The midland journal. (Rising Sun, Md.) 1885-1947, 1895-02-08
Financial Deception.

Oh DuSlIlCSS u dllSttSlCN ny NhSNNo hhN OlAA(i
methods where the actual handling of
cash is dispensed with, one of these
papers adds 1T will be seen that bank
credits are usurping the place formerly
held by currency i'll business, and that
actual money exercises small and con-
stantly decreasing function in the tran
sactions" of business, and that bank
checks are preferred to paper or metal
currency.
Such statements, supported by for
midable looking array of figures from
some high official source, are calculated
to, and are put forth to, deceive credu-
lous public.
The falsity of this statement in the inn
preston it is intended to convey is appar
ent when we consider that every check
represents money of some kind. When
check, which is an order to pay money,
is given it necessarily represents deposit
of money or the check is worthless and
will be returned to the maker unhonored.
| II ~ gives Ills SHSCk " ID lOI SiOO tHeIS
must be that amount of money in the
| bank on which the check is drawn, B
passes the check to c, c to D and SO on
and the transaction pays each $780, but if
A had used the cash i'll place of the check
it would have performed the same service,
and while the check was moving the 500
was lying in the bank idle Tor supposed
to be- and there was no less money re-
quired to effect this financial action, or
series of actions, because it was done by
a check. The latter is the more conven-
lent and safe, but no less quantity of
currency is required to transact business
by checks than with cash-as far as the
persons transacting said business are
concerned-only less handling of money.
But by system of special class laws,
known as banking laws, a very large
amount of business is conducted BY
checks and similar devices, which has no
currency or real money to rest upon. 1t
is species of money, however, which is
known as credit" 1t is i'll reality wind
or phantom money, used on account of
the insufficient quantity of money in cir
Culation to transact the business of the
country-1nade so by the bank for a
purpose which we will proceed to explain.
1t has been determined by experience
that it is SAFE when business is normal,
to retain only rs per cent of the deposits
in bank to meet checks. The deposits
over and above one-fourth are subject to
loan and the bank proceeds to avail itself
of this privilege accorded it by special
law. Business men are always in need of
money, and the bank ready to accommo-
date them many times more than there is
cash in its vault. All the borrower has
to do is to furnish the required security
and the loan is effected, which is generally
credit on the books of the bank against
his promissory note payable in one, two
or three months. If cash is demanded it
is paid to the borrower, out of the funds
of depositors knowing full we'll that the
Will ILL " Liz DdIk III
few days at most, by the hand of de-
positors to whom the borrower pays it
almost Immediately on receipt of the
the funds. But as a general thing the
cash is not demanded and the borrower
checks against the credit he has secured
OIL the books of the bank. The cash of a
| depositor draws no interest from him, but
the wind or credit borrower pays interest
to the bank for his deposit To all in
tents and purposes this credit is money to
the borrower, but it is bank made or wind
money and is very costly. All of this
credit money draws interest, which is
part of the products of labor, to the bank,
and by this costly fiction of money I'M
mense sums are extracted from the hand
of industry, amounting to hundreds OF
millions yearly, on account of this COM
pulsory borrowing system established by
banks, and their policy of making the
circulating medium or money of the
country scarce and inadequate to transact
business OH cash basis. So it is plain
the facts are not as the writer referred to
states, that the necessity for currency
grows less yearly, the device of checks.
transfers by telegraph, etc, taking the
place of money. These devices enable
the banks to loan wind ON account of the
scarcity of real money, and collect i'm
mense sums of interest ON this fictitious
money.
The loss to business entailed by this
interest paid on bank wind, is only one
side of the loss inflicted on the productive
industry by this bank exploiting Goods
purchased for consumption must all be
paid for i'll cash sooner or later, as checks
must be met by cash finally The scarcity
of cash forces the price of products down
and although credit or bank wind money
may keep business running full blast and
create fictitious prosperity" for a time
a collapse is sure to result. The wind OF
credit money with its high rate of interest
with real cash in a diminished, insult
ficient quantity paying for the products o.
business built CT the phantom of credit
money, soon created aa uHbslanced con
dition of business resulting in cash
And this condition was the primary cause
of the panic ia the year of 1898, intensi
fed and ilastened by conspiracy between
the President and Wall street to force ths
FeDeai of the Sherman law and the entire