The record-union., 1898-09-16

their assets, upon condition that these
notes shall be convertible into gold coin
| and placing upon them the burden OF
| finding the gold necessary to adjust our
commercial balances. The working of
such system has been seen in France,
| where there is a uniform rate of inter-
est as low as 2 per cent; in Scotland,
where for two hundred years there
have only been three bank failures, and
| in Canada, where the best results OF
| any have been attained. But it may be
| objected that in all these cases the
| capital of the banks has not been large.
| The answer is to point to the Suffolk
4 system in our own country, when con-
| ditions were not so favorable as now,
which established the proposition that
4 it is as safe for a bank to issue notes
| as to receive deposits and lend them
| out. The principle Of credit currency
| has been tested under almost every
| condition, showing its fitness best
when legislative interference has been
| least, through the all-sufficient require
ment of current controvertibility.
The best form of paper currency,
| then, springs into being every day con-
| currently with those transactions by
which we are exchanging products to
the extent of $100000,00O every twen-
ty-four hours, and is as certainly hqul-
dated when those exchanges are COM
plete. A bond securing currency, on
the other hand, is issued only when 1t
is profitable to hold the bonds by which
| the notes are secured. Its Whole ten
dency and effect is, where rates are
high to reduce the loanable funds, and
Just in proportion as the rates rise, to
| Th,1C a
verse of what should happen does hap
pen But credit currency works in har-
mony with the demands of each local
ity increasing the loanable funds by an
amount equal to the capital employed,
and correspondingly lowering the rates
of interest. The one is artificial; the
other natural and a part of the business
itself
But it may be objected that banks
would withhold their notes for the pur-
pose of making money scarce and fore
ing up the rates of interest. Such is not
the experience of the world, for where
a practically unlimited note issue Is
granted there the rates are lowest. The
rates of interest, for instance, in Cam
ada are practically uniform ranging
from per cent. to 6 per cent. while
from / per cent. to SO per cent. The
truth is that the bank which has the
largest amount of capital to lend will
make the most money, and that rates
will be lowest where the deposits are
greatest. There is not the slightest diff.
ference between lending the notes of
a bank and lending deposits, or grant
ing credits, except so far as the habits
of the people require one instead of the
other. A banker is a merchant, and ii
is just as reasonable to say that the
dry goods man will not sell his wares
as that the banker will not sell his
goods which are credits, not notes.
Banks desire to expand their cred
it's, not contract them; banks want
prosperous times, not panics. Coun-
tries with practically an unlimited note
issue have escaped the frightful spasms
of the past twenty-five years incident
to America and England; and these
two countries have only been saved
from commercial ruin in great crises by
resorting to the same system and issu-
ing notes against assets. Would 1t not
then be safe for the banks of the United
States, with more than one thousand
millions of capital and five billions of
assets, to issue eight hundred million
bank notes? Each current year there
passes through these institutions in
: representatives of value something like
seventy billions of dollars. Let us re-
member that the object to be attained
; by the currency Of trade is the transfer
of the right to have a certain amount of
: property, and that the currency which
fulfills the conditions of safety, facility
and economy in the highest degree is
the mCSt desirable A credit currency
based upon the liquid wealth of our
country and issued by the same instru-
| mentalites by which our vast produc-
, ton of fifteen billions annually are
} transferred from producer to consumer
best answers and satisfies these re-
quirements."
w. w. Clay of Chicago said money is
money by virtue of the law behind it.
He is opposed to the coinage of sold
{ silver or paper on private account
8 John p Irish of San Francisco de-
Tended the gold standard in a. few
( words
Chairman Towne came back at the
gold mems contention that value can
not be legislated into a substance by
! saying legislation can affect value The
, only value money has is it's exchange
= value
: A paper by William c. Cornwall OF
Buffalo, n. Y, on deposits, was read
; by +. V. Smalley, Secretary of the Ma
tional Sound Money League.
? Two of the middle-of- the-road edi-
tors of the Reform Press Association
t \. NJ. Motsinger Of Indiana and A
Reed of Iowa, managed to be heard or
their theories of absolute fiatism
: Reed created a scene by charging tbs
gold standard advocates with being
a paid hirelings of the bankers and the
| money power.
. This evening A. W. Wright of Chi
. caSo elabsrated on a plan for a free
' banking system without Government
> supervision.
. Professor K. Allen Smith of the
E Washington State University and Judge
q Sheldon of Connecticut contended fol
the quantative theory as regulative u
prices, and Congressman Dearmond oi
Missouri pictured a gruesome future
9 with only a 3 per cent. gold reserve
to redeem an immense volume of bank
paper, under the present system of gen
:, eral panic.
, Time was allowed Congressman Nc.
Clary to give his reasons for an idea
banking system.
The closing argument for fiatism was
q made by General Warner. He said the