Fort Worth gazette. [volume] (Fort Worth, Tex.) 1891-1898, 1891-06-13
WHICH SHALL 1T BE
MORE REAL MONEY OR INSUB-
STANTIAL MONEY
Gold Silver and Paper are Basic Money,
Bank Credits Inflated Currency-A
Question foI Farmers and Others.
BANK CREDITS.
From Facts About Silver.

But gold. silver and paper are not the
only kinds o. 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 tae place of money, but
they effect exchanges and close trausac-
tons 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, 1890, the 3546
national banks had on deposit, subject to
check, $1,596. coo. coo, and that all other
subject to check, exclusive of saving de-
posits, S1,Ol4, 900 900. The deposits in
saving banks was 81. 524, 000,0 600
Against this credit money the national
banks held of actual money-gold, silver.
greenbacks and bank notes-S290, SOC, 900,
and all other banks SlS5,254, 900
Tins, altogether, the banks held but
StiO.OoJ.UvU VI dCIudl dllu Dl JuIS
built up structure of credit money of
S2,604. coo, coo, or, including saving deposits,
of 81. l2S, 900, 900.
1t IS impossible to give the relative eff
iciency of this credit currency and actual
money, but it performs a 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,O 25, OO0. 600
Actual money in the vaults of
banks. ................... $4,000, 900
Total actual money ....... 1,500, 600, 900
Bank credits subject to indiyid-
ual check ACKNOWLEDGEMENTS. 1904 900, 900
Savings deposits subject to call
on various conditions .. / .524 600. 900
If we leave out the saving deposits we
still have credit currency created by the
banks from $40, 600, 600 of actual money. of
1904, 900, 900, or, deducting the $40. 100000,
and we have purely credit currency of
81, l29, 600, 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 III the same
way
This volume of credit is creation from
nothing, resting on confidence alone and
amounts to more than So to 81 of the money
1t Is based upon, and if savings bank de-
posts be included, it amounts to IS to 81.
a withdrawal OF 100000, 900 of actual
money from the banks. therefore, compels
the contraction of their credit volume from
five hundred to eight hundred millions It
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 OH call, so that when
confidence is shaken they can call in their
loans and let the borrower take the cOnSe-
quences.
DANGER TO SAVINGS DEPOsIToEs
1t is claimed that the restoration of sill
yer would reduce the value of the savings
of poor people i'll savings banks and trust
companies.
But who ever sustained loss from a
banks having too much actual money in its
vaults, or from too much gold and silver in
4 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 TIE BANKS WANT.
The great banks of the cities want the
single gold standard maintained, silver and
paper restricted and made redeemable in
gold, and the supply of currency left for
them TO provide i'll the manner just set
forth. This is the English system, only
their bank credits reach ten to one of actual
money.
WHICH SHALL IT BE!
Which, ther, 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 dictate2
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
Emo question before the people so deeply
concerns all classes, the farmer the labor
er, the producer, as this which affects the
welfare of all.
This Is the Best Route. ~
The Fort Worth and pYytv roll