The midland journal. (Rising Sun, Md.) 1885-1947, 1893-07-28
Real and Credit Money-the Differ
enca-Cost of the latter.

The Comptroller of the Treasury has
recently called for a statement from the
national banks throughout the country, and
the statement was published last week.
They show how much money is in actual
circulation, and how much money is wanted
to conduct the business in its present cramp-
ed and shrinking condition, How much
more it would require to conduct it if in
healthy and thrifty condition is a profitable
problem for our readers to consider.
For illustration we will take our own
county and the result is pretty fair object
lesson of the whole country. The state
ment of the four banks in Cecil show an
aggregate active debt of $l,24o,5 $50. We
call this an active debt, because it is short
time debt. mostly so day debt, and incur
red for the purpose of securing money for
the running expenses Of business. Without
this amount of money which is upwards of a
million Two hundred thousand dollars bus
mess would stop. This does not include the
mortgage debts, individual loans and IN
paid running accounts. ALI of these latter
unrecorded sums which press both ways,
inconvenience and harass both creditors and
debtors, are gnawipg like cancer at the
peace, contentment and comfort of the COM
munity. The actire debt alone which these
four banks exhibit foots up the colossal sum
above stated. That sum at per cent, which
is much below its real cost, when cost Of
renewals, advance interest and perquisites
are included, means tax en- the commu-
nifty who are employed in active business, of
$S9,919 per year. This is the cost to the peo-
pie of the county for the hire of the money
which is absolutely necessary to get along
with their business, and they could use a
great deal more if the products of their bus
fness would justify the increase. Now we
will next ascertain how much of this million
two hundred thousand dollars is actual
money, made by Uncle Sam and how much
Is confidence" and "credit' money made
by the banks. The bank statements show
the aggregate sum of ''deposits subject to
check" is $500, 1902. The law of Congress
under which the national banks work, per.
pitts the country banks to loan the deposit
tors money all but Is per cent. This sum
by experience has been found sufficient to
meet the checks which the depositors
draw against their deposits in their
ordinary course of business. And now
we will next ascertain how much Is
per cent of these aggregate deposits
subject TO check" represents. We find the
sum to be $75, 645.3O and this is absolutely
all the active, business-doing money there
is 10 the county. The balance or 81, Ill.,
9l5 is all Confidence and "credit' money,
manufactured by the banks, and like the
earth, as the old legend tells US, at the begin
ming of creation, is "without form and void"
The banks with that omnipotent financial
power which our paternal government has
Invested them, say "let there be money"
and there is debt drawing interest. All of
the phantom money represented in that
great debt draws interest and only the
$75,645 which belongs to the depositors
draws no interest from depositors. The
huge million debt is created by loariug and
reloaning this small nucleus of SIS, 645, or
more properly speaking by building loans
on this narrow basis.
Now don't jump on the banks with both
feet. The banks do just as all banks have
been doing for seven hundred years. They
cannot do otherwise, as far as the transac-
tions above sketched are concerned. They
are agents whose business is to distribute
the money which is in actual circulation
II must not be understood that $75,645
comprises the entire stock of actual money
in the county. There is in addition GER
tain amount in the pockets of the people.
This sum is properly "hoarded' money.
The people keep it to be handy to pay cash
for small bills, and the amount Is speedily
replaced, so there is an average sum-ihe
amount unknown-held as personal reserve
by the people, that is Withheld from the
money in active business. If every cent of
this reserve money were placed in the banks
It would be loaned and go into active bus
mess. But the sum represented above is
absolutely all that is in active business and
is vastly short of what the demands Of
business require, as shown by the colossal
debt in the banks statement.
1t will be apparent that with this small
amount of money without an agency which
the banks supply, business would almost
stop. Ifevery person held his money in
his pocket till he wanted to use it that would
stop all business and he would soon have no
iuducemeut to use ii. The boarding money
and holding it cut of use is great injury to
the BUSINESS of the community, and people
who get frightened and withdraw their
deposits from The banks are only injuring
themselves and all others employed in bus
iness. Money is far safer in our country
banks than in any private house. The only
way TO close an honestly conducted bank
and injure at The same time the business o
The neighborhood that is transacted through
that bank is to withhold deposits. Th'
great distress in financial matters does no
lie with the banks, which are worked unGe