The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1901-12-05
REFORMS IN RANKING.
Secretary Cages SuggestiOns-Thc
Central Bank Proposition.

Secretary Gage includes in his report a
treatise on banking and currency, in which
he reiterates his Well known views "Ad-
mirable in many respects" he says. lex
perience shows that our banking system is
devised for fair weather. not for storms
This can be clearly shown. The individual
banks stand isolated and apart, separated
units. with no tie of mutually between
them. There is no obligation of duty from
the strong to the weak or exposed. nor any
method of legal association for common
protection or defense in periods OF adversely
and depression. The function and office of
a bank is to give its money obligations in
exchange for the money obligations of its
customers and dealers. This is the bust
ness the bank chiefly prosecUtes If it re-
ceives the promise 10 pay of a borrower,
the obligation of the bank is evidenced by
an open credit 10 the borrower upon it's
books or il may be by issuing to him
corresponding sum in its circulating notes
In either case the transaction is the same
exchange by the bank OF its obligation to
pay against the borrowers obligation to
pay. This is made plain by glance at the
reports furnished by the banks to the Of
flee OF the controller of the currency At
the period of their last report, the national
banks as a whole held obligations against
the public 10 an amount in excess of $3.0lS.-
00o,0o0 while the public enjoyed a total of
credits upon the books Of the banks 10 an
amount in excess of $3Of4,O00 600. These
credits on the banks books are called de
DOsits' Ii is a convenient name b1t II is
a misnOmer If by its use il is intended to
represent deposits Of actual money
Ihe truth II. that although money forms
an element in the daily deposits Of the
banks, IN the daily average receipts as "A
whole not over 10 per cent. is in cash The
other 90 per cent. consists of checks. or, to
speak more simply. orders for the transfer
OF existing bank credits from one person
10 another. IL Is these orders for the trans
fer OF bank credits than transact the bust
ness or the country, and. out Of all COM
pariSCn with coin or paper money as To ex-
tent and volume they constitute the cur
rency of which trade and commerce in all
large affairs make use liz is important thar
this be comprehended. Bank notes green
backs. gold and silver coin. perform i'm the
field or circulation a very important ri
but their use Is substantially limited IN re
tail transactions. the payment of wages.
and the smaller affairs OF life For ali
larger matters, bank checks or credit
transfers. are the effective currency tbe
real medium or exchange and means of
payment
SOME PHENOMENA.
Now loan OF credit by the bank is es-
sentially manufacture Of creation of the
medium OF exchange. Banks do not pri-
marily lend money. they give credit. Cred
IL 50 given may indeed be availed of bv
the borrower 10 secure money, either in the
form OF coin OF bank notes but in much
the larger degree the credit obtained is
made the subject OF transfer from buyer
10 seller. To be retransferred again and
again in the course OF trade. So we have
these phenomena. In the operations Of trade