The representative. [volume] (St. Paul, Minn.) 1893-1901, 1897-03-10
PROBLEM IN BANKING
Bank DEPOSITS Greater Than Total
Circulation Of Money.
iigantic Confidence Game Should be Abolished
as Other Outlawed Swndling Devices s-Let
Us Establish Government Banks in
Every County Seat and City.

"Conhdence.' ''confidence.' conf
lcnce,' shut your eyes and have CON-
FIDENCE.'
Such is the constant and vociferous
,quawk OF every national bank parrot
and paroquite Let us study out the
wherefore Thirty-one years ago the
people had $62 so per head Of money in
circulation among them. Prices OF prop
erty and labor were higher, or, in other
words. money was cheap. Money sought
labor for employment, and sought out
opportunity for investment. Business was
done for cash There was less per cent
Of credit business than ever known be-
fore Confidence was never thought of IN
business transactions. Having plenty OF
cash. people had no need OF confidence.
Today we have about SCI per capita
counting national bank bills as money
and the volume SO reduced scarcely cir
Culatcs al all.
Now only 3 per cent OF our business
exchanges is made with cash: the other
o. per cent is done with bank checks,
drafts and other forms OF credit that pass
well enough as long as there is conf
dence in them-a species OF confidence
currency.
1t is aXOmatiC that a given amount OF
business exchanges requires a given
amount OF money, or something to take
the place OF money, therefore the less
actual money the more room Tor the
banker with his confidence stuff. Hence
they demand the retirement OF the green
backs and silver to give room tor their
bank scrip. and they ask us to have con
fdencc that they will fairly, justly, equit-
ably and unsefishly furnish us with a
proper amount OF money.
But it as custodians OF other people 5
money that they are now Ceiling lor CON
fdence most imploringly.
a few months ago | noticed state
ment of deposits and loans OF other peo-
pies money on given day as shown by
the books OF all the banks, and they were
i'll round numbers as follows:
Deposits subject to check and draft
Ss.35o. 900 900; loans. $325oooo 900. Bu1
we know that all the money in the Unit
cd States, including national bank bills
does not exceed 81 500, 100000, and thai
if the banks had every dollar OF this ii
their vaults they could not pay their de
positors 80 cents on the dollar.
How is it possible that peole can hole
certificates showing deposits in the bank:
OF more than three times as much
money as there is in the United States.
Il occurs III this way: A sells piece o
property ior $4,000. and having no i'm
mediate use ior the money, he deposits
it in the bank and takes certificate o
deposit B is about to make trade II
which he will need $4,000 ready cash. Ii
order to have that amount where he CaI
Law his hands on it when he wants it. ht
borrows from the bank this $4,000 tha
A has deposited and gives the bank hi
note bearing 10 per cent interest, anG
leaves the money in the bank. taking
certificate showing that he has $1,000
on deposit in that bank.
In like manner {, d, + and F, in turf
borrow Of the bank this same $4,000
and leave it there subject to their checks
The result is that this $4,000 is made tC
show on the bank books as follows: De
posits, 10000; loans, $4,000. And th
bank IS drawing interest at the rate OF II
per cent per annum on the notes OF B
{, D. Z and f. for $4,000 each. maxim.
IN aggregate OF so per cent interest OF
AS $4,000 thus loaned out again.
AS long as the public have confidence
enough suckers will be making deposit