The Democrat. (Scotland Neck, Halifax Co., N.C.) 1884-1896, 1891-08-06
BANKS AND MONEY
Communicated

that there is being formulated a teel
ing for the Old banking system that
existed in the states before the
war. The present National banking
system is almost an intOlerable
curse, bat it is far superior TO the
state system. Our greatest oUJec-
lions to the National banking
system are that it IS founded upon
the Indebtedness of the government,
and that the government at the
expense of the people or at least
without any expense to the Banks
increases their working capital
ninety per cent, and at the same
time gives them power to expand
or contract the currency. The plan,
proposed by the Neacs & Observer
and other journals are by far more
Objectionable than the National
system. | take 1t that no honest,
sensible man desires any kind OF
money in circulation that is not as
good as gold and will not buy as
much and pass as rapidly from hand
i to hand as gold.
Under the constitution no state
can coin gold or silver or fix their
value, or limit bills of credit, or
make anything a legal tender in
the payment of debts except gold
and silver. 1t is as clear as the
sun IN his MONDAY splendOr that
no state, Or state institution or
private concern or individual, can
make and put in circulation as
money anything and compel cred
itors to receive the same in payment
of what may be due them.
The government of the United
States alone can make legal money
and put the same in circulation and
compel creditors to receive it. The
system of banking proposed and
advocated by leading State papers
as we understand it, is this: A. B.
and C. have one hundred thousand
dollars in gold. They get charter
from the state to issue two or three
paper dollars for every one dollar
they have in gold, and then loan
their paper dollars out to the people.
This plan is more obnoxious than
the national bank. 1t not only
increases each bankers capital
ninety per cent, but it increases 1t
from two to three hundred per cent,
with no guarantee of the redemption
of more than one third of this paper
money III gold or it's equivalent,
with power to initiate and contract
the currency greater by far than
the national banks now have. II
the national banks should initiate
the currency, every dollar Of inha-
ton would be equal to gold dollar;
If the state banks should initiate
the currency it would take two OF
thee dollars of the initiation to be
equal to one dollar III gold. There
is and never will be any danger OF
the national banks initiating the
currency too much, but however
much they should initiate, the
national government would be re
sponsible for every dollar of the
initiation.
The state banks would be always
tempted to initiate the currency toe
much. while no one but the bank
would be responsible for the re
demptlon of the imitation in gold
The national bank if it so desired
could not initiate the cDrrencS
beyond the face value of the bond
deposited with the government fol
the redemption Of the bank bills
The state bank could initiate from
two to three times the value of the
, gold held for the redemption Of the
imitation.
How could one hundred thousand
dollars in gold redeem in gold two
or three hundred thousand dollar!
in paper money! This would bt
all the security and guarantee thu
bill holders would have for til,
6 redemption of the outstanding bills
But aside from all this, what pru
dent business man would Ieceiv.
these bills in payment of debt
f when he knew absolutely that tn,
bank could never pay the bills
" hen he knew as fact that th,
bank had only enc dollar IN gold O
other property to redeem ever,
r three dollars outstanding agains
the bank? 1t is no argument t,
say they would not (the Bills all b,
presented at one time for redemp
ton. They would be, if every bill
holder knew that not more thar
one third of the bills could be re
, deemed, there would be rush t,
get that one third redeemed. AM
the other two thirds would be onl,
so much worthless paper in thu
hands of men who had parted Will
, one dollar IN value tor every dollaI
of this worthless paper. But Il
start out in the beginning Of such {
banking system, nc one would take
the bills. They would not answer
the purpose Of money any more
than pr0mlSsOry notes now answer
the money functions of the country
, The national banking system is fan
preferable to the one proposed
IL