Conservative *
IIKI'OSIT CimitKNCY : ITS SIIKNT
HUT STKAIJY GROWTH.
IIY WILLIAM I' . COKNWKLL.
The vast bulk of the currency in the
United States is created without la\v.
While legislators for thirty years have
been endeavoring to issue and regulate
the currency commerce has been issuing
its own money in the proportion of 8JJ
of its own to 5 of the government's and
.substantially without the knowledge of
congress. Nevertheless it is not only
absolutely harmless but has been of the
greatest benefit in the progress of our
people. Without it the United States
would le a poverty-stricken wilderness.
By its aid enormous prosperity has been
developed.
Considerably over three thousand
million dollars worth of promises are
held by the banks of the United States.
These promises are made in writing
and are signed by all classes of people.
Some of these people have property
like stocks and bonds , or other forms of
% ' collateral which they have put up to in
sure the payment of their promises.
Others have prospects which they vir-
/ 1 ually pledge in their proim'ses to pay
* * prospects of selling things , like wheat ,
com , cotton , lumber , iron also muscle-
work and brain-work. With the pro
ceeds of the sale of these things they
expect to pay their promises.
These promises are the loans and bills
discounted , held by the banks.
All of this value in promises to pay is
used as the basis of a currency which
has come gradually steadily into use in
the business of the United States. The
operation is this : The man with a
promise turns it over to the bank , which
gives him its promise in the shape of
a right to draw against the amount of
his promise , less the discount.
The right to draw is expressed in the
, form of a deposit to his credit.
His checks against this deposit are
accepted by anyone he wishes to pay
money to , and his checks at once fonn
a part of the currency of the country.
This currency has come into use with
out concerted action , without legislation
almost without the knowledge of the
great majority of the people who are
using it daily.
This currency is what is known as
deposit currency.
A very large part of the business of
the United States is carried on with this
kind of currency.
The deposits in the banks , the basis of
this currency or money , have increased
from 11 hundred
INCREASE OF million iu 1876 to 83
HANK DEPOSITS. hundred milUou iu
1807. The currency furnished by checks
against these deposits does 95 per cent
of the business of the United States jusfc
exactly as it would be done with bank
notes if there were enough of them , or
with government paper money. This
great bulk of payments is made by
checks and drafts no one of which stays
n existence much more than one or two
days. This method of doing this busi-
less , as I have said , has come into use
practically without law , to approve , or
regulate , or restrict it. It is the inven-
ion and choice of the business public
md has come into enormous use in the
Jnited States , while bank notes have
> een cut down in volume from over 300
nillions to under 200 millions.
If commerce had not been hampered
> y legislation it would have made
equally advantageous use of bank note
currency in sparsely settled regions
where deposit currency is not available.
We have here a method of payments
which has sprung up of itself out of the
iceds of commerce , composed wholly of
he products and paraphernalia of com-
nerco , solely possible of use in com-
nercc , and wonderfully adapted in
every way for such use a perfect med
ium.
ium.And
And when we reflect that money , a
medium of exchange , used only by com
merce , would not be used at all if there
were no commerce , does it not seem ad
missible and just , that commerce should
decide on its own medium and perfect
it ?
The same process would long ago have
perfected a system of bank note cur
rency in the United States had not leg
islation intorferred to embarass , to en
tangle and to destroy.
But note currency is exactly the same
as deposit currency in its general prin
ciple. It is the promise of the bank
given not in the shape of a right to draw
against it as with a deposit , but the di
rectly expressed promise of the bank to
pay , divided up into single dollars and
fixed multiples of single dollars ones ,
twos , fives , tens , twenties , hundreds
printed on paper and used exactly as the
checks against deposits are used.
These made absolutely safe by a
guarantee fund of the banks collectively ,
pass current in agricultural and wooded
sections where names of drawers of
checks would not be taken because not
known.
These notes have behind them the
same land of assets as deposits namely ,
the secured promises of individuals who
have borrowed the notes from the bank.
In order to make them doubly sure to
the innocent holder they are made a
prior lien on all the assets of the bank
issuing them.
More of them cannot go out into the
community than are actually needed in
business because no good borrower will
pay interest unless he needs to use the
money , and when ho ceases to need this ,
the notes come back to bo paid.
Instead of these perfectly adapted
mediums of exchange , these absolutely
secured notes of banks , we are asked ,
in fact , have been compelled for more
than thirty-five years , to accept govern
ment notes which are totally unadapted
to the uses of business.
Hampered iu this way commerce has
spread out and quietly developed its own
medium deposit currency.
But why should commerce be ham
pered when its success means pros
perity for all ?
Why should not commerce bo allowed
to develop the usefulness of the bank
note 'i
A bank note is a title to actual prop-
porty held by the bank.
A government legal-tender note is
not a title to anything.
It is issued for expenses , or buildings ,
or harbors , none of which can be used
to pay it with.
It is a forced loan.
It can only be paid by taxing the people
ple for the money to pay with.
If it is intended to have it constantly
redeemable in gold , then a vast amount
of gold must bo tied up in the Treasury ,
idle , which is a direct loss to every citi-
7.011.
7.011.The
The tendency of legal-tender notes is
to increase instead of to diminish.
It is an inflator , because once issued
there is no force in the conditions of
trade to drive it out when not needed.
Inflation benefits only reckless specu
lators and its reaction harms all.
Tried by nearly every government in
existence legal-tender notes have proved
in every instance a failure , entailing in
their use speculation , business uncer
tainty , fluctuating employment for
labor , suffering to wage-earners and
finally disaster to every interest.
A correspondent
, . , , * - , . .
as s 1G Spanish
" ! > AGO. " " "
are called dagoes
because their patron saint is Saint Jago.
It is quite possible that this saint , with
San Diego and a number of other simi
lar-sounding places and persons , may
have had a hand in it , some rough-and-
ready word-coiner having summed up
his impressions of the whole language
in the injurious word in question. The
odd thing about it is that the name has ,
wo believe , been applied exclusively to
Italians , at least in the North , until the
outbreak of the Cuban difficulty. The
Standard Dictionary says that it signi
fies "any dark-skinned foreigner. " We
cannot recall having seen or heard it
prior to 1882.
Japan is going to borrow 50 millions
of dollars from foreigners and pay in
terest for the use of the money. Isn't ,
it queer that Japan has never profited
by the advice of such eminent financiers
as Senator Allen and Jacob S. Coxey ?
Why do not the Japanese extend an in
vitation to these gentlemen to go to the
"Land of Flowers" and teach the na
tives the art of making something out
of nothing of legislating value into n
disc of metal or a piece of paper ? The
Japs would then be able to save mil
lions of dollars in interest each year.
