The Caucasian. (Clinton, N.C.) 188?-1913, 1893-11-16
TAs KEY NOTE TOTHs PO2U-ST SAN
PLI6N-REFORuS MUST COVE
FROM T-S C1uaCN PEOPLE
PEBLIC I>>TRt NE>T> NI~r Et IA
TIoSAIIZkD--THEP toPIk MI ~
own AND OPERATE THk rtB
TIC HIGBNA
We MU>T HAVE NATIoEA SYSTEM
or FINANCE NOT BANH SYS
TEM.-THE NEXT GoVENoR
oF Iowa TALKS FOR THE
People and strikes some Heavy Hi"w- at
the Old Parties.
Continued from last issue

Continued from last ISSUE
Let rs try 10 illustrate by example
what is meant BY confidence. and
find out If we can what class of peo-
pie are interested IN having so much
confidence and SO little money. Sup
pose that five citizens of this place
determine 10 start banking bust
ness. They have a thousand dollars
apiece in cash, but this free bank
ing system that We are told is the
, best IN the world. requires capital
I of $5O, 900. No less amount is per
mitted by the law. These five citi-
zens go TO a loan and trust company,
borrow $4,000 apiece on mortgage
security. buy $50, 900 in government
bonds, deposit them width the com
/ ptroller of the currency as security
and have issued to them So. 900 III
currency. The bank is opened, and
we will suppose the first act is to
| pay their debt to the trust company
This will take every dollar of their
| funds, and If the trust company is at
the money center where such institu-
tions congregate, all of the new issue
will go to that center. The bank is
ready to receive deposits. These
five men are good citizens, they are
wealthy, they have the confidence of
their neighbors And now Mr. Smith
calls and leaves on deposit $4,000.
This SIS all the money in the bank
and all we need for this illustration
Fifteen per cent of this deposit is set
aside for a reserve fund and the
balance $500 is loaned to Mr.. Ma
thew at 10 per cent with good secu-
rity. Mr.. Mathew pays debt with
it. and the check, for there has been
no money actually paid out, is re-
turned and placed on deposit. FIT
teen per cent is again set aside and
the balance loaned to Mr.. Mark. 1t
is again returned to the bank, again
clipped for the reserve fund and
the balance loaned to Luke; in due
time and through the same process
John gets the balance. Now Ma
thew, Mark, Luke and John have
all been accommodated" they put
up their notes with good security.
and so this credit, for no money has
been used, passes around until al
the twelve apstles have been sac
commodated." And now let us take
a look at the books of the bank.
They show line of deposits footing
up 100000. Loans at 10 per cent to
the twelve amounting to $1,000 and
$4,000 cash on hand. At the end
of the year, the public will have
paid the bank $4,000 in gold as in
terest on the bonds deposited at
| Washington and the twelve citizens
will have paid $4,000 as iterest on
their notes. Now how much capital
had these bankers invested in the
businesse Only ST. 900 apiece. That
was all the money they had, All the
balance was credit, confidence. The
bonds were paper credits, the cur
rency, was credits, the loans to the
twelve were credits, mere book ac-
counts. No money was necessarily
used in the whole transaction from
start to finish, That is not all about
this "best system in the world"
$4,000 of the $4,000 has been by
force Of law absorbed by the reserve
fluid and cannot be loaned to any,
body. 1t is absolutely dead as
medium of exchange. There IS no
legal way of putting it into crcula-
ton till some depositor chooses to
draw it out: Suppose Mr.: Smith the
first deposltor draws his money
$4,000. This leaves the balance
500, 900 of deposits uncovered, abso-
lutely without dollar of specific re-
demptlon fund; its sole foundation
IS the secured notes of the twelve.
When they are paid the bank could
wind up, pay all deposits and have
5000 profits from the sale of credit
confidence. Whose credit was this
the banks? Impossible. The bank
had nothing upon which to base
credit. The twelve have paid S.. 900
for the use of confidence that had
no other real basis than their own
property. The credit was their own
In all Justice. Could they have rem
dered the credit of their property
current, as the government permit
ted the five bankers &c do they could
have saved the S., 900 for themsel yes
Here is precisely where the enormous
burden OF debt arises. Here is the
secret of the confidence" the game
that robs industry all around the
world. 1t consists in taking through
legal form and barbarous customs.
by small and privileged class, the
credit OF the people, then selling it
back to them at the price of real
capital to be used as medium of
exchange, as money.
THE SYSTEM IS WRONG,
On the 23rd of last August Mr..
Hepburn, in congress, said:
The distinguished gentleman
from Ohio (Mr. Harter) a few DAYS
ago gave the true key to the whole |
difficulty. extolling the benefcient
acton OF the banks he told us that
we had $24 per capita of money
furnished by the government. bnt
the banks by their processes and
their methods had enlarged that |
volume until there was s72 per cap
lta In circulation among the people.
pa OF 1t was cash capital en- which |
DUNES was done-it was supplied nv
the government; $4S of the S72 ner
capita was the credit supplied by the
banks-the debts of the bank. and
on which they were doing business
The want Of confidence is NOT in ~
money of the government, it is IN
this substitute for money furnished
by the banks. There is where the
trouble is, gentlemen, not with the
treasury notes.
Now, fellow citizens, Is this prob
lem a difficult onet Stripped Of all
sophistry, of all fiction, and present
ed IN the light of the naked truth
anybody can understand it. The
small class that for two hundred
years has sold credit to industry ~
tool OF commerce, wonld have ns
believe that they are not onlv tbs
salt OF the earth, but that thay ao