The Goodland republic. [volume] (Goodland, Kan.) 1891-1907, 1894-12-28
PROPOSED FINANCIAL SYSTEM

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bankers for the profit of the national
banks. President Cleveland goes a
shade furthur than the bankers, gives
them more even than they have asked
| in the way of increasing their circula-
ton without cost to themselves. The
people, and particularly the people of
the west, who look with some disfavor
on the surrender by the government to
private proflt-seeking sgences Of the
function of issuing and controlling the
money used in the daily operations Of
commerce, viii not regard the currency
clauses Of the presidential message
with favor.
Tt has been very generally reported
for some weeks that President Clsve-
land would give his approval to the
Baltimore plan. We have been slow to
believe it, knowing his aversion to any
kind of money except that based on
gold. He is not a greenbacker, yet in
approving this Baltimore plan he gives
the national banks power to issue pure
Stat money! something which we have
always denied the right of the govern
ment to do except in time Of war. He
is suspicious of bimetallism because,
under false and artificial conditions,
the bullion in a silver dollar is worth
less than 30 cents in gold. Notwith-
standing this, however, he is willing to
allow any banking corporation to issue
one dollar in paper money for every 30
cents in treasury notes it deposits with
the comptroller of the currency. Ac-
cepting the arguments and the termin-
ologYo of Mr., Cleveland and his financial
advisers, We may well ask why 30-cent
paper dollar, wholly destitute of sin
trinsic value" is superior to a silver
dollar which, even under the false con-
ditions Of today, has 80 cents worth Of
intrinsic valuep in it.
We think that the primary error in
the position of the president and his
advisers is their idea that the issuance
of money is not a proper function Of
government. "The absolute divorce
ment Of the government from the bust
ness of banking" says the president in
his message, sis the ideal relationship
of the government to the circulation
Of the currency of the country" In
opposition to this we advance the prop
ositions that to issue money is no part
of the business of banks, that banking
consists legitmately in receiving and
holding deposits, making loans and
discounts, and facilitating exchange,
and that the most proper and the high
est function of the state is to provide
the money necessary to the commercial
intercourse of its citizens and that IN
der no conditions should this function
be delegated to private individuals OF
corporations.
The essence of the presidents propo-
sition for currency reform is that
banks of issue shall no longer be CON-
PEELED to deposit national bonds to the
amount of 80 per cent of their out
standing circulation as security for its
redemption, but that they shall be au-
thorized to issue notes to the amount
of IS per cent of their paid up capital
upon deposit in the treasury Of legal
tender notes to the amount of only 80
per cent of the amount Of currency
they desire to issue. For example, four
men having $4,000 apiece, start ma
tional bank, capital 100000. They
take $4,000 Of their capital and deposit
it, in United States notes, With the
treasurer of the United States for safe
keeping, That leaves them $4,000 to
operate with, plus the notes Of their
own bank, which they are then autho-
rized to issue to the amount of s15O, 900.
By an investment of 100000, therefore,
they secure in ali $4,000 to lend out
at interest, besides having 10000 laid
away in place Of perfect safety, al
though it bears no interest. We have
heard much from q certain school Of
writer's on money Of the impossibility
I OF making something out Of nothing,
but this illustration of the presidents
plan seems to show that $4,000 can be
made out Of nothing, provided you
start national bank under favorable
Legislation.
The bankers themselves, in their
Baltimore plan, did not ask as much
as President Cleveland now demands
for them. They ask for authority to
issue notes to the amount Of so per
cent of their capital stock, with the ad-
ditionaf privilege Of issuing, in time Of
great demand, emergency notes to the
amount Of % per cent more, the latter