The Birmingham age-herald., 1912-12-08


 1 based on an obsolete and antiquated 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 it's government is expected to regulate and l supervise all public quasi-public ac tivites, under which must be included money and banking. The control of | 'money'' is and always has been a func- ton of the sovereign state. Conse- quently the coinage of money, the seec- tior of the unit of the monetary system, it's weight and fineness, fixing the various denominations of coins and moneys regu- lation of the alloy and seignorage choos- ing 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, The state has passed general Legislation about checks just as it has about contracts and the like; it determines when check is l legal and it looks after forgery and simi- lar acts, but within it's supervisory sphere | it leaves the amount and uses of the de-
 
 experience. And yet, as has been shown, | this deposit currency is our principal medium of exchange-which is an ad mtted function of money in all lands One point, then, we must all admit: The evo- | lution of modern business has created | media of exchange so connected with private transactions that they cannot in common sense be performed by the gov ernment. 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.
 We may start from the automatic proposition, which all will admit, that the state itself cannot-or should not attempt l to--perform the private banking functions of deposit and discount. That is it could not attempt to offer loans to all it's cit 1 zens, judge of the character of paper, grant loans to one and refuse them to another. We have not yet reached that extreme of socialism, even if it were pos sble. And yet the deposit currency is a very part and consequence of the bank l ing functions of discount and deposit which, under our policy, lie outside of the | direct performance by the state-not out side of it's supervision. If the govern ment should not undertake the work of private banking functions, 1t cannot create the deposit currency, our chief medium of exchange. This conclusion Is too obvious to need further discussion, but 1t leaas to something more.
 No Special Profit in Bank Notes
 The particular service rendered by a bank note is very much the same as that rendered by the deposit currency. When bank makes a loan, it's profit is the same whether it grants to the borrower it's demand obligation in the | form of a note or of a deposit ac- | twn in matters of duration and distance of circulation, which are well known and obvious. But the borrower should have choice. without difference in expense between the deposit currency and the bank note. Because he lives in rural community, away from a city, and wishes to use notes, there is no reason why his medium of exchange should cost him more than the deposit cur. rency does the city man Gas Is now the easel.
 The point of great importance in connection with bank notes-although ! they do far less work than the de- posit eurrency--is to recognize that they, as well as the deposit currency. originate from the private operations of discount and deposit. In proportion to the rise and fall in the amount of exchanging goods, will more or less notes be called for accordingly as notes
 
 of the deposit currency. That is, the issue of such notes cannot be per formed properly by any institution not directly in touch with the borrowing public. As the government is not in such touch, it would be impossible for it to issue these notes. In the common interest it may supervise the system, see that it is enlightened and adapted 10 modern business. but could 1t pos sibly render directly the service per formed by bank notes?
 Note Issue Not State Function
 If the deposit currency cannot be provided by the government then how about the function of note issue? The sovereign control over money" re= mains. Our gold standard and it's di- rection lies above all private modifica- ton But who should control the is- sue of notes, also used as medium of
 exchange? It Is patent that the pro