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6 The Conservative *
A PROSPECTIVE MONEY TRUST.
( .Written for The Conservative. ]
Seventy and more years ago , there
was an institution in this country
known as the United States Bank. As
near as I remember , its capital stock
was $80,000,000 , of which the govern
ment owned about $9,000,000 , and the
remainder was larcely in the hands
of foreign investors , whoso resident
agents looked after it for them.
When Andrew Jackson was president ,
congress passed a bill recharteriug
the bank. Jackson vetoed the bill ,
and on returning it unsigned , told
congress substantially this : "When
this congress was elected , the subject
of rechartering the bank was not
before the people and was not presented -
ed to them. The existing charter has
four years to run yet , and the bank has
two years in which to close up its
business , equal to six years. There
will be at least two elections , and
plenty of time to put it before the
people. Go home and lay the matter
before the voters for their cousidera-
tion , and give them a chance to look
into it and decide. If they send you
or another congress back here in
structed to recharter the bank , I will
sign the bill for that purpose. "
Jackson was a candidate for re-eleo-
tion .to a second term as president.
Nicholas Biddle , the president of the
bank , at once organized all the forces
and powers the bank could control to
defeat Jackson. Jackson immediately
removed from the bank all the gov
ernment deposits , and began what
afterwards grew into the sub-treasury
system.
The people decided against rechar-
tering the bank and Jackson was
triumphantly elected. But the bank
made a most bitter and unscrupulous
fight upon him ; in many ways the
most abusive and malignant ever
known. The parties then called
themselves "Republican Whigs" and
4' Republican Democrats. ' ' The sub-
treasury system continued in force
unti | Salmon P. Chase's plan of Na
tional banks , based on government
bonds , came into operation.
The attempt of the United States
bank to control the results of a presi
dential election was an interference
the people would not brook. The
idea of government being concerned
A in.the . banking business was not
favorably regarded , tending , as it did ,
to make a hot-bed of corruption of the
congress , and to a centralization of
money power for a corrupt use in con
trolling elections. This was" the first
time the people had come face to face
' with a moneyed oligarchy , and were
? * forced to consider the danger to lib
erty which an exercise of its power
would constitute , or the power it
could exercise. The subject of money
is not well understood by the people
at large. On the contrary , it is mucli
misunderstood ; and during the last
three decades the advocates of a free
and unlimited coinage of silver have
done little else than to increase the
misunderstanding. Money is an out
growth of trade and commerce. If
there wore no trade and commerce
there would be no use for money.
We are told that money is a stand
ard and a measure of values. That is
not true ; for a standard or measure
must be fixed and permanent , and ex
cept statutory coin , money has no fixed
and permanent value and is ever fluc
tuating. Where the law says sixty
pounds of wheat and thirty-two'pounds
of oats shall constitute a bushel , it fixes
a standard for a bushel regardless of
the number of cubic inches it con
tains. The substance must be there
to make the weight , or it is not a
bushel. But it does not fix any value
of the grain. So , when the law says
the unit for coinage shall bo the dollar
lar , and that silver and gold , alloyed
ten per cent , shall constitute the
bullion for making dollars , and that
871 grains of silver bullion , and 25.8
grains of gold bullion , in the form of
a mint coin , shall constitute a dollar ,
the law fixes a standard , and a value
both , and both are permanent until
the law changes them. But these
have only a statutory value , and
their money value depends on the
consent of the seller in trade and
commerce , whether he will receive
them at the statutory value as money
or not. No , money has but one func
tion and can perform but one office ,
and that is to represent the value of
other tilings in the exchange of com
modities , in trade and commerce ;
and in conducting business affairs
among men and nations. It has
nothing to do with the value of the
things , except to represent their val
ue , and whether the value be higher
or low , value and price are not .the
same only when they coincide. What
ever will perform this function with
the consent of sellers and buyers
serves the purpose of money.
The creation of money , and issuing
of 'what is allowed to pass as money ,
the handling and application of what
is recognized as money , is called
finance. This is usually done through
associations of men called bankers in
institutions recognized by law as
banks generally private corpora
tions. Bank notes representing money
are issued by national banks , but they
are not money unless convertible into
statutory coin at the will of the hold
"
er. The bank issuing them must be
required by law to redeem them in
coin or its equivalent , on demand , to
make them the equivalent of money.
Coin is created by government , its
monetary value is fixed by law , and
that alone is real money ; but paper
promises to pay money issued by
government and by banks authorized
by government , when redeemable in
coin , on demand , represent and are
used as money. Banks receive the
money of individuals and of each
other , on deposit , and loud the same
on interest. Experience demonstrates
that a bank can usually loan two-
thirds of its deposits , or circulation ,
if it issues notes , and keep in reserve
a redemption fund of one-third , and
be safe. The deposits of each day
replace the loans , leaving such a
margin only that the bank can re- I ,
deem if called on.
But of late 'years what is called the
credit system has grown up , under
which ninety-five to ninety-eight per
cent of the business of the country is
done without handling money. Checks
and drafts on deposits in the banks are
used , and through a clearing house a
bankers' bank these are sent each
day through the clearing house from
all the banks ( in cities and large
money centers ) to the banks drawn
on , and are charged by that bank to
the drawer's account , or are paid.
This , with notes payable in bank , on
which money is advanced all known
as commercial paper passes , from
hand to hand as money , and a thou
sand dollar check may do the business
of two thousand dollars in one day ,
without one dollar in money being
used. So with foreign drafts , bills
of exchange , letters of credit , postal
orders , telegraph orders , bills of lad
ing , storage , etc , etc.
In 1878 , there was in the United
States in the treasury and out a
little over $700,000,000 of money , all
told , of which only $25,000,000 was
coin. Today , I am not advised of the
quantity , but I will be safe in saying
there is about $2,500,000,000 in the
treasury and out , of which probably
$1,400,000,000 is in coin. This in- j
eludes treasury notes , certificates of 1
gold and silver deposits in the treas
ury , greenbacks , national bank notes ,
and other government promises to pay
money , and coin , mostly deposited in
banks ; all redeemable 011 demand
in coin ultimately by banks or by
government , and representing money.
Large banks in cities have begun
to combine , with deposits running
high into the millions. More re
cently a corporation has begun to
form chains of combination among
the country banks , extending from
ocean to ocean sooner or later to be
controlled by one central bank. Con
gress has plans before it for a law
authorizing banks to issue notes and
do business based upon its assets.
Also of propositions to establish a
United States bank. All these things ]
tending to a moneyed oligarchy ,
where all the money of 'the coiintry
will be under the control of a-few
