Twice-a-week plain dealer. (Cresco, Howard County, Iowa) 1895-1913, 1895-10-25
CarliaIe Critic,sed.

tary Carlisle to task for the statement
in his Boston speech that "the govern
ment should go out of the banking
business. 1t says that this senseless
phrase originated with shabby dema-
gogues who supplement lack of rca-
soning by appeals to prejudice and
ignorance, and that It's use is wholly
discreditable to a man of Carlisle's in
tellectual calibre and public station.
The Tribune adds:
Did Mr.. Carlisle ever get far enough
to think what "the banking business"
actually means? 1t is essentially the
lending of money received on deposit.
There are 5,73S banks in this country,
more than half the whole number ex-
listing, which issue no circulation. The
whole number of national banks is 81.
756, and a few of these do not issue
circulation. But Mr.. Carlisle appears
to Imagine that the distinguishing
feature of '.the banking business is
not the lending of money, but the bor-
rowing of money by issues of notes. 1t
is rather a pity that the highest tinan-
cial officer of this government should
be unable to rise above such sloppy
use of language. The plain truth is
that the government is not in the
banking business at all. 1t never
lends money, has no authority or
{ power to lend, and never receives
money on deposit for the purpose of
being loaned. 1t issues notes only for
Its debts. and that every individual or
firm, whether engaged in manufacture
ing trading or any other occupation,
can do at any time without engaging
in the banking business in any sense
whatever. An iron manufacturer or
drygoods merchant does not become Il
banker when he puts out his notes 10
pay tor material or goods purchased.
But more, individuals and firms can
and do put out small notes, which
pass from hand to hand, and serve
more or less as circulation and many
did it to a large extent during the
currency famine of 1898. But they
did not thereby become bankers.
Ii Mr.. Carlisle would learn what a
banker is, he would discover that the
precise thing of which he complains,
the necessity of holding money to
meet outstanding obligations, is not
the function of a banker any more
than of butcheror a barber. Who
ever has to borrow stands in need of a
reserve to meet obligations and pro-
tect his credit. The concerns engaged
in strict banking business without
note issuing have the great advantage
that they always appear as lenders
and not as borrowers, and by ability
to lend large sums build up a credit sc
powerful that Secretary Carlisle this
very year placed the treasury of the
United States in the hands of -four
banking firms as receivers, though
not one Of them ever issues any notes.
The worlds greatest bankers are no
engaged in showing their paper Into
circulation.
1t is regrettable that after thu
proving that the government is not ir
the banking business the Tribune neg
lected to show that note-issuing bank
a are in the governing business. Ate
a half century of experience and dis
cussion the statesmen and tinancier
of England decided in 1874, and reaf
firmed their decision in 1857, that tn,
issue of notes for circulation as none,
shonld be entirely separated from tn
banking business. This principle no
only prevails in England to-day; it ais
prevails in Germany and France. II
none of these countries is the issue o
paper circulation left to individuals o
corporations as it would be left to tn
caprice, within or self-interest of ma
tional bankers under the plan submit
ted by Carlisle TO the last congress, o
under the scheme suggested to thu
American Bankers association a fep
days ago by ex-Gov. Merriam of Min
nesota. The judgment of Europe il
that note-issuing is a function entirel.
distinct from that of banking, and tina
it is dangerous to unite the two
American experience has confirmed
this, and the consensus of public judg.
ment is that under our constitution
currency issuing is an exclusively gov
ornamental function. 1t will probably
be treated as such in future. The pop
ulnr determination not to permit the
and Sherman treasury
otes to be used as basis for adj
itional bank circulation, or to allow
their redemption and retirement and
an issue of bonds for the same purpose
is likely to be emphatically echoed by
at the next session. Iele-
graph.