The diamond drill. (Crystal Falls, Iron County, Mich.) 1887-1996, 1913-01-04

| IN London. American merchants can
not pay for goods they buy abroad with
the goods they have TO sell. unless they
happen to buy from England. When.
ever the trade is with another country.
the accounting must be through En-
gland credit machinery. 20 England
profit.
There was nothing OF sorcery in the
methods by which England achieved
her present position. She II no al
chemist transmitting paper into gold
An examination of her monetary sys
tenn reveals, not Black Art. but science.
London has perfected the most elastic
credit system in the world and this
marvellous structure has been upreared
on stock Of gold usually about one.
third as great as we have In our none.
tary system.
The Bank OF England is the fiscal a
gent OF the Government and il holds
the ultimate reserves of all the banks
OF the country all the gold ana notes
they do not actually need in their-tills.
Their reserves consist OF leash in hand
at the Bank of England. A credit at
the bank counts with them as cash.
When, for instance. the Government
must pay its quarterly dividends on
consols and needs say, two million
pounds for that purpose, IL borrows the
money from its fiscal agent. and re
ceives credit for that amount on the
Banks books But only small frac.
ton of the money is fall hat. The
machine is marvel OF ease and of
ficiency.
The Bank i notes. excepting about
SIS, 900, 600. based on securities. are
backed by al exact equivalent in metal
in its vaults. But borrowers from the
Bank, AS rule. ask not for it's notes.
but for credit on its books.
England. in common with the other
countries OF Europe. has q redIscount
market for commercial paper. A bill
OF exchange is convertible at once INTO
cash, after IL has been accepted. Either
bank an accepting house or the firm
on which the bill is drawn may accent
lt IN England. In either event the
person drawing il is enabled 10 get his
money promptly. instead Of waiting
sixty or ninety days for payment.
Banks in the United States may deal
IN bills Of exchange. but they may not
accept them, in The sense that they are
accepted abroad thus putting their
,redit behind Their customers and Civ
ng the bill national and information.
il market
The advantages OF English banks
'ver the banks Of the United States,
hen. may be briefly summed up as
ollows:
They have a rediscount market for
commercial paper;
They mobilize their reserves at the
sank OF England. 50 that its actually
The interest warrants ara
aid tor the most part into other banks.
o the credit Of customers who own
onsoIs, and these banks pay them into
he Bank OF England. 20 the credit OF
heir balances. 50 that instead of
aging out two millions in gold or
otes, the Bank need only set it's clerks
work whereas. in this country the
ayments OF Government taxes and inn
orts withdraws lawful money from
REGULATION to the amount of hundreds
millions of dollars. This money ~
'cked up in the Sub-treasury. useless
y the purposes of agriculture aud in.
lstry. until Government disburse.
ents release it.
The Bank of England is further en-. \
'led to issue emergency currency 10
Get the seasonal demands of orop
ovaments and at the end of the quar-
rs, when interest payments are being
ade and when banks all over the
untry are increasing their reserves
as TO make fine showing In their
larterly statements. III the supply OF
oney runs short borrowers go to the
INK with securities Of the kind IN
III accept and IN the course of a few
Inutes add million or two 10 the
sis Of credit (which is credit at the
NIX as easily as one would buy enor.
'us strength IL behind each of them
Their bank the Bank Of England =
q discount rate which 10 may nae
attract or expei gold. thus control.
z the international ebb and siow of
) metal;
Ineir bank acts as fiscal agent or
Government. go that Government
lds are not withdrawn from the nsea
industry commerce and agriculture.
locked up in Government vaults.
is conceded that we do not want a
tral bank. such an institution pro.