abundance of currency, even
10 the widest initiation; but if it is not
made their interest to do it they will
not put out any.
And this is the principle on which the
currency volume is now regulated in
this country, and ON this volume, say,
depends in large degree the business
concerns Of the country, as well as the
value of everything that enters into
commerce. For, say what YOU will, the
truth IS such currency, for the greater
purposes OF trade, has the same inllu-
cncc on prices rs 50 much gold and sill
yer would have. and by placing in the
hands of these corporations the power
at will, or as their interests may prompt
them. to change the volume Of circula-
ton, you place in their hands the pow
er to control the value of all property
and the obligations of every existing
} contract.
attack, therefore, the very principle
OF bank regulation of currency. 1t is
unsound 1t is Lawism and nothing
else. John Law proposed 10 issue mon
cy on land Why not on land as well
ds on bonds? 1t would seem that land
which is by nature limited, ought to be
as secure as bonds that may be unlim-
: tied. The value depends on quantity
as compared with use; final payments
/, upon the assets of the issuers; and this
b is true whether the issuers be the banks
: or the government.
70 come now to the principle on which
= those who favor bank regulation of
Il currency lay great stress. The banks,
= they claim, adjust the volume of cur
rcncy to the demands of business; that
y they give out and take up circulation
t in response to the wants OF trade, so
Il that there will always be Just as much
" currency as business requires and no
; more. The real contest is over this
= principle, for if such an adjustment
IL were possible there would be great
: force in the argument in favor of bank
regulation of currency National banks
= take out circulating notes equal to sc
1t per cent of the bonds they deposit.
= When once taken ont they are out tC
S, stay. In this respect there is no differ.
)t encc between national bank notes and
d grcenbacks. The banks do not even
d pretend now to be governed by any
If such principle as is claimed for them
y But if they did the principle itself i,
: deceptive. The old State banks claim
= ed TO act on this principle but the re-
l. suit was always alternate imitation and
H. collapse Such relation or adjustment
=, from the nature of thing is impossible
d No doubt there is greater business ac
u tivity Mt one tim than another; great
y er number of exchanges at one time
VI than another, and if the demand fol
money grew only out of this relation
L. there might be some reason for sup
rs porting the elastic principle, as this
OF principle is called, in currency regula
cs tion, But no sooner is currency issueC
ST in abundance than arise of prices take!
Sc place: and every rise of price is new
+ demand for currency, When prices
n are doubled the demand for two dollar.
TO make an exchange is as great as tn,
+ demand for one was before the rise.
e. In short this is demand that is new
n cr satiatcd You might as well talk o
n adjusting fuel to the flames. The de
IN mand for money was never greater thai
ry in times of greatest imitation during
ST. and at the close of the war. Lord Ov
w crstone said in his evidence before tn
parliamentary committee in 1877 pag
of 36j). u nave no hesitation in sayin!
Ia that the Bank Of England can put on
" any quantity of its notes that it think
lc- proper think this is enough to shoy
is that the elastic principle in currenc,
MS regulation is Il fallacy. Indeed it is
he notion long ago exploded, but neverthe
to less one of those persistent errors tina
be are all the time coming up anew.