Daily independent. [volume] (Elko, Nev.) 188?-1915, 1899-12-22
BASIC MONEY CONTRACTED.

advantage OF the increasing produce
ton Of gold for the elimination OF the
existing stock Of silver in this coun-
try from use. The metallic stock of
the country consists of about nine
hundred millions of gold and six hun
dred millions of silver, fifteen hun
dred millions lii all. This is the only
basic money, the only money of final
redemption.
1t Is true there are greenbacks and
national bank notes in existence, but
these are merely promissory notes,
payable in metallic money, issued
either by the government or the
banks. While they aid in the ex-
changes they form no part of the
money of the country; on the con-
trary, they themselves are redeem
able in money. The metallic money
needed no redemption; gold needed
no redemption; silver needed no re-
demption, but the purpose Of the
dominant party was to make the six
hundred millions OF silver redeem
able in gold by the treasury, 1t was
true that they used the term "ex-
change" that is to say, the treasury
was tc exchange gold for silver. but if
gold was. to be given for silver, clearly
silver would turn into debt redeem
able in gold and thus become liza
bihty OF the treasury. BY this pro.
cess the basic money of the country
was to be contracted from fifteen
hundred millions to nine hundred
millions, and unless relief was given
in some other way the contraction
wonld be disastrous.
FUNCTION OF CHECKS.
To justify this great wrong, the
dominant party claimed that the
great bulk Of the business of the
country was conducted upon credit
basis, and that credit involved abso-
lutte security as to the standard. It
was claimed that checks and bills of
exchange had lagely taken the place
OF money, No greater fallacy existed
than this. Checks and bills of ex-
change had not taken the place of
money. Their use was merely sup
Elementary to that of money; their
general use involved the necessity of
more money instead of less money.
PRACTICE OF BANKS.
OF the money Of the country, about
two.thirds was now in the pockets of
the people, used in current exchanges;
the rest was in the banks and furnish
ed the basis Of credit. 1t was the
custom Of banks to loan their custom
ers on the average, about five times
as much money as they had, the loans
being turned into deposits, against
which the depositors we're accustom-
ed to check. The amount Of the de-
poeitors' accounts, therefore depend
ed upon the amount Of loans made by
the banks, and the amount of loans
upon the amount OF money
that the banks had. Country banks
were required to keep a reserve Of 10
per cent of their deposits in cash and
banks IN reserve cities we're compell-
ed to keep reserve Of % per cent.
Assuming, therefore, that the banks
of the country today had loaned out
us much money as they could upon
their present reserves OF cash. it is
impossible to understand how they
could loan out more money as bust
ness and population increased with
out an increase of cash. An increase
OF cash in the banks would enable
them to loan more money; diminu-
ition OF cash in the banks would
cause them to loan less money. A
contraction OF bank loans meant a
contraction OF deposits, and con-
traction OF deposits meant a contrac-
ton OF bank checks; 80 there was an
intimate mathematician relation be-
tween the cash on hand, the deposits.
the bank loans and the aggregate of
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