Arizona republican., 1912-12-09

actual deposits, but the amount of checks drawn on these deposits. The real extent of the use of the deposit currency as a medium of exchange can be approximately seen in the amount or cIearingS. These figures disclose the fact that transactions to the amount of over $150, ,000, ,000. 900 are per formed annually in the United States by the deposit currency as q medium of exchange. In other words modern business has created methods of ex- changing goods by first expressing their worth in dollars; borrowing on their value thus expressed, which ac- cordingly appears in a deposit account to the credit of the borrower. and on which checks are drawn to be used in paying maturing obligations Thus goods on the way from the producer to the consumer are coined into means of payment
 Obviously, then, the service that banks perform for the community. apart from loaning, is not merely that of issuing notes. Quite the contrary the function of issue is less important
 
 posit. Tn fact, the function of issue is not esential to q modern bank in this country; because, by use of the functions of discount and deposit. it can create an effective and really elas- tic medium of exchange in it's deposit currency. This evolution out of busi- ness experience, without any heIp from legislation, has appeared mainly in Great Britain and the United States (not being of importance on the con tinent) Our various state banking in stitutionS do all their business-which IS greater than that of national banks without issuing notes. The fact then is known to all that banking can. if necessary. be carried on without the issue of bank notes The suppostion, therefore, that the banking and none tary question is primarily enc of note issues, or of a specified quantity of so-called money in any form is clearly based on an obsolete and antiduated view of the methods by which business is now carried on.
 Government Should Not Be Banker.
 The relation of the state to money and banking, therefore, must be viewed with an intelligent understanding of business conditions as they really exist today By general consent. the state through its government is expected to regulate and supervise all public or quaSi-public activities under which must be included money and banking The control of money is and always has been function of the sovereign I'nnCannnntl,- ha .,@ money. the selection of the unit of the monetary system, its weight and fine ness. fixing the various denominations of coins and moneys, regulation of the alloy and seignOrage. choosing the kind of metal out of which the standard and subsidiary coins should be made, are attributes Of sovereignty.
 But is it an attribute of sovereignty to determine and regulate the amount and character of bank checks? in one sense. yes; in a large sense. no. The state has passed geeral legislation about checks just as it has about con- tracts and the like; it determines when q check is legal and it looks after forgery and semilar acts; but, within its supervisory sphere. it leaves the amount and uses of the deposit curren- cy to the laws of trade and experience And yet, as has been shown. this de- posit-Currency is our principal medium of eXchange-Which is an admitted function of money in all lands One point then, We must all admit: The evolution of modern business has creat- cd media Ot echange so connected with private transactions that they cannot, in common sense. be performed by the government This does not mean that the service should not be supervised by the state; it means that the state cannot in any practical sense directly perform the service itself