IMAGE EVALUATION TEST TARGET (MT-3) / o "'% ,v ^tLe ///// .V * ^r ///// "i Vi 1.0 I.I 1.25 te 1^ IIP-^. - IB 2.2 2.0 i.8 U nil 1.6 vQ <^ /M A VI c-. VI % y Photographic Sciences Corporation me rtV ^\ ^"""^.^ ^A?^ "^^^ r Those of small means are ruined. Insolvency clears the rest. After the general wreckage the warehousemen write * « t t • .*•.♦' ,. • • • • a • < • ' . » I » ■ » 77926 ...,. • . • ..•• • ••• ••/•. • • • •• •• ••#• • •••« • • * • • • • 4 ;•.•;. • • '••!' • • • • ...' ••. • • .**•* * -• •. •f • • n • _ • • • • \ • • • • •• • • ;•.•;. '*••!* • • • • • • • • • • * • • •••• ••. • • • • .!*!•' • ••• • • • • • • t « « •• •..• .*!.';* •. •. r !!'.*:! • • • « • • » • • • t off a pile for bad and doubtful debts. Some are so weakened they coalesce with others to incite confidence again. The warehousemen of money deal in the undertakings of the warehousemen of flour and wheat and not caring to exercise a child-like faith in allowing the latter to bank, but preferring the exercise of a manly faith, they get laws passed subjecting the flour and wheat man to three years peniten- tiary when he issues a promise to deliver on demand what he has not got. The consequence of the law is, there is never any panic about warehouse receipts, the public know- ing that when the flour and wheat is wanted it is there. Did warehousemen of flour and wheat bank as those of money do, they would occasion great ups and downs in the flour and wheat market, but their practices would effect little else than flour and wheat ; but those treating money in the same way making it cheap at one time and dear at another^ periodically upset the whole business of the country. If^ therefore, the flour and wheat man deserves three years- penitentiary lor issuing a promise to deliver on demand what he has not got, the banker when he does the same thing, on account of the wide-spread misery he occasions, ought to be sent to the penitentiary for life. Formerly the Kings of England who attempted to tamper with the money of the country by alloying it, were threaten- ed dethronement, and although banks by their expansion virtually do the same thing several hundred per cent., it has been tolerated, because their action on money is sub- tle and it has been countenanced by writers on political economy even oi the stamp of John Stuart Mills. McLeod, a recent wrijter of two large volumes on money and banking puts the point distinctly when he says : " The whole Art and Genius of bankmg consists in forming a sound judgment as^ lioi< many different parties the same identical capital may be pledged ? The pledging money more than once by banks is the cause of the agonies this country in the dark suffers, upsetting the calculations of even veterans in business. Having thrown light upon this matter, I call upon every business man, I call upon every working man, to rise in a solid body, put their toot down on this principle in banking and crush it. If they do not I shall be forcibly reminded of the old woman and the eels. " Hurt them ! Bless your soul, sir, I have^ skinned them these last forty years ; they are accustomed to it." The proper office of banks is simply to lend their own capital, borrow money and lend it, tfe^ing care the loan on their part falls within the terms of their borrowing, facilitate exchanges, and hold money on deposit. When banks deal in money only, there is no need of lia- bilities without money in reserve against them. With this reserve loans are released from all restraint. The following account serves to illustrate this method of banking. $1,000,000, proprietors capital paid in money. 5,000,000, borrowed on stipulated terms. Inl L R B C -weakened' ikings of r-nng to |ank, but passed ipeniten- N what [there is |c know- Ire. 'hose of Is in the effect |oney in nother^ •y. If, years d what thing, ight to arnper eaten- ansion cent., s sub- 3htical Leod, inking ie Art ?ment ^ may cause gthe rown m, I , put ih it. man iave« d to 3wn I on iate Ha- his ing 3 Loans at discount and in exchange deal- ings, say seven per cent, per annum, $420,000 CONTRA. Interest on $5,000,000 borrowed at five per cent per annum $250,000 Loss of interest on $40,000 money in re- serve at seven per cent 2 .800 Rent $1.500 — salaries $9000 10,500 Bad debts one-fifth of one per cent, say 12,000 Contingencies 4,700 280,000 Dividends on proprietors capital fourteen per cent per annum $140,000 With such an ample capital mentioned, a bank might borrow several times the amount of their capital. Their money would be constantly employed either as money ; or in checks ; or certificates of deposit, with money in reserve, dollar for dollar, such reserve would be a special deposit without interest. The institution would be an honest "money bank" dealing in capital, getting money before loanmg it. Were tlie Government to settle that six and a half millions of gold dollars were sufficient money for the carrying on the business of the country, provided that they alloyed it sufficiently, to make it pass lor sixty-four millions or more or less, according to their views of the necessity of business, or rather as their own interests were affected ; it is clear all credit must be at an end, for whatever a contract might mean to-day no one could predict what it would mean to-morrow. It is on account of such an uncertainty all civilized nations have denied to Governments, for the purpose of making more money, the right of altering or in any manner interfer- ing with the purity of coin as established by law. Instead oi alloying the coin itself, suppose the Government were to hold the six and a half millions gold, and were to issue eight or nine times as many promises to pay it on demand, and attempted to preserve that relation always between the promises to pay and the actual money, the uncertainty of the nature of contracts would be affected precisely in the same way as when the coin itself was alloyed in different degrees, for as the imports and exports over- balanced each other contractions and expansions of the currency would take place. As regards Canada, the above case of pledging gold several times is not a supposed case, for what the Govern- ment does not itself do, it authorizes banks to do. Taking the statement of the bank returns for December last, we find their liabilities to pay gold on demand, reach about sixty- four millions of dollars ; this includes the notes they issue, the money of the people, and the deposits payable on demand, the money of merchants and manufacturers. The deposits (not those on time, which strictly are loans) are as much the circulating medium of banks as the notes they issue, for a holder can check upon them and demand gold. They are by far the larger portion of the circulating medium, of banks, being three or four times the amount of their notes. Many writers on the circulation of banks overlook this. The six and a half millions gold is virtually alloyed to the extent of sixty-four millions, and when banks are called upon for gold on the imports largely exceeding the exports, the contraction that necessarily ensues, throws the business of the country into difficulties, Irequently wiping out the value of assets which were expected to more than meet li. bilities. The functions ot money are so interwoven with the affairs of men, that its stability and uniformity of value is almost as essential to their prosperity as is the establishment and maintenance of the right of property itself. A country, consequently, ought to have a measure of value of the best possible kind ; that is, money that will not be cheap at one time and dear at another ; that will not be abundant at one time and scarce at another, like the product of the herring fishery, but that will be uniform in quantity and therefore, uniform in value. This is to be attained only by a country having money peculiarly il^s own, that will not circulate in other countries on account of its greatest value being at home, issuing it on well defined principles, and not allowing it to be tampered with, either by counterfeiting or bring pledged more than once. Money is that which is made legal tender and it is money only in the country so making it. The sovereign is money in England, on the Continent it is only so much gold, a com- modity, and is sold for money required there. Money should be purely money, if it partakes of the nature of a commodity it is liable to be used as such, thereby destroying so much of the volume of money (the measure of value). Gold and Silver have generally been used for purposes of money, because they are objects which are supposed to fiuctuate less in quantity than any others, but, independent of the effects ot the late discoveries on these metals, the action of one country on another in withdrawing and replenishing the store is attended with very pernicious consequences. A country ought to conduct its affairs in a way to be affected as little as possible by any action of a foreign country. When England raises her rate of discount it is felt in all parts where gold is used for money. To avoid this is one of the advantages of a country having money peculiarly its own. To move the crops of the country it is said an elastic currency is necessary. What is the plain English of this ? If a currency of Indian-rubber is meant, that it will be elastic can be understood ; but, if two dollars gold is to be made out of one dollar, that is an enigma. If on one dollar gold there are issued half a dozen promises to pay it on demand, the first man that comes gets it, then there is trouble with the rest. Instead of such a proceeding as the last, which is really what is meant by an elastic currency, the circumstances of the case are to be met by rapidity of circxdation, that is, banks by their offers must prevent the stagnation of funds in the hands of private persons. Money being simply that which is made legal tender, it is clear Government can make its own money, and were it to do so its value would depend upon the quantity issued. As there is nothing to be gained in altering prices, except a '4- this. The the extent upon for ports, the usiness of the value li bih'ties. |the affairs almost as ment and country, f the best leap at one |ant at one he herring therefor J, a country rculate in : being at allowing or bring IS money money in Id, a com- ley should ommodity o much of irposes of pposed to dependent the action ishingthe :nces. A e affected country. 'elt in all is one of y its own. in elastic of this ? : will be '■ is to be ne dollar )ay it on there is g as the urrency, ^idity of i^ent the ler, it is i it to do ed. As xcept a I sinister purpose is intended, the volume of alloyed money we have been using might be taken as a basis as to the auantity to be issued. This comprises, as before said, the eposits payable on demand, and notes of banks, amoi-ntmg to about fifteen dollars per head of population. Should this suffice, or ought more be issued ? We see money so abundant in England that it commands only one or two per cent. The high rate of interest in this country draws the very life blood out of its bone and sinew. To stay this, Government should issue money to an extent that interest might not be higher than four per cent, a year. Usurers might protest, but as they are do-nothings, what matter. Instead of fifteen, twenty dollars per head of population might be issued, instead of sixty, eighty millions of dollars. On this point, all the information that can, should be elicited. Possibly by the issue of sixty millions of real money and doing away with the issue of the promises of banks, bank debt, issued on individual indebtedness, and, therefore, called a debt currency, the rate of interest might fall to the desired point. During the Napoleonic wars when England suspended specie payments, it is stated that the rate of interest of the Bank ol England was uniformly four per cent. I have no means of verifying the statement, or of knowing, were such the case, by what principle the Bank was guided. Advocates of National Money dwell principally on its advantages to carry out public works or to reduce the public debt. These are incidents of such a currency, its main feature is overlooked. The country requires a contrivance by which business can regulate its proceedings with some degree of certainty. A farmer who borrows five thousand dollars on a ten thousand dollar farm, wants always to feel that he has five thousand dollars at his back ; the merchant that his assets are what he sets them down at. This would generally be the case were the volume of money to remain al- ways the same. The measure of value in present use is one that constantly varies, an infernal machine, that often occasions wide spread destruction, supplied by banks. It is the duty of Government to step in and provide one ol the best kind. If, in so doing, it is placed in funds, then may arise the question what to do with them. If it has no use for them, the money should be loaned on good securities, as a private individual would, to any one requiring it, Government receiving interest therefor. The advantages arising from the adoption of the measure of value proposed, are many. The business of the country would not be subjected to the fluctuations that it is at present ; its progress would be steadily onwards. The Government would be placed in funds to execute undertakings or reduce the public debt. The increase of population would be a direct source of income, as would the loss by fire or other- wise of its notes, no small item, and which, properly, should enure to the public. The notes placed on the same security as the bonds of the country, namely, the good faith of the Government and the resources of the country, would be received without doubt or question ; and, for carriage, would be infinitely preferred to a lot of dead weight in the shape of metalic money. Having a measure of value of our own would put a fence round the country, and, considering the white slavery of various degrees of severity existing in different counties, that is very desirable. A correspondent of the Times, describing his visits among the agricultural classes in England, said "that some placed marbles of dough in the boiling pot and they came out the size of cannon balls, that these were slicked down with the faintest notion of something sugary." Such a dietary reminds one of the cobbler's cat that was fed with wind and water. A light diet like this is not palat- able to the working classer of this country. Their standard of comfort is higher ; they therefore very naturally object to placing their labor in competition with the low type of slavery in England. Free trade in the present abnormal state of society, is simply nonsense. Indeed, most of v/hat is written on Political Economy is the same. It has been so regarded by some Universities in the United States, which have done away with the chair, very properly objecting to their sucklings depending as they necessarily must do, much on authority, imbibmg false viev.s, though supported by old and familiar names; the "old fat'iers" of political economy, but who in point of time of the .vorld's progress and intelli- gence may be regarded simply as " the infants." It is thought that the Governnent could not disburse the amount proposed, and that its issue would restrict foreign commerce. On looking over the border one cannot fail see- ing the facts staring one in the i:ice, that the Greenback is eagsrly taken by the people and is preferred to any other money, and that its use does not restrict foreign commerce, for English merchants complain the Americans are superceding them in the markets of the world. These views have been placed before different Governments and the only one that acted strictly upon them was the French Government. By their adoption they were enabled to pay without any difficulty 120 of the 200 millions Stirling, imposed by the German on the French nation, and to recu- perate in a way that has astonished the world. Much surprise has been expressed that they kept their paper money at par with gold, the fact is, they have not allowed banks to tamper with it, to alloy it, by oftentimes pledging it. It may here be said that whether the paper dollar com- mands two of gold or only halt a one, is of little consequence, provided, that having established its relation to things gener- ally, the paper dollar itself is not tampered with by over issues, contractions, counterfeiting or pledgings more than once. The French Government has accumulated some eighty millions Stirling, which has been for some time locked up, but which it is believed is to be used this year for the resumption of specie payments ; for the requirements of the exchanges of the country it might as well be at the bottom of the sea. The Greenback in the United States has been shamefully abused by the Government and by the banks of the country. Even now, because business is reviving, after the great prostration occasioned by a severe contraction of the cur- rency, a syndicate of Bankers in New York have settled that they ca of thei '^d that ^"^one)' 150 mi Our old. =y-as pi' ||to coi ^versic ?fdesire t in mt a fence slavery of inties, that describing land, said ng pot and ere slicked sugary." that was not palat- r standard lly object w type of abnormal t of v/hat lias been tes, which ejecting to do, much ted by old economy, ind intelli- sburse tne ict foreign t fail see- enback is any other ::ommerce, icans are I'ernments 1 was the re enabled s Stirling, d to recu- Much eir paper •t allowed ; pledging )Ilar corn- sequence, igs gener- i by over lore than ed some ne locked r for the ments of )e at the lametully country, he great the cur- tied that I ^they can foist upon the people an additional fifty-four millions ^of theirs purious promises to pay gold,