The Cape Girardeau Democrat. (Cape Girardeau, Mo.) 1876-1909, 1891-02-07
A BANKING SCHEME.
A Proposition to Abolish the
Present System.
Three Thousand Governmental Banks as
4 >u~bsiitutc-Thcy to Loan Money
to borrowers 1T the Fate Of
Four Fer Cent.

Thomas +. Hi. of Hills Manual,
has been for some years engaged in
farming AT Prospect Park. ILL.,. and.
from a farmers standpoint, he gives
the following suggestions on banking
in an interview with 4 representative
Of the Chicago Inter Ocean:
Why occasional money stringcncy?
Because through numerous bank and
other failures people become frightened
and hide their money. Two causes have
combined To produce recent failures.
One has been the late era of real es-
tate speculation in the vicinity of large
cities. initiating values To 4 point that it
had To stop. The other has been the
steady diminution of money through the
contraction of National bank currency.
Ten years ago the National bank circu-
lItion was SOL. 900. COO. One year ago
il was 500. 900. 600. To-day it is about
>i>0.O 900. O0).
Why do National banks contract their
circulation? The National bank law
enacted in fSG; and 1861 made it Obliga-
tory upon the bank company to loan
onc-third Of its capital to the Govern
mcnt. upon which il was granted 4
charter To do business for twenty wears
and Issue bank notes to the extent of
30 per ccIt. of iuan Ia Government. A.
Government bonds in the beginning of
this system paid & per cent. interest in
gold. and gold yielded 80 per cent. pre-
MUM. banking WAS very profitable.
Lattcrlv. as the Government will pay
no more han > per ccnt. interest. banks
are unwilling to loan il money. They
prefer not to issue National bank cur
rrrcv. but would rather take other pco-
PIES money on deposit. get full interest
for all they loan. and be free from the
annoyance of Government bank inspcc-
ton. consequently they are gradually
withdrawing the currency they have is
sued from circulation.
But, il may he said. if the Government
! could give Encouragement why should
not the present bank system he contin-
ucd? Because our National debt i be-
inr too rapidly cxtin@uishcd Ia allow
the present system Ia be pcrprtuatcd.
Tanks that have proven the most rclia-
hlc, and have been of the greatest Srrv-
ice t" tine people. have been those init
matcly connected with the Government:
have been founded on Government ne
rcs>itirS. when the Government had a
largr debt and had to borrow. Thus
the Bank of Venice. founded in III.
owed its existence to the Imperative
necessity that the government borrow
money. This bunk. under government
control, WAS the admiration of all Eu-
rope for 600 years. and only ceased its
existence on the overthrow Of the re-
public in i597 by the revolutionary army
of France.
The Bank of England. established in
1914. was organized as Il means through
which to borrow money from the pco-
pie. The government had been paying
from 20 to - per cent. 81 money. which
was difficult 80 get ut that. William
Paterson, Il London merchant. con-
ccivcd the idea OF Organizing a con-
pany to furnish $1,000. 900 L. the gov
crnmcnt As a permanent loan. FOR
eleven years. at : per cent. interest.
Subscriptions to the entire stock were
taken in zen days after the books were
opened. and from that day to this the
loan Ia the government las been about
equal e. it, capital. the bInh company
obtaining their profit from their bank
notes in circulation and their deposits.
The government supervision over the
bank has bccn such As II give entire
confidence. 80 much 50 that the bank *
allowed to issue 50. COS. 600 in excess of
-. .r-ll 49, e. u IL lnnl-. 1a,,lI L.,
maintained. and viii be. IS the peoples
guardian Of the public debt of England.
which i 81. 100. OJ0. 900.
In contrast with the bencticent scrv-
ice rendered the people. through the
Bank of England. was the disastrous
consequences tn the people through the
failure of the Bank of Glasgow. which
went down in 1873 owing the people
S.. 900. 900: bank officials. free from
government control having squan-
drred its funds and mi>rrprcSrntcd its
condition for years before its failure.
The unreliable condition of banks in
the United States * well illustrated in
the ~fluctuatinG values of paper money
from 1910 to 1sGU-banks without Gov
crnmcnt control. The wal came on:
the Government found it necessary to
borrow. and then was inaugllrated our
National bank system, which, under
Government supervision and inspection.
has served its purpose with comparative
safety to the people. With the extin-
punishment of the public debt, however.
which is down to $50. 900. 600. the pres
cnt National bank system must be
changed.
the following:
/. Ever perfect as our National bank
system is the failures had been so nu-
nervous as to cause a loss To ~Gcpositors
IN National banks of 500. 900 annually
for twentv-scvcn years prior to 1879,
while the loss to depOsitors in other
banks was ovcr SO. 900. 900 per year dur
ing the same time. The great number
of bank failures of late is not only
taking the hundreds of thousands from
suffering bank depositors and putting
the same into few hands. but money
stringcncy compcls many millions Of an
nual loss to the people from being
obliged to sell property at a sacrifice,
while the enormous interest which
borrowers are compelled to pay
in the money crisis is another
loss of many millions to the people.
.. The present system is one of favor
itiSm. The man so fortunate as to do
business at a bank can have accommo-
dations. while the farmer. offering Sc
curity worth twenty times the money
required. can not get a dollar from the
bank. but is compelled TO pay an extra
per cent. above interest, in order TO Dor
row.
3. The unequal and very high rates
of interest in certain portions of the
country. especially in the newly settled
regions, is i great burden TO the poor
immigrant. In some portions of the
West the allowable rate is Is per cent.
per annum: and. with a commission
above that 20 farmers. it is not surpris-
ing that all the farms and chattels
thereon arc so mortgaged that they are
rapidly passing into the possession of
the few money loaners. The postal
system, under Government manage
mcnt. makes It possible to buy a post
age stamp as cheap iu Idaho rs in New