The times. [volume] (Richmond, Va.) 1890-1903, 1898-06-14
TUESDAY. JUNE a. 1895.
THE VIRGINIAN AND PILOT GhI'
rINc DOWN TO BUSINESS.

saved II has abandoned denunciation
and abuse to a great extent though not
entirely. and has entered into serious
discussion with us concerning the foun-
dations of its free silver and Popuiisuc
faith. ana It is only a matter OF time
now when the scales will fall from its
ewes. and it will see the whole world in
ALI the roseate beauty OF truth. There
will soon be that great rejoicing that FOL
lows when one sinner-and in this case
A most hardened one-is saved
Replying TO one Of its denunciatory ar
euments. some ten days ago, The Times
pointed out to the Nirginian and Pilot
that SIS fundamental error. like that OF
All the free coiners and Populists, was
in thinking that the business Of the coun-
try was done with coined money and cir
culating currency notes and that great
quantity OF these, was, therefore. neces-
sary; whereas, in fact, the business Of
the country is done by exchange OF COM
modiues effected by exchange in the
banks Of the credit values Of the COM
modiues.
The Virginian and Pilot replies most
deliberately 10 our article. and its reply
is a practical admission. that we have
correctly stated its faiJn and 1t is an at
tempt TO defend the proposition that the
country must have great quantities OF
coined money and circulating notes. 1t
insists that. although business effects its
transactions by checks, yet there must
be actual money 10 represent the checks
or the transaction is a swindle. But
there is the point at which the Virginian
and Pilot needs light and that light we
shall shed upon it this morning.
Our contemporary is totally mistaken
in thinking there must be cash money to
represent the checks that are given in
business. A commission merchant in
Wilmington. n. c.. sells cotton spin
ner in Richmond a carload Of cotton
for 5000 and fertilizer manufacturer
in Richmond sells a merchant in Will
mington a carload OF fertilizers for
$500. The Wilmington commission mer-
chant draws a draft on the Richmond
cotton spinner for 5000. which he de-
poslts In the Wilmington bank, and the
Richmond fertilizer manufacturer draws
a draft on the Wilmington merchant for
5000 which no deposits in the Rich
mond bank. and these two drafts meet
in the exchanges OF the country, are
swappee. the one for the other. and this
transaction IS concluded without the use
OF dollar OF cash. But that is not all
that was done. When the draft for 5000
was deposited in the Wilmington bank It
az once had 5000 OF idle money in its
vaults. 1t was not money, in the PopU-
lists sense OF money. but Il was money
according 60 the needs OF commerce. II
was a credit Of 5000 that rested upon
the actual value that the carload Of
cotton contained. The same thing was
true OF the Richmond bank. II had 5000
OF idle money in its vaults. the credit
resting upon the actual value OF the fer
tilizers that had been shipped. Now,
each bank knows that. according TO the
usages Of business. the credit Il has on
its books Is not going TO be called for
in actual cash. 1t knows that whoever
owns that credit Is going 10 dispose OF
It by checks. which will be nothing but
an assignment OF the credit on its books
from one person to another. Each bank
abo knows that while some men are as
signing the credit on SIS books TO some
other bank other men will be making
new deposits OF credits with Il 20 take
the place OF those assigned away. The
consequence is. each bank feels safe in
lending out great part. II not the whole
OF the 5000 credit that has been opened
with it. the moment the draft for $500
Is deposited.
This. then, is the way business goes on.
As soon as credits are opened upon the
books OF bank that are drafts drawn
against real values. the banks treat those
credits as actual cash in their vaults.
ana they lend these credits out Just as
though they were actual coined dollars.
They stand ready 10 give coined dollars
10 any one who asks for them. but prsc-
fical experience has taught them that
one dollar OF coined money Is enough 10
keep on hand for ten dollars OF demand
liabilities. II the yirginian and Pilot