Barbour County index. [volume] (Medicine Lodge, Kan.) 1880-current, 1892-01-06


Besides, Mr. Knox, as have before
stated, does not consider any reserve
at all necessary, except to redeem out
standing notes Of banks ceasing to do
business on account of insolvency. But
suppose we say that in the case of the
United States government a reserve
fund of five per cent would be neces-
sary to guarantee the redemption of
full legal tender greenback currency.
1t would then take one hundred million
dollars of gold or coin or silver bull
lion" to secure a paper issue of two
billions of dollars
Now apply Mr.. Knox's principle Of
cooperation to the people, as he ap-
plies it to the banks As the banks
under the operation of his plan are to
subscribe a fund of one per cent of
their circulation, so let the peoples
congress authorize the United States
treasurer to cover into the redemption
reserve fund each year sufficient
amount to keep such reserve fund al
ways up to the maximum limit of one
hundred millions of dollars to guar
antee the redemption of the two bill
lions of outstanding legal tender pa
per. This would be safe and practic-
able. If not why not?
Mr.. Knox's argument against the
plan would probably be the yell of
fiat money" But whose fat? And
whose fat would give the proposed
bank currency the cloak of legality?
But what about the relative benefit
of the two plans to the people atlargeP
In the one case the banks would have
500 OF credit to loan to the people at
an average rate of eight per cent for
which they would be out just 81 in
gold or silver coin or bullion" In
the other case the 500 would be loaned
to the people ''at rate of interest not
to exceed two per cent" 1t is very
easy to discern which would be the
best for the banks. Now as to the
hexibility of the volume of bank cur
rency contemplated by this proposition
OF Mr. Knox's- Let us be exact. The
actual cost of that half of the volume of
bank currency secured by the proposed
safety fund" would be for each 500
the sum of twenty cents in money, and
the interest upon 81 80. Mr.. Knox evil
IDENTIFY wishes to convey the impression
that on account of the low cost of such
currency to the banks, that they could
afford to let goodly portion of it lie
idle at times in their vaults and yet
realize good average profit upon the
whole. But we know, and Mr.. Knox
should know, that an addition of two
or three hundred millions of dollars to
our present volume of currency would
make no more perceptible ripple upon
the stream of commerce, than would a
pebble cast into lake of water. And
It must be remembered that the banks
having control of this currency it would
not be let out to the people until the
extreme necessity and urgent demand
for it raised the rate of interest to a
satisfactory point This would be a
snap for the banks, but the fexibilitv
does not make itself very apparent
The requirements in order to flexi-
BILE volume of money are:
First-A volume of money limited in
amount only by the quantity that can
be proftably used in productive in
dustries and the channels of commerce,
provided such money may be freely OBJ
tanned at rate of interest which will
equitably divide the net annual prod
net of the nation between the two
factors--labor and capital
AS the net annual increase in ma
tional wealth has just about averaged
four per cent for the past twenty
years, money, If loaned by Capitalists
or bankers. should not cost more than
two per cent If, however, money be
furnished to the people direct by
themselves (government) 1t would be at
the cost of issue, all tax or interest
paid above such cost taking the place
| of other forms of tavation.
Second-An absolutely safe place of
| deposit for the savings, or surplus
money Of the people, from whence it
can be obtained upon demand; such
savings, while in such place of deposit,
to draw interest at lower rate than
the established legal current rate for
the use of money.
These requirements may be filed:
Firstly the people, as a govern
ment loaning their credit (money) to
themselves as individuals, upon pro-
ductive real estate at two per cent in
terest.
| Secondly making such credit bills
(money) interconvertible with United
States postal savings bank bonds, OF
convenient denominations, bearing one
or one and one-half per cent interest,
and obtainable at the post offices in the
cities and principle towns.
This would give US a flexible, elastic
volume Of currency, which would auto
matically adjust itself to all ordinary
or extraordinary demands for it's use.
George c. Ward, in Topeka Advocate.