The great West. [volume] (St. Paul, Minn.) 1889-18??, 1893-11-03

tax Of 10 per cent on state bank circula-
ton, and that state banks, under certain
prudent" and conservative regula-
tions to beenforced by the national gov
eminent, shall be permitted to issue cir-
culating notes. The national banks of
the country have been sounded on the
subject, and their approval has been Sc
cured almost unanimously in advance.
Of course this administration would not
entertain any views on the subject of a
new monetary policy without first con-
sulting the banks. Andrew jackson held
to different policy, but Grover Ceve-
land is built on another plan. The banks
agree because the diminishing supply of
government bonds admonishes them that
their days Of issue are numbered.
What the prudent" and "conserva-
tive" regulations of the new banks of is
sue are to be has not yet been announced,
but it is limited that the banks are to be
granted note issues on their own capital
dismissed on their own recognizances,
as it were-turned loose to fill the coun-
try with wild cat" and s'red dog" money
to the full limit of their own require
ments. In the minds of the splendid
financiers who have ruled our monetary
policy for 20 years any scheme for bank
imitation is most conservative and ad-
mirable, while the most insignificant issue
Of paper money direct from the govern
ment is considered as a device Of the
devil to destroy the righteous.
Twill risk hurting out right here an
important truth, which is universally
known, and almost as universally sup
pressed because business interests are so
beholden to the banks through loans Sc
cured or hoped for, that we have devel-
oped racial habit of speaking and
thinking of the banks almost as if each
were q sanctuary. This is the truth
which everybody knows-that the banks
are the weakest. unsoundest and rotten
est business enterprises in the world.
When ''confdence'' weakens, they are
the first to fail and the last to resume.
Their weakness is the prime cause of all
our commercial panics. They are un-
sound because they owe at all times on
call to depositors from three to twenty
times as much as they can pay. Their
profit is in lending the money of deposit
ors, and the more they lend and the less
they keep on hand, the greater are their
earnings; hence they are under perpetual
temptation to pass the danger line. It
is their interest to keep actual money
save of their own issue scarce, that they
may force the use of bank credits, where
in their profit lies, in the bulk of bust
ness transactions
The circulating notes of the banks
based upon their own capital only would
be as insecure as their own deposits,
which experience even of these very days
tells us are out of sight when wanted.
Even the pompous and self righteous
clearing house banks of New York city
including the famous Chemical bank,
whose stock has sold at 81 900 for each
800 share, and which stands as the type
of everything substantial in American
banking-have suspended cash payments
for month or two past.
These are the institutions to which
the Cleveland administration would sur
render the profitable and sovereign pow
er OF issuing money. But observe that
the banks are not to issue circulating
notes purely upon their own response
bility, in which case their bills would be
useless as money, but their issues are to
be made sound and current by the in
dorsement of the government. Here is
where the prudent and conservative
part of the programme comes in. The
note of broken national bank is good
only because the government has guar
anteed it. The new state banks of issue
are to pledge their capital or some other
form of security, and the government is
to indorse their paper. But why should
the government pledge it's credit for
the benefit of the banks and transfer to
them the profits of issuing money which
should be exercised for the benefit of
the whole people?
Another proposition advanced with
the utmost seriousness in congress is a
bill authorizing the government to in
sure the deposits of the banks. This
would be heavy undertaking. Even
the fat of the government, strong as it
is, could not make the 81 in cash in a
banks vault pay the So to $50 in deposits
which the bank owes on call against its
cash. The state is not powerful enough
to maintain the arbitrary arithmetic of
the banks that equals to 20.
If the government is to be called on to
insure the issues and deposits of the
banks, then the next step should be to
guarantee their dividends. Is there any
one so dull that he cannot see that the
banks are working and milking the ma
tional treasury while they confuse and
bamboozle the people with talk about
prudent and conservative methods"
''honest money and the 'evils of in
f1atiOn?" ALLAN NORTH.
New York, September, 1898.
What Party Did It?
Some time ago the prosperity cranks
said the Populist party had caused the
closing of a tobacco wareh0nsa at Hon.