The Black Hills union. [volume] (Rapid City, Pennington County, Dakota [S.D.]) 1889-1904, 1891-07-10

DAKOTA ALLIANCE.
''money power" in any emergency.
When the treasury had one or two hun
dred millions Of dollars more on hand
than there was any immediate use for
this "money power" came down from
New York and with the connivance of
Democratic administration got the use
of sixty or seventy millions of dollars for
some time without paying interest for it.
That is to say they came down and
told the administration that this money
would be safer, perhaps, in their bank
vaults than in. the treasury vaults. SO
they named themselves "banks Of de-
posit," and the Democratic administra-
ton let those banks have 500, 100000.
The banks of course loaned out this
money to people who were obliged to
borrow at pretty high rate Of interest,
but they never paid the government any
interest.
The present Republican administra-
ton did the same thing for the banks,
only there was not quite so much money
On hand and it could only lend twenty
millions of dollars. Then "billion dol
lar" congress came along and cleaned up
things generally. That congress forgot
the obligations Of the government and
spent and squandered SO much money
ths..,st ,t..s s ssssasM5sys.oInciais We're soon 2,
not be enough on hand to redeem fifty
millions of dollars of II per cent. bonds
which would fall due during thu year.
The banks held these bonds and they
waited awhile to see what the treasury
department would do.
That department didn't know what to
do, and its head and chief went to the
banks and asked their advice They
told him to extend the bonds at a lower
rate OF interest-say about II or per
cent. This, they said, would give the
national banks a better and easier
chance Of issuing bank notes than they
had formerly had. And the head of the
treasury department has concluded to
take the advice of the banks.
Now here is the way his scheme works
ont. When all the United States bonds
are redeemed and Cancelled there can be
no national banks. Under the present
system a bank holds, say, $1OO, 1000 of
bonds. The government pays the bank
4 per cent. interest, and at the same time
permits the bank to issue 800, 900 of bank
notes, which the bank lends out at 6 or
8 per cent. or more. Now, while the
government pays the bank $4,000 a year
interest on its bonds, the bank lends its
490, 900 Of notes at per cent, taking in
$1,000.
Thus the bank is getting in $11 200
annually on its 800, 900 worth of bonds,
and for this privilege it pays but per
cent. ON the $4,000 Of notes, amounting
to only $500 per year. This is very
soft and safe thing for the banks, for in
addition to all this it has the temporary
use Of money deposited, and usually col
lects interest in advance and loans the
interest money out right away, thus
making interest on interest which has
never been earned.
But the banks are complaining some
now at a condition which they them
selves brought about. National banking
was such nice thing that great many
people wanted to go into it. This made
9 lively demand for the bonds, and the
demand got so strong that those who
wanted them for banking purposes be-
gan to offer more than their face value
for them. The final result of this move
has been to run the price Of 800 worth
Of bonds up to $125 and more. Of course
the bond bears interest only on it's face
value, SO that when a banker pays $125
for bond he gets interest only on $780,
This Is more than he can bear. He wants
at least 8 per cent. interest on every dol
lar loaned out and wants 1t in advance,
and he wouldn't think about investing in
United States bonds if he could issue
notes without it. Now he is working his
scheme to get the bonds, soon due, ex-
tended at low rate of interest SO that no
one will care to buy them at premium.
Nobody wants to make investments
that will pay only II per cent. interest,
and If the bonds shall be extended at
that rate nobody will want them except
bankers, and they will only want them
for banking purposes; that is they will
only want them for the purpose of issu-
ing bank notes upon them. and these
notes can be loaned at per cent. in adj
vance and perhaps more. And if no
body but bankers will want the bonda
they will soon fix it so that they can get
them FOR face value and perhaps less.
Tho banker may lose little interest
money from the government on his
bonds by this scheme, but it will perpet-
uate the national banking system, and
that's whas ne is bending his energies to
DO. i is altogether too good a thing to
/ Jet 30. and, as usual. the national ad.
ininistfation is conniying with the
ssmoney power" TO keep It's grip fastened
oa the public and the people.
s a little snrvsy end examination Of f. =tli tina
taets here outlined viii show that the