The herald., 1894-01-28

mendous security of our government
back OF it; and there is not banking
institution in the United States today
from the very nature of the present svs-
tenn, that can inspire complete conf
dence with any citizen of the fulfllment
of any of its obligations. Not bank
in the United States pretends to make
success or dollar profit to itself, except
by the use of capital which is owned by
people outside of the bank in the char
acter of depositors; and this capital is
used in the regular processes OF business
in making time loans 80, 60 and 80 days,
and even longer according to the neces-
sites Of the patrons who borrow this
capital; and yet there is not bank
that does not pretend and assume
to return this capital to these
depositors at any time, on the demand
of these depositors. Now as a point of
commercial probity there could not be q
greater specimen of false pretense in
any legitimate business institution than
these conflicting assumptions. If the
banks have this money in use how can
these depositors have a chance to use
1t? 1t is a strange anomaly, and yet
absolutely true, that under this system
the stronger the bank becomes in theo-
ry the weaker it ia in practice. The
more successful it is the less are it's OPT
portunities of carrying out It's obliga-
tions. A bank having $l,000,00 of de-
posits will lend $750,000 of it on an av-
erage of go days. time, and promise to
return this entire million on the instant
OF their demand. The bane of this sys-
tenn exists in this fact that in times OF
unsettled conditions these depositors do
demand that money, whether they are
in need OF it or not, and the immediate
result is the suspension of the banks,
and with the banks the failure of every
commercial institution which is de-
pending on the banks. Commerce sus-
pended means ruination to many and
loss to everyone in the community.
This last panic has created more
wreck and misery within our nation
than that OF any war, famine or
pestilence combined. Furthermore,
this system is productive of an
other condition quite as disas-
trous to commercial health as this one.
One extreme always begets another;
depression is followed by initiation.
Commerce becomes reinstated to an
abnormal excess, and staple business
ripeIa into visionary speculation.
reckless Of the security to offer individ-
uals are importuned to borrow their
overburdensome funds. Until running
its course uneasiness becomes aroused
again, and-presto change thus main
tanning alternately perpetual regime
OF feast and famine, and never that safe
and harmonious middle course which
brings quiet and contentment to life,
70 aOp ha &c IN
situations which promise permanence
and prosperity.
Make the banks secure the govern
ment and let the government secure the
depositors. This law alone would sever
the root of the entire financial trouble
of today. This guarantee OF the govern
ment would induce every citizen in the
United States to deposit every surplus
dollar that he possessed with these
banks. 1t is simply human nature for
every individual to want to deposit his
money and valuables with an institu-
ton which is perfectly safe. An insti-
tuition OF this character only is perfectly
safe, and all that money which is at
present hidden away in private vaults,
and various other hooks, would be de-
posted with banks of this character, to
much money as in actual circulation at
the present time; and with this attend
ant protection of the governments
guarantee, shis amount of actual money
that is now in in existence, as a basis of
circulation, is several times sufficient
to carry on all the commerce OF
the United States. 1t is only con-
tidence that ia needed, and it ia only
that good faith which is backed by abso-
lutte security that inspires confidence /;
and in proportion that we have this con-
fidence, we need no actual money at all.
The very certificate OF deposit from
bank Of this character, guaranteed by
the government would be as good for
all practical purposes as the deposit
itself. 1t would purchase any COM
modify, or pay off any debt, the same as
the deposit itself; and if it performs all
these functions that the deposit itself
performs, it is the same as money, and
is money. Itwould not only be redeem
able in gold or silver or greenbacks, but
1t would be redeemable in anything else
under the sun which possesses market
value. This idea of compelling one form
of money to be redeemed in another
form of money, before it passes
current. is in many aspects
very absurd to say the least.
ANY form of sound money includes, aside
from the intrinsic value of the material
composing it, promise to pay or re-
deem the amount it calls for in anything
under the sun that the holder wants
that is offered for sale; and primarily
question only of the security back of
that promise whether it is accepted or
refused. If the security is perfect it will
always be accepted, and it will be re-
deemed in that commodity which affords
the best bargain to the holder of it,
whether he desires to purchase gold,
silver, precious jewels or wheat with it.
Ii the security is not good it will only
pass current for the amount of CONNER
cial value of the material that composes
it. Who would desire to purchase
gold money with silver money, or
both with any other kind OF money,
if ne can procure the same benefits
with one that any other kind will pur-
chase for him. Furthermore, If any
citizen Of our nation presents suffi-
cient amount of unquestionable security
to any of these banks. be it in govern
ment bonds or warehouse receipts of
grain, it ia not only commercial
depravi.y, but disgrace to any civil
lied nation, much less than ours, that
such individual in a period of an
emergency is unable to save himself
from financial ruin by his Inability to
borrow enough OF this medium of ex-
nh 1t