The Seattle post-intelligencer. [volume] (Seattle, Wash. Terr. [Wash.]) 1888-1914, 1892-01-14
Az OBJECT LESSON FOR THE
PEOPLES PARTY.

When Michigan became state IN Janu-
airy, 1887. her legislature passed a general
banking law, under which any ten or
more freeholders Of any county might or
ganize themselves into corporation for
the transaction Of banking business. OF
the nominal capital Of bank only 10 per
cent in specie was required to be paid
when subscriptions to the stock were
made, and % per cent. additional in specie
when the hank began business. For the
further security of the notes which were
10 oe issued as currencys the stockholders
were TO give first mortgages upon real es-
tate, 10 be estimated at its cash value by
a: least three county officers, the mort
cages 10 be filed with the auditor general
Of the state. A bank commissioner was
appointed to superintend the organization
of the banks, and TO attest the legality of
their proceedings to the auditor general,
who, upon receiving such attestation, was
70 deliver to the banks circulating notes
amounting to two and half times the
capital certified to as having been paid in.
The panic of 1897 followed; the legisla-
ture assembled in June and added to this
banking law full authority for banks or
ganized under it TO begin the business of
issuing bills in q state of suspension-that
Is, TO dood the state with an irredeemable
currency, based upon 30 per cent. of specie
and 10 per cent. of land mortgage bonds.
The Law was so modified that any number
of persons, upon signing an agreement to
that effect might become banking corpo-
ration, and almost any one might become
q director.
The -ess'lt was that everybody who was
in debt and everybody who saw in the law
wide opportunity for rascality, went into
the banking business. Within a few
months wherever two roads crossed
bank was established. One was
found in a sawmill. and one Of the official
records of the period says: EVERY viii
lage ploS with house, or even without
house, If il had hollow stump to serve as
vault, was the site of bank" Many OF
them had no Office, no books and no cap
ital Wild lands that had been recently
bought of the government at sl25 an acre
were now valued at ten or twenty times
that amount, and lots in villages that still
existed only on paper had worth for
banking purposes only limited by the con-
science of the officer who was to take the
securities.
Within one year forty-nine banks were
organized and forty went into operation
with professed capital OF I,745. 600. of
which 30 per cent. was claimed 10 have
been paid in specie. over 100000 of IL
redeemahle paper was distributed through
out the state, of which probably not dol
lar was based upon bona Gds capital paid
in for legitimate banking purposes The
local public had no confidence in this
money. Adventures from New York and
other distant places went into the wilds of
the state, located banks. took the entire is
sue of money and put it in circulation
anywhere but near the place of issue
At the end of 1889 there were no fewer
than forty-two "wild-cat" banks in the
hands of receivers, and only four still
doing business. Nearly all the currency
Of the state was worthless. business was
PROSTATE, values of all kinds had been
nearly or quite destroyed. There was no
buying or selling of lana. and only the
bare necessities Of life were able to COM
mand market The banking law was
taken before the courts and declared un-
constitutional. and the system Was abol-
ished. leaving behind il no assets.
This was the disastrous end of Michi-
CANS experiment of manufacturing cheap
money by the printing press. One of its
lessons was that neither real estate nor
anything else not Immediately convertible
into money can support the credit of bank
currency, and yet the Farmers Alliance
Peoples Party is today stupid enough to
think that the United States government
Is powerful enough TO support the credit
of bank currency in real estate, farm prod
uets or other property not Immediately
convertible into money.