The representative. [volume] (St. Paul, Minn.) 1893-1901, 1896-05-13

absorbing capacity, as Will be seen trO.
the table following
i Hssr LSans ss7 $, nspGsst s R5sssafs
1884 1924 POP 22644 sS7 Gao O55 IS 246 no 76
1883 1.s4s5l7 1896 LII 429,914y 2S2 oSI 6a5.ss
1856 1470 1915 T. 169 10 301 AL 268 90
1887 1.5Ss 941 1896 s4l5s 34s, lS3 81
1883 167e554 8s367 1881 265.6170S s452s9 gag. 50
1889 1slIsSS, ssl57 14s6 4oa 6s5 $ 1928! 2o5 g
1 1ss1 assi s sss Ss SO ss y
1892 2.17 .oSs11 1765 1885 405.61S 1O4.43
I'VE come now to the year 1893-the
! bankers panic. The bankers decide to
give the South and West an "object les
son" to cure them of their love for silver.
| Business was transacted largely by bank
credits; and by withholding these credits
"hard tines would follow, and the cause
would be ascribed to the want of conf
dence, because of the Sherman bill. The
only source, other than the gold mines,
through which an addition to the money
volume could flow, was by the provisions
of the Sherman bill. This interfered
with bank monopoly, which decided to
cut it off; and it succeeded.
AT the time the panic commenced,
the banks held the promises of the bust
| ness men for over 2,100 millions: the
banks had given the business men the
promise of the banks for 1900; the banks
had nineteen cents for each dollar that
| was thus subject to check, to be paid on
demand. Their object-lesson was to be
general squeeze; but they were unable
to control the result Of it. When tle
banks refused their credit for money
tools, business men bid high for money
There was no current rate of interest.
Lenders got anything they chose to ex-
act. Brokers paid on prime security
276 per cent per annum some days. Even
gold was drawn into circulation; and sill
ver-the fjfty-cent dollars which the
| Sherman discussion talked about-com-
| manded three cents premium. The banks
were solvent, but nineteen cents would
| not pay one hundred cents; and they sus-
| pended cash payments, and again created
| clearing house loan certificates In two
months and eight days from May 4, 1893,
the volume of bank credit was cut down
| over 36,0OO,000. For the quarter end
ing August 81, Dunn said the business
failures were about 1000 in number, and
81 200, 900 in volume. A coincidence
that the amounts should approximate so
closely. By November, 1893, the volume
| of bank credits were cut down $500, 0O0,-
600; and gold-bugs were saying that de-
positors had horded $500, 900, OOO They
forgot to mention that the decrease in the
deposits represented the decrease in the
| loans. With the tools which effect the
exchange of labOr's production cut down
| one-seventh, industrial stagnation fol-
flowed, and commenced to recover only
when the tools were replaced. Dunn
says the failures in 1893 were 16,757 in
number and 1851, s,697 in amount. Is
| not this Indictment sufficient to condemn
| the system?"
"Mr. Banker" said a farmer, Twill you
answer me some questions?'
Certainly l WILL" answered the bank
er. eve have a league in New York
whose MISSION it is to reward or pay
| editors to print our ideas on sound
money but go ahead with your ques-
| tions.'
what is a national bank-note, for
| which we sell our labor?" asked the
| former
"A national bank-note is promise of
national bank to pay the amount named
| on its facel II loash-rETAOI ETET
on the face of the note,' answered the
| banker.
Pay what-gold?" asked the farmer.
"Oh, no; lawful money!" answered the
banker
THAT gives you an option of paying
it in silver. Do you pay out silver
asked the farmer.
MOSTLY silver silver certificates, notes
OF other banks, etc." answered the bank
er.
"But, Mr.. Banker, if you have the OPP
tion and pay it in silver, why do you
claim that, If government has the option,
it should pay in gold?" asked the farmer.
Because we are on a gold basis; and
If government paid out silver, confidence
Wnn1d
| a premium said the banker.
Then, if we are on gold basis" said
| the farmer, why don't you pay your
| notes in gold?''
Because" answered the banker, 'the
law gives me the privilege of paying law
full money; and we educate the people
who want gold to demand gold of the
| government for that lawful money, and
that relieves the banks of the burden of
providing the gold for the gold basis"
''Then, what we get for our labor is a
| paper promise of a bank?" asked the
| farmer.
"Oh but it is good-good all over the
country" said the banker.
What makes it good?" asked a la
borer.
"It is secured by United States bonds"
said the banker. For every 5000 we
issue IN our DanK-nOIeS, we deposit
| one thousand dollar bond in Washing
| ton. The law furnishes us with 5000 in
bank-notes for every thousand dollar
| bond there deposited"
"And the bond is the property of the
bank; and the government is response,
BILE for it's safe-keeping, and it's return to
ycu?' asked the farmer.
EYES," answered the banker.
"You buy a bond with 81 900, and then
| get 5000 back, that is good currency as
| that which you gave for the bond?"
"Ye-yes," hesitated the banker.
what is bond?" asked the farmer.
"a bond-a United States bond?" asked
the banker. "Why, every one knows
what a United States bond is. It is a
promise of all the people that the holder
of the bond shall receive interest until
| the bond is matured, and the principal
| named in the bond at maturity"
"Then, you draw interest on the bond?"
asked the laborer.
Yes said the banker
and" continued the farmer, "you get
back 5000 out of the 81 900 you paid for
the bond. Then, isn't it trut that you are
drawing interest on the full bond, when
in reality all that you have loaned the
people is ten per cent Of that bond?"