Askov American. [volume] (Askov, Pine County, Minn.) 1914-current, 1927-11-17

money Delng largely gold In the form
of bullion and coin, men known as
goldsmiths made business of weigh
ing and testing it for the people.
Finally, they took to receiving gold
for safekeeping in their strong boxes,
issuing storage receipts therefor.
These storage receipts came to be used
extensively as money instead of the
gold itself.
Finding that only a small part of
their stocks of gold was ever called
for at one time, goldsmiths took to
lending some of the gold stored with
them. Often those who borrowed, in
stead of taking the gold. left it in
store with the goldsmiths and took
only a storage receipt.
Thus, it came about that the
amount of such storage receipts out
standing and in use as money greatly
exceeded the amount of gold in stor-
age. The people CREDITED the gold
smiths with ability to pay on de-
mand, and so, much of the business
of exchange came to be done really
by means of GOLDSMITHS' CREDIT.
Initiating the Gold Supply.
Since these storage receipts to a
great extent took the place of gold in
the business of exchange, and since
the holders of them wishing gold for
any purpose coud always get it, the
action of the goldsmiths in issuing
storage receipts in an amount in ex-
cess of the amount in store with
them, had all the effect of an increase
in the supply of gold. Gold became
cheaper.
Gold being money, and prices being
quoted in it, as gold became cheaper
prices of commodities became CORE
spondingly higher. Thus, it came to
be true that, as the amount of stor-
age receipts outstanding increased,
prices of commodities rose, and, as
that amount decreased, prices fell.
Experience taught the goldsmiths
that they might safely have outstand-
ing storage receipts for an amount of
gold four or five times the amount of
gold in store. So they made loans
for short periods and planned to keep
on hand an amount of gold only one
fourth or one-fifth as great as the
amount represented by the amount of
storage receipts outstanding.
Curtailing the Currency.
Whenever, for any cause, their
stocks of gold fell, they curtailed
their loaning operations, the amount
of storage receipts outstanding de-
creased, and prices of commodities
fell; while, when their stocks of gold
rose, they extended their loaning oper-
ations, the amount of storage receipts
outstanding increased, and prices of
commodities rose.
The amount of gold in store with
the goldsmiths tended to fluctuate
with the amount of gold in the coun-
try, and also, with the faith of the
people in the goldsmiths. Thus,
prices came to be the product of
many other factors other than the
supply of commodities.
In modern times the bank fills the
place once filled by the goldsmiths.
The money used now is gold, and pa
per money issued by the government
or under it's authority. AS men for
merly stored their gold with the gold
smiths for. safekeeping, so now, men
deposit their money in banks for safe
keeping. AS goldsmiths loaned some
of the gold stored with them, so now
banks loan some of the money de-
posted with them. AS borrowers
from the goldsmiths often left the
gold and took only storage receipt,
so now, borrowers from banks often
leave the money borrowed on deposit,
and have the amount placed to the
credit of their checking accounts.
How Prices Are Manipulated.
Thus, the amount of money in the
banks subject to check now fills the
place formerly filled by storage re-
ceipts for gold stored with the gold
smiths, and tends to rise and fall
with the amount of money in the
country.
AS it was in the time of the gold
smiths, an increase in the amount of
money in a country now tends to an
increase in the amount of money de-
posted with banks, an increase in
the amount of loans made by them,
and therefore, in an increase in the
amount of money in the banks sub
ject to check, and consequent rise
in the price of commodities. While
a decrease in the amount of money
in country has the opposite effect.
Thus it will be seen that under
modern banking conditions, wherever
In a country the power to change the
volume of money in use is bestowed,
there lies the power to change prices
in general, powers to cause them to
rise, and to fall, and power to stabil-
ize them as well.
Bankers Confidence Game.
Under modern banking conditions
there might be heavy Withdrawals of
gold from a country, thus decreasing
the amount of money in that country,
and so, the amount deposited in banks.
Or there might arise a. more or less