Richmond dispatch. [volume] (Richmond, Va.) 1884-1903, 1899-12-08

ward.
| II ia impossible. in the limited space at
command. to present a satisfactory sum-
mary OF Mr.. Cages Views and argu-
ments but few of the salient points ne
makes follow. After giving BRIEF MS
| tory OF the evolution OF banking from the
Individual TO the corporation, Mr.. cage
says:
important as Is the establishing OF our
money standard upon a safe ana shuu-
ring basis. important az j. the guaru','s
of the national demand obligations W
adequate reserves. these alone VIII sun
leave our financial system exposed 10
evils which ought 10 be cured. Ihese
evils arise out OF our SITUATION as IL
latcs 10 the currency.
while stability in the currency shouio
be safely guarded, fexIbiliiy-the power
OF needful expansion-mu also De pro-
yided The exercise OF this power. with
proper limitations and restrictions. must
be intrusted to the bank
Mr.. Gage then asserts that, as mat
ter OF fact, the banks do exercise that
power now. as respects the larger part OIL
that element. which. rightly understood,
really constitutes money and thus sus
tains his position:
1T is q popular delusion that the bank
deals in money. Money Is an incident
in it's dealings-an important incident. no
doubt--but, truly speaking, an incident
only. The bank deals in credits. FOR
consideration varying according 10 time'
place, and circumstance, II gives TO lhe
public with whom IL deals It's own deDt
obligations In exchange for the debt OBJ
.al rlfC
The obligations of the bank thus created
are generally evidenced by credit upon
its books to the dealer. who has the right
to draw upon ii by his checks or drafts
as his convenience may be served Inc
constant interchange of credits between
the bank and its dealers. with the enor-
nous volume Of checks and drafts con-
stantly passing between buyer and seller
constitutes in the broadcast sense the cur
rency of the country. IL Is these lnstru-
ments which trade uses in much the
larger part of all its operations. Money
real money, gold or silvcr-plays but a
small part in the mutitudnous eX-
changes. The total money Of the coun-
try-metallc and paper-is less than two
thousand millions, while the deposits
of the commercial banks-State and ma
more than four thou
sand millions"
Mr.. Gage next argues that while this
operation proves that checks and drafts
are the instruments for the transfer of
property and credit rather than for the
realization of money, they perform in
our domestic commerce and trade the
same function that the dollar note Of the
government, or the fractional silver coin,
rFl..s hot &c no
agency by which goods are passed from
one to another and by which trade ac-
are settled. and therefore, in the
larger transactions of our commercial
life. the currency supply is equal. as a
rule, to the demand. But, he continues,
for the purposes of paying labor market
ing the crops, etc. this form of currency
is not convenient or suitable. What is
needed, he sets forth. is form Of credit
instrument easily recognized by the peo-
pie. one convenient as to denomination,
and one which will pass from hand to
hand without being questioned-in short,
paper money, or hard cash. And here
he makes this point:
Now, subject to one limitation-that
of safety to the nOteholder, a qualifica-
ton never to be disregarded--it is i'm
possible for any one to name a good rea-
son why the Indebtedness of the banker
in this field of the exchanges should not
be expressed as freely in his notes Of
hand Of convenient size as in one consoli-
dated entry TO the credit OF his dealer,
upon his books of account. 1t is precisely
at this point that difficulty, embarrass-
n = nd
would be a natural economical, and effec-
tive operation is by the inhibitions and
restrictions of law now made impossible
In state of freedom. the extraordinary
wants of the country at harvest time
would be largely. If not wholly, met by
the conversion of bank balances not
available for these general purposes. into
Dank notes or paper money. These. per-
forming their function, would again re-
turn when their service was ended. to be
again transformed into balances in bank
v here. through the medium of checks
and drafts. the larger commercial uses
would be the better served"
In justification OF his statement that
the present inhibitions and restrictions
Of the law make this natural course i'm
possible" Mr.. Gage cites the prohibitiye
and the unreasonable" regulations
touching national bank-note issues. And
having passed to the question of the re-
cent currency dearth which necessitated
the invasion Of the reserves of the New
York banks. he says:
IF the New York banks could have
issued their notes in the form of paper
money, they would have furnished them,
and thus discharged the credits standing
upon their books. and this would nave
entirely satisfied interior and western
needs. In that case there would have
been no expansion of credits. By so
much as notes were issued, by so much
book credits would have been cancelled.
The bank statement would have been ex-
pressed in different form, with no mate |
rial change in fact. Deposits would |
have diminished circulating notes. by |
SO much. would have been increased, the |
total would remain the same. The cash |
reserves remaining unaffected would |
have continued TO be a sufficient guard 10 |
liabilities, and the course of the loan and |
discount market would have had no |
shock. But, as before stated, this course |
was not OPEN"
Mr.. Gage, of course. means, If the |
banks could have issued their notes un-
der conditions that would have paid, they |
would have furnished them, because it |
would have been to their interest to take |
that course. In closing what he has to
say on banking and currency reform, Mr..
Gage makes a succinct and forcible d.
gest of some of the limitations Congress
has imposed upon banking.
AS we have stated. Mr.. Gage advocates |
no specific measure, and it may be that |