New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1890-12-26
THE FINANCIAL CRISIS.
THE LACK OF FLEXIBIllTY AND ELA>lO
lrY IN THE CURRENCY.
AIR VAS buren, DENSLoW DieOU'9N' sun
MEASURES INTENDED 10 lNPAhI I'M
NEEDED QUALITIES.

Tho nrcSpnt iinanclal cilSiS dhH '''N -
,hc Farmers, Alliance for unlimited loan oil IeS"'
BRIGHT orcenhacks to the farmers on 'heii oo.''"'
corn and wheat are the natural and io2Icai Sc
,,.nce and indeed. punishment, coming on inc
arr,r,, because of it's failure to provide an a''
ouo,e lending agency, ny ard through "tlch "
,mo;ont volumr of money can h0th I've Iodho"
,.hon wanted ON commercial securities ana p'P'i
and can I've kept not merely fedcemape' p"'
actually redeemed in com.
This vouId he a National bank after the PAT
fern of the old Hamilton United States EahR u, VI
the Bank of England, Bank OF France anu LUZ
peria Banks Of Germany and EHssla 'o-"'S' W." wv
800 JOOO, 900 capital besides ocposiS' VIZ"
branches in the leading cities OF the couH"S' w
take the place of our National bahEhe N''",
so-callcd which is or was conSeries OF ii'"oP'
cnt severed branches without any uhl'lhS "uiiN'
Such q proposition would involve coh'ihu"'io'i
in existence of perpetuaiOn OF the portion VI oui
National debt now remaining unpalu' '"e p'H
ment of which is, in every point OF Vic"' "''''
Of capital. n
The clements OF the problem are these faper
Nancy issued otherwise than in loans upon com
.;oal manor ny n bank TO which it is regularly
recalled by the process of redemption cannon eN
oond apa contract 10 meet the changing demands
of the seasons.
Our paper money has not gone through lhe pro-
cess of periodical redemption IN coin IN thlr'y
years. partly because OF the existence OF green
back fund in which alone it is by law redeem
able. and which is known to he identical IN quail
itv with the note il redeemS and partly lor
other reasons which will appear as we procceu'
Hence the theory has grown up here that no
body wants redemption in coin, and that inc
ability to get coin fol any bank note, from every
one else but the bank that issues it, Is Just as 2oou
as redemption. and just good as its rctarn
TO the bank that issued it.
THE BANKING SYSTEM NEVER PERFECTED
Hence. the National bank system was never
perfected, as a system of circulation ana currency
sunnlv because its issues were never made redeem
able il, fact in coin and never in fact flowed
back TO the bank which issued them.
Hence the National banks We're never the means
of expapdng and contracting the currency with
the wants of commerce, which all banks ShouId
be and will I've if created under proper set OF
conditions.
Hence. each 100000 of currency issued 10 the
National banks had only the same ehect as u
would have had if it had been issued as green
backs. viz. it was a fixed addition To hN'd
volume of stagnant paper money unsupplicd WIN
n motive TO that form of circulation 1ouhu Ill
redemption.
Hence, tne DdnkS lOuIu Ho P'iin'''''' '''
in issliug notes because after lOaninc them once
thov never returned AGAIN to the same bank TO
'bc loaned They were not continually loanablc
fund like the redeemed notes of each of the conn-
trv banks of England, or of our American N'a'e
hanks before the war. The people did not Ike
the banks because they said, why cannot 'his
money be as we'll issued directly By the Govern
ment as by these banks?
Had the banking system ever been periec'ed ny
q withdrawal Of the Grecnback and redemption
in coin of the note there would have been an
effective answer 10 this question, VIZ, Because
q bank currency is elastic it expands when mer-
chants need accommodation and contracts when
II is no longer wanted, which a Government cur
rency cannot do.
The National bank currency involved the same
cost as if it had been made elastic but II possessed
M elasticity whatever The one object which
alone could Justify an issue of currency by banks
had not been obtained by it, though all the cost
of obtaining that object had been incurred ana
all the means had been used but two, viz. the
retirement Of the grecnback and the creation Of
a central National bank of large capital which
would supply all these discovered agencies with
a common point Of redemption, thus Supplying
all these limbs with n trunk, all these arteries
with heart and lungs. and these separate nerve
centres with brain.
BETWEEN FINANCIERS AND FARM RS
Having been KEEP, in n state Of emaciation and
marasmus Tor twenty wears. the National banks
az means OF supplying paper money. are now
diving while the iinauCierS on the one hand anC
The farmers on the o1hcr unite in a common cry
10 the Government 10 become. in effect. hanl
for their benefit. tie hEanCicrs SAYING: Pleas
lend TO MS. because We are rich anc can give Nol
good collateralS 10 lend on and the farmers
crying: Please lend TO MS because if vow don
we will kick you oUt Of power, as we form seven
ftecnths of the voters of the country already, and
by uni.ing with the Knights o! Labor we cai
easily control a majority OF the people
That the situation is one for serious consi cra
lion there can he no doubt.
II the Government becomes a bank for lcndins
70 the farmers on their wheat cotton, pork beef
oats reas. beans potatoes and barley, or, as Sen
ator stanford proposes. on their land. then w
all callop down the same steep place into the sea
as the swine of Judca travelled when the devil
went into them. Tie people of Bucnos Ayrc
have lust travelled over this identical route, an
rs the great and acute Barings We're sciuccd int
travelling il with them, we are not 10 a>sum
that because the scheme is mad therefore We can
not be drawn into 1t. The very pumbcr of thos
who will vote for il constitutes the sonndest an
strongest reason why it is mad scheme. For I
lend 10 people in proportion TO the numbers VII
would like TO borrow, and on a scheme OF equali
among all, the impecunious would bankrupt an
possible Government Treasury in a very few day
Tic Government can iudciously, as lende
only lend as individuals lend, viz, 10 the richie
possible borrowers, not TO the poorest possible
IL is limited in its capacity TO inquire as TO PEE
pies solvency, and while it can know the solvcnc
of one bank it, cannot know the sOlvencY of ever
farmer II must look TO the quality Of the s
,uri,y on which it lends, not to madeap wilkins
for leudng in u frenzy Of equality 10 all.
The principle Of Democracy breaks down wh'
il comes TO lending money, and the other prncip
applies that capital attracts capital, wealth ao'
jnspires confidence q 10 him that hath shall
given. while from him that hath not Shall
taken away If purpose 10 lend money
seek TO lend it only to the rich-the very rich-t
ricbcst nossiblc-then We know we will get