Fort Worth gazette. [volume] (Fort Worth, Tex.) 1891-1898, 1891-06-18
WHICH SHALL IT BE-?
MORE REAL MONEY OR lNSUB-
STANTiAL MONEY
Gold, Silver and Paper are Basic Money,
Bank Credits Inflated Currency-A
Question fol- Farmers and Others.
BANK CREDITS.
From Facts About Silver.


But gold silver and paper are not the
only kinds of money that act on prices:
Bank credits, or credits on the books of
banks subject to check, perform, within
certain limits, the chief functions of money.
They not only take the place of money, but
they effect exchanges and close transac-
lions the same as actual money, and to the
extent they do this they affect the prices
the same as so much money would.
So that, the real effective currency, act
ing on prices, is made up Of gold, silver,
paper and bank credits, which might fit
tingly be called confidence money, since
the extent of this character of currency de-
ponds largely on the confidence people have
in it.
The relative proportion of this credit
currency to the actual money in the country
is difficult to state accurately, but the
report OF the comptroller of the currency
shows that in October, 1880, the 1916
national banks had on deposit, subject to
check, 1885, COG, coo, and that all other
banks and trust companies had on deposit,
subject to check, exclusive of saving de-
posts, S1,O14, 000,o0O The deposits in
saving banks was 81, 524, 900, Goo
Against this credit money the national
banks held of actual money-gold, silver Ce,
and all other banks $1S5, PSI 900.
Tins, altogether, the banks held but
s475, 6S9. 900 of actual money, and on this
built up structure of credit money OF
81, 604, coo, 900, or, including saving deposits,
of 81. lbs, 00O,0
1t is impossible to give the relative eff
fciency of this credit currency and actual
money, but it performs very large per
cent of all transactions in the large cities.
The real condition of the currency of the
United States last October may therefore
be stated in round numbers, as follows:
Actual money in the hands of
the people. ..............sl 81, o25, 600, 600
Actual money in the vaults OF
banks. NEUTRALITY-SUSPICIOUS. f'o,uoo,UVu
Total actual money. ....... 1,500, 600, goo
Bank credits subject to individ-
ual check. ACKNOWLEDGEMENTS. 2,bU4,U OU,Ouu
Savings deposits subject to call
on various conditions. .... !, 524, DOC, 900
If we leave out the saving deposits we
still have credit currency created by the
banks from S475, 900, 900 of actual money, of
81 604 000, Co., or, deducting the s475, 0O0, 600,
and we have purely credit currency of
81, 1919, 900, 900.
This is currency as much if notes were
issued for this amount-currency as much
as were ever held the old state bank issues
and it initiates and contracts in the same
way.
This volume of credit is creation from
nothing, resting on confidence alone, and
amounts to more than S. to 81 of the money
it is based upon, and if savings bank de-
posits be included, it amounts to S. to 81.
A withdrawal of S100, 000,0 900 of actual
money from the banks, therefore, compels
the contraction of their credit volume from
five hundred to eight hundred millions! 1t
is plain enough to see that right here, in
this purely credit currency, is where all
the sudden contraction and expansion OF
money takes place. 1t is in this credit cur
rency that all our money troubles originate.
Here all panics begin
1t is by loaning this credit at interest,
this currency created from nothing, that
banks derive their large dividends. Their
loans must be largely on call, so that when
confidence is shaken they can call in their
loans and let the borrower take the conse-
quences.
DANGER TO SAVINGS DEPos1ToRs
It is claimed that the restoration of sill
yer would reduce the value of the savings
of poor people in savings banks and trust
companies.
But who ever sustained loss from
banks having too much actual money in its
vaults, or from too much gold and silver in
a country? The real danger, and the only
danger to savings deposits, comes from
the over-expansion of bank credits, and not
from too much gold and silver money.
WHAT THE BANKS WANT.
The great banks of the cities want the
single gold standard maintained, silver and
paptT 1Iu luduc TcuCCIl1Ol6 III
gold, and the supply of currency left for
them to provide in the manner. Just set
forth. This is the English system, only
their bank credits reach ten to one of actual
money.
WHICH SHALL IT BET
Which, then, shall it be, an enlargement
of basic, primary money, accessible to all
through the mines, or bank credit currency
created, contracted and expanded, as the
interest of the banks alone may dictate?
The wise thing to do at once, it would
seem, would be to restrict bank credits and
enlarge proportionately the metallic basis,
and if this is not enough to make up for the
restrictions Of credit, enlarge the volume
Of paper money.
This would be but substituting a sub
stantial kind of money for very insub-
stantial kind, and one regulated not in the
interest of the few, but self-regulating
through the mines, or, if paper, regulated
in the interest of all and not of one class.
No question before the people so deeply
concerns all classes, the farmer, the labor
er, the producer, as this which affects the
welfare Of ell