'Cbe Conservative.
they have , in many cases , proved to be
unsafe. Some method must be devised
by which sound banks can extend their
business , by means of branches , scattered
through all the agricultural districts ;
and the farmers must be taught to re
ceive and pay , by means of checks , in
stead of either coin or bills. Thus they
will gain ten times as much relief as
they could possibly gain by the issue of
more money. The remedy , therefore ,
for the present condition of things , even
accepting all the statements made by
representatives of the farming class as
true , will have to be found in an exten
sion of banks and not in any expansion
of money.
We may learn a valuable lesson in
this , as in many similar matters , by the
operations of reck-
A Lesson. less speculators ,
and , oven , of
swindlers. Such men , if they have
sufficient ingenuity to keep them
selves afloat for any length of time , dose
so by supplying some urgent want of the
community , which men of more dull
and cautious minds fail to appreciate.
Magnificent swindlers are generally
men of very keen perceptions , who see
much more clearly than more honest
men do , what the mass of their fellow-
citizens unconsciously need or desire.
The misfortune is that such men , by
abusing then ? superior knowledge , cast
discredit upon the admirable ideas which
often lie at the foundation of their
operations.
Thus , it is now universally recognized
by historians that John Law had a
clearer perception of the needs of Scot
land than any other man of his time ,
and that his banking system , which
ultimately developed into a magnificent
swindle , was , in its origin , a profoundly
wise and sagacious scheme.
Our own Zimri Dwiggins , although
by no means equal to John Law , never
theless has been sharp enough to see that
which most honest men have overlooked.
His scheme of affiliated banks , each
small , but connected with one large in
stitution supposed to be responsible and
carefully managed , is exactly what the
people of his vicinity needed. The plan
was excellent , but the administration
was very bad. The need of some such
system remains. D wiggiuses are spring
ing up all over the country , and will
continue to do so , because the business
of the country imperatively demands
the accommodation which they pretend
to offer. Every little village needs its
own bank of deposit , and will certainly
have one within a few years. The only
question is whether such banks shall be
made safe and sound , and whether the
people at large shall receive such posi
tive assurance of this safety as will
make the use of such bank universal.
THE CONSERVATIVE is not prepared
to formulate any plan for the establish
ment of these
A Needed System , small banks. But
there must be
many persons connected with banking
affairs , in one way or another , who are
entirely competent to frame such a
system. Instead of abolishing the
national banks , we ought to multiply
and extend them , only making them
real banks of deposit , conducted in good
faith and absolutely secure. They ought
to multiply to such an extent that
almost every payment of five dollars or
more , throughout the country , should
be made by means of a bonk check.
When we get to that point , we shall have
no further trouble with the demand for
more money. -
There are vast difficulties in the way
of providing a system of deposit bank
ing , which shall be
Safety. absolutely safe and
secure. But the
same difficulties formerly existed with
regard to bank notes ; and they were , at
one time , supposed to be insuperable.
Yet we have seen a system established ,
so perfectly safe that a bank note panic
has been for many years absolutely un
known. There has been no such thing
as a run upon any bank by its bill
holders , for very many years. In fact a
bank note is never presented by any
ordinary holder for redemption.
Why should it be deemed impossible
to extend the same security to bank de
posits ? It is quite true that no system
could bo devised by which such deposits
should all be redeemed in cash , if a
panic seized all the depositors at once.
But it is equally true that no such
scheme has been , or can be , devised with
regard to bank notes , so long as their
amount is large enough to constitute any
material addition to the currency. It is
true , also , that there must always be
some cases in which deposits will be im
paired or entirely lost. But the same
thing is true , with regard to bank notes.
There is nothing but a government
guarantee behind them , which could
only be made good very slowly by grad
ual collection of taxes. Precisely the
same thing could be done for the pro
tection of deposits.
It cannot be too often repeated that
the whole question of currency and
banking is one of
Confidence. confidence , with ,
of course , honesty
and integrity in the system , which will
justify that confidence. It is a very
common mistake , oven among the wisest
men who talk and write upon this sub
ject , to maintain that there is a funda
mental distinction between money and
credit. It is commonly said that ninety
per cent of business is done upon credit ,
and ton per cent in cash. The real
trutli is that one hundred per cent of
all business is done upon credit. Money ,
even in the form of gold coin , is useful
in the transaction of business , solely and
entirely because it is at present the one
form of absolutely secure , undoubted
and unshakable credit.
Every man who has a gold coin ,
knows , with perfect certainty , that he
can exchange it for
Gold Credit. anything which he
wants hi the civil
ized world , to the face value of that
coin , subject only to differences in ex
change. But if he goes outside of the
civilized world , into regions where gold
coin is not appreciated , he finds it as
useless as a piece of paper. If he were
prevented , by law or force , from ex
changing that coin for the things which
he actually wants , he would rather have
the other things than the coin. To put
it in another form , the only value of
even gold coin , considered as money , is
that it contains , practically in itself , the-
promise of every civilized man to de
liver goods to the face value of that
coin. In other words , it is the perfec
tion of credit. It is the ideal promissory
note or check.
All that is necessary , therefore , is to
develop a banking system which shall
approximate a s
Only a Standard , closely to the credit
which attaches to
gold coin , as does the national bank
note of today , and then to teach the
whole people to make their payments by
checks instead of either coin or bills.
When this is accomplished , a single gold
eagle , kept in the treasury department ,
as the standard yard is in Greenwich
observatory , might well be imagined as
answering all the necessary purposes of
coin in the entire country.
All these questions of currency and
banking lead round , as usual , to a ques
tion of taxation.
Taxes. If we could , in a
single day , estab
lish a chain of pefectly sound , solvent ,
and well-managed banks all over the
country , which would supply the need
of the farmers and planters , they would
instantly proceed to tax them out of
existence. It would be difficult enough
to make small banks of this kind pay
expenses , even free from taxation. But
if they are to be instantly loaded with a
tax of one and a half to two per cent ,
per annum , it would be impossible
for them to live. It is quite probable
that this universal mania for taxing the
very money which the farmer thinks he
wants to increase , lies at the bottom of
our entire financial difficulties. This
heavy taxation compels banks to extend
their loans at high rates of interest , thus
talcing great risks , whereas they ought
to take none. Surely the perfection of
human folly is reached when the farm
ers' alliances and granges clamor , at the
same time , for an unlimited issue of
money bearing interest at only two per
cent per annum , and an annual tax
upon that same money , no matter in
