The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1892-10-14

is evident from the fact that the banks
issue as little circulation as possible, be-
cause there Is no profit in it.
Aprivate bank with q capital OF 500, GO
loans out its capital in full let Us say at 8
per cent, which would be an interest
profit of 5000 The national bank, for
the security OF its bill holders. buys United
States bonds with its 500, 900, and at the
present price Of 4 per cents. would have
some So. 600 of bonds. As their currency
issue can 10 only 30 per cent. Of the face OF
the bonds. the national bank will have
about s77.0fO to loan. At per cent this
would De $500. Plus per cent. interest
On bonds, s3.420, making 1880, less one
per cent. Of issue for cost of same, or .
total interest of $3.50. which is a gain Of
$50, or about per cent. in annual inter-
est profit by being national bank.
When We remember that private bank
is permitted 10 loan money in ways that
are forbidden TO national bank no Intelli-
gent man Of business will pretend for .
moment that there is any profit to ma
tional banK in being bank of issue. Its
profits lie in its deposits; the fact that 1t
IS national bank. subject to frequent ex-
animation by United States official ex-
amIner: that il is compelled 70 conform its
business to the requirements of the ma
tional barking act invites the confidence
OF depositors and is strong advertisement
for the bank. This is the whole truth, and
nobody but an ignoramus or an unscrup-
uious demagogue talks nowadays about
the profits Of national bank on its circu-
lation. The circulation of the national
banks is kept as small as possible, which
proves there is no profit in it: the profits
of national banks are at best moderate and
they are chiefly from its deposits, which
It's superior security as national bank
invites.
The demand of the Peoples party that
''the amount of money in circulation be
speedily increased to $50 per capita" is
absurd. Who can tell how much money
the country requires? There is not the
slightest evidence that the business of the
country needs any more money; it has
more than il ever had at any time in its
history. In new countries there is some
times lack of banks and distributiye
agencies for money, but there is money
enough for anybody who has any collat-
eral. The fellow who never has any col.
lateral always thinks money is scarce.
Ninety per cent. of the business of this
country is transacted without the use Of
money. The banks Of the country settle
balances through the clearinghouse of
a hundred million every day without
handling dollar of money. The i'm.
mense volume of large transactions makes
some such system absolutely imperative.
The Peoples party argument for an In.
creased amount of money, is that money
may be cheap. What is wanted is not
cheap money, but good money. Imitation
does not give cheap money in the sense
that it can be had at a low rate of interest !;
II merely gives US money that is cheap"
in being plenty, and therefore deprecated
in the purchasing power of the dollar.
The amount Of money in circulation in
the United States per capita is today con-
siderably above that Of England, yet Eng
land has q lower rate of interest. Interest
rates are higher in Washington and Ore
gon than in the New England and Middle
states because there is less surplus wealth
accumulated in new countries than in
older countries. The surplus wealth of a
nation or community determines the in
terest rate. If surplus wealth is scarce or
insecure, rates are high; if surplus is
plentiful and secure, rates decrease.
Doubling the amount. Of money for cir
culation would lessen its purchasing
power, and it would be dishonest to at
tempt to scale debt by paying it in money
of half the purchasing power of that under
which debts were contracted, and when
the Peoples party cries for free silver and
for practically unlimited legal tenders it
proposes a scheme of extensive and dis
astrous Reputation. What is wanted is a
stable currency which does not tiuctuate
in value, but remains in purchasing
power as nearly as possible q constant
quantity.