The great West. [volume] (St. Paul, Minn.) 1889-18??, 1892-12-23
BANKS AND INTEREST.

BANKS AND INTEREST.
The People, Through their Goyernment,
Should Perform the Functions Of Bank
Ing, %st5 ia 49,. :. ~sr
III the American Banker, of October
"a, 1891, I noticed series of clippings
taken from an article from the pen OF
Mr.. Edward Atkinson and first pub
lished in the Manufacturers Record, OF
Baltimore, under the caption Blanks
and Banking"
From such clippings select the fol-
lowing matter upon which to offer .
few comments Mr.. Atkinson says:
It may finally be held that the utility and
service Of any system Of banking in any state OF
section depends wholly upon the character and
credit Of the people Of that particular section
Il there Is anything settled about financial mat
tiers It is this-that the requirements for . given
community for coins, notes or other forms Of
lawful money or Of circulating medium Is IN In
verse proportion to their intelligence and to
the credit to which they are entitled by virtue
Of their character. The greater the intelligence
and the higher the character, the less actual
money, the more credit. No section can be
safely trusted and no bank can be safely eSta0
hshed where the mass Of the people look upon
the bank and banker as money sharks" term
sometimes applied, or as "usurers," or gold
bugs" or as anything but agents or agencies
working with the people of community fo1
mutual service. AS I have repeatedly stated,
and as all writer's who know anything OF the
subject have repeatedly proved, the function OF
actual coined money or notes convertible into
any kind OF lawful money or coin Is very limited
in comparison to the function OF credit. That
so1,o
and banker is not fit to be trusted, and in that
community no kind Of money will ever be
abundant, because it is not entitled to credit.
1t would be very interesting to know
Just whose ''credit" Mr.. Atkinson is
alking about and who it is that fur.
ishes any given community with any
species of credit that is any better
than the ''credit" of the community it.
self. Mr.. Atkinson Says, and he says
truly, that "the function of actual
coined money or notes convertible into
any kind of lawful money or coin is
very limited in comparison to the func-
ton of credit" But is it not barely
possible that the reason this is true is
because money. being limited in its
supply by law, is not sufficiently plenti-
full with which to do business upon a
cash basis? There can be no success
full denial offered to the statement
that as all real wealth is produced by
labor, all real "credit" must rest upon
the productive capacity of any given
community. Banks produce nothing.
Moreover, as money is simply the legal
representative of produced and ac-
quired wealth, all forms of wealth
should be legally entitled to be repre-
sented in money. But because of q
law that discriminates in favor of GER
tain forms of acquired wealth-gold
and silver-the amount that these
metals lack of furnishing sufficient
money to transact business with has
to be furnished by credit as a sub
stitute. But whose credit? Mr.. At
kinson writes as if he thought it were
the banks that furnished this credit.
I assert that it is the people who really
furnish the credit and the banks sim
ply make enormous profits by hand
ing it.
Let us see. From the Workers Her
aid clip the following article:
The business of banking is ancient and honor
able because 1t Is prOntaDle, Dut the people QOn
seem to understand the fundamental principle
of banking although every person must know
that banks "loan' money to business people
who go and pay their ''debts' with that ''bor
rowed" money which in turnis almost certain
to be deposited" in that or some other banl
"before SHUTDOWN"
The following illustration is based upon thu
experience Of business men in every city on thi!
earth and it can be easily understood by taking
twenty-one persons whose initial letters begiI
with the letters Of the alphabet, stopping will
the letter U.
The national government having called it.
bonds for payment under section 1893 OF the re
vised statutes as we'll as under the act of Marcel
B, 1881, Mr.. A. goes to the treasury department
1t Washington, D. c., and lays down his bonds
to the amount Of 500, 900 and takes up his none,
and goes around to his bank where he leaves il
and gets certificate Of deposit" which h,
puts in his pocket and goes on about his private
business, having unbounded confidence in tn
honesty and ability Of the bank to redeem hi
certificate Of deposit" at any time.
The bank, being required by law to set asid
twenty five per cent of all deposits as reserv
for the redemption of it's certificates of deposit
does so, and at once 'loans' the remaining sew
enty-five per cent. Of Mr.. A. s deposit to Mr.. B.
who pays it to Mr.. G. on account, who In tur
takes it back to the bank and gets "certifcat
Of deposit" for it, just like Mr.. A.
This process is continued on down the alpha
bet by twos until the transaction finally stand
as follows:
Don 1yso tRov~ IL,