Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1913-01-21
TWO FORMS OF CURRENCY
Essential Difference Between Bank
Notes and Money.

NohSS anu "OIISJs
The distinction between money, the
character and soundness of which is
protected by the government regula-
ton, and bank note circulation, which
is essentially a part Of the credit and
exchange system of a country, is ex-
planned in an article prepared for the
National Citizens league by ]. Laur-
ence Laughlin, professor of political
economy in the University Of Chicago
Not infrequently it is said in con-
nection with measures for banking re-
form, that it is against public policy to
allow monopoly of note issues to an
institution formed by private capital;
and that the control over money always
has been, and always should be, a func-
tion of the sovereign state" says Pro-
fessor Laughlin. There has been much
vague thinking on this topic, which OF
all others, due to its basic Importance
demands clearness, penetration and
good sense.
by their very nature, banks are in.
stitutions for collecting and loaning
capital. So long as capital is necessary
to production, banks render an unmis-
taxable service to industry. What kind
of a banking system We have is, then
of direct concern, not merely to bank
ers, but to all borrowers, to producers
and labor and an evil system which
entails injury always hurts most the
man at the bottom.
Vast Exchanges Without Money.
Our vast exchanges Of goods-valu-
ed at billions of dollars-are performed
mainly by checks drawn on deposit ac-
counts in banks. We have the gold
standard, in which contracts and prices
of goods are expressed, and in which
our various media of exchange are di-
rectly or indirectly convertible, but gold
is seldom used as a medium Of eX-
change. We have gold and silver cer-
tificates, greenbacks and national bank
notes but the amount of the transac-
tions in goods performed by them is
| insignificant as compared with those
performed by checks drawn on de-
posits.
"A glance over the totals of the items
for all national banks from 1866 to the
present day, shows that the increased
business of the country has been met
not by any significant increase of the
note issues, but by an extraordinary in
| Of hn a
checks drawn on bank deposits. While
notes have risen from about 300 mil
| lion dollars to 700 million dollars, de-
| posits have risen from 600 million dol
lars to 4,4OO million dollars, and the
| figures for banks outside the nationa
system strengthen this showing, fol
they issue no notes and provide only
deposit currency.
$50 Billions Paid With Checks.
THE real extent of the use of the de-
posit currency as a medium of eX-
change can be approximately seen ir
| the amount of clearings. Transactions
to the amount of over $50 billions art
performed annually in the United
States by the deposit currency as 6
medium of exchange. In other words
modern business has created methods
of exchanging goods by first expressing
their worth in dollars; borrowing or
their value thus expressed, which ac'
cordingly appears in a deposit account
to the credit of the borrower, and or
which checks are drawn to be used II
paying maturing obligations. Thus
goods on the way from the producer u
the consumer are coined into means Of
payment.
What Government Cannot Do.
THE state has passed general legis'
lation about checks just as it ha:
about contracts and the like; it deter
mines when a check is legal, and Il
looks after forgery and similar acts;
but, within it's supervisory sphere, Il
leaves the amount and uses of the de-
posit currency to the laws of trade ant
experience. And yet, as has beer