The commonwealth., 1912-08-02

The general stock of money In the
United States is $3.50, 100000.
The deposits of the banks in the
United States aggregate $16,000,000,-
600
The exchange Of commodities In the
United States reaches some such In
conceivable sum as 5000, 900, 900, 900
every year.
The wealth of the United States is
placed for statistical purposes Mt $685.
OOO,OOO,OOO.
A glance at the figures shows the
disparity between the amount OF
money and the amount Of bank depos-
fits.
The disparity between the amount OF
money and the amount of the ex-
changes of commodities is more start
ling.
The wealth OF the country is placed
in terms of dollars for convenience.
The wealth exists The dollars in
the form of currency do not.
How does the business world effect
the exchange of commodities to such
value as 100000 millions of dollars,
when there is only 3,643 millions Of
dollars in the country?
Obviously there is some other me-
dlum Of exchange than what is called
money. There Ia. 1t is known as
deposit currency. 1t Is represented
by checks and drafts on bank depos-
its 1t is the most used currency the
country has. BY means of 1t, ex-
changes to the amount of at least 15O,-
900 million dollars are effected each
year.
T..e medium of exchange in use
consists Of the following elements;
Deposit currency.
Cold
Silver. n aaa..... ......... a. .. ..
United States notes.
National bank notes.
First Requisite OF Reform.
ANY plan of banking and currency
reform has to do with all these ele-
ments, It must take into account the
service each renders, and to what ex-
tent all together meet the demands OF
business for currency and whether
their adjustment Is such that they
meet the demands perfectly at all
times or lmperfectly some of the
time.
The one purpose of currency of all
kinda Ia to furnish convenient meth
cd to7 the exchange OF goods. At
time In the commercial progress OF the
world when business has reached Its
highest point OF development, 1t is fair
70 expect and demand the best and
most convenient means Of effecting ex-
changes. Does the currency system
OF the United States meet this expecta-
lion and demand? 1t does not,
First, the deposit currency.
First Aid to Business Needs.
This currency Is form of bank
credit II is transferred through the
medium Of checks and drafts. In cit
les where banking facilities are ample,
more than 9S per cent. Of the ex.
changes are effected by its use. In
country districts, the percentage may
We as low az SO In some cases. In
general, more than 30 per cent. of busi.
ness IN this country is done In this
currency.
deposit currency is so called be.
rause 1t. Is created by bank deposits.
"hile bank deposit Is commonly
enousn created by the placing OF
sun OF actual money in the bank, and
.unas supplied by non-borrowing de-
posi'orS contribute to the supply OF
means Tor Lending, deposits are also
.a,'a lated oy loans. The borrower re-
ives IN exchange for his promise TO
pp!' not money but the right to draw
.neeks and SO transfer the credit oh.
eu oy the loan. Between deposits
ua discounts, there is an intimate "a.
s auon, They are interdependent and
N'y nse or fall together.
- a Check to Business.
~. 10 ,isid reserve system curtains or
tn, 'ue lending power Of banks.
slw.s sore the deposit currency "a moi
sa.. s responsive to the demands :,
4 asss It is not perfectly dayssad
nerce Ssui einents of com.
Under TIE Law. must keen
4 sss n s II, T