The Anaconda standard. [volume] (Anaconda, Mont.) 1889-1970, 1899-12-12

man notes snail De WltndraWn from
circulation and cancelled.
1t may be thought by some that this
will not diminish the amount of the
coinage, but only change the form Of
a part of it to smaller pieces. This,
however, is a mistake. It will operate
to not only change full tender coin
age-which the dollar is where not
otherwise stipu1ated--to a subsidiary
coinage. which is legal tender for no
more than ten dollars in one payment,
but it will reduce the total amount
If this bullion were not used for the
small coinage, 1t would be necessary
for the treasury department to pur-
chase additional bullion for that pur-
pose. This in itself is not so important
matter. but 1t serves to illustrate the
general purpose OF the bill. which is to
get rid of all full legal tender money
except gold.
We now come to glance at the bank
features of the bill. AS already init
mated 1t stops short of giving the
banks the full extent of their demand,
namely the right to issue circulating
notes upon their general assets It is
not to be supposed that this was
through any unwillingness to give than
whatever they want. 1t must be looked
upon simply as a measure of precau-
ton. Those who formulated the bill
felt that they must withhold little
something. so that they might be able
to go before the people with the plea
that they did not give the banks all
that they desired. At the same time
they have so shaped the other features
of the bill that the last step will be a
short and easy one.
For the present the bill goes no far
Their than to allow the banks to issue
notes right up to the par value of the
bonds deposited as security, instead of
only to the amount Of ninety per cent,
as under the existing law. This, how
ever, is a very substantial advantage,
being equivalent to a direct gift of the
difference between ninety per cent and
a hundred. A bank which can now
| issue ninety thousand dollars in notes,
may, under the proposed bill, issue one
| hundred thousand without any addi-
tional security. Besides this, provision
| Is made for the organization of banks
with capital of twenty-five thousand
dollars in places having population
| not exceeding two thousand. The min
imum capital now allowed is fifty thou
sand dollars.
If the banking scheme as a whole is
a good one. this feature is also a good
one; II it is bad, then the more the
system is extended the worse it be-
comes. The special objection to it is
that the national bankers nearly all
think alike. and such a measure would
give them fortified outpost, as it were,
in every little town. But the great OBJ
lection is to the entire policy of allow
Ing the banks to control the money
supply of the people. No man has ever
yet shown in what way national bank
note is better than one issued by the
government, but the contrary has fire.
quently been demonstrated.
Not being legal tender, the bank note
can be not better than the credit of the
bank which issues it, unless the govern
ment stands ready to keepit good. Even
then the absence of the legal tender
quality may In some cases be serious
drawback, for no one is bound to take
it unless he wants to.
The argument is that with bank is
sues the currency will be more "elas-
tic 1t is assumed that the banks will
put money into circulation when it is
needed and withdraw it when it is not
The flaw in the argument is that the
real operation is directly the reverse
The banks always put money into cir
culation most largely when boom
is on, and when the boom" has gone
to the utmost limit of safety, they be-
gin to draw their money in and the
boom collapses. Then, instead Of throw.
Ing out money in order to sustain tbs
business of the community, the banks
continue to draw in for the purpose OF
saving themselves. This Is in accord
ance with all human experience In busl
! ness affairs since banking assumed
large proportions.
The whole theory of the banking
scheme as advocated by secretar,
Gage and the banking classes, rest
upon the fundamental error that bust
ness is primarily independent of none!
: and that 1t is only necessary to pu
money into circulation to sustain thu
business after it has created itself. TIL
truth is that under modern condition
money Is, ITSELF the primary factor. I
! takes money to start business. TIL
larger the amount of money going int
business the higher the tide will rise
: and the more the tide rises the NOR
money will be required to keep 1t from
falling. In brief 1t may be stated tina
In order to make currency system
! elastic, more money should be put int
circulation when prices begin to fall il
order to sustain them, and Withdraw VI
from circulation when they show ten
dency to rise too high. But every maj
with a particle of business sense know
that money nearly always seeks a ris
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