The midland journal. (Rising Sun, Md.) 1885-1947, 1899-10-27
HOcuS-POcuS Money.


ton" by the Treasury Department, but
their estimates are unreliable, and no
student of political economy gives them
credit for even approaching accuracy,)
and 1000, ooo,oo of this hocus-pocus
bank money or loans of credit by the
banks, which are drawing interest from
the hands Of productive industry on
this vast sum Four thousand millions
OF phantom, or hocus pocus money, at,
say per cent per anrun, is 24o million
dollars. The probability is that is not
one-half the sum they draw OUT of the
active business of the country. This
amazing sum of interest is not paid by
the immediate borrowers but by the
whole consuming mass of $4,000, 900
people, for it must be added as part of
the expense of production.
The present business boom and "pros-
perity" which is credited TO the increase
Of the gold find within the last two or
three years by the commercial press, is
true to comparatively small extent, and
mainly 10 the banks whose four billions
of hocus-pocus money or bank credit
which is now driving the wheels of trade.
When they got the movement started
they knew it would run a certain length
of time and then collapse i'll panic or
contraction which would tumble prices
back to their old position or to the level
where the quantity of real money and the
quantity of products to be exchanged for
it are equal, The hocus- pocus money or
bank credits always make business hum
when they get it started after period of
depression and low prices, and finally
ends with another era Of depression, low
prices, stagnent business and failures Of
those who are caught The country is
approaching one of those periods at
present and great effort will be made t.
tide over prosperity" till after the
next Presidential election, but we do not
believe that can be done. There Is not
enough real money in the country to
carry the weight of business which is
being increased by the hocus- pocus
money of the banks.
The weak point In this credit money
which drives business till large amount
of products is Oil the market, and after
they are consumed or put TO final use
must be paid for. That is, final settle
ment has got to be made, books balanced
and balances paid i'll cash Open accounts
cannot be kept running for ever.
When this period is reached the banks
are called OH for real money. The hocus-
pocus sort will not answer The banks
always scent this period of danger and
begin to refuse accommodations )"
Business that has been entirely depend
ent on bank credits is struck by contrac-
ton of the banks and their capital van
ishes, the underpinning of their credit
built business is knocked out and all
comes down with q crash. Prices cannot
long be maintained without real money
behind them. The hocus- pocus, bank
credit will not pay for anything which
has been CONSUMED or ceased moving. A
representative i'll real tangible money
must be present to compensate its former
owner that has parted with it. So look
out for the panic and depression that must
follow the present prosperity" mainly
built on hocus-pocus money. and like all
its predecessors must inevitably follow
the same course they went.
England's war in the Transyal will
require large sums of gold to be sent there
and the United States is the only country
which gold can be drawn from, and it
will be taken from this country if a
premium has to be paid for it. The bal
auce of trade which demands money from
Europe will be settled by return of secu-
rites, which will be sold and the proceeds
placed to foreign credit, as has been done
largely in the past which will contribute
10 curtail the circulation of real money in
business lines and cause the contraction
period to draw near.
Albert Griffin has constructed from the
report of the Comptroller of the U. S.
Treasury very instructive table on the
financial system of the United States.
Mr.. Griffin says:
The table makes it clear that, in some
important respects the condition of the
banks is worse than it has been at any
time since the war-and panic is pos.
sible at any time. Bankers are confronted
by a grave dilemma. MANY of them
clearly see that they have gone beyond
the bounds of safety, but. in order to
perpetuate their control of the country, it
is absolutely essential that they elect the
next President and Congress. A panic
within fifteen months would make this
impossible. They know that the longer
contraction is postponed the greater will
be the disaster when it comes; but, from
their standpoint, 1t seems so necessary to
keep the Government in the control of
uien with Sound financial ideas that
they are likely TO do all they can to per-
petuate present prosperity until the last
ballot has been counted. But, to do this,
it will not be sufficient TO prevent contrac-
ton of the present volume of loans; for
they must be increased sufficiently to keep
pace with the natural increase in business,
as failure would leave an importunate
demand which, if not satisfied, could
hardly be prevented from creating I'M
easiness, then alarm, and finally. a wild
attempt OF everyone to save himself"
There is but one rational remedy for
Our present false money system. All
bank money. whether it be currency or