t3be Conservative *
banking institution in the world , having
a combined capital and surplus of
$80,000,000 , deposits of § 140,000,000 to
$150,000,000 , employs over 1,000 clerics ,
and the buildings cover over 80 acres.
It has stood its own these many years ;
the name Bank of England being a
synonym of strength and security , its
notes being taken at par the world
over.
The Bank of England enjoys special
note-issuing privileges from the govern
meut ; its note-issuing department is
separate and apart from its commercial
department , the note-issuing depart
ment being under the control of the gov
ernment. The bank is allowed the priv
ilege of issuing notes against deposits of
gold to an unlimited amount , against
the deposit of its commercial paper to
the extent only of 14,000,000 , this
being the elastic part of the note-issue
privileges and being resorted to only hi
times of extreme necessity.
Banking in the United States has
had many ups and downs. In a now
country where exchange of products is
carried on by means of barter , banks
are called into existence as the means of
providing a currency whereby to facili
tate this exchange. Banks would not
be started to be banks of deposit for the
reason that there is no money to deposit.
So as early as 1715 we iind in the New
England colonies , various plans ad
vanced for starting banks with note-
issuing privileges. The first were
planned on the Lord bank idea , < ' . c. the
banks issue currency , secured by loans
on real estate , said loans drawing a low
rate of interest and repayable by install
ments. Depreciation on all such issues
was the result and such plans soon died
out. Later every state granted bank
charters with special note-issuing privi
leges , so that the country was filled with
banks issuing what was called "wild cat
currency. " Inasmuch as no credit other
than local was back of the same , its cir
culation was limited. A person having
to exchange his currency with each
change of locality , never certain that the
morrow would find his stock of bank
notes of any value at all , the bank possi
bly over night having folded its tout and
moved away , gradually the system be
came so bad that improvements were
demanded and it was endeavored to take
away the local character of the bank
note issue and have a central place of
redemption , resulting in the Suffolk sys
tem for the Now England states , the
plan being that the various banks kept
on deposit at Boston a certain amount
with which to redeem their notes. This
changed the local character of the notes
and gave them more stability. New
York also "planned such a sj'stem provid
ing for redemption at Albany. From
the New York system was taken the
plan of our present national bank act.
The United States early in the year
1800 granted special charter to the
United States bank , it being organized
largely as a means of granting personal
support to the United States. At that
time the policy of the Jacksonian party
was opposed to the contrali'/ation of
power in the government and with its
ascendency the plan of the United States
bank was defeated.
The civil war did much for us both
good and bad in a financial way.
The government had to resort to every
scheme to maintain its credit , and to se
cure funds with which to pay its enor
mous daily expenses. The issue of the
greenback was one , the organization of
the national bank act another. The idea
of the Suffolk and Now York plan of re
deeming local banknote issues proving
a success , it was urged that if good for a
locality or a state , why not better to
formulate a plan whereby the local ixsnc
would be wiped out and the issue bo of
a national character with provisions for
redemption at a fixed point. Looking
back still further for precedent the plan
of putting up the government debt as se-
cxirely for the circulation covered the
other points , so that the dissatisfaction
resulting from a poor system of state
banknote issue coupled with the strait
ened condition of the government open
ing up , as it would , such a demand for
its bonds , wore the causes that ended in
what is called the National Bank act ,
bringing us up now to our present sys
tem of banking.
The location or starting of a bank in a
community is the result of an actual
need as much as the opening of a gro
cery store or a meat shop.
Business is complex , the proper ex
change of commodities , the buying of
what is needed to supply the demands ,
the selling or marketing of what is pro-
dxiced , requires an extensive system. A
factory to run must have machinery ,
engine and boiler , the crude product
to operate with ; so in the business
world. The product of each community
must be garnered. It must be supplied
with necessary articles from the outside
world. All this requires labor and detail -
tail and the bank is almost the first re-
qxiisito. It is the belt that connects the
power ( products ) with the machinery
( demand ) keeping the whole in active ,
steady motion , meeting unusual de
mands without apparent effort. There
is no restriction as to who shall start a
bank. It is as free to embark into as
any business enterprise. The primary
effect as in all other pursuits is gain.
An individual may start a bank , call
himself a banker and the community
having confidence in him , favors him
with its business and makes him the
custodian of its funds. Ho may bo all
that is desired in a banker and faithfully
care for the funds in charge. Inasmuch
as it requires large capital to start a
bank , capital being the foundation , the
broader and deeper it is the greater the
stability and prospects for success. The
individual rarely possessing sufficient
capital ; wo almost universally find a
number of the well-to-do of
- - a city band
ing themselves together as stockholders rf %
and organizing a stock bank under t !
either national or state laws , being then
subject to inspection , laws and regula
tions , thus gathering to themselves the
benefit and consequent additional confi
dence in them from the public
The Wealth of Nations states of banks
as follows :
"It is not by augmenting the capital
of a country but by rendering a greater
part of that capital more active and pro
ductive than would otherwise be so ,
that the most judicious operations of
banking can increase the industry of the
country. " That is the olfice of the
bank. Capital is not at all augmented ,
but is made more active. It does more
work with money , economizes it , as it
were , lets the check , draft , bill of exchange -
change , serve in its stead ; allows the
merchant and manufacturer to bell their
products on time , GO and ! )0 ) days , dis
counts the same with the banker , thus
realizing from the sale at once and thus
having the funds to make further in
vestments. Without banks , each indi
vidual , each merchant or manufacturer ,
would have to have as capital in his
bxisiness the maximum amount of money
needed in his business at the period of
its greatest demand and activity. As it
is no\v with our banking system all ho is
obliged to have is the minimum amount
of capital , i c. its fixed part , the farm ,
the factory and its machinery , the stock
of goods needed for the period of its least
activity. The excess needed is supplied
by the banker. He advances the fanner
to carry his grain to buy stock to feed ;
the manufacturer to buy the crude ma
terial with which to operate the factory ;
the merchant to stock up to meet un
usual trade demands.
There are populists who , if we may
believe them , have been self-sacriflcingly
fighting the "money power" for more
than twenty-five years. Wo wish that
some of these ancient knights of philan
thropy would write autobiographies ,
It would be intensely interesting to read
their own accounts of single combats be
tween them and the money monster
about which they dream , and concerning
which , even in their troubled sleep , they
chatteringly discourse. Give us an
autobiographic account of oven "Tho
First Battle" and tell who got whipped.
More money is needed , saith Bryan ,
Teller , Towno and Coin Harvey. Moro
money is needed with which to cripple
and repress the power of money. To
keep the boiler from having power , in
crease the steam. To lesson the tyranny
of rich men , who have now too largo a
share of the currency of the country , in
crease the circulation and multiply
chances for the gold gormands to got
still more money. Beware of the mouej'
power and avoid its wicked despotism by
making money plentier and easier to got.
Easier to get by whom ? By every
body of course , except those , who have
heretofore gotten money.