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LIBRARY 
 
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Digitized by the Internet Archive 
 
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 http://www.archive.org/details/freebankingnaturOOdilwrich 
 
FREE BANKING 
 
FREE BANKING 
 
 A NATURAL RIGHT 
 
 BY 
 
 JAMES A. B. DILWORTH 
 
 MDCCCXCVII 
 
 CONTINENTAL PUBLISHING CO. 
 
 NEW YORK AND LONDON 
 
^A?'' 
 
 
 GF/Vffiyit 
 
 Copyright, 1897, by 
 CONTINENTAL PUBLISHING CO. 
 
PREFACE. 
 
 To the critical reader of history it is appar- 
 ent that, as a nation advances in civiUzation 
 and material wealth, the increase of its pauper 
 and criminal class is at a much greater ratio 
 than its population, and that poverty pro- 
 motes crime. If this were the result of a uni- 
 versal law, the ratio of pauperism and crime 
 to self-sustaining population would be equal 
 in communities of equal population, enlight- 
 enment, and wealth. 
 
 Such, however, is not the case. Nor is it a 
 universal law, nor, indeed, a law at all that, as 
 communities increase in intelligence, material 
 wealth, and in the development of the arts, 
 poverty and crime must also increase. 
 
 In communities where natural opportuni- 
 ties, properly utilized, furnish in abundance 
 the necessities and comforts of life for all, the 
 existence of poverty and crime is not the re- 
 sult of a universal law; it is because of a dis- 
 regard of a natural law. 
 
 It was the hope that I might do something 
 
 5 
 
 1 ORO^n 
 
6 PREFACE. 
 
 to imbed this truth in the minds of some of 
 my fellow-men that caused this monograph 
 to be written. 
 
 The particular lesson I wish to teach is 
 that the monopolization of money by nations 
 or by great corporations, like that of the Bank 
 of England, is a disregard of natural rights, a 
 fruitful source of injustice, a limitation of free- 
 dom to opportunity, and is most potent in 
 developing poverty and crime. I seek to 
 prove, furthermore, that money is not an 
 essential concomitant of commerce, but that 
 credit is, and that civiHzation can more readily 
 dispense with legal-tender money than with 
 credit money. 
 
 This is no new thought to me. More than 
 thirty years ago I published my first article 
 on this subject, and the years of thought since 
 then bestowed upon the theme have served 
 only to strengthen my belief in the correct- 
 ness of the theory; namely, that the best 
 money to promote the welfare of communities 
 is money of that character that makes it ac- 
 ceptable to those of the community for whose 
 interest it is issued, and is to them of value 
 equal to the safest money, yet of so httle in- 
 trinsic value that it will not be attracted from 
 the community for whose interest it was 
 issued. 
 
PREFACE. 7 
 
 I herein propose monetary methods 
 founded on the Golden Rule — just to all, and 
 unjust to none. These, put into practice, will 
 give to each community in the United States 
 where natural privileges abound and idle 
 labor exists, opportunities equal to those of 
 other communities of our country. 
 
 It will prevent innocent communities from 
 being disastrously affected by the inequalities 
 or the calamities of others; by it, financially 
 weak communities could not be oppressed by 
 financially strong communities. Because of 
 it, great cities cannot grow and prosper at 
 the expense of smaller cities and those of 
 agrarian interests. 
 
 The Author. 
 
ERRATA. 
 
 Page 41. Line 28. Read "limitation," not "imitation." 
 
 Page 49. Line 19. Read "could fix," not "would fix." 
 
 Page 55. Lines 2 and 3 should read : " Of its citizens for 
 the law and in their belief in the justice of 
 law. So long as law," etc. 
 
 Page 62. Line 4. Read " arbitrary laws," not " artificial 
 laws." 
 
 Page 82. Line I2, Read " restriction of," not " exer- 
 cise of," 
 
 Page 98. Line 17 is a repetition of line 13 and should be 
 omitted, and instead read "national bank 
 notes, bonds, stamp." 
 
 Page 139. Ivine 15. Read "apparently," not " on the 
 other hand." 
 
 Page 182. Line 29, Read " being established," not 
 " established." 
 
 Page 196. Lines 2, 3, 4, 5 and 6, should read " activity, 
 under the system described, the accumu- 
 lation of wealth has been reserved for the 
 people of the communities which produced it, 
 and distributed as fairly as under any system 
 of economy yet devised." 
 
FREE BANKING. 
 
 CHAPTER I. 
 
 The Presidential election of 1896 teaches in 
 an emphatic and unmistakable manner that 
 an abnormally large part of the American 
 voters are thoroughly discontented with the 
 monetary system of our country. Upward of 
 forty-six per cent, of those voters emphasized 
 their discontent by voting for a radical and 
 extremely experimental departure from our 
 established custom of monetary manage- 
 ment, notwithstanding the fact that every dol- 
 lar issued by our Government — whether of 
 paper, silver, or gold — is worth, and is readily 
 convertible into, 24.8 grains of gold, 900 fine- 
 ness, and equal to the most reliable and staple 
 currency of the world. Upward of 6,500,000 
 of our people, as intelligent, patriotic, and 
 honest as the 7,000,000 who voted for Mr. 
 McKinley, gave their consent to our Govern- 
 ment to open the mints of the United States 
 to the free and unlimited coinage of silver 
 into silver dollars of 412^ grains of silver, 
 
10 FREE BANKING. 
 
 900 fineness, and to make such silver dollar 
 legal tender for all public and all private 
 debts. 
 
 Nearly all of these 6,500,000 of voters knew 
 that the silver bullion in the silver dollar was 
 worth in the markets of the world only half 
 as much as the gold bullion contained in a 
 gold dollar. 
 
 To assume that nearly all of those citizens 
 who voted for Mr. Bryan did not know the 
 relative value of the metals contained in the 
 two coins, is a reflection on the intelligence of 
 the American voter and on the system of edu- 
 cation in the United States. This cannot suc- 
 cessfully be maintained. To assume that a 
 great proportion of those 6,500,000 of voters 
 is dishonest, and that when giving their 
 votes in support of free coinage of silver they 
 sought to escape financial responsibilities, is 
 even a greater libel on the fair name of our 
 country, as well as on the ethical development 
 of republican institutions. 
 
 Upon many men has been bestowed the 
 gift of beautiful speech, and the power to array 
 in charming language unreasonable and illogi- 
 cal thought. And too often also for the best 
 interest of the whole people has this gift been 
 used to charm the ear, to disturb thought, and 
 to stagnate reasoning. The power of elo- 
 quence, too, has probably never been used 
 
FREE BANKING. II 
 
 with greater disadvantage to the people of the 
 United States than during the last Presidential 
 campaign. 
 
 Mr. Bryan, the nominee of the Democratic 
 party, possesses a power to arrange and 
 emphasize words to charm the ear that but 
 few other orators possess; and throughout the 
 late campaign that great gift was aided also by 
 great personal magnetism and severe physical 
 endurance. 
 
 Few of our public men have displayed 
 more courage — none, perhaps, as much 
 energy and endurance — in espousing a cause 
 as that displayed by Mr. Bryan in his cam- 
 paign for *' Free Coinage of Silver." His was 
 the energy of the enthusiast. Mere personal 
 ambition could not have prompted such fervor 
 of speech, such intensity of action. Like 
 Peter the Hermit, the cause he championed he 
 believed to be just; that its triumph would 
 emancipate millions from a bondage more 
 galling than that of slavery, and would destroy 
 a power that, if not soon checked, would rele- 
 gate the agricultural masses of our country to 
 poverty more terrible, to ignorance more 
 dense, than that of Russian serfdom. 
 
 Had his cause been triumphant, it might 
 not have been so disastrous to his followers 
 as was the cause of those who followed the 
 Hermit, whose bones now form a part of the 
 
12 FREE BANKING, 
 
 soil from the sea-washed coast of Europe to 
 the banks of the Bosphorus. 
 
 It is difficult to see how any lasting bene- 
 fit could come to a people from changing their 
 money basis from gold to silver, or from 
 gold to silver and gold, unless the method to 
 provide mediums for exchange was radically 
 changed. Mr. Bryan's fervent and distract- 
 ing eloquence is largely responsible for the 
 failure of those millions — discontented with 
 the financial condition of the country — to go 
 deeper into the real cause of the discontent. 
 To the Democratic campaign he gave the cue; 
 and a flood-gate of eloquence was opened, 
 from which outswept entrancing and distract- 
 ing appeals to the people. All were centered 
 upon the one financial remedy — free coinage 
 of silver. Yet the very arguments used to 
 win voters to the free coinage of silver, if ex- 
 tended to a logical conclusion, demonstrated 
 that free coinage was not the remedy for 
 existing evils. 
 
 Mr. McKinley, not so eloquent in speech, 
 probably, but more subtle perhaps in stage 
 effect, appealed to the emotional rather than 
 the reasoning nature of men. In this respect 
 he also gave the cue to the great army of ora- 
 tors and educators who espoused the cause of 
 " Sound Money " and the single standard. 
 The "Credit of the Nation'' and "Honest 
 
FREE BANKING. 13 
 
 Money " were potent factors in winning voters 
 for Mr. McKinley. Even " Old Glory " and 
 " Patriotism " were honeyed words in the vo- 
 cabulary of the Republican orators. 
 
 In the great cities, where marble and granite 
 palaces are the homestead of many, where 
 rich and ornate temples cover the assembled 
 worshipers, many preachers — doubtless a 
 number of them sincere in their belief — 
 turned the sacred desk into a political ros- 
 trum, and, as a solemn duty of all who serve 
 the cause of Christ, preached a new religious 
 doctrine of '' Sound Money," '* The Nation's 
 Credit," *' Old Glory," " Patriotism," and 
 " McKinley." 
 
 In communities where the homesteads con- 
 sist of a few rooms made habitable by boards, 
 lime, and sand, shutting out the breeze and 
 cold blasts, and where pious and honest hu- 
 manity worships in temples not made of 
 stone, not ornate with gems of art, many other 
 brethren preached that the money-changers 
 of Jerusalem were the special aversion of the 
 Master, and that the establishment of the 
 single gold standard by the great nations of 
 the world was in the interest of the money- 
 changers, and consequently not justified by 
 the Master. Each of these two classes of 
 spiritual leaders preached, doubtless, that 
 which he believed should be taught as a 
 
14 FREE BANKING. 
 
 cardinal truth. That one or the other of these 
 classes could not be right in their belief, it is 
 evident. It is indeed highly probable that 
 each was wrong. Those who believed in the 
 righteousness of the cause, and who preached 
 it with more or less vigor, were honest in pur- 
 pose, sincerely fulfilling the solemn obliga- 
 tion they took upon themselves when they 
 entered the ministry. 
 
 But those among them who introduced the 
 discussion of the " money question " into 
 their church work, and from the pulpit dis- 
 cussed " Honest Money " and '* Patriotism," 
 ** The Masses and the Classes," and " Crime of 
 '73," for the purpose of touching a chord in 
 harmony with the views of their congregation, 
 are the ulcers of religion, the pests of society, 
 an affliction to mankind. The generation to 
 follow will pity these ignorant zealots of the 
 last campaign, and will hold in supremie con- 
 tempt those who used the sacred desk for 
 pride and gain. 
 
 The geographical division of the country 
 into " Sound Money " and ** Free Silver Coin- 
 age " communities should, of itself, be sufB- 
 cient to raise a doubt in all thoughtful minds 
 as to the correctness of the views of either of 
 the great parties on the question of money. 
 
 Following the line along the southern 
 boundary of Delaware to the mouth of the 
 

 Potomac River; follov^iigjthe cgan^ of that 
 river to the Falls of the Potomac, and then 
 westward to Kentucky, and along the Ohio 
 River to the Mississippi; up that " Father of 
 Waters " to the north boundary of Missouri, 
 and then westward to the crest of the Sierras; 
 along these mountains to Mexico; then follow- 
 ing the Mexican line to the Gulf, and along 
 the coast back to the Delaware boundary, 
 comprises a territory of gigantic extent, popu- 
 lated more or less densely by a people of much 
 intelligence, great energy, and of enormous 
 capability. By a great majority of the voters 
 of that immense territory the free coinage of 
 silver, at a rate of i6 to i of gold, was de- 
 manded as a measure of relief from that 
 which they doubtless believed to be the op- 
 pressive system of money, the basis of which 
 is gold. 
 
 It displays very little intelligence, less love 
 of country, and no sense of justice at all, to 
 denounce the majority of the people of that 
 great territory as ignorant, unpatriotic, or dis- 
 honest. Nor can their discontent be reme- 
 died by such criticism. For this discontent 
 some other source must be sought than that 
 of ignorance, disloyalty, or dishonesty. Tlie 
 measure of their intelligence — if gauged by 
 the mental forces of those who met them in 
 discussion on the hustings, in the forum, or in 
 
1 6 FREE BANKING. 
 
 the press of the country — does not, on the con- 
 trary, disclose great ignorance. 
 
 Let the storm signal of the nation's danger 
 be hoisted, and in responding to the country's 
 call tO' arms, no doubt as much alacrity 
 would be displayed by the people of those 
 States that gave their votes to Mr. Bryan as 
 would be shown by those States that gave 
 their votes to Mr. McKinley. And measured 
 by the standard of wealth, they would no 
 doubt be equally responsive to the Govern- 
 ment call for financial aid. The honest and 
 dishonest proclivities of American citizens are 
 not marked by States, nor by sections of the 
 Republic. 
 
 Assuming that States vote as a unit in Presi- 
 dential elections, 40,000,000 of the people, 
 worth $47,390,000,000, or per capita of about 
 $1200, gave their ratification to Mr. McKinley 
 in support of the existing gold standard, and 
 22,000,000 of the people, worth $16,680,000,- 
 000, or per capita of about $750, gave their 
 votes to Mr. Bryan and to a free and un- 
 limited coinage of silver into standard dollars, 
 the bullion value of which at the time was 
 worth only about half as much as the worth 
 of the bullion in the gold dollar. 
 
 The figures given above are presumably 
 correct. They were those presented recently 
 by a great New York daily journal, to support 
 
FREE BANKING. 1 7 
 
 the theory that, because the wealth of the 
 country was so largely on the side of Mr. Mc- 
 Kinley and the gold standard, it was the in- 
 telligence of the country that gave its support 
 to that cause. Well may the Free Silver 
 Coinage advocate give Dean Swift's retort to 
 a similar proposition : " God shows his appre- 
 ciation of money by the character of the man 
 he bestows it upon." 
 
 These figures prove that the rich and afiflu- 
 ent communities are well satisfied with the 
 present condition; while, on the other hand, 
 the poverty-oppressed and struggling com- 
 munities are discontented. And it is a fair 
 inference that the present conditions afford 
 the affluent all the opportunity that they may 
 reasonably hope to possess to hold on to their 
 present accumulations and to increase their 
 stores of wealth. It is equally fair also to 
 assume that existing conditions deny to the 
 struggling classes a fair opportunity to main- 
 tain themselves in comfort, or arouse a hope 
 in them that they may provide themselves 
 against want, when age incapacitates them 
 from producing for themselves. 
 
 Those who possess large fortunes, who con- 
 trol the finances of the country, and largely 
 expand or limit its credits, as their hopes or 
 fears control them, cannot aflford to treat with 
 indifference, much less contempt, the appeals 
 
1 8 FREE BANKING. 
 
 for relief from fancied or real oppression that 
 the large vote given to Mr. Bryan seems to 
 plead for; no matter if this oppressed con- 
 dition be real or imaginary; no matter if the 
 cause of the discontent be the result of bad 
 management or of diseased minds. Whatever 
 the cause, so great a number of discontented 
 is a menace to the stability of government. 
 
 How to reconcile these discontented citizens 
 of our country is a problem that demands the 
 thoughtful attention of every lover of law and 
 order. There can be no questioning of the 
 fact that a large majority of American citi- 
 zens demand that order must be maintained. 
 This sentiment is almost unanimous. Not 
 only do they demand preservation of order in 
 all communities, but they insist upon it to the 
 extent even that if the law stands in the way 
 of its immediate enforcement, the law must 
 violently for a time be brushed aside. It is 
 this demand for order that prompts lynching, 
 and, as is well known, causes men to organize 
 such societies as Kuklux, White Caps, and 
 associations of that character. And in the 
 judgment of the masses of our citizens, the 
 end nearly always justifies the means, if 
 the end be peace and quietude. 
 
 The assembling, too, of men to hear and 
 discuss principles of statecraft, religious, and 
 other social problems, is encouraged by the 
 
FREE BANKING. 19 
 
 sentiment of our people, who are quick to re- 
 sist any infringement on that right unless the 
 belief be prevalent that such assembling of the 
 people may be to advance a theory of political 
 science that will lead to disorder. In case of 
 such assembling the people are intolerant, and 
 in their criticism of the Government too often 
 are severe because it gives too much con- 
 sideration to law, and, consequently, being, 
 in their belief, too lenient in its treatment of 
 such assemblings. It is indeed to be re- 
 gretted that so great a number of the citizens 
 of the United States should prove themselves 
 to be " violent people." This is one of the 
 potent factors of American temperament that 
 now menace the stability of our Government. 
 
 It will be impossible to maintain the present 
 standard of education, much less advance it, 
 if freedom of thought is to be crushed. Nor 
 does it alone require Bastiles and Siberian 
 mines to repress it. Social ostracism is even 
 more potent to do so than prison walls or 
 Siberian ice-wastes. 
 
 The growing tendency of the well-to-do 
 citizens of the United States, and of their army 
 of satellites, to class all who differ with them 
 on the great social problems as anarchists and 
 socialists is much to be lamented. Doubtless 
 only a small proportion of those who so 
 flippantly use those terms to describe their 
 
20 FREE BANKING. 
 
 neighbors and fellow-citizens have the remot- 
 est idea of what anarchism or socialism really 
 means. When using such terms they wish 
 to be offensive only, and there is about the 
 same amount of intelligence displayed when 
 using them, or less, even, than by those per- 
 sons who describe the great Adversary as a 
 man with horse's hoofs and bull's horns, who 
 feasts on live coals, and washes them down 
 with libations of liquid sulphur in a fiery state. 
 
 Men, by their environment left free to think 
 and to express their thoughts to their fellow- 
 men, will not unite in concerted action on any 
 one line of thought, nor worship at any one 
 shrine, nor be bound by any one creed; yet if 
 left free to think and speak, the same men 
 will unite on ethical lines along highways of 
 justice and truth. There are but few of our 
 countrymen who, convinced that those princi- 
 ples of government that they have advocated 
 are not calculated to increase the national wel- 
 fare, but, on the contrary, to detract from it, 
 but what will quickly abandon the advocacy 
 of those principles. The number of citizens 
 who seek, either by direct or subtle means, to 
 impair the welfare of our common country is 
 so infinitesimal as to be an incalculable factor 
 in the nation's affairs. 
 
 On the contrary, to anyone who will give 
 a thought to this proposition, the wholesale 
 
FREE BANKING, 21 
 
 charges of dishonesty and disloyalty against 
 those millions of our people who opposed the 
 election of Mr. McKinley, must appear not 
 only absurd, but almost criminal. How many 
 of those who so delighted to speak of Mr. 
 Bryan as an insincere seeker after fame and 
 fortune, who called Governor Altgeld an 
 anarchist, Senators Morgan and Jones repudi- 
 ationists, and Senators Teller and Stewart 
 plunderers, have ever realized the extent of 
 the degeneration of the agriculturist's hope 
 since i860? 
 
 A full generation has passed away since 
 then, but thousands now live in health and 
 vigor whose memory carries them back to 
 years even before i860. They well remember 
 the joyous expectancy that filled the souls 
 of the young couple who began life upon a 
 mortgaged farm, with only their good health 
 and energy, a few horses, cows, fowls, pigs, and 
 old farming utensils as capital. Experience 
 of others had taught them that only a lack of 
 health and an unnatural shortening of the life 
 of the farmer, and the absence of sobriety and 
 energy on his part, would prevent them from 
 attaining the full ownership of that farm ; that, 
 in fact, free from all detracting incumbrances, 
 with many improvements that would add to 
 its fertility and to their comforts, they would 
 greatly increase its market value should they 
 
22 FREE BANKING, 
 
 desire to sell it. That farm was to them what 
 the savings banks are to the wage-earner. 
 The labor they expended on its improve- 
 ments only increased their store to provide 
 for their comforts when years should incapaci- 
 tate them from further productiveness. It was 
 indeed this hope, born of the experiences of 
 their fathers, that in forty years turned the wild 
 prairies of Ohio, Illinois, and Indiana into 
 fertile fields rich with grain and grass. It 
 built up the great West without the aid of 
 capitalists. In one generation it established 
 OH' the plains, over which wild beasts and 
 wilder men had roamed, a territory vast and 
 densely populated with happy, prosperous, 
 and hopeful agriculturists. 
 
 To those who dwell in cities! Does the 
 thought ever occur that, if measured by the 
 standard of gold dollars, scarcely a farm in 
 the thirteen original States, or in those new 
 States created solely by the energy, nerve, and 
 logical hope in the hearts of young farmers, 
 could have been sold for as much — the im- 
 provement being equal — on any succeeding 
 New Year as on a preceding year since the 
 year i860 unless some special local value had 
 been given to it by a new industry available to 
 only the few? 
 
 Do those worthy citizens who dwell in 
 towns and cities and deal in commodities of 
 
FREE BANKmC. 23 
 
 the farm, who have grown richer year by year 
 during the past thirty-five years, and who have 
 seen that real estate upon which they trans- 
 acted their business and upon which they Hve, 
 increase year by year in selhng value, realize 
 what would be the probable condition of their 
 minds had they, after a struggle of a lifetime, 
 reached old age, or an age of crippled energy, 
 only to find themselves unprovided for, the 
 real estate on which they did business practi- 
 cally unsalable, their homestead valueless? 
 
 To thoroughly understand the trend of mind 
 of the voters of purely agricultural communi- 
 ties, one must put oneself into the same 
 conditions that the farmer now finds him- 
 self in. 
 
 A good ship sails over summer seas laden 
 with a precious freight of human lives and 
 their treasures; the gentle swelling of the 
 waves and the balmy breezes blowing over 
 deck make existence upon her most delight- 
 ful. Over her quarter the water is churned 
 into cream by the rapid turning of her pro- 
 peller; and all on board are happy and con- 
 tented. In comfort and safety they are speed- 
 ing toward that haven that they hope soon to 
 find. Not a cloud is to be seen in the sky; 
 not a breath of air save that which the ship's 
 onward motion creates. On the far-distant 
 horizon a small dark spot presents itself to 
 
24 FREE BANKING. 
 
 the few whose eyes are trained to seek just 
 such premonition of coming storms. 
 
 The ship and time speed on, and all eyes on 
 shipboard soon see the little dark spot. Some 
 believe it to be the vanguard cloud of an im- 
 pending storm; others that it is an island; 
 others that it is a great ship. All are honest 
 in their separate convictions. Each has seen, 
 by natural processes of brain and optic nerves, 
 what each has described. It is certain that 
 all convictions cannot be right. In that case 
 one alone could be correct — perhaps none. 
 
 In a little time, however, no one would be 
 left in doubt. The black clouds will present 
 themselves so distinctly to their vision that all 
 soon will know that a storm threatens them 
 with destruction. The government of a 
 ship at sea is that of an autocrat, and the 
 maneuvering of the ship is the w^ork of its 
 commander. Upon his ability as a seaman, 
 upon his fidelity, depend, in any given im- 
 pending danger, the safety of his government, 
 the lives and comfort of its people, the security 
 of the wealth within the ship's boundaries. 
 
 Suppose the ship be not under autocratic 
 control; suppose it be that of a democratic 
 community in which all on board are equally 
 interested in the welfare of its freight of human 
 lives and communal wealth ; should those who 
 saw in that little speck on the horizon an 
 
FREE BANKING. 25 
 
 island or a ship, be forever disfranchised from 
 having a voice in the control of the affairs of 
 that ship? Should they be condemned to any 
 degradation or distress for their failure to see 
 aright? Surely he who would assert the 
 afHrmative of such a proposition cannot be a 
 good citizen of a republican institution, no mat- 
 ter if perfectly honest himself in such belief. 
 Does any man see an unworthy and dishonest 
 cause for doubting the integrity and earnest- 
 ness of those who failed to see that the little 
 speck was a cloud? If he does, then his own 
 reasoning is faulty, and he is unfitted to be a 
 critic of other men's motives. 
 
 Upon that ship, where all are equal in au- 
 thority, suppose the majority should deter- 
 mine that the best seamanship demanded that 
 the helm be ported, would it be good 
 policy, would it be just, would it be kindly, 
 would it be even good, hard, common horse- 
 sense for that majority to declare and reiter- 
 ate that those who wanted to starboard the 
 helm were anarchists, knaves, repudiationists, 
 destructionists, numskulls, and ignorant hay- 
 seeds? Would it mend matters? Would 
 it enable the ship to weather with more ease 
 and security the next storm that might arise? 
 
 And who can tell how soon that storm will 
 come; with what a fury it will rage? Forty 
 thousand men may stand viewing an ap- 
 
26 FREE BANKING. 
 
 preaching storm. There may be a division of 
 opinion as to whether the storm will burst 
 upon them; but no one will dispute the exist- 
 ence of the clouds, or that their appearance 
 portends a storm. On the question of how 
 best to protect themselves from the fury of the 
 storm there will be many opinions; but each 
 opinion may be the honest expression of a de- 
 sire that all shall escape from a calamity that 
 possibly threatens them all. 
 
 A fire started on the prairies by some care- 
 less hunter, discloses itself to a little band of 
 travelers; all at once recognize its presence 
 and its danger. The swift-blowing breezes 
 sweep it rapidly toward them. Safety, in their 
 opinion, can be assured only by starting an- 
 other fire and by keeping to the windward of 
 the newly-started conflagration till sufficient 
 space has been burned over in front of them. 
 On this they may stand in safety from the 
 oncoming fire. By their act of starting a fire 
 they have endangered the lives and property 
 of those beyond. 
 
 But who is it can truthfully say that, had 
 his environment been that of those travelers, 
 he would not have done likewise? The most 
 impressive law of nature is that of self-preser- 
 vation; and those endangered prairie-travel- 
 ers can be held no more accountable for the 
 destruction to life and property that the fire 
 
FREE BANKING. 27 
 
 they had kindled might cause, than can those 
 who in the last Presidential election gave their 
 votes to Mr. McKinley, believing that the elec- 
 tion of his opponent meant the destruction 
 of their business and of their hope in life; or, 
 on the other hand, than those who gave their 
 votes to Mr. Bryan, believing that the elec- 
 tion of his opponent meant the continuance 
 of monetary methods that were responsible, 
 they believed, for the grinding poverty they 
 felt themselves, their friends, and fellow- 
 countrymen to be afflicted with. 
 
CHAPTER 11. 
 
 The cause of the rapid massing of great 
 bodies of humanity into phenomenally large 
 cities during the last century, is a problem that 
 has been a fruitful source of prolific study and 
 discussion by political economists. Doubtless 
 the great increase of facilities for rapid and 
 economic transportation, thereby making the 
 victualing of the people of such cities as Lon- 
 don, New York, Paris, Berlin, and other great 
 centers, not only a possible but an easy task, 
 has had much to do with the development of 
 those cities. But rapid and economical trans- 
 portation was by no means the cause of such 
 growth. It only made such growth possible. 
 
 The harnessing of the subtle forces of 
 nature, — as steam and electricity, — and the 
 making of them obedient to the will of 
 man, have made it possible for the crude ma- 
 terials for the manufacturing arts to be 
 brought cheaply to the great cities, and there 
 formed into the various articles that the needs 
 of humanity demand, and are again dis- 
 tributed as naturally required, thus giving em- 
 ployment to the dwellers in the cities. But 
 28 
 
FREE BANKING. 29 
 
 the mere fact of it being possible to give em- 
 ployment to the dwellers in cities does not 
 constitute a cause for people huddling into 
 them, as they have been doing during the 
 last century. 
 
 Man is essentially a social animal, and, when 
 mentally normal, seeks the companionship of 
 his fellow-men. He is a progressive animal, 
 too, and seeks for enlightenment wherever his 
 judgment leads him to believe he can find it. 
 
 Here again we have an important factor in 
 the building of villages, towns, and cities; 
 although not a sufficient one. But, after all, 
 it is not because of the ease by which food may 
 be got to them, nor because natural forces 
 have been harnessed by man, and made sub- 
 servient to his will, nor for social advantages, 
 that the young, intelligent, and active men go 
 from the farms and the villages to the great 
 cities; it is rather because they believe that re- 
 wards for effort put forth by them are greater 
 in the cities than in the country. It is not the 
 allurement of the tinsel and gold of the cities, 
 nor is it so much the more generous food 
 supply, the more pleasant companionship, that 
 attracts them ; it is more generally the glowing 
 pictures of ease and comfort of the cities, por- 
 trayed to them by those of their acquaint- 
 ances who, at some time more or less recent, 
 had, like themselves, labored in the country, 
 
30 FREE BANKING. 
 
 but, unlike them, to mend their fortune had 
 gone away to the city. There they had met 
 with fair success, and had come back well 
 clothed and apparently well kept, to enjoy a 
 short holiday of rest. 
 
 If those thousands of young men who 
 are now so anxious to change their country 
 homes for homes in the city could but 
 feel with the same confidence that their 
 efforts to secure a fortune in their country 
 homes would be equally rewarded as that 
 hope born of the evidence of prosperity of 
 their kind who have gone to the cities bids 
 them believe will be their reward in the cities, 
 not one in a hundred would ever think of leav- 
 ing the friends and associates of childhood and 
 youth for the dazzling brilliancy of the cities. 
 Those who change their dwelling places from 
 the country to the city are almost invariably 
 induced to that act because they believe that 
 the problem of how to maintain life with the 
 greatest ease is more readily and more satis- 
 factorily solved in the cities than in the 
 country. 
 
 As water fallen from the skies to the high- 
 lands finds its way to the sea along lines that 
 offer the least resistance, so does man seek 
 for his subsistence along those lines that afford 
 him the greatest ease. From the dawn of 
 civilization all records seem to support the 
 
ft UI>i!VtLKiiU T I 
 
 FREE BANKffSs^^^^,^^^ "i"^ 
 
 affirmation that tilling the soil has ever been 
 the most laborious, the least exciting, and least 
 attractive occupation of man. Under ordi- 
 narily favorable conditions it has been health- 
 ful, and man has developed brawn and brain- 
 powders under its influence. The fields and 
 farms have throughout the ages furnished to 
 mankind the spirit of progression from which 
 very largely has come that development that 
 has transformed man from a nomad to that 
 high enlightenment he has attained, and it is 
 now a debatable question whether man, ex- 
 clusively under the influence and the culture 
 of the civilization that directs the ethics of 
 great cities, would not become a degenerate. 
 The ages may be called as convincing wit- 
 nesses to prove that the fields and farms have 
 no such fatal influence. The progressive man 
 among the agriculturists who selects some 
 field for his talents other than that of culti- 
 vating the soil, may progress more rapidly by 
 going to the cities to pursue studies, because 
 there he will find a greater opportunity for in- 
 vestigation. He will find also allurements to 
 lead him from his work intO' avenues of 
 ease and pleasure, which, if he does not re- 
 sist, will vitiate the progressive spirit within 
 him. 
 
 It is not necessary, however, to draw a com- 
 parison between the merits of humanity on 
 
32 FREE BANKING. 
 
 farms and humanity in cities, much less to 
 glorify one, or to disparage the other. To 
 awaken the public to the fact that the agri- 
 culturists of the world have always, under fair 
 conditions, been decidedly progressive, is, on 
 the other hand, desirable. 
 
 Success is an unsatisfactory criterion of ex- 
 cellence, but to be uniformly successful is 
 certainly strong evidence of superiority, and 
 the successes of the children of the farm in all 
 the various phases of human struggles for 
 supremacy have been quite marked. It is 
 absurd to deny, on the score of lack of intel- 
 lect, to the tillers of the soil the right to claim 
 equal privileges in afifairs of state. 
 
 There is a vast difference in the meaning of 
 the terms intelligence and intellect, although 
 the one is frequently used as the synonym of 
 the other. A dull mind may, by careful cul- 
 ture, be developed to a degree of knowledge 
 that may enable it to reason with force and 
 even vigor. But such mind must be continu- 
 ally forcing the sense of memory to an in- 
 ordinate energy. That in a measure afifects 
 the power of that mind. Tlie possessors of 
 such minds may truly be classed as intelligent. 
 But intellect is a gift, something born with the 
 body, and which, unaided, will cause the soul 
 or will of such a body to seek for information 
 or intelligence. An intelligent mind does not 
 
FREE BANKING. 33 
 
 stand upon the same plane with an intellec- 
 tual mind. Intelligence is acquired. Intel- 
 lect is a gift. The intelligent mind in pursuit 
 of knowledge may, under more favorable con- 
 ditions, surpass the intellectual mind; but, all 
 things being equal, it will always be behind 
 it in the struggle for mental supremacy or 
 progress. 
 
 Hygienics is as essential to mental de- 
 velopment as are training schools. A dis- 
 eased body may contain a highly developed 
 mind, but the seed of that body most gener- 
 ally develops a degenerate. Hothouse plants 
 are frequently more brilliant than those pro- 
 duced in the open air, but they are never so 
 hardy, and the seed of the hothouse plant 
 almost universally produces a degenerate of 
 its species. Does this not teach a wholesome 
 lesson? May it not be that much of the bril- 
 liancy in the minds of those reared in the cities 
 is the result of the hothouse-forcing system of 
 education prevalent in the cities, and, like 
 other hothouse plants, may the seed be not 
 more certainly depended upon to produce a 
 degenerate than otherwise? 
 
 It is undeniable that a very large proportion 
 of those men who have stamped their names 
 indelibly on the pages of recorded history 
 have been those .vhose earlier opportunities for 
 education have been limited by rural environ- 
 
34 FREE BANKING, 
 
 ments, and who, in spite of these hmited means 
 for acquiring knowledge, have become great 
 in all the various professions and avocations of 
 life. There is no good reason now for sup- 
 porting the theory that there has in recent 
 years been any degeneration of the mental 
 capabilities of rural populations. 
 
 Nor can the theory that there has been any 
 marked mental progression among the in- 
 habitants of the great city be successfully 
 maintained. 
 
 Unless indeed it can be successfully main- 
 tained that the rural population of the United 
 States are degenerates, and that the popula- 
 tion of towns and cities are progressive, it is 
 not only unwise, it is absolutely senseless, to 
 maintain that the great mass of American vot- 
 ers were not controlled in their voting by 
 sense of reason when, by their votes, they gave 
 their consent to the free coinage of silver by 
 the mints of the United States. 
 
 It is quite possible that a great majority of 
 those who consented to the free coinage of 
 silver by our Government believed that free 
 coinage alone was not the remedy, but that 
 the monetary methods of the present time 
 were oppressive to the struggling industrial 
 classes, and that free coinage of silver was a 
 step in the direction of a reform that they be- 
 lieved necessary for the commonweal. 
 
FREE BANKING. 35 
 
 Had they no cause to believe that a reform 
 in the monetary system of our country is a 
 necessity? That necessity has been recog- 
 nized by every Congress assembled in Wash- 
 ington since the War of the Rebellion, and it 
 must indeed be a dull mind that did not per- 
 ceive in the currency panic of 1893, and in the 
 rapid depletion of the Treasury of its gold in 
 1895-96, a most serious defect in our mone- 
 tary system. 
 
 Examine for a moment the plain facts of the 
 currency panic of 1893. In that year there 
 was somewhere hidden, or in use, in the 
 United States $1,111,720,898 of paper money, 
 the redemption of which was guaranteed by 
 the United States. In addition to this, there 
 was, according to the reports of the Treasury 
 Department, in use or in reserve throughout 
 this country, in gold and silver coins and bul- 
 lion, — all serving the purpose of money, — 
 $1,213,413,584, or a total money supply of 
 2,325,134,482. Statistics of the money sup- 
 ply were prepared by the Treasury Depart- 
 ment showing that there was a per capita 
 circulation of nearly $15 in paper money alone 
 in the United States. No thoughtful man will 
 doubt that ample money had been provided 
 for all business demands of the country. But 
 the monetary methods of the country were so 
 defective, that but a small part of this vast 
 
36 FREE BANKING. 
 
 issue of currency could be made available by 
 the people. For some undefinable reason, or 
 insane impulse, the whole nation, as one man, 
 seemed suddenly to become impressed with 
 the conviction that there would in the very 
 near future be a great scarcity of currency 
 bills. 
 
 This impulse could not have been the re- 
 sult of a distrust of the silver certificates, or 
 because of silver legislation, because the 
 silver certificates were with the green- 
 backs, national bank and coin notes, care- 
 fully concealed in the safety-deposit vaults, 
 and between the leaves of the family Bible, 
 and other similar secure hiding places. The 
 silver dollar bill commanded a premium in 
 gold on the counters of the money dealers. 
 The gold and silver, coin and bullion, in the 
 vaults of the Government could not be 
 moved but to meet current expenses of the 
 Government; hence it was- practically not 
 money in circulation. Probably sixty per 
 cent, of the paper money of the country was 
 hidden from circulation. 
 
 It is quite probable that at the time of the 
 greatest contraction of currency in 1893, there 
 was not in circulation in the entire country 
 more than $400,000,000 of money available for 
 business purposes. What remained of the 
 money of the country was securely withheld 
 
FREE BANKING. 37 
 
 from the public. Within six weeks from that 
 time confidence had been restored, the insane 
 had become rational, the intoxicated returned 
 to sobriety, and the entire mass of hidden bills 
 were again put into circulation. Within six 
 months the credit of the country had oscillated 
 from vigorous health to the verge of dissolu- 
 tion, and was again restored to its full and 
 healthy vigor. Within that time the currency 
 had been contracted nearly or quite sixty per 
 cent., then suddenly expanded to its extreme 
 bounds. 
 
 Can any country prosper, can its finances 
 ever be healthy, when such conditions may 
 threaten it at any time? Tariff legislation, 
 presumably an innocent business of Congress 
 to provide revenues for government, has for 
 many years menaced the stability of business 
 affairs in the United States, and Congress may 
 at any time, in the course of natural and nec- 
 essary legislation, cause a contraction of the 
 currency, either of its paper or its coins, by 
 simply starting an alarm that will send the 
 bills or the coins, as the case may be, into the 
 safe deposit vaults, or old stocking, or between 
 the leaves of the family Bible. 
 
 The financial scare of 1895-96 was the re- 
 sult of a fear by those rich enough to be 
 lenders of money that the purchasing power 
 of the dollar, in the event of our Government 
 
38 FREE BANKING. 
 
 opening its mints to the free coinage of silver, 
 would be decreased, and that they would be 
 compelled to receive, in payment for their 
 loans, less value than they gave. 
 
 It is difficult to find in their reasoning any 
 error on this question. Thousands of those 
 who could afford to buy gold and hide it, 
 did so: some from a sense of security, others 
 from purely speculative motives. Banks, to 
 a very great extent, substituted in their vaults 
 gold for bills for the reserved funds, and pri- 
 vate citizens, to a very great extent, locked it 
 in safe-deposit vaults. " Here a little and 
 there a little " of the gold coins of the coun- 
 try was hidden away, until practically the en- 
 tire coined gold supply of the country was 
 effectively withdrawn from public use. Twice 
 the gold reserve of the country was depleted 
 to an extent that impaired the credit of the 
 country. The third time, two months before 
 th€ last Presidential election, the Treasury 
 came nearer being depleted of its gold than 
 ever before; so much so that it became ap- 
 parent to the dealers in money, and to the 
 bankers of the country, that any attempt by the 
 Government, by bond-selling, to again replen- 
 ish the Treasury with gold, would result 
 either in turning the Government over to 
 those who favored free coinage of silver, or so 
 disastrously affect our credit that the whole 
 
FREE BANKING. 39 
 
 system of American securities would be sadly 
 impaired. 
 
 It was therefore necessary for the banks to 
 demonstrate to the public that they were doing 
 business on a sound basis, and were abun- 
 dantly able to come to the aid of the Govern- 
 ment. This they at once did — which they 
 could easily have done eighteen months be- 
 fore. By simply exchanging gold for Gov- 
 ernment paper money, silver certificates 
 included, they furnished the Government 
 with the necessary gold to maintain its reserve. 
 The rapid rise in the value of wheat, caused 
 by the great demand for American wheat 
 in foreign countries, has since made it easy 
 for the Government to maintain its gold 
 reserve. 
 
 But wheat, the very cause of relief to the 
 Treasury, and, at a critical moment, so great 
 a help to the credit of the country, is, notwith- 
 standing, a menace to the permanency of that 
 credit. When India, Russia, and the Argen- 
 tine Republic again produce great crops of 
 that cereal, those who deal in money for a 
 profit, will see a possibility of our paper money 
 — the basis of which is silver dollars — being 
 worth less than a gold dollar; they will then 
 begin insidiously to deplete the Treasury of its 
 gold, unless this or the next Congress con- 
 clude that governments should not do bank- 
 
40 FREE BANKING. 
 
 ing business, and provide, thereby, for its 
 discontinuance by the United States. 
 
 But upon what can we base a hope that 
 Congress will commit so wise an act of legis- 
 lation? Certainly not by the records of that 
 body for the last forty years; not by the plat- 
 form of principles promulgated by any of the 
 parties and factions of the last year. 
 
 The nearest approach to a decided declara- 
 tion against the Government engaging in a 
 banking business was made by the National 
 Democracy at Indianapolis. But so long as 
 any government uses all its powers of gov- 
 ernment to dictate what kind of paper money 
 shall be used as money, and also guarantees 
 the redemption of such money in the most 
 valuable coined money of the country, so that 
 such money shall at all times and at any point 
 within the limits of that government be equal 
 in value to the standard, and by prohibition or 
 taxation prohibits the use of any other kind 
 of paper money, that government remains in 
 the banking business, and to the disadvantage, 
 too, of the industries of that country. 
 
 The powers of the Federal Congress are de- 
 fined by the Constitution. The Constitution 
 provides that Congress shall have power " to 
 coin money, regulate the value thereof and 
 of foreign coins, and fix the standard of 
 weights and measures." 
 
FREE BANKING. 41 
 
 It would be impossible to frame a paragraph 
 in the English language that would more con- 
 cisely express its meaning than that relating to 
 the powers of Congress in relation to money. 
 The concluding sentence, relating to weights 
 and measures, declares beyond the possibility 
 of a doubt that the framers of the Constitu- 
 tion intended that Congress should have no 
 power over the money of the country other 
 than to coin the precious metals and define 
 what each coin should consist of, and what its 
 relative value to the standard should be. To 
 Congress was given the power to establish 
 a standard of money, of weight, and of 
 measures. 
 
 That the power of Congress was limited to 
 such specific work in regard to money was not 
 seriously disputed until 1865. The Secretary 
 of the Treasury, Mr. Chase, — who was 
 largely instrumental in inducing Congress to 
 issue greenbacks, — did not believe, never pre- 
 tended to believe, that Congress had the 
 power to stamp a piece of paper and make it 
 a legal tender. This fact was shown later in 
 his opinion when, as Chief Justice of the 
 United States, he decided the legal-tender 
 legislation to be unconstitutional. 
 
 If Congress, under the imitations of Article 
 First, Section 8, and Paragraph 5, of 
 the Federal Constitution, is given the power 
 
42 FREE BANKING. 
 
 to fix a value at which public and pri- 
 vate creditors must accept any piece of 
 paper or coin in payment of money owed 
 to them, they have the right also to in- 
 crease or diminish the weights and meas- 
 ures. They can declare that eight ounces 
 shall constitute a pound, and that six inches 
 shall measure a foot. All unfulfilled con- 
 tracts calling for those things sold by weight 
 and measures would be settled, except by con- 
 cession, by the new scales of weights and 
 measures, and every man who had contracted 
 to buy would thereby be robbed. 
 
 Is there a sane man in America who will 
 assert as his belief, that the Supreme Court 
 of the United States, as constituted since its 
 organization, would ever have asserted the 
 constitutionality of laws that state untruths? 
 It is manifest that a law that declared six 
 inches to be a foot, or eight ounces to be a 
 pound, would be an untruth. 
 
 Would it not be most unjust if a law that 
 provided that those who had made contracts, 
 prior to the passing of the law, for looo feet 
 of piping for delivery at some future time, — 
 which proved to be subsequent to the passage 
 and enforcement of the new law, — should, 
 nevertheless, make it mandatory to accept in 
 satisfaction of such contracts the delivery of 
 500 feet of piping because the new law had 
 
FREE BANKING. 43 
 
 declared 6000 inches and not 12,000 inches to 
 be the equivalent of 1000 feet? It would be 
 robbery to compel those who had contracted 
 for the delivery of a ton of coal, to accept in 
 satisfaction of such a contract the delivery of 
 1000 pounds of coal because the new law had 
 declared 16,000 and not 32,000 ounces to be 
 the equivalent of a ton. 
 
 To reduce the value of the metal in the 
 coins and, by legal-tender enactments, to force 
 them on the creditors of the country would, 
 at any time in the history of our country, have 
 been held by our Supreme Court to be uncon- 
 stitutional. 
 
 Is there anyone who seriously doubts this 
 proposition? 
 
 But the Supreme Court, asserting a legis- 
 lative power never given to it by the Consti- 
 tution, overturned all precedents, and declared 
 that Congress possesses the power to have 
 stamped on a piece of paper of no intrinsic 
 value the words " one dollar," and make its 
 debt-paying power equal to that of the gold 
 dollar of the United States. Under that de- 
 cision Congress may have printed enough 
 paper dollars to pay ofif its indebtedness. By 
 the time the Government have issued two or 
 three thousand millions of such dollars, and 
 been making a few payments in this kind of 
 money to the Supreme Court Jtidges, that 
 
44 FREE BANKING. 
 
 honorable body will perhaps more earnestly 
 study the Constitution of our country and thus 
 arrive at the agreement that coining money 
 does not mean printing on paper. 
 
 There are certain scandals, of course, the 
 less said of them the better will morals be 
 promoted. That legal-tender decision may 
 be one of them. But may it not be well for 
 those who have received the benefits. of that 
 decision, and those who sustain it as a patri- 
 otic measure growing out of the necessities of 
 our country, not to throw stones too violently 
 at that Chicago fabric known as the Demo- 
 cratic platform of 1896? One of its planks 
 emphatically indorses the issuing of paper 
 money as not only a delegated power of Con- 
 gress, but declares it also to be the duty of 
 the Government to do so to the exclusion of 
 all other paper money. By direct assertion 
 the Chicago platform protests against the use 
 of national-bank paper issue, and by its silence 
 on the subject it in a measure opposes State 
 and private-bank paper money. 
 
CHAPTER III. 
 
 During the heat of the canvass of the late 
 Presidential elections the candidate of the Re- 
 publican party, with masterly stage effect, ap- 
 parently, gave utterance to the declaration 
 that, we must have " a dollar as sound as 
 the Government, and as untarnished as its 
 honor." 
 
 There may be a great uncertainty as to the 
 meaning of that utterance of Mr. INIcKinley 
 if he did not intend it for dramatic effect, but 
 if he really meant what he said, then his dol- 
 lar of the United States, to be at all times 
 " as sound as the Government and as un- 
 tarnished as its honor," would be some- 
 what elastic, not in the quantity but in the 
 quality. 
 
 When the Government issued its first green- 
 back currency, compelling the creditors of the 
 country to receive it in payment of amounts 
 due both from Government and private 
 individuals, and refused to receive it for taxes 
 due to the nation, the Government, it is true, 
 issued money " as sound as the Government 
 and as untarnished as its honor." And this, 
 
46 FREE BANKING, 
 
 according to history, appears to have been 
 worth, judged by the standard of gold, some- 
 where between one and sixty per cent, below 
 par. The different rates of discount varied 
 as the Government's prospects of life or death 
 presented itself to that honored body of pub- 
 lic benefactors and citizens of the world — the 
 money-lenders. 
 
 Again, in 1893, this same band of philan- 
 thropists had become so firmly impressed with 
 the stability of the Government that they were 
 induced to consider the various bills of 
 the United States currency — especially of the 
 smaller denominations — as commodities too 
 precious to be used for such base purposes as 
 paying debts, excepting debts of honor and for 
 labor; and so these same philanthropists 
 bought the various currency bills and stowed 
 them away, thus creating a corner in currency, 
 just as " vulgar speculators " in the necessities 
 of life buy corn and wheat to store, to create a 
 corner in breadstuff. But, on that occasion, 
 was it the paper dollar or the gold dollar that 
 was " sound and untarnished "? Who among 
 the voters of the country shall say which of the 
 two dollars now issued in metal — the gold or 
 the silver dollar — is, or is not, " a dollar as 
 sound as the Government and as untarnished 
 as its honor." Shall it be those millions who 
 voted for Mr. Bryan, and, presumably, for 
 
FREE BANKING. 47 
 
 free coinage of silver and for the silver dollar 
 as a standard? Or shall it be those other mil- 
 lions who voted for and elected Mr. McKinley, 
 and, presumably, demanded that the gold dol- 
 lar should be the standard of value in the 
 United States? Who shall or shall not de- 
 termine whether the honor of the country was 
 or was not tarnished when a Congress, elected 
 by the people at an election when the money 
 question was hardly considered, voted to 
 demonetize silver — a measure by which the 
 creditor class would have all to gain and noth- 
 ing to lose; while, on the contrary, the debtor 
 class had all to lose and nothing to gain by 
 such demonetization? Shall it be the cohorts 
 of Mr. Bryan, or of Mr. McKinley? 
 
 Silver and gold are commodities and not 
 money when in the form of bullion. They are 
 commodities of which for ages the principal 
 use has been for money, or as a basis for 
 money. For ages the value of the gold and 
 silver coins has been determined by the bul- 
 lion value of the gold or silver the coins con- 
 tained. As commodities each was used for 
 the same common purpose — to furnish a con- 
 venient method for the exchange of commodi- 
 ties. Had there been no gold in the world, 
 the world's demand for silver for the purposes 
 of money would have been much greater; 
 consequently, the purchasing power of a 
 
48 FREE BANKING. 
 
 pound of silver would have been greater. 
 Had there been no silver in the world, the pur- 
 chasing power of a pound of gold would have 
 been greater. 
 
 In many parts of the United States it is not 
 an uncommon thing to find a mule and a 
 horse hitched together drawing a load, which, 
 by their united efforts, they move readily. If 
 the public demanded that only horses should 
 be used to pull such loads, it is evident that 
 in those communities where like conditions 
 exist an increased demand for horses would be 
 created, and the demand for mules would be 
 decreased. And so, to extend the figure, if 
 the world should unite in proscribing the 
 mule and demanding the horse, the value of 
 horses would vastly increase, and the mule 
 would manifestly have only such value as the 
 curio-seeker and the arts might give it. 
 Were, indeed, the production of horses limited 
 in line with the limitation of gold productions, 
 the value of that animal would be vastly in- 
 creased. Why does not the law of supply 
 and demand, which governs one division of 
 the world's commodities, apply to all other 
 sets of similar commodities? 
 
 It does apply; and to gold and silver, it also 
 applies; and so by the demonetization of sil- 
 ver by the great commercial nations, the 
 value of gold was enhanced; its purchasing 
 
FREE BANKING. 49 
 
 powers were increased, while those of silver 
 were decreased. 
 
 It is possible that, had the commercial 
 nations made no effort to demonetize silver, 
 that metal, in comparison with gold, might 
 have fallen during the last twenty years, but 
 not to the great extent it has declined. It is, 
 therefore, not unreasonable to believe that, if 
 all the great commercial nations of the world 
 were to open their mints to the free coinage 
 of both silver and gold, the demand of the 
 debt-payers for the cheaper metal, — silver, — 
 and consequently a depressed market for gold 
 for purpose of coinage, would very shortly 
 drive the gold-bullion holders to offer their 
 bullion — gold — for coinage. For, by thus 
 giving to the debtor class the option of these 
 two metals with which to pay their debts, 
 those nations would fix the ratio of one ounce 
 of gold to ten ounces of silver. 
 
 But so long as a half dozen of the greater 
 commercial nations demonetize silver, it can- 
 not, in all probability, be rehabilitated by the 
 United States as money at a ratio with gold 
 satisfactory to the commercial world. For so 
 long as those great trading nations accept 
 silver at only its bullion value, its value, meas- 
 ured by that of gold, will continue to fluctuate 
 to an extent too great to be accepted by the 
 traders of the gold-standard nations as the 
 
5© FREE BANKING. 
 
 measure by which the commodities that they 
 sell to the silver-standard nations shall be 
 paid; while, on the other hand, the fluctuation 
 of the value of gold, measured by that of silver, 
 will also vary to such an extent that traders 
 in the silver-standard nations will be greatly 
 inconvenienced in their business operations. 
 Importers of silver-standard nations would be 
 in no better condition than would be the im- 
 porters of gold-standard nations. Interna- 
 tional trade, consequently, would be very 
 greatly interfered with. And any interference 
 with international trade is to the disadvantage 
 of the people affected by it; though it be a 
 people that has reached but the condition of 
 semi-civilization; while it is to the greater dis- 
 advantage of those who accept the least used 
 and least convenient and least forcible money 
 standard. 
 
 There can be no great exporting nation that 
 is not also a great importing nation. That 
 wise member of the present Congress who, in 
 his campaign literature, announced that he 
 was in favor of *' the world's market for 
 American workmen, and not for the pauper 
 labor of Europe," wrote himself down an un- 
 thinking man when he made that his battle 
 cry. Nevertheless, owing to the blind big- 
 otry, the unreasonable passion, and the asinine 
 proclivities of his constituency, and also the 
 
FREE BANKING. 5 1 
 
 fact that his competitors were of the same kind 
 with but sHght variations, he was, unfortu- 
 nately for his country, elected. 
 
 That the people of the United States could 
 live and be progressive and prosperous if sur- 
 rounded by an impassable barrier may be con- 
 ceded to be a fact, were climatic influences to 
 remain the same. That they would not en- 
 joy the same comforts, nor progress as rapidly 
 in the arts and in science, is also a truth 
 that a few thoughtful moments will fully 
 corroborate. 
 
 Nearly every part of the world contributes 
 to the pleasures of the breakfast of even the 
 poorer of the workingmen of the United 
 States. Tea, coffee, the condiments, and 
 much of the sugar, without which that break- 
 fast would be very unsatisfactory, come to us 
 from foreign lands. These contributions are 
 in exchange for those products of which we 
 have an excess ; while the contributions of for- 
 eign lands to the pleasure and comforts of the 
 well-paid and the rich among our citizens are 
 much greater. The United States might 
 be rich if it were a world to itself, but it 
 would become much richer by having that 
 world enlarged; providing that, in the enlarge- 
 ment, new conditions of climate, new soil and 
 culture were added. 
 
 No civilization has ever been, nor ever will 
 
52 FREE BANKING. 
 
 be, satisfied with the productions of the terri- 
 tory within which that civihzation exists. No 
 environments have ever been placed about 
 man that did not create within him the desire 
 to surmount or overcome them. The greater 
 man's enhghtenment, the more intense is his 
 desire to overcome enforced environment. 
 To restrict man by legislation from the exer- 
 cise of his natural right is at once to make 
 of him a secret or open rebel against the gov- 
 ernment so restricting him. In a popular gov- 
 ernment like that of the United States, or of 
 the States of the Republic, it is impossible to 
 enforce a law that is contrary to public opin- 
 ion. This is a perfectly apparent proposition, 
 which, happily, few minds fail to accept as 
 truth. Yet many of our philanthropists and 
 statesmen have evidently failed to grasp it 
 when applied to certain features or conditions. 
 The result is, the statute books of the States of 
 the United States and of the general Govern- 
 menit are crowded with unpopular laws that 
 have become dead letters, no attempt ever 
 being made to enforce them. There they re- 
 main, monuments to the impotency of minori- 
 ties and to the imbecility of legislators. More- 
 over, they are harmful, a mienace to morals, 
 and alas! too frequently, a lever in the hands 
 of the unscrupulous wise to oppress the timid 
 innocent. 
 
FREE BANKING. 53 
 
 Around that spot upon this globe that 
 civiUzation has determined to be the North 
 Pole, the eternal ages have placed a barrier of 
 snow and ice, guarded by a cruelly frigid 
 atmosphere. So far that barrier has resisted 
 all attempts of man to surmount the spot. Of 
 all the men who have endured the awful suf- 
 fering in their effort to reach the North Pole, 
 no man has been actuated to the frightful 
 task by any hope that beyond those barriers 
 there was a land where conditions for living 
 would be an improvement over lands easily 
 accessible to him and without privations of 
 any kind. All may have been encouraged 
 by the hope that, if successful, they would re- 
 ceive the plaudits of their fellow-men; that 
 their names would be sent down the ages on 
 the recorded pages of time, along with other 
 great discoverers; but the controlling motive 
 of that spirit, which will yet surmount those 
 barriers, is the same motive that has actuated 
 man in all his struggles to reach a position on 
 the heights of fame loftier than that hitherto 
 achieved by his fellow-man. And the greater 
 the environments, the greater the determina- 
 tion to surmount them. Man feels it to be his 
 natural right to possess himself of anything 
 that his judgment tells him it would be to his 
 benefit to have. Education and association 
 have taught him that his right to possess that 
 
54 FREE BANKING. 
 
 which his heart desires, must be Hmited to the 
 possession of those things that do not rob his 
 fellow-man of a possession. Hence, man has 
 a natural right to anything attainable by him 
 not the possession of some other man. 
 
 It is readily assumable, therefore, that the 
 North Pole belongs to no man. Neither does 
 trade belong to any one man. The right to 
 trade justly with his fellow-men, in a manner 
 commonly agreed upon, to buy in the cheap- 
 est and to sell in the dearest markets is man's 
 natural right, and any restriction by govern- 
 ment of those natural rights will be resisted 
 by him. He will do it openly if he believe it 
 to be to his interest to do so; secretly, if that 
 method be to his advantage. His condition in 
 life may be pleasant, his respect for law deep- 
 seated, and his temptation to infract the law 
 be slight. In the last case he may even obey 
 a law the enforcement of which would have no 
 bearing upon his condition in life. But as 
 soon as he feels that the enforcement of such 
 a law is a disadvantage to him and restricts 
 him in the exercise of his natural rights, he 
 becomes, to a greater or less extent, discon- 
 tented, and his respect for law will be measur- 
 ably decreased; and too frequently it becomes 
 so decreased that his respect for law will be 
 changed to a contempt for law. 
 
 The only hope, then, for the permanency of 
 
FREE BANKING. 55 
 
 constitutional government rests on the respect 
 of its citizens for the law. And in their belief 
 in the justice of the law, so long as a law re- 
 mains in the statutes of the country, the 
 abridgment of any natural right of man by 
 the laws of such government becomes a men- 
 ace to the permanency of that government. 
 
 Perhaps no set of legislators, either of 
 the States or of the Nation, could serve 
 their countrymen in any way better than 
 by devoting the entire time of a term 
 of such an office in efforts to repeal laws. 
 The country can well afford to get on 
 for a few years without new legislation, 
 much as new legislation is needed, if it can 
 thereby get rid of those pernicious laws that 
 restrict its citizens from the exercise of natural 
 rights. 
 
 Man's most important and most restricted 
 natural right is to trade with his fellow-man 
 and fellow-men in any way, and with the use 
 of any convenience, that those immediately 
 interested may commonly agree upon, so long 
 as the methods and the conveniences do not 
 deprive any persons of their natural rights. 
 
 This is the particular natural right of man 
 that the government of civilization has most 
 restricted. And from that persistent and per- 
 nicious interference with the conveniences of 
 exchange by nearly all the governments of 
 
5 6 FREE BANKING, 
 
 the world durinig the past two hundred years, 
 and by the Latin nations for upward of two 
 thousand years, has come the greater part of 
 that degrading poverty that has ever increased 
 in degradation and extent as arts, science, and 
 the industries have been developed. 
 
 By the study of the experience of com- 
 mercial nations the political economist formu- 
 lates economic laws. Gresham's law was 
 formulated by that financier and economist, 
 from whom it takes its name, after years of 
 patient study of the effect of the debased 
 money of England upon the money not 
 debased. 
 
 But to establish a proposition in economics 
 into a law of economics by study of conditions 
 is not possible, unless those conditions can be 
 sustained as a logical sequence. If the ex- 
 perience of most of the progressive nations 
 were to be accepted as establishing economical 
 laws, a law might readily be formulated that 
 the experiences of nations would sustain, to 
 the efifect: "That in proportion as nations in- 
 crease in wealth and refinement, poverty and 
 crime increase, and virtue and honesty de- 
 crease." It is not necessary to waste time in 
 attempting to prove that such a preposterous 
 proposition is not a law of nature. It is so 
 absurd that the dullest of human minds will 
 by intuition know it to be illogical, and conse- 
 
FREE BANKING. 57 
 
 qiiently not a law of anything, but rather a 
 result of the application by the controlling 
 nations of the world of injustice and disregard 
 of natural laws to the methods of government. 
 And in no other way is this injustice and dis- 
 regard of natural laws more flagrantly en- 
 forced than in the governmental control of the 
 monetary affairs of the people. 
 
 Under the freest banking system ever en- 
 joyed by the people of the United States, the 
 number of paupers and criminals in the coun- 
 try was scarcely a disturbing factor, being 
 less than two hundred and fifty to each 
 one hundred thousand of its population. 
 Under the supposed improved banking 
 laws that now control our monetary sys- 
 tem, the number of paupers and criminals 
 to each one hundred thousand of our 
 population has increased to upward of 
 three thousand, and, in addition to this 
 charge upon the public, upward of a mil- 
 lion of our people are honorary pensioners of 
 Government. 
 
 Under the free banking system the tramp 
 was unknown. 
 
 Under the improvements that the ablest and 
 most disinterested class of our fellow-citizens, 
 the experts in banking laws, have been able to 
 devise, the army of tramps have so increased 
 that there is scarcely a highway in the United 
 
58 FREE BANKING. 
 
 States that is not in use by them. And these 
 tramps are not enumerated either as paupers 
 or criminals, unless they have been either in- 
 mates of jails or of almshouses. Their pres- 
 ence, moreover, is a menace both to person 
 and property, and the unprotected females on 
 almost any of the highways of the land are 
 more fearful of them than of savag-e beasts. 
 The tramp is not a seilf-invented, self-devel- 
 oped, self-made brute; he is an evolution, and 
 society is responsible for his brutalization, and 
 the monetary laws of civilization have had the 
 greater part in that evolution. The criminals, 
 too, are largely the products of bad legislation. 
 
 Who are the paupers? They are mostly of 
 that class who are too honest to steal, and not 
 intellectually or physically strong enough to 
 win their own support in the struggle for ex- 
 istence. They yield to what they believe to 
 be the inevitable; surrender their liberty, and 
 voluntarily seek the imprisonment of the alms- 
 house that they may be sheltered. 
 
 Against what? The injustice of existing 
 laws. 
 
 Several of the almshouses of our country 
 prove the truth of this proposition in being 
 made self-sustaining by the united labor of 
 their inmates. Sussex County, Delaware, 
 was at one time in its history swept by the 
 waters of the ocean. By ages of unceasing 
 
FREE BANKING. 59 
 
 energy of the sea a sand bar was formed, that 
 in time emerged from the ocean and became 
 covered with vegetation. Its soil is thin and 
 offers no seductive encouragement to the agri- 
 culturist. Yet by cultivation, aided by fair 
 intelligence, and without exhausting labor, 
 man in that county may make for himself a 
 dehghtful existence. 
 
 In one of the poorest sections of that county 
 is located the " poor farm," which contains 
 about two hundred acres of land, upon which 
 is situated the almshouse of the county. The 
 population of the county is about forty thou- 
 sand souls. Land is cheap and more accessi- 
 ble to its people than land in sections of the 
 country where Nature makes it much easier 
 for the agriculturist to produce his require- 
 ments. It offers but little inducement to the 
 land speculator. This probably explains the 
 fact that but forty-one of its inhabitants sur- 
 rendered their personal liberty and volun- 
 tarily were inmates of the almshouse last year. 
 
 Certainly those forty-one paupers in the 
 Sussex County almshouse cannot be possessed 
 of greater energy and intellect than the 
 average denizens of the poorhouscs of our 
 country. It is fair to assume that their 
 energy and intelligence are below the average ; 
 nevertheless, by the wise management of that 
 almshouse, those paupers were given an 
 
6o FREE BANKING. 
 
 Opportunity to labor and produce, by cultivat- 
 ing the land of the poor farm. The result is, 
 they ceased to be paupers and became worthy, 
 self-sustaining people. 
 
 The Sussex County Almshouse in 1895 was 
 not only self-sustaining, but returned a profit 
 to the county — the result of the labors of its 
 inmates. Upon that farm were grown those 
 commodities that could be produced upon it, 
 not only more than enough for the wants of 
 the inmates, but the sale of the surplus was 
 enough to purchase other requirements, and 
 make a profit for the county besides. Those 
 forty-one people in that almshouse are no 
 longer paupers, but honorable and valuable 
 residents of the State of Delaware. 
 
 There is no reason to doubt that if the same 
 wise methods of giving opportunities to labor 
 and to produce were also given to the inmates 
 of all the almshouses of our land, and of all 
 other lands, all the almshouses would become 
 self-sustaining, and the inmates of such insti- 
 tutions would cease to become paupers, but 
 would, on the contrary, become serviceable 
 members of society. 
 
 And if to the people of all countries were 
 given free access to uncultivated lands, pov- 
 erty would disappear from the civilized world 
 and almsliouses and charitable institutions 
 would be things of the past in civilized com- 
 
FREE BANKING. 6 1 
 
 munities, or would remain only as curios or 
 as monumental relics of a past barbarism. 
 
 There surely is a monstrous injustice some- 
 where in the system that robs man of his 
 natural rights to produce those commodities 
 necessary for his existence; and as man's 
 genius harnesses to his will newly discovered 
 forces of nature and increases the capacity 
 of man to produce, that injustice is intensified 
 when the methods adopted reduce the oppor- 
 tunities of one set of men to produce for 
 themselves. 
 
 If poverty and crime are increased as a con- 
 sequence of man's inventive genius, it must 
 necessarily, then, follow that the man who dis- 
 covers new forces in nature, and invents appli- 
 ances by which man's individual power to 
 produce is increased, is a curse to most of his 
 fellow-men, and so, instead of encouraging 
 mechanical invention, it should be dis- 
 couraged. It is unthinkable, however, that, 
 Franklin, Fulton, Evans, Whitney, Morse, 
 Ericsson, Edison, and men of their character 
 and mental force can be considered otherwise 
 than blessings to their countrymen. 
 
 It is not because man's inventive genius has 
 vastly enlarged man's capacity to produce his 
 wants that poverty and crime increase; it is 
 because of bad government. We have en- 
 tirely too much paternalism in governments. 
 
62 FREE BANKING. 
 
 Man cannot be too free, he cannot indulge in 
 too much individuaHsm, so long as he respects 
 another man's rights. Education teaches re- 
 spect for others' rights; not by artificial laws is 
 man taught to respect them. No man can 
 claim as a just right any individual right that 
 gives him a monopoly of a natural opportu- 
 nity. That which nature has created without 
 the aid of man any man has a natural right to, 
 in common with his fellow-men. When pos- 
 sessing more of such opportunities than he 
 can make available for his comforts and neces- 
 sities, he robs his fellow-men when he denies 
 to them access to that part of a natural oppor- 
 tunity that he cannot himself make use of. 
 
 It is the " dog in the manger " that causes 
 poverty and crime: in his freedom to trade 
 with his fellow-men, in whatever manner that 
 those who do the trading may agree upon, 
 man should be unrestricted. If A is indebted 
 to B to the amount of twenty-five dollars, 
 he should not be restricted in his right to pay 
 that indebtedness by creating a new one. He 
 should be permitted, if B is willing to take 
 such payment, to make five or more notes 
 payable on demand. It is no one's business 
 but that of A and B. B may owe other 
 men who will willingly take A's note in pay- 
 ment of his debts, and those to whom B makes 
 such payments would find their creditors will- 
 
FREE BANKING. 63 
 
 ing to take A's note, and possibly, after a 
 time, A's notjes would be returned to him in 
 payment of amounts due A. 
 
 These notes of A's could not be thus circu- 
 lated as a currency, unless those who took 
 them had faith in the integrity and sound 
 business methods of A. When a paternal 
 government prohibits the use of such cur- 
 rency, because of the fear that some innocent 
 or ignorant holder of such notes will possibly 
 be a loser by using such currency, that gov- 
 ernment stands upon a par in intellectual de- 
 velopment with that parent who refuses to 
 take the necessary health-restoring drug into 
 his house because of his fear that some of his 
 innocent and ignorant children will get a part 
 of it and poison themselves. If any set of 
 legislators seriously contemplate formulat- 
 ing laws to prevent fools from doing foolish 
 things, they are themselves the fools against 
 whom such legislation should be aimed. 
 
CHAPTER IV. 
 
 From Rome came the jurisprudence that 
 now governs European civiHzation. The 
 Roman system of jurisprudence was evolved 
 from centuries of experimental efforts of the 
 governing class of the Commonwealth and 
 Empire of Rome to compel the great mass of 
 the producing class there to be human brutes 
 — mere beasts of burden and of toil. And 
 so effectively had the government of Rome 
 formulated and executed laws for that pur- 
 pose that, when the Empire reached its great- 
 est attainments in wealth and literature, nearly 
 two-thirds of its population were slaves. 
 Rome made no great advance in either the 
 arts or science. She built magnificent 
 palaces, by calling to her aid the skill and 
 genius of Greece, but it was in war and 
 along the avenues of destruction that she be- 
 came powerful and great. Might was the 
 foundation of Roman jurisprudence. No 
 soldier of Rome and but few of her statesmen 
 ever questioned the right to possess anything 
 that might could command. From such 
 64 
 
FREE BANKING. 65 
 
 ethical culture it is not reasonable to assume 
 that a system of perfect justice could evolve. 
 
 Nor did it. To-day the foundation of the 
 system of justice in every country of civiliza- 
 tion is that of might. Not the possession of a 
 natural opportunity held by any mortal of to- 
 day, if traced back far enough, will fail to 
 reveal the blow, the force, and the ruthless 
 robbery that tore it from the possession of 
 someone else. And doubtless, if the history 
 of the possession of such an opportunity be 
 carried back far enough, it will show that by 
 the process of violence it had frequently 
 changed ownership. 
 
 A great Latin prince, believing himself, and 
 also believed by Church and State, to be the 
 vicar of God on earth, incapable of doing an 
 injustice, having been forced by scientists, 
 not the development of Roman culture, to 
 accept the belief of the rotundity of the globe, 
 drew a line across the chart of the new conti- 
 nent, the existence of which had but recently 
 been made known to him; and to his faithful 
 subject the King of Spain he said: "All that 
 is north of the line — land, people, and wealth — 
 I, as the vicar of God, give to you, to do with 
 as you may, and all to the south of that line I 
 give to my faithful subject the King of 
 Portugal." 
 
 In this simple transaction of a Pope whose 
 
66 FREE BANKING, 
 
 goodness of heart aiid nobleness of purpose 
 are here not questioned, we have a complete 
 illustration of Latin jurisprudence. If those 
 king's could possess themselves of those lands, 
 rob their inhabitants of their w^ealth, and en- 
 slave them, they might justly do so, and the 
 Almighty God v^ould justify, and Latin civili- 
 zation and jurisprudence would legalize the 
 transaction. And to-day the foremost nations 
 of the world recognize the binding force in 
 law of that division of a continent made by a 
 man nearly four hundred years ago. 
 
 Surely the dead reigns, and the living bow 
 in obedience to a lump of clay. Fetichism 
 among savage men is a vice; among the most 
 learned, most cultivated, and most progressive 
 nations of the world it is a cardinal virtue. 
 
 And why? Because Roman jurisprud- 
 ence has declared it to be so, and Thomas 
 Jefferson to have been an anarchistic teacher 
 when he taught that the earth in its usufruct 
 belongs to the living, and that the dead should 
 have no control of it. 
 
 Under the Roman system m,en apparently 
 recognized no man's rights to anything that 
 could safely be taken from him. If man was 
 strong enough to retain what he became pos- 
 sessed of, his right to it was recognized. The 
 hero of the Romans was not only a robber, 
 but a fratricide. He taught his subjects the 
 
FREE BANKING. 67 
 
 art of deceit as a necessary method of estab- 
 lishing homes, and the history of the nation 
 that he estabHshed is a history of robbery, 
 murder, and Hcentiousness. Here and there 
 in the history of Rome are presented such 
 characters as Brutus and Lucretia, but they 
 are as oases in the desert. 
 
 Is it not time for the people of the present 
 civilization to cease their fetich worship of un- 
 natural things? For ages men have been 
 submitting themselves to horrible torture, 
 mutilating their bodies and dwarfing their 
 intellects to appease the wrath of undiscern- 
 ible and unknown demons; but those ages of 
 human torture do not prove the existence of 
 the demons. No more do the system of laws 
 of some kinds of civilization^ — in spite of the 
 indorsement of ages — prove that such laws are 
 founded on justice. 
 
 Modern intelligence has eliminated from 
 civilization the worship of snakes, serpents, 
 cats, and other living things. It has de- 
 stroyed the faith of educated people in demons, 
 witches, and such uncanny creatures. But in- 
 telligence has much more to do to remove 
 fetich impediments from the pathways of hu- 
 man progress. So long as the human mind 
 accepts the proposition that because humanity 
 has for ages believed to be true an economic 
 or ethical proposition, and that those many 
 
68 FREE BANKING. 
 
 years of humanity's faith in the correctness of 
 the proposition is conclusive evidence of its 
 truth, so long does that human mind need fur- 
 ther education and development. 
 
 There are certain propositions the truth of 
 which is so apparent to the human mind that 
 w^ords cannot be framed to express the ideas 
 more comprehensively to the mind than by 
 merely stating the proposition. The geo- 
 metrical proposition that a straight line is the 
 shortest distance between two points cannot, 
 for example, be more clearly elucidated than 
 by the bare statement that '' The shortest dis- 
 tance between two points is a straight line." 
 Though a volume of thought be devoted to 
 elucidation, a mind incapable of accepting 
 that proposition at once, but demanding 
 further proof of its accuracy, is incapable of 
 reasoning, and by its fellows such a mind 
 would be deemed that of an imbecile. 
 
 That which man produces without aid from 
 his fellow-men should be the property of the 
 man who produces it, is an axiomatic truth; 
 that man has a right to opportunities to live 
 upon earth, is equally true. Man is entitled to 
 possess whatever he may produce, so long as 
 in the process of production he has not de- 
 prived his fellow-man of anything that was his 
 possession. Man cannot rightly take for his 
 use that which other men possess, unless by 
 
FREE BANKING. 69 
 
 the consent of the possessor, even though 
 he who possessed it acquired it by unjust 
 methods. 
 
 No arguments are needed to sustain the 
 truth of these propositions. They are self- 
 evident. Man should not be permitted by his 
 fellow-men, by society, by government to re- 
 tain possession of anything he was not justly 
 entitled to possess. If it did not belong to the 
 man, and no owner for it could be found, it 
 should become the common property of 
 society. This logical proposition, however, is 
 not sustained by Roman jurisprudence. By 
 that law it remains the private property of 
 the possessor, to be used by him for his 
 private purpose, and for its misuse he is 
 accountable only when complaint is duly 
 and legally made by the real owner of the 
 property. 
 
 If anyone will take the trouble to investigate 
 the suit and the decision regarding it handed 
 down by our highest courts of certain people 
 of New York city against the Old Dutch 
 Church, to compel that church to account for 
 the use or misuse of the old shoemaker's 
 cow pasture '' down by the Maiden Lane," he 
 will see that the highest courts declare that 
 persons holding illegal possession of property 
 cannot be disturbed in the possession of it, save 
 by complaint of the real owner of it. Fetich 
 
70 FREE BANKING. 
 
 worship of Roman jurisprudence makes an 
 anarchist of the man who asserts that property 
 illegally in possession of individuals, and for 
 which real owners cannot be found, should be 
 confiscated for the use of society. " Posses- 
 sion is nine points of the law." Justice may 
 hold one. 
 
 When the Great Master went up to Jerusa- 
 lem preaching a new philosophy, He was 
 denounced both by Church and State as an 
 anarchistic teacher. In the beginning of His 
 work He was simply the despised Nazarene. 
 And the same spirit that disdainfully ex- 
 claimed in the last Presidential contest, 
 *' What do the hayseeds know of finance?" 
 lived, clothed in purple and fine linen or in 
 SLcerdotal robes, in Jerusalem upward of 
 nineteen centuries ago, and disdainfully asked 
 the question, '' What good ever came out of 
 Nazareth? " The Master taught a simple phi- 
 losophy. One so easily comprehended that 
 any mind not indurated by selfish injustice 
 or Roman jurisprudence could comprehend 
 and understand it. The whole philosophy of 
 Christ's teaching was epitomized in His in- 
 junction to His followers, *' Do unto others as 
 you would have others do unto you." The 
 man who desires special privileges to trade 
 cannot be wise and honest according to the 
 Master's standard. 
 
FREE BANKING. 7^ 
 
 If wise, he knows full well that he can pos- 
 sess and make use of no special privileges to 
 trade that will admit of him doing " unto 
 others as he would have others do unto him." 
 If he be wise and asks for special privileges, 
 he intends to get more than an equivalent for 
 w^hat he intends to give, as it is his in- 
 tention that his fellow-men shall, by their 
 necessities, be compelled to give him more 
 than an equivalent for what he gives 
 them. If he be wise, and seeks to pos- 
 sess any of these special privileges, he is 
 not honest if he pretends to Christian virtues. 
 By the standard of Lycurgus he would be 
 honest, provided he could conceal the method 
 by which he got the better of his fellow-men 
 in the deal. By the Roman standard he 
 would be both honest and honored if he could 
 retain possession of what he got, no matter by 
 what means. 
 
 But the pretended basis of justice in the 
 United States is Christ's philosophy. Equity 
 is presumably based upon Christ's teachings. 
 The exponents of law to-day should be as 
 wise as those of any preceding period of the 
 world's history. It is even a fair assumption 
 to say that they should be wiser. They know 
 that when the Romans accepted Christianity 
 as a state religion, they modified that religion 
 to accord with Roman thought, to such an ex- 
 
72 FREE BANKING. 
 
 tent as almost to destroy its resemblance to 
 the religion taught by the Apostles; they know 
 that Rome accepted Christian precepts. The 
 Christian nations of to-day, not even except- 
 ing those under the full sway of the Roman 
 Church, no longer teach the religion of Con- 
 stantine, but that of the Apostles, as the cor- 
 rect foundation for the ethics of our daily lives. 
 All, however, in their political and economic 
 systems, cling to the traditions of Constantine 
 and his successors, as their reverence for the 
 Justinian code proves. 
 
 No better real estate title is held in England 
 to-day than those of tbe monastery lands of 
 that country that Henry VIIL, asserting abso- 
 lutely his own free will, took violent possession 
 of, and bestowed upon those whom he sought 
 to reward for personal service. Had Henry 
 been what he claimed to be, — the personifica- 
 tion of the people of England, — and taken vio- 
 lent possession of those lands for the benefit of 
 the whole people of England, there might have 
 been some justification in the philosophy Oi 
 Christ for such confiscation. It is very proba- 
 ble that Henry really believed that all his acts 
 in that direction, both in the robbery and in 
 the distribution of the plunder, were for the 
 best interest of all England. But because he 
 believed so, and a division of the Christian 
 Church and the courts of England, as he had 
 
FREE BANKING. 73 
 
 organized them, sustained him in that belief, 
 is no reason why those of the present genera- 
 tion should believe it. He had no more right 
 to limit the freedom of opportunity that those 
 lands afforded — even with the indorsement of 
 every man in England — to the generation 
 that was to follow, than he had to declare 
 that no man born in England after his death 
 should ever wear a coat, or leave the country. 
 Surely it is the dust of the dead that most 
 oppresses mankind, and ancestral worship too 
 greatly prevails in the halls of justice. 
 
 An ethical system that turned Europe from 
 an advanced stage of enlightenment into a 
 charnel house of free thought, and plunged it 
 for nearly a thousand years into darkness and 
 decay, from which it was rescued only by ex- 
 ternal pressure, is a system well worth aban- 
 doning; and it would have long since been 
 abandoned had not civilized man been pre- 
 eminently a conservative animal. 
 
 Give any man a happy home and ease, and 
 he is likely to rest contented with what he has, 
 and frown upon any proposition that may dis- 
 turb his enjoyments. That is the artificial 
 man. Most civilized men's natures are arti- 
 ficial — the creation of their environments. 
 So long has man been oppressed by tradition 
 that most men easily learn even to question 
 the proposition that they have a right to live; 
 
74 FREE BANKING. 
 
 they readily accept the behef that they can 
 only live by the consent of the divinely an- 
 ointed, or heavenly appointed of their fellows. 
 When a happy home and an easy existence 
 become his share of this world's gifts, man is 
 too anxious to retain them to consent to any 
 radical departure from the traditions of the 
 fathers, from whom he believes he may have 
 become possessed of those good things. 
 Hence it follows that no radical reformation 
 of economic systems may be expected to 
 originate or be effected by those who possess 
 the wealth of the country. Selfishness, con- 
 tentment, and ignorance — allies in the main- 
 tenance of governmental monopolies — have 
 rarely failed to maintain their supremacy. 
 The most powerful factor for evil in this alli- 
 ance is that of ignorance. It can generally be 
 depended upon as an all-powerful reserve. 
 The *' men who think that they think " are 
 perhaps the most dangerous of the ignorant 
 class. This class is largely composed of well- 
 dressed, well-preserved men, who know some- 
 thing of the art of making money and of 
 polite society, who consider it rather vulgar 
 to be in " politics," whose reading of political 
 literature is restricted to the limits of a very 
 partisan but eminently refined newspaper, the 
 tone of which harmonizes with what they be- 
 lieve to be their own really intelligent politi- 
 
FREE BANKING. 75 
 
 cal convictions, but which more nearly 
 resemble a fetichism. 
 
 To many such men gold and silver are 
 money, whether in the form of bullion or of 
 coin. They believe that, in the limitless ages 
 that have passed, God made those metals that 
 man might have money. Some of this class 
 of men who " thought that they thought " 
 have had a hard rap on their brains in the last 
 twenty years by the odd freaks in which sil- 
 ver has been indulging; and they are becom- 
 ing a little skeptical of the theory that God 
 made silver for man's money; and by this 
 skepticism many minds may become emanci- 
 pated from the fetichism that gold and silver 
 are natural money. 
 
 ' A worthy gentleman, twice elected by a 
 most complimentary vote Governor of one 
 of the Pacific States, wrote, a few years ago, 
 for one of the popular monthlies, an article 
 on money, in which, with apparent serious- 
 ness, he set forth the proposition that the 
 failure of the gold and silver supply began in 
 the third or fourth century of the Christian 
 era, and, continuing until a beneficent provi- 
 dence most mercifully guided Columbus to 
 the New World and new supplies, was the real 
 cause of the decadence of Europe during those 
 centuries. And the discovery of vast deposits 
 of silver and gold in accessible places in 
 
76 FREE BANKING. 
 
 America was, he said, the cause of the rapid 
 intellectual development of Europe during the 
 last four centuries. 
 
 Was that Governor a wise man, or should 
 he be classed among the ignorant allies who so 
 valiantly and, alas! so successfully support gov- 
 ernmental monopolies? Evidently this man 
 had no intelligent conception of the greatness 
 of the Venetian republic, nor knew anything 
 of the mighty commerce and trade promoted 
 by the Bank of Venice without the assistance 
 of an ounce of gold or silver money; promoted 
 simply on the basis of the credit that men 
 might inspire who possess honesty, good busi- 
 ness methods, with other forms of wealth, 
 other than that of gold or silver money; a 
 banking system in which honesty, sobriety, in- 
 dustry, and business capabilities were more 
 desirable securities than gold or silver. 
 
CHAPTER V. 
 
 The use of money became a necessity to 
 man when, in his onward progress, he passed 
 beyond a certain stage of barbarism into the 
 Hmits of civihzation. And in hke manner did 
 textile fabrics. Gold and silver were made 
 use of for the purpose of expediting ex- 
 changes, and became money, or rather that 
 portion of those metals became money that 
 was made use of solely for purposes of ex- 
 pediting exchange. 
 
 But textile fabrics, in certain countries and 
 at certain stages of civilization, were also used 
 for the purpose of expediting exchanges, and 
 that part of such textile fabrics used for that 
 purpose became money. As money they were 
 also commodities. 
 
 Gold, silver, and textile fabrics were all com- 
 modities. The eternal ages cannot change 
 them from their position as commodities; 
 although it is possible that all of them may 
 cease to be used as money, or as the basis of 
 money. They would never have been used 
 as money had they possessed no commodity 
 
 77 
 
78 FREE BANKING. 
 
 value. They would not have been used as 
 money if the use of them as money had de- 
 stroyed their commodity value. Their value 
 as money was only at par with their com- 
 modity value. 
 
 Gold and silver money must be in the future 
 what it has always been in the past — commod- 
 ities only. Money made from those metals or 
 from any other metal is now, always has been, 
 and always will be, considered by commer- 
 cial operators as commodities. Their value is 
 not ascertained by the ciphers stamped upon 
 them, but by weight, and by the assayer. 
 
 By the Bank of England the value of a de- 
 posit of gold sovereigns is not determined by 
 counting, but by weighing. Surely, at the 
 Bank of England the gold sovereign is not 
 considered as money. A like weight of gold 
 bars of the same fineness, and coined gold 
 sovereigns are accepted for exactly the same 
 value by that Bank. The fact that a pound 
 of gold has been coined by the authority of 
 England adds nothing to its bullion value. 
 The notes of the Bank of England might 
 be termed money, but not commodity, if 
 they were not exchangeable at the will 
 of the holder into gold or other commod- 
 ities of equal value. This exchangeability 
 of the notes of the Bank of England makes 
 commodities of them as absolutely as the arti- 
 
FREE BANKING. 79 
 
 cles that they buy are commodities, and so 
 must all other governmental or private bills 
 issued for the purpose of money be classed as 
 commodities. They who exchange cloth for 
 Bank of England notes buy those notes. 
 Money is as much a commodity as is 
 the article it buys. If the dealers in 
 money be put in possession of power to 
 control the issue of money, they possess 
 a power to oppress the users of money that 
 should not be given to them. As long as 
 the money-dealers possess this power — to a 
 limited or an unlimited extent — they create in 
 the popular mind a distrust that any unusual 
 commercial disorder is almost sure to in- 
 tensify. As the basis of the world's money is 
 gold, a commercial disturbance of any great 
 magnitude in any part of the world creates, 
 among all the people of the commercial world, 
 distrust in their ability to exchange the prod- 
 ucts of their labor for an amount of money 
 that will compensate them for the cost of pro- 
 duction. 
 
 This distrust is at once an incentive for 
 those who have money convertible at their 
 option into gold, to hoard their money, which 
 at once creates a scarcity of it and a greater 
 disturbance of business. Gold, being a basis 
 of money that has already been hoarded, is, 
 for the purposes of its daily businiess, practi- 
 
So FREE BANKING. 
 
 cally useless to the commercial world. If the 
 monetary system be inflexible, — and that is 
 practically the case with the world's money at 
 the present time, — those who possess great 
 wealth immediately proceed to conserve their 
 holdings at all times of business disturbances, 
 by drawing their lines of ventures to the safest 
 possible contraction. The first called upon to 
 liquidate their indebtedness are the weaker 
 members of the business men of the country, 
 the ones who really need and should have the 
 greatest support. The money-dealers at such 
 times are critical about the character of their 
 credits, and seek to reduce the limit of that 
 credit to circles where their personal knowl- 
 edge may better serve the safety of their invest- 
 ments. Money-dealers, as a class, live in the 
 great money business-centers in the great 
 cities; and it is but natural that they should 
 limit their lines of credit on occasions of com- 
 mercial disturbances to the vicinity of their 
 home city. The weaker communities are as 
 much depressed and disturbed by the business 
 disturbance that was the primary cause of the 
 distrust, as the wealthy communities are, and, 
 in addition to this general disturbance, a de- 
 mand is made upon them to pay at once, or at 
 short time, obligations that they would not 
 have been called upon to pay, and were not ex- 
 pected to pay, until a much later date; but 
 
FREE BANKING. 8l 
 
 would have had simply to pay interest 
 thereon. 
 
 This power of the money-lender, without 
 any sordid or selfish motive on the part of 
 but few of them, — strictly -following a neces- 
 sity of business only, or what they are justified 
 in esteeming a business necessity, — has had 
 more to do, during the past fifty years, with 
 building up great cities and with prostrating 
 small communities than any other one eco- 
 nomic factor has had. 
 
 When a government, by the exercise of the 
 natural rights of its people, institutes a mone- 
 tary system that prevents any substitute for 
 money, it institutes a monetary system that is 
 absolutely inflexible. If there is any one fea- 
 ture of the money question that bankers, 
 financiers, and business men do agree upon, 
 it is that a currency system to be perfect 
 must provide for a flexible currency; a cur- 
 rency that, in regard to quantity, will adjust 
 itself to the requirements of the various com- 
 munities of that country. 
 
 Many of our serious statesmen, who have 
 been chosen by their fellow-men to legislate 
 for them in Congress, have been enervating 
 their mental forces by attempting to formulate 
 a monetary system by which the Government 
 should supply sufficiently large paper issues of 
 money to preclude the possibility of any in- 
 
82 FREE BANKING. 
 
 dustrial section of the country from ever being 
 without a sufficient supply of currency. But 
 so long as they confine their efforts to a sys- 
 tem that provides for confining the issuing of 
 paper money exclusively to the Government, 
 or to government control, they seek after the 
 unattainable. It would be fully as wise, if not 
 wiser, were they to devote their mental forces 
 to devise some plan by w^hich the Gov- 
 ernment could control the output of wheat, 
 corn, cotton, and other commodities quite as 
 important in commercial and industrial enter- 
 prises as money. They would succeed in es- 
 tablishing a more perfect plan of promoting 
 the happiness of the whole people, if they 
 could formulate laws that would compel every 
 man to do his share of the labor of producing 
 those commodities necessary to the comfort 
 and happiness of the people of our country, 
 and secure to each man a just reward for his 
 labor. 
 
 To provide a satisfactory currency exclu- 
 sively by governmental issue, that will ad- 
 just itself to the requirement of all parts of the 
 country at all times, is far more difficult than 
 that of controlling the productions of com- 
 modities or to control the energy of the coun- 
 try. No sane man would propose that a 
 government should control energy or the pro- 
 duction of commodities, and it is difficult to 
 
FREE BANKING. 83 
 
 determine why any sane man should advocate 
 the control, by the Government, of the volume 
 of currency to be used. The function of gov- 
 ernment should be limited to coining a stand- 
 ard by which exchange may be expedited, to 
 fix a standard of weight by which certain com- 
 modities may expeditiously be exchanged for 
 others, and to establish a standard of meas- 
 ures for the convenience of trading in such 
 commodities that custom and convenience 
 may demand. 
 
 Why should the Government control the 
 quality and quantity of currency-issue any 
 more than it should control the quality and 
 quantity of cotton produced? Men may be 
 deceived into buying worthless cotton as 
 readily as they may be deceived into buying 
 worthless currency. They honestly get pos- 
 session of each only by purchase or produc- 
 tion. Education and the police powers of 
 government, rightly directed, are capable of 
 preventing serious disasters from afflicting the 
 public from deceit, either from the owners 
 of worthless currency or worthless cotton. 
 
 Three great political parties of the United 
 States held conventions in 1896, to formulate 
 political principles and to nominate candidates 
 for President and Vice President. The first 
 convention to assemble, that of the Republi- 
 can party, declared, " All our silver and paper 
 
84 FREE BANKING. 
 
 money must be maintained at parity with gold, 
 and we favor all measures designed to main- 
 tain inviolable the obligations of the United 
 States and all our money, whether coin or 
 paper money, at the present standard — the 
 standard of the most enlightened nations of 
 the world." 
 
 This was a prettily worded resolution, and 
 was quite as sensible as another would have 
 been that had been made to read that, *' All 
 the wheat, corn, and oats grown in the United 
 States must be equal in quality to the best 
 grown anywhere else in the world, and we 
 pledge the solemn obligations of the United 
 States that no man shall be permitted to grow, 
 buy, or sell, a bushel of wheat, corn, or oats 
 that is not equal in quality to the best of these 
 grains produced anywhere in the world." 
 
 The Democratic convention, which met a 
 month later in Chicago, *' demanded free and 
 unlimited coinage of gold and silver at a ratio 
 of I to i6." This might have been a proper 
 demand in 1872, but in 1896, if such a demand 
 could have been enforced, owing to the 
 changed conditions of trade in the world, its 
 enforcement would have so seriously disturbed 
 the industries of the country that it is beyond 
 man to calculate the calamity that might have 
 resulted as a consequence. That the bullion 
 value of silver would have advanced under the 
 
FREE BANKING. 85 
 
 action of free coinage of silver by the United 
 States, scarcely admits of a doubt, and it is 
 equally certain that the purchasing power of 
 gold would have been depreciated; but that 
 they would have finally settled to a point 
 where the ratio of the two metals would have 
 been i to 16, can scarcely be considered even 
 as a possibility. The result would have been 
 that we would have had two standards: that 
 of gold, which would be the standard of meas- 
 uring the value of all commodities we import, 
 and that of silver, for measuring the values of 
 all commodities we produce. 
 
 Labor's reward, after a period of readjust- 
 ment, would probably not be much affected 
 by a double standard. The wages of the 
 laborer under either system would purchase 
 like quantities of commodities. Labor gets 
 no more or less commodities than labor 
 can command. The wages of labor is ulti- 
 mately labor's products. Labor that com- 
 mands the amount of labor's products that 
 an ounce of gold will buy, will not be con- 
 tented with only the amount of labor's prod- 
 ucts that sixteen ounces of silver will buy. 
 
 A change from the gold to the silver stand- 
 ard in the United States wAW not Mexicanize 
 the American laborer. It is well known that 
 employers of labor do not reward their em- 
 ployees from a sense of gratitude or from 
 
86 FREE BANKING. 
 
 human sympathy, but simply on the purely 
 business principle of the cheapest markets. 
 They will pay as little as they are compelled 
 to, and they will employ labor only so long 
 as they believe it profitable. 
 
 Under the system of human justice prevail- 
 ing throughout the civilized world, members 
 of what is known as the laboring class are 
 compelled to a very great extent to accept 
 those wages that will give them a barely 
 comfortable existence, because of the great 
 competition among them for the privilege of 
 living. 
 
 The laborers of this country, especially in 
 the agrarian districts, are now about in that 
 condition, that they cannot take less wages 
 and live. They still have remaining some un- 
 monopolized opportunities. They can fish in 
 the streams, hunt on the marshes and on the 
 hills, and little patches of land are generally 
 accessible to them. And when wages fall to 
 a point where by fishing, hunting, and hoeing 
 a man can make a more comfortable exist- 
 ence than by wage-earning in factories, thou- 
 sands avail themselves of the few remaining 
 free opportunities to work for themselves. 
 Labor supply, then, becomes scarce, and em- 
 ployers of labor are compelled to pay increased 
 wages. 
 
 In countries where every opportunity to live 
 
FREE BANKING. 87 
 
 is denied to man, save by special privilege from 
 a few individuals, men can be compelled to 
 labor their weary lives through for sufficient 
 rice and bread for maintaining a miserable ex- 
 istence; but not so, yet, in the United States, 
 nor even in Mexico. Nor would wages in 
 Mexico be so low as they are if man's necessi- 
 ties there were greater. If there were less 
 sun and fewer bananas, and more frost and 
 grass in Mexico, wages there would be higher 
 per capita. Measured by the work per- 
 formed, there are but few places in the world 
 where labor is so well rewarded as in Mexico. 
 
 The exact meaning of the language used in 
 the plank of the Chicago platform of 1896 
 that relates to the currency bills was not very 
 clear, excepting so far as it related to the 
 national bank system. There was no mistak- 
 ing that the Democratic party, of which the 
 Chicago convention was the oracle, demanded 
 that " the right to issue paper money should 
 not be delegated by the Government of the 
 United States to corporations or to individu- 
 als." It did not demand that paper money 
 should be issued by the Government, nor did 
 it advocate nor oppose the giving to corpora- 
 tions or to individuals the right to issue bills 
 that might be used for currency. 
 
 But it did most emphatically protest against 
 the Government conferring legal-tender privi- 
 
88 FREE BANKING. 
 
 leges upon any currency not issued by the 
 Government. 
 
 It is a fair inference, however, that the 
 Chicago platform of 1896 advocated the issu- 
 ing, by the Government, of paper money 
 armed with legal-tender powers and redeem- 
 able in coin, either of gold or silver, at the 
 option of the Government. 
 
 Few men will dispute the correctness of the 
 theory that the Government should not con- 
 fer legal-tender powers upon currency issued 
 otherwise than by the Government itself. The 
 only essential difference between the R^epubli- 
 can and the Chicago platform, so far as they 
 relate to the currency question, is that the 
 Republicans demanded that all paper money 
 issued by the Government shall be redeemable 
 in gold, while the Chicago platform demanded 
 that such notes must be redeemed in coin. 
 
 It is evident that the majority of the Ameri- 
 can voters believed that, when the Govern- 
 ment opened its mints to the free coinage of 
 silver, silver would displace gold as the basis 
 of the American paper dollar, and that the dol- 
 lar bill would be redeemable in a coin the gold 
 value of which would be considerably less than 
 that of a gold dollar. And they also believed 
 that such was the true meaning of the cur- 
 rency plank of the Chicago platform. 
 
 It is equally evident, on the other hand, 
 
FREE BANKING. 89 
 
 that the majority of voters believed that the 
 election of Mr. McKinley insured the re- 
 demption in gold of every bill issued or 
 guaranteed by the Government. 
 
 The Republican party is pledged to continue 
 the Government in the banking business. 
 Whether by bond-selling or increased taxa- 
 tion, it is pledged to maintain a sufficient 
 amount of gold in the Treasury to maintain 
 the public confidence. This is embodied in 
 the declaration that, " All our silver and paper 
 money must be maintained at parity with 
 gold." It practically stamps silver as a base 
 metal, and the silver dollar as a fiat dollar. 
 
 Would it not have been greater wisdom 
 had the Republican party declared that silver 
 was too valuable a metal to be used as tokens 
 for money? that paper was less expensive and 
 more convenient for that purpose? that good 
 business principles demand that the silver dol- 
 lar, together with the silver bullion not neces- 
 sary for subsidiary currency now in the 
 Treasury of the United States, should be sold 
 in the best attainable markets? and paper 
 money, to the value realized from such sales 
 of silver, should be issued instead? or, at least, 
 such amount of it as the business of the coun- 
 try demanded? This would have been a more 
 logical declaration to make. 
 
 If the silver dollar is a fiat dollar, and. 
 
90 FREE BANKING. 
 
 surely, under the present monetary system of 
 the United States, no one will seriously claim 
 that it is not, why should the Government pay 
 fifty cents' worth of gold for a piece of silver 
 upon which to stamp " one dollar," when for 
 that amount of gold enough paper may be 
 bought to make, perhaps, five hundred one- 
 dollar notes. Certainly no one who uses 
 money in the United States will give more 
 commodities or more labor for a silver dollar 
 than he would give for a paper dollar. Out- 
 side of the United States, among civilized 
 people, the paper dollar will command the 
 greater price, because it will cost less to get it 
 back to its highest market. 
 
 The National Democracy, that assembled 
 in convention at Indianapolis, declared, with 
 an emphasis that cannot be misunder- 
 stood, against a continuance of the '* pres- 
 ent patchwork system " of national paper 
 currency, and maintained the necessity of 
 such intelligent currency reforms as will 
 confine the Government to its legitimate 
 functions, completely separate it from bank- 
 ing business, *' and afford to all sections 
 of our country a uniform, safe, and elastic cur- 
 rency under governmental supervision, meas- 
 ured in volume by the needs of the country." 
 
 That this plank of the Indianapolis plat- 
 form clearly stated the necessities of currency 
 
FREE BANKING. 91 
 
 reform, cannot be disputed. That it acknowl- 
 edged the urgent necessity of an elastic cur- 
 rency is apparent also. But, unfortunately, 
 the way to accomplish this necessary reform, 
 and thus secure the elastic currency acknowl- 
 edged to be a necessity, is but opaquely inti- 
 mated. The Government supervisors capable 
 of measuring the needs for currency of the 
 various parts of the United States and the ex- 
 tent of the volume best suited to such needs, 
 as well as the methods of getting the currency 
 to them, are angels that have not yet been 
 sent to earth. And if the people are com- 
 pelled to await their coming before such 
 monetary reform can be instituted, it is use- 
 less to waste further time and thought on the 
 subject. 
 
 The Government should retire from bank- 
 ing business entirely. So long as it issues 
 paper money, or controls its issue, or guaran- 
 tees the face value of bills or of anything else 
 issued as a substitute for money, it remains in 
 the banking business. To explain how the 
 Government can separate itself entirely from 
 the banking business, yet supervise the bank- 
 ing business at one and the same time, must 
 be left to those gentlemen wdio are responsible 
 for that Indianapolis currency plank. The 
 Government's business with the money of the 
 country is to stamp a measure of value on 
 
92 FREE BANKING. 
 
 " coin money." There its obligation to the 
 people ends. To do more than that for many 
 years of the country's history has generally 
 been believed to be an usurpation of power 
 not delegated to it by the States. The Gov- 
 ernment should demand from its citizens that 
 taxes should be paid with the standard. And 
 it, too, should pay its debts with the standard 
 coins and thus let the citizens be free, each 
 State, each community ascertaining the means 
 of expediting its business, and in such a man- 
 ner as it is believed is best suited to promote 
 its greatest interests. 
 
 The impetus that the possessors of good 
 character, correct business methods, and 
 wealth may give to industrial develop- 
 ments of communities has emphatically been 
 shown in an illustrious example — the Bank of 
 Venice. For upward of six hundred years 
 that bank, notwithstanding revolutions, the 
 wreck of empires, and the unceasing geo- 
 graphical changes, practically sustained the 
 enormous commerce of the Adriatic and the 
 Black seas, and their thousands of miles of 
 tributary rivers — a most gigantic force in the 
 intellectual development of Europe; a force, 
 too, that destroyed the charnel house of 
 free thought that Roman jurisprudence and 
 religion had for so many centuries maintained. 
 It was this commerce, promoted by the Bank 
 
FREE BANKING. 93 
 
 of Venice, that made a Galileo and a Colum- 
 bus possibilities in Rome. A Church that had 
 accepted the belief that the earth was a flat 
 disk, surrounded by impassable walls and held 
 in position by four enormous elephants, — 
 without troubling itself to explain what power 
 sustained the elephants, — and a judiciary that 
 sanctioned the Church's prosecution of Hypa- 
 tia because she taught that such a proposition 
 was absurd, was not likely to develop scien- 
 tists and navigators. It was intercourse with 
 people who had read the stars and studied 
 natural developments of animal and plant life, 
 and wanted to know some reason for the cause 
 that produced the effects other than that it 
 was the will of an unknown personality. 
 The fact that the vicar, in Rome, of that un- 
 known personality was often a very bad man, 
 made progressive Romans susceptible stu- 
 tlents of the Alexandrian schools. Com- 
 merce on those seas and on their tributary 
 rivers was, to the Middle Ages, what the 
 trackless waters of the ocean are to commerce 
 of the world to-day. 
 
 The Bank of Venice did not deal in money; 
 did not receive it on deposit; did not pay it out 
 on drafts; it was simply a clearing house of 
 commodities and credits. Of course the 
 measure of values by which exchange of com- 
 modities was expedited was gold and silver. 
 
94 FREE BANKING. 
 
 Men well known to the management of the 
 Bank for their business ability, integrity, and 
 worth, lent to the bank their indorsement to 
 a limited amount, and on the basis of such 
 loans the Bank issued trading certificates or 
 letters of credit, so much more valuable to the 
 commercial venturers of that period of politi- 
 cal disturbance than was either gold or silver, 
 that users of these certificates were frequently 
 willing to pay a premium above the value of 
 gold for the privilege; and, at times, upward 
 of thirty per cent, was paid as premiums. The 
 system of the Bank of Venice was simply that 
 of bookkeeping. The Bank continued to do 
 business — a mighty factor in promoting com- 
 mercial and industrial developments in 
 Venice — until that ruthless destroyer of indus- 
 trial development, the great Napoleon, over- 
 threw it by war and devastation. 
 
 The history of the building of a market 
 house on the little island of Guernsey is a 
 good illustration of what can be done without 
 money of gold or silver — or any form of 
 money the soundness of which was guaranteed 
 by a great government. One of the towns of 
 that island felt the need of a market house, 
 but it could not raise the money necessary to 
 build it. It was ascertained that there was an 
 abundance of material, enough skilled and un- 
 skilled artisans accessible that money could 
 
FREE BANKINCr--^y, ..nXi^iff^^^S 
 
 readily command. The governor of the 
 island, Daniel DeLisle Brock, determined 
 that the market house should be built; that the 
 skill and material were accessible; money was 
 not a necessity. He issued five thousand one- 
 pound notes. To inspire confidence in own- 
 ers of the material needed for the building, 
 and in the artisans necessary for its erection, 
 he made those notes legal tenders on the 
 island of Guernsey. But making them legal 
 tenders did not inspire as much confidence in 
 the value of those notes as was inspired by 
 the character of the people who issued them. 
 Every man who received those notes believed 
 that they would be redeemed in the best and 
 most precious money of England, or its 
 equivalent in other commodities. 
 
 Legal- tender notes are by no means always 
 accepted at their face value in standard 
 money, save by those who are compelled by 
 law so to accept. And by the nation that 
 issues them they are maintained at par with 
 the standard only at great cost. Competent 
 financiers maintain, with great force, that it 
 has cost the United States upward of two 
 billions of dollars to maintain the greenback 
 currency at par with gold. 
 
 The community of St. Peters accepted these 
 notes issued by Governor Brock, it being 
 clearly understood that the notes were only to 
 
96 FREE BANKING. 
 
 be issued to pay for the construction of the 
 market house; the notes were to be returned 
 to the governor for rentals of that house, and 
 when returned were not to be reissued save 
 for repairs or work upon the market house. 
 And as these notes from time to time accumu- 
 lated, beyond the amount necessary for con- 
 struction and repairs to the house, they were 
 destroyed by the governor. In the course of 
 a very few years all these notes were collected 
 by Governor Brock; and by him, in the pres- 
 ence of the assembled people of the town, they 
 were canceled by flame. There in a remote 
 island of England, by a people in affinity more 
 French than English, a most excellent market 
 house was built, which for many years served 
 as a useful building and a source of income to 
 the people of St. Peters; and without a coin 
 of the Government or a note of governmental 
 creation. What was done in the town of St. 
 Peters on the Isle of Guernsey may be done 
 anywhere else on earth, when the material and 
 the labor are accessible, without the aid of 
 anything that the majority of sound-money 
 economists term money. 
 
 To say it is possible that Governor Brock's 
 system may be useful in small communities, 
 but not in great nations, is to advance a 
 convincing argument against extending to 
 the central government the control of 
 
FREE BANKING. 97 
 
 monetary systems. If a great government 
 cannot insure as much happiness and as com- 
 fortable an existence to its people as a gov- 
 ernment of a small community can, there is 
 then no questioning of the fact that a great 
 government is to its people an affliction rather 
 than a blessing, and that any effort by anyone 
 to extend the boundaries of a nation is in the 
 direction of a further oppression of the people 
 of that nation. 
 
 Some such thought undoubtedly pervaded 
 the minds of our Revolutionary fathers. The 
 fear of centralizing the powers of the Govern- 
 ment seems to have possessed the minds of all 
 who had fought for liberty during the period 
 between the acknowledgment of American 
 Independence and the adoption of the Federal 
 Constitution. And, apparently, it was a great 
 relief tO' all when plans of the Government 
 were adopted that gave to the Central Govern- 
 ment the dignity of a great nation, with powers 
 to maintain that dignity before the world, 
 yet, at the same time, giving to each State of 
 the Union the privilege of self-government. 
 United for protection against external aggres- 
 sion, they divided for internal progress. 
 Hence a community of free States, throughout 
 which freedom to trade was the equal right 
 of all its citizens, and where personal privi- 
 leges and individual freedom were granted to 
 
9^ FREE BANKING. 
 
 or taken from them by the authority of the 
 State only; that is, only to the very limited 
 extent to which the authority of the United 
 States had been restricted by the States upon 
 the adoption of the Federal Constitution. 
 
 In the United States the man who robs can- 
 not be punished by the laws of the United 
 States, save in the few cases where the power 
 to punish criminals has been conceded by the 
 States to the general Government. Man is 
 practically protected in his property and per- 
 sonal rights by the laws of the States, and the 
 national Government, without usurpation of 
 authority, cannot punish. The Federal Gov- 
 ernment can punish for illicit distilling of 
 spirits, for smuggling, for counterfeiting 
 National Government, without usurpation of 
 such acts as are unlavv^ful under Federal 
 statutes, provided those Federal statutes do 
 not usurp the privilege or right of the States. 
 But there the Federal powers to punish 
 crimes in the United States end. 
 
 Has this feature of the Federal Government 
 been its weakness or its strength during the 
 past eleven decades of its existence? 
 
 Is there a student of politics and of history 
 in all the wdde world, who has a reputation 
 worth considering, who will have the hardi- 
 hood to wTite above his signature the 
 declaration that he believes the United States 
 
FREE BANKING. 99 
 
 would have been more progressive and have 
 grown to greater eminence in arts, science, 
 justice, and power, had a monarchy — no mat- 
 ter what kind, from the autocracy of Russia 
 to the freedom of England — been erected here 
 in 1788 instead of a Republic of republics? 
 
 There is no reason to doubt that men can 
 be made happier by self-government than by 
 dictatorial government. There is no doubt 
 but that climatic conditions afTect man's natu- 
 ral tastes and sensibilities; there is no doubt 
 that a system of government may be perfectly 
 acceptable to New York and much esteemed 
 there, and believed to be nearly or quite a per- 
 fect system, which in other parts of the coun- 
 try would be perfectly worthless, while in still 
 other parts it would be even harmful. 
 
 These are plain common-sense propositions 
 that demand the thoughtful attention of the 
 American people; and until they are given 
 serious attention there can be no greatly bene- 
 ficial reforms in the monetary system of the 
 country. Bimetallism would practically aid 
 monetary reform, if it could be successfully 
 accomplished. But it could be successfully 
 accomplished only by the united effort of 
 the commercial nations of the world. Gov- 
 ernment issue of all the paper money per- 
 mitted to be used in the country would not be 
 a reform; it would be a decided retrogression. 
 
lOO FREE BANKING. 
 
 No kind of paper money can be made a legal 
 tender for debts and be of advantage to the 
 people of the country that issues it. It will, 
 however, prove to be of immense advantage 
 to some people of those countries who deal in 
 money. Fiat money is fruitful money to the 
 money-dealers and money-changers. 
 
CHAPTER VI. 
 
 It is a serious study to determine what kind 
 of currency a sound financial policy demands 
 for business purposes; to make such currency 
 the best attainable mpney possible, or, in other 
 words, to make it not only sound currency 
 but one also readily available for currency pur- 
 poses in all communities equitably entitled to 
 it. That there has never been a very clear 
 definition of what the term *' sound currency " 
 is intended to imply, is much to be regretted. 
 If it is to be read as meaning a currency to be 
 used only for the payment of interest and 
 taxes, the soundest currency, then, would un- 
 doubtedly be the currency that could be most 
 readily disposed of in exchange for com- 
 modities in any of the markets of the world. 
 It is, therefore, unnecessary to say that such a 
 currency should be made of gold. 
 
 Inasmuch as the commercial industry and 
 enterprise of the British kingdom have best 
 acquainted the commercial world with the 
 gold sovereign of England, that coin would 
 perhaps suit best for an international or an all- 
 round trading currency. But to use the British 
 gold currency in the United States would be a 
 
102 FREE BANKING. 
 
 source of much inconvenience, and, if used 
 here, doubtless would in many cases be to the 
 disadvantage of many ill-informed people. 
 
 If this proposition be correct, it follows, 
 then, that no gold coin or any coin whatever 
 can be the best currency, even if it be sound 
 currency like the British sovereign or the 
 American gold dollar. All there is of value 
 in coin-money, not possessed by any other 
 kind of money, is the bullion value of such 
 coin as a measure. 
 
 To' enter into an argument to prove this 
 proposition is unnecessary. The commerce of 
 the world proves it. The ratio of coin-pay- 
 ment to the total payment of commercial and 
 State obligations is so infinitesimally small it 
 is scarcely to be represented in figures. So 
 long as the great trading nations of the world 
 use gold bullion as a measure to efifect ex- 
 changes and settle balances, there can be no 
 currency sounder than a currency of gold 
 coins of fixed and reliable weight and fineness. 
 Such coins are rarely used for currency; they 
 are used rather as a measure of value. 
 
 Even in France, where small silver coins are 
 so generally used by the people, paper cur- 
 rency circulates to many times the value of 
 the coin in use. Paper is used there almost 
 exclusively for currency, except where frac- 
 tional currency is necessary; even the sub- 
 
FREE BANKING. 103 
 
 sidiary silver coins are banked away by the 
 thrifty French peasantry for safe-keeping. It 
 is true that France in her financial system 
 makes use of nearly or quite $1,200,000,000 
 worth of gold and silver coin. But $750,000,- 
 000 worth of paper money furnishes the work- 
 ing medium of exchange for her tradesmen; 
 and at least three-quarters of her coin is held 
 in reserve for what is believed to be necessary 
 for the maintenance of a sound business and 
 financial system. It is not used to perform 
 the functions of money any more than gold 
 and silver bars, the weight and fineness of 
 which are vouched for by the Government, 
 would perform such functions. 
 
 The United States held in its vaults, Janu- 
 ary I, 1895, nearly $650,000,000 in gold and 
 silver coins and bullion ; and nearly $500,000,- 
 000 more was held by banking institutions and 
 individuals in safe-deposit vaults. The value 
 of coins circulating as currency among the 
 people certainly would not be any larger than 
 that represented by the silver dollars and sub- 
 sidiary coins — nearly all silver — reported by 
 the Treasury Department to have been taken 
 out of the Mint, the coin value of which was 
 stated to have been $120,561,176. The 
 paper money in circulation at the same time 
 was also reported to have been upward of 
 $1,000,000,000. 
 
104 FREE BANKING. 
 
 There can be no disputing the fact that all 
 of the United States silver money is worth, as 
 money, nearly or quite double the amount it is 
 worth as bullion. Fifty per cent, of its money 
 value is simply the result of a fiat of the Gov- 
 ernment; and therefore it should be properly 
 classed with paper money — of a better grade, 
 perhaps. Both silver and paper money are 
 freely accepted by the people of the United 
 States as money, owing to the faith of the peo- 
 ple in the intention and ability of the maker of 
 such money to keep its face value in parity 
 with the soundest money of the world — gold. 
 The assurance of its weight and fineness is 
 stamped upon it by a Government command- 
 ing the confidence of the commercial world; 
 and, so stamped, without any regard to a ratio 
 between gold and silver bullion, it is just such 
 stamping as England puts upon her gold 
 money. That the legal-tender quality of this 
 money would force the people to take it un- 
 willingly, is true. 
 
 Great Britain, to keep her gold coin in the 
 country, does not permit an issuance, in Eng- 
 land proper, of paper bills of less value than 
 one-pound denomination. The Bank of 
 England issues none for less than five 
 pounds. Consequently, in England's home 
 business, a far greater proportion of coined 
 money to paper is issued than elsewhere 
 
FREE BANKING. 105 
 
 among the great commercial nations of the 
 world. This, however, does not prove that the 
 masses in England are made richer thereby. 
 The compactness of the English people doubt- 
 less enables their business to be conducted 
 with less currency than other nations of Hke 
 business volume, whose people are scattered 
 over a many-times greater area. England re- 
 quires but $600,000,000 worth of coin and 
 bills to transact all her enormous business, 
 while France needs three times that amount. 
 Germany uses nearly $1,500,000,000 worth of 
 currency in various forms, and the United 
 States has more than $2,000,000,000, and, from 
 intelHgent sources from all parts of the coun- 
 try, the demand upcm the Government is made 
 for more. 
 
 This demand for more currency invites the 
 most serious attention of every American citi- 
 zen. This request does not come from silver- 
 producing States alone, nor can it be lightly 
 pushed aside as we would push the demands of 
 thoughtless children, consoling ourselves with 
 the belief that we are wiser than they, and 
 know better their needs. When such States 
 as Kansas request, in unlimited quantities, 
 free coinage of silver, we cannot, as wise men, 
 deny that request on the assumption that her 
 population is too ignorant to be permitted to 
 influence financial legislation. Kansas was 
 
io6 FREE BANKING. 
 
 settled by the best blood of New England. 
 Her schoolhouses and churches were built 
 while yet the floor-beams of her homesteads 
 were being laid. A newspaper was an estab- 
 lished fact before the teacher and the preacher 
 had been assigned to duty there. Such was 
 the method of settling Kansas, and in her 
 moral and intellectual development she has 
 taken no steps backward. 
 
 In the demand made by Kansas and other 
 States where there can be no such influence as 
 silver mines and silver-mine boomers to influ- 
 ence the votes of the people, it is plainly to be 
 seen that there is in the currency system an 
 inequality, an injustice, and a disturbing in- 
 fluence great enough to fill the minds of the 
 leading men of highly intelligent communi- 
 ties with a desire for some radical change in 
 the money system. The gold coins, they 
 know by experience, cannot keep in circula- 
 tion, and by sad experience they also know 
 that the paper money, circulating upon the 
 faith in the Government and upon a gold basis, 
 is also, on the least disturbance in the money 
 market, taken from them to the great money 
 centers. When needed most, it is to be had 
 only by the weaker communities making 
 business-destroying sacrifices of their com- 
 modities. 
 
 It is the hope, possibly, that a money made 
 
FREE BANKING. 107 
 
 of or based upon silver, which would not be so 
 easily attracted from them, that impelled them 
 so urgently to demand unlimited silver and 
 free coinage. That silver money would act 
 dififerently with them than gold acts now is 
 not probable. It is not gold or silver that they 
 so much demand; it is some form of currency 
 that will expedite business transactions. They 
 know the present system is dangerously faulty ; 
 they believe, in fact, it could not be worse; 
 that any change would be an improvement. 
 Upon free coinage of silver they compromised, 
 because it was to them apparently a possibility, 
 and was a radical measure. Few people, how- 
 ever studious, who have not had intimate rela- 
 tions with the country districts of the United 
 States, can begin to realize how great is the 
 volume of business done in many country dis- 
 tricts of the United States simply by barter. 
 
 This demand for money, made by so many 
 of the States, is not altogether the demand of 
 ignorance. Governmental policies have al- 
 ways been more or less speculative, and that 
 there is much of the speculative in the theory 
 of free coinage of silver is indeed true. The 
 business men of the South and West want a 
 more convenient medium of exchange than 
 they now have. The national banking sys- 
 tem has failed to provide currency, with 
 equity and justice, to the entire people. 
 
io8 FREE BANKING. 
 
 Rather, indeed, has that system enabled 
 the banking institutions of the great com- 
 mercial centers to control at times the 
 volume of circulation of currency notes. In 
 most cases, it is true, they have done this for 
 their own protection, or rather for the protec- 
 tion of the industries that their particular 
 banking system largely sustained. On such 
 occasions they have oppressed the commercial 
 industries of other centers — in many cases to 
 the extent even of destroying them. 
 
 The people of the South and West have 
 for years in their business relations been sub- 
 jected to conditions that have made it exceed- 
 ingly difftcult for them to transact business. 
 Those having the strongest — financially con- 
 sidered — Eastern connection possessed ad- 
 vantages. The weaker sections, however, 
 could not transact their usual business with 
 that freedom from friction that in the more 
 favored parts of the country was usual, owing 
 to the scarcity of currency notes. Small 
 checks, common in the West, particularly with 
 tradesmen, were used frequently as currency, 
 which after many months came back to the 
 bank on which they were drawn, soiled and 
 covered with indorsements. No other proof 
 is needed to show that more currency was re- 
 quired in such communities, and that a cur- 
 rency as sound as the gold dollar was not the 
 
FREE BANKING. 109 
 
 best currency for expediting the business of 
 such communities. It is absurd to say that, 
 if the people of the West have commodities 
 worth the amount of currency they desire, 
 they can demand the currency bills. Such is 
 not the fact. In every case where his checks 
 were used for currency, not only did the maker 
 possess the commodities to the full extent of 
 the face value of that check, but he had also 
 put those commodities into the most conven- 
 ient form for exchange into currency bills. 
 By the usual process, he had established a 
 credit at his bank by exchanging his com- 
 modities for that bank's indorsement or credit. 
 But experience had taught him that such 
 credit would permit him to use, in a more or 
 less cumbersome way, the bank's credit and 
 his own in the character of a check to liqui- 
 date his own indebtedness to the extent of the 
 credit established, but would not give him 
 circulating bills. 
 
 This proposition should be clearly under- 
 stood. He established a credit at that bank 
 by making a deposit that was accepted 
 by the management of the bank as equal 
 in value to gold dollars — to the extent 
 represented on the book of the bank's 
 deposits. If the currency system in use in our 
 country had been the best, the man who de- 
 posited his funds in the national bank, " Bar- 
 
no FREE BANKING. 
 
 ren Lands," Idaho, should have no more diffi- 
 culty to draw out his money in greenbacks or 
 national-bank bills, or even gold, than has the 
 merchant who banks in the Chemical Bank of 
 New York. So long as such bills may more 
 readily be secured from the banks of New 
 York than from the banks of St. Paul, then 
 New York has an advantage over St. Paul 
 sufficient to justify the people of St. Paul in 
 demanding of the Government a different 
 condition. This is true so long as the Gov- 
 ernment assumes parental control over the 
 banking interests of the country. 
 
 To dwell a little while on the present sys- 
 tem of barter prevailing in the South and 
 West may not be a waste of time. The coun- 
 try merchants in the Southern and Western 
 States are practically the people's bankers. 
 But the people in those sections of the country 
 make deposits with their bankers, not in 
 money, but in commodities, and receive pay- 
 ment, not in money, but in commodities. The 
 condition of such a banking system is that the 
 merchant will receive one kind of commodity 
 on deposit, and will pay out in the same or in 
 another kind of commodity, but make pay- 
 ments in commodities only. In many com- 
 munities throughout the South and West 
 money is almost an unknown article. No one 
 of sense will claim that such a condition 
 
FREE BANKING. m 
 
 represents a healthy business in those com- 
 munities. 
 
 The farmer takes his eggs, butter, corn, 
 wheat, poultry, etc., to the merchant. In 
 almost all sections of the country, eggs are 
 readily accepted, and at all times, by the mer- 
 chant, at prices fixed from day to day by him ; 
 but with nearly all other commodities the pur- 
 chaser of them must consult the merchant be- 
 fore bringing them to him for deposit or sale, 
 as it may not be convenient for him to take 
 the commodities at that particular time. 
 This, of itself, is a great inconvenience to the 
 producer. Nor can the merchant, in safety to 
 his own interest, do otherwise — else doubtless 
 he would; for it is to the interest of the mer- 
 chant to be popular; and self-interest would 
 prompt him to accept all commodities offered 
 by the producer at an agreed price, and at any 
 time, were not such commodities presented to 
 him as would make it unsafe for him to do 
 so. Eggs furnish to a very great extent a sub- 
 sidiary currency to the country people. This 
 the following incidents show: 
 
 On one occasion, in a country store in 
 Maryland, a lad came and ordered a dozen 
 grains of quinine, in payment of which he 
 handed up to the clerk two eggs. It seemed 
 to be no unusual transaction either to the 
 boy or the druggist. On another occasion, in 
 
112 FREE BANKING. 
 
 the same State, a New York lad, temporarily 
 on a visit to his uncle, a storekeeper, was be- 
 hind the counter of that uncle's store when an 
 old colored woman passed up to him an ^'g^ 
 with the request to give her '' a roll of pins 
 and de balance in snuflf." 
 
 When trade-conditions in those country dis- 
 tricts are so good that the country merchants 
 are always ready to buy any of the farmer's 
 products, the farmer frequently establishes a 
 credit at the merchant's. His deposits of 
 commodities may exceed his withdrawals of 
 commodities, perhaps, by several hundred 
 dollars' worth, but he -ii close the account 
 only by withdrawing commodities to the value 
 of the balance. In such cases the country 
 producer pays his own indebtedness by giv- 
 ing orders to those whom he wishes to pay 
 and who will receive such orders on the mer- 
 chants. But it is always understood that 
 such orders or drafts are to paid in com- 
 modities. The merchant sends his eggs, 
 poultry, and grain to the cities, to be sold on 
 his account. In return for his products, 
 checks are sent, which go directly or indirectly 
 to the city merchant from whom he makes 
 his purchases. In many such communities a 
 country merchant who sells $50,000 worth of 
 goods in a year has often not handled, in that 
 time, $5000 worth of money. Indeed, there 
 
FREE BANKING. 113 
 
 are communities of producers who have pro- 
 duced $100,000 worth of commodities for sale, 
 of which $99,000 has been bartered. It is in 
 such communities, and where such conditions 
 exist, that free-coinage advocates are most 
 numerous, and where converts to such a 
 speculative theory of finances are easily made. 
 It is in such communities that '' Coin's Finan- 
 cial School " found attentive pupils. 
 
 If we may hope to turn such communities 
 from the worship of the silver idol, we must 
 offer them a currency that their commodities 
 will command, and that the bank there will 
 be abundantly able, on all conditions of hon- 
 est and healthy business, to supply to their 
 depositors; the dollar, in such communities, 
 being equal to the best dollar of the country, 
 and readily exchangeable on demand for the 
 best dollar in the world, namely, a gold dollar 
 of the United States. But it need not be of 
 such a character that a hundred miles away it 
 will be worth as much as it is in the community 
 in which the bank that issued it is situated. 
 For this convenience that bank was created. 
 If it be possible to create a currency note that 
 will serve all the purposes of a gold coin of 
 like stamped value, in a community in which 
 and for which it was issued, serving all the 
 purposes in that community that a gold coin 
 would, and that, at the same time, will be too 
 
114 FREE BANKING. 
 
 unattractive to be diverted from the com- 
 munity for whose convenience it was issued, 
 that, then, would be the best possible currency 
 for that community. 
 
 No banker or borrower of money will at 
 this date pretend to assert that the First 
 National Bank of New York is any more bene- 
 ficial to the people of that city than is the Man- 
 hattan Company Bank, merely because the 
 First National Bank is operated under a na- 
 tional charter, while the Manhattan is under 
 a State charter. And while such an object- 
 lesson exists, it is obviously absurd to claim 
 that the only safe banking system must neces- 
 sarily be a national system. It is indeed true 
 that national currency and national-bank notes 
 have given the public a most convenient cur- 
 rency with which to travel, but not more so 
 than that possessed by the English people, 
 whose banks are all private corporations, and 
 where the Government is not responsible for 
 the payment of the notes. 
 
 The usefulness of the national bank has been 
 much overestimated, while its bad features 
 have not been well understood. To the na- 
 tional banks a monopoly was given when they 
 were first established — and intentionally so. 
 Those national banks organized in 1863 and 
 1864, which, also, were not dragooned into 
 organizing under a national charter, were so 
 
FREE BANKING. 11$ 
 
 organized in consequence of a stimulus, the 
 substance of which was monopoly. The 
 weaker State-banks were dragooned into 
 organizing themselves into national banks be- 
 cause of the necessity either to abandon busi- 
 ness or to adopt the new national-bank system. 
 In New York, as w^ell as in several other 
 States, the bonds held as security by the State 
 for redemption of circulating notes were quite 
 as valuable as the United States bonds. 
 When the Government, in 1865, taxed the 
 State-bank notes ten per cent, per annum, it 
 became absolutely necessary that those banks 
 that could not withdraw their circulating notes 
 without selling their security bonds should 
 sell them at once. And they did so. By 
 those banks loans were called in, payments 
 demanded, their circulating notes canceled, 
 and their security bonds redeemed with as 
 much alacrity as possible, so that, by organiz- 
 ing under the national banking system, those 
 bonds might be sold to secure money with 
 which to buy the Government bonds necessary 
 to place those banks in the condition to save 
 their already-organized banking business. 
 Many banks throughout the country were 
 rich enough to protect themselves against be- 
 ing forced into that national banking system. 
 They simply called in their circulating notes, 
 and continued banking business under their 
 
Il6 FREE BANKING. 
 
 State charter. And it is a significant fact that 
 among the banks that to-day have most com- 
 pletely the public confidence, are those State 
 banks that refused the Government's bribe in 
 1863-64, and declined to be dragooned into 
 the national banking system in 1865. 
 
 The originators of the national banking 
 system in 1863 had too vividly before them 
 the verdict of the people against a really indi- 
 vidual national bank, and it was therefore 
 necessary that they should formulate some 
 plan of banking other than that which the 
 people, under the leadership of Jackson and 
 Benton, had buried beyond resurrection more 
 than twenty-five years before. And the 
 national banking system adopted by Secretary 
 Chase, Jay Cooke, E. G. Spaulding, and other 
 brilliant financiers of that day, was a system 
 that only geniuses of the highest order could 
 have devised, even with the experience of 
 Massachusetts and New York to aid them. 
 The Government was in a " wilderness of 
 woe." Its very existence was threatened. 
 The booming of hostile cannon could be heard 
 by the Finance Committee while sitting in the 
 Treasury Department, consulting with Secre- 
 tary Chase. 
 
 And only those forces that money com- 
 manded would silence those threatening guns. 
 Money in sufficient quantity could not be had 
 
FREE BANKING. II7 
 
 from those who possessed it, unless a rich, com- 
 pensation was offered for its use. Rarely is 
 capital unselfishly patriotic. The organized 
 banks of the country had much of it. Under 
 their control were those securities, whatever 
 they may have been, that were required — or 
 their value — by the Government. And it 
 then became necessary for the Government 
 to use every means to possess them, so far as 
 possible, without actually resorting to forced 
 loans or robbery. Possibly there were two 
 hundred million dollars' worth of State-bank 
 notes in circulation among the people. Those 
 financiers devised a plan to capture most of 
 the values that those notes represented. No 
 matter at what cost to the stockholders of 
 those banks, without regard to the currency 
 of the weak banks, the thing had to be done. 
 And it was done. The genius of America 
 was equal to the occasion. A great national- 
 bank trust was created. The banking busi- 
 ness, or that part of it where currency for cir- 
 culation among the people was an essential 
 feature, was converted into a monopoly. The 
 monopoly was dealt out among those com- 
 munities alone that were rich enough in capi- 
 talists to lend money to the Government, in 
 consideration of the monopoly offered. The 
 bonds of the Government were exempt from 
 taxation, and for every hundred dollars lent 
 
Il8 FREE BANKING. 
 
 by such capitalists for such a purpose, the 
 Government gave its obhgation for one hun- 
 dred dollars, upon which it guaranteed inter- 
 est in gold, and issued to those capitalists 
 ninety dollars in paper money, and so legis- 
 lated that the people were compelled to take 
 ninety dollars from those capitalists for their 
 full par value. By forcing the greater number 
 of the existing banks to close out their other 
 securities, the Government artificially lessened 
 the value of all other kinds of securities, in- 
 cluding municipal and State bonds, and thus 
 by mere force it appreciated the value of 
 United States bonds. 
 
 It was a stroke of financiering that places 
 Mr. Chase among the foremost financiers of 
 the world — if success in getting money for 
 immediate wants, without regard to future 
 calamities, be successful financiering. 
 
 Hundreds of national banks were organized, 
 each with its staff equipment of officers. But 
 in the control of all was a National Comp- 
 troller with extraordinary powers under the 
 law — a power purposely given to him — that 
 practically constituted the system a national- 
 bank trust. An annual tax of ten per cent, was 
 put on all other bank notes. From such a trust 
 the people cannot, now that war necessities 
 1 ave ceased to exist, derive any special bene- 
 fit, unless it be because of the superiority of 
 
FREE BANKING. 119 
 
 that banking system over all others. When 
 organized, the very monopolistic character of 
 those banks appealed to the selfishness of 
 capital, and, as the Government necessities 
 required that money should be raised at once, 
 to accomplish that purpose the method pur- 
 sued was possibly the best available one by 
 which, to use a bonus. 
 
 The evils of monopolies need not be dis- 
 cussed in this book ; they are too apparent to 
 the ordinary student of pohtical economy to 
 waste time in their consideration. 
 
 If the present national banking system is as 
 perfect as its friends claim it to be, it should 
 within its own resources provide, and conse- 
 quently control, or rather equitably issue, all 
 the currency notes used by the people of the 
 United States. The coinage of the country, 
 under honest methods, and limited, — as in for- 
 mer years when special legislation was not in- 
 voked to create artificial value of the metals 
 used in such coins, — would be limited to the 
 extent of the demands by the people of the 
 United States for those coins, and foreign 
 balances would be adjusted as, in fact, they 
 are now, by the bullion values of the gold coin 
 of the country. Under such conditions there 
 would be but a very limited coinage, and bul- 
 lion assayed by the Government might more 
 frequently than othen\ase be used in the set- 
 
120 FREE BANKING. 
 
 tlement of those balances. But for the Gov- 
 ernment's indorsement of the purity of the 
 metal used therein, the gold coinage of no 
 country to-day is of any more value to its peo- 
 ple than is an equal quantity of gold bullion; 
 and excepting for subsidiary coins, the same 
 is especially true of silver. 
 
 Coinage of either gold or silver legal-tender 
 money will probably prove to be more of a 
 menace than a benefit to commerce, until the 
 commercial nations agree upon a ratio of value 
 between the two metals, and upon an agree- 
 ment to maintain that ratio. 
 
 National-bank currency could not be flex- 
 ible under any conditions other than that of the 
 Government being a creditor to large amounts 
 of the banks ; when Congress and the national 
 Treasury Department were incessantly ex- 
 panding and contracting the Government's 
 indebtedness to those banks as the require- 
 ments of the trade of the country for bank bills 
 demanded. The genius has yet to be born 
 that can successfully and satisfactorily execute 
 such an office. Under the present condition 
 it must, of necessity, be steadily contracted as 
 those bonds guaranteeing the national-bank 
 notes fall due. Were the Government to liqui- 
 date its indebtedness the national banks would 
 cease to exist, — unless new legislation be re- 
 sorted to. It could not, under any condition 
 
FREE BANKING. 121 
 
 of governmental poverty or wealth, "be 
 thoroughly elastic. National banks for de- 
 posit purposes, and for such advantages as 
 result from the use of bank checks, cannot, 
 therefore, have any advantage over the private 
 bank or private individual, so long as the pri- 
 vate bank or private individual has the confi- 
 dence of the trading public. They certainly 
 have established no claim to the credit of being 
 able more equitably than other banks to circu- 
 late the currency notes among the people. 
 No one has ever given them credit for doing 
 that. But the severest criticism on the na- 
 tional banks has been because of the inequi- 
 table distribution of their circulating notes. 
 It was because of that bad feature of the 
 national bank that the Greenback movement 
 was started as early as 1865. And the agita- 
 tion then begun was sufficient to prevent 
 any of the banks from attempting to tamper 
 with the volume of the currency, as was so suc- 
 cessfully attempted with gold coin on that 
 memorable Black Friday. Had there been 
 no Government guarantee of redemption of 
 paper money. Black Friday would have been 
 impossible. 
 
 Currency promotes exchange of commod- 
 ities; lack of currency restricts exchange and 
 causes stagnation in trade. Stagnation in 
 trade causes a reduction in the selling prices of 
 
122 FREE BANKING. 
 
 commodities, and if such stagnation be long 
 continued, the reduction is to that low point 
 at which such commodities cannot be dupli- 
 cated; for labor's reward, in the operation 
 of duplication, would not sustain life. 
 
 This well-known law of trade insures a 
 profit to the capitalist when withholding cur- 
 rency from tradesmen, although idle money 
 ceases to be interest-bearing during the 
 period it is withheld from circulation. When 
 commodities are forced upon the market at 
 from twenty-five per cent, to sixty per cent, 
 below the cost of production, capitalists may 
 and generally do reap rich rewards. The 
 shrinkage of values following the contraction 
 of the currency under Secretary McCullough 
 was probably far in excess of the amount of 
 national debt at that time. 
 
 Even if the bank ofBcials had exerted all 
 their forces equitably to distribute their cur- 
 rency notes throughout the country, it was not 
 in their power to do so, because the natural law 
 of trade, in times of stringency, tends to the 
 concentration of the money of a country to 
 the financially stronger centers, where it really 
 is least needed. And thus the drain is from 
 the financially weaker centers, where it is 
 most needed. There is absolutely no flexi- 
 bility in the national-bank currency, and to 
 meet an extraordinary demand it could not be 
 
FREE BANKING. 123 
 
 expanded. In this respect the national bank- 
 ing system is defective. And that fault has 
 been most keenly felt throughout the country 
 during the last thirty years. This, too, is a 
 fault so grievous that it constitutes the present 
 national banking system — ^not " a great bless- 
 ing," but a real calamity. 
 
 The objection to free banking, or to a re- 
 striction of a monopoly of the national bank, 
 or to the Government abandoning the bank- 
 ing business, seems to rest largely upon the 
 theory that the money issued by free banks 
 will prove inconvenient money to travel with. 
 
 The fact is, the great majority of the Ameri- 
 can people do not travel far enough from their 
 own home to carry a good bank bill beyond 
 the range of its face value. Only the foolish 
 or dishonest would attempt to travel by using 
 worthless bank bills. If they lived in the 
 immediate vicinity of a bank and the bills of 
 that bank were not at par, it would be because 
 the managers of that bank had not inspired 
 the people living within its vicinity — who 
 knew them well — with implicit confidence. 
 Such banks could not circulate their bills; the 
 people, distrusting those who managed the 
 bank, would not accept them. 
 
 If the State bank or the free bank would 
 stimulate healthy business in its immediate 
 neighborhood, the amount of the benefit de- 
 
124 FREE BANKING. 
 
 rived from that stimulation would unquestion- 
 ably be infinitely more profitable than would 
 be the loss from the inconvenience arising 
 from the State-bank notes not being as con- 
 venient a currency with which to travel. 
 
 It is not necessary to enter into any argu- 
 ment to prove the necessity for the use of 
 paper money. To an extent yet unheard of 
 business could be conducted or managed with- 
 out a single coin, or without a currency based 
 upon the value of coin. Coin values fluctu- 
 ate, and the cause of that fluctuation is the 
 supply and demand of the precious metal. A 
 Secretary of the Treasury of the United States, 
 shortly after the discovery of the immense 
 gold fields in California, in a serious public 
 paper addressed to the President of the 
 United States, expressed alarm because of a 
 calamity likely to fall upon the country, — 
 from the cheap gold of the new mines driving 
 silver out of the country. Less than a quarter 
 of a century later, another Secretary of the 
 Treasury addressed a similar communication 
 to the President, in which he deplores the 
 calamity likely to fall upon the country from 
 cheap silver depleting the country of its gold. 
 The fact is, neither gold nor silver is essential 
 to the successful conducting of the business 
 of the country. That is a fallacy that has 
 twice within this century nearly wrecked the 
 
FREE BANKING. 125 
 
 Bank of England. And each time the disas- 
 ter was averted by the use of paper money. 
 
 Business is conducted now, not by man's 
 faith in the value of a coin, but by man's faith 
 in his fellow-man. A business man of to-day 
 trusts his fellow-man, not because that man 
 has gold, but because he has business and per- 
 sonal integrity. Man's faith in his fellow- 
 man is to-day the foundation upon which 
 business rests; and checks, bank notes, and 
 promises to pay are essentially necessary only 
 to make the wheels of business run smoothly. 
 
 The bank located in the country districts 
 does not, under the present system, afford to 
 the farmer or country operator any accom- 
 modation whatever except when money is 
 cheap. In straitened financial times, when 
 the farmer or country manufacturer, as well 
 as the merchant, needs financially bridging 
 over, he can get but very little assist- 
 ance from the bank; and the reason of 
 it is clear. The circulating medium is 
 gathered to the money centers as soon 
 as any stringency in the money market be- 
 comes apparent ; and however firm may be the 
 bank officers' faith in the business tact and the 
 personal integrity of the country farmer 
 or the country merchant, it is not within 
 their power to lend him money; the demand 
 from the money centers having exhausted the 
 
126 FREE BANKING. 
 
 supply of bank bills to the lowest point that 
 it is possible for the bank to reach and yet 
 live. 
 
 The argument that the notes of State banks 
 would be more likely to be kept at home than 
 either the Government fiat notes or the 
 national-bank bills, many financiers dismiss 
 with a sneer. Mr. Blaine said, *' We would 
 keep it — State-bank money — at home, because 
 it would be so worthless nobody would take 
 it abroad." No one of good judgment would 
 take State-bank bills abroad to pay traveling 
 expenses with, because only very few with 
 whom one would have to transact business 
 would have sufficient confidence in the genu- 
 ine character of the bill, or confidence enough 
 in its maker, to accept it in payment, especially 
 as payment could be exacted in a currency 
 with which they were perfectly conversant. 
 This objection to State-bank notes applies 
 with equal force to national-bank bills, and 
 to Bank of England notes, excepting that 
 those notes have a wider range of ac- 
 quaintances. Yet at the proper distance 
 from or nearness to the place of issuance, 
 any of those bills are readily exchange- 
 able for currency that will be acceptable in 
 that quarter of the world to which the traveler 
 may wish to go. If a traveler be not suffi- 
 ciently intelligent to effect such an ex- 
 
FREE BANKING. 127 
 
 change before he sets out upon his jour- 
 ney, he would, under any proAasion of 
 Government for his protection, most probably 
 be put to much loss and great inconvenience 
 before he got very far on his way in the dis- 
 tant country through which he was to travel. 
 Had he a pocketful of gold disks, each of 
 the value of ten dollars, their purity attested 
 by a stamp of the bankers Rothschilds, not one 
 out of each hundred men and women he met 
 in a business way would, on the security of 
 one of those gold disks, trust him out of their 
 sight with fifty cents' worth of commodities. 
 There are, doubtless, many counties in this 
 American Union where not a business man 
 has any knowledge of the appearance of a 
 Bank of England note; and not a hotel keeper 
 in many of the counties would trust a traveler 
 with a night's lodging on the security of a ten- 
 pound note of that bank, unless there was 
 something about the traveler himself that im- 
 pressed the hotel keeper with faith in his in- 
 tegrity. Over all this land there are thousands 
 of places where men are trusted upon the 
 lines in their faces alone, whereas a bagful of 
 notes of the Bank of France would not pro- 
 mote the credit of a dollar. 
 
 A circulating currency for the benefit of 
 travelers is not what is wanted, but a currency 
 for the benefit of people who stay at home, 
 
I2S FREE BAXA'IXG. 
 
 who form business communities, who transact 
 the business, and develop the possibiHties of 
 such communities. And a currency that is 
 most convenient for travelers is. in times of 
 financial distress, almost certain to be least 
 beneficial to small, undeveloped communities. 
 It is that feature of the State bank, — that its 
 currency \\\\\ stay at home, — which many deem 
 worthy of a sneer only, — that is alone of any 
 real value in any bank, excepting the benefit 
 derived from a bank of deposit, and from the 
 convenience of the check system offered to 
 the business public by such banks. 
 
 The simple fiat money of the Government 
 may be the most convenient money for people 
 traveling through the countr}- that issues it. 
 There is no logical objection to a limited 
 quantity of such currency issued on a basis of 
 taxation, and made legal tender for taxes, 
 but not for private debts. 
 
 Xational-bank bills have no advantage over 
 the bills of a State bank, excepting that given 
 them by the guarantee of the Government — 
 that their face values will be paid in legal-ten- 
 der money. It is nothing more nor less than 
 fiat money. Xo responsibihty rests upon any 
 individual should those notes not be paid in 
 coin values, adjusted by the commercial world 
 on the basis of bullion \'alues of the precious 
 metals. There is no provision for the redemp- 
 
FREE BANKING, 1 29 
 
 tion of those bills in gold if the struggle of 
 free-silver coiners were to result in the triumph 
 of the silver party. Should that happen, the 
 value of the American gold dollar will possibly 
 be appreciated fully sixty per cent. Under 
 the discount of a fraction of one per cent, it 
 would soon be withdrawn from circulation, 
 and the American legal-tender note, based on 
 silver bullion, would then be discounted in 
 Europe at a rate regulated wholly by the 
 value of buHion silver. 
 
 That the currency bills of State and private 
 banks are more likely to remain in circula- 
 tion near their point of issue than Government 
 notes or national-bank bills, is a well-attested 
 fact. And that fact makes these private and 
 State-bank notes vastly superior to the Gov- 
 ernment bill. For, it was the very purpose 
 for which that bill was passed that those 
 private and State banks or a bank of the 
 national-bank system were constituted. This 
 primarily was for the convenience of the 
 people living near such banks, and to develop 
 more thoroughly the possibilities of the com- 
 munities in which they were located. 
 
 It has been shown that, under the national- 
 bank system, currency bills — money — at 
 times were attracted away from those locali- 
 ties where the greatest real necessity for their 
 presence existed, to localities of more financial 
 
ISO FREE BANKING. 
 
 force but of less necessity; and always at a 
 great inconvenience and cost to the people 
 living in these financially weaker localities. 
 Such would not be the case with State-bank 
 bills. This an apt illustration will plainly 
 show. 
 
 A State bank of Delaware, under a system 
 of banking so radically liberal as to appall 
 many conservative bankers of the hour, was 
 chartered with the privilege of issuing three 
 dollars in currency bills for each dollar in coin, 
 legal-tender currency of the United States, 
 that was held by the bank in its vaults. Of 
 course there were conditions imposed on 
 the officers of the bank to secure safety of the 
 bank-note holders, but so far only as police- 
 regulation laws for collection of debts can se- 
 cure. Tliose bills could be issued only on 
 ample security that they would, when returned 
 to the bank in the course of trade, be re- 
 deemed at their full face value. Such bills 
 could lawfully be paid out only to depositors 
 in the place of money they had already depos- 
 ited in the bank, or on notes indorsed by ac- 
 ceptable indorsers, or for other reasonable 
 securities. The loans made on notes were 
 made by bank officers who were personally 
 acquainted with the maker of the note, whose 
 business and private habits were thoroughly 
 known to them. Consequently, ** honesty, 
 
FREE BANKING. 131 
 
 sobriety, economy, and good business habits " 
 were, when taken collectively, really bankable 
 values, and, substantially, were capital. 
 
 Men possessing such capital should be en- 
 couraged to exert their talent and wealth to 
 develop the possibilities of the communities 
 in which they live. 
 
 And that is what that bank and other like 
 banks in Delaware did, before they were 
 throttled by the bank-note tax of 1866. It 
 was not State pride nor patriotism that 
 prompted the managers of those banks to 
 encourage— by lending their bills— those 
 sober, honest, economical, and capable busi- 
 ness men to develop the possibilities of their 
 communities. Patriotism, more frequently 
 than otherwise, when reduced to the basis of 
 dollars and cents, is a low-priced article. It 
 was from the interest-money that the bank 
 managers could gather from lending their cur- 
 rency that they derived their profits. And as 
 the currency bills would not be accepted at 
 face value very far from the banking house, 
 it was necessary for the bank managers to en- 
 courage business men within the limits of 
 their acquaintance and locality to develop 
 those industries that would demand the use 
 of the currency bills. It was of little advan- 
 tage for such banks to lend their bills to some- 
 one living in a remote community. Had the 
 
132 FREE BANKING. 
 
 officers of the Bank of Dover, in illustration, 
 lent five thousand dollars face value of their 
 bills to a man engaged in developing an enter- 
 prise in Lancaster County, Pennsylvania, that 
 man would in all probability have deposited 
 those bills in a Lancaster County bank, and, 
 although the Lancaster County bank presi- 
 dent may have been an intimate friend of the 
 president of the Bank of Dover, — with the 
 uttermost confidence in his integrity — those 
 Dover Bank bills would have been sent with 
 thte speediest dispatch back tO' that bank. 
 Such is the force of the law of trade. The 
 bills of the Bank of Dover were only certifi- 
 cates of credit. Only by lending its credit 
 could the Bank of Dover make a profit on the 
 loan made to the Lancaster County man. If 
 the certificates of credit were returned to the 
 bank, and legal-tender money demanded for 
 them within three days, it follows that the 
 Bank of Dover lent its credit for three days, 
 and could realize therefrom only the interest 
 on a three days' loan, in which transaction of 
 course there would be no profit. The Bank 
 of Dover could not have been profitably con- 
 ducted if the business of the bank had not 
 been confined to the immediate vicinity of 
 Dover, where bills of that bank furnished the 
 currency of the community, and where the 
 greater part of the bills — money — deposited 
 
FREE BANKING. 133 
 
 by the business men as security for the pay- 
 ment of the checks or drafts drawn on that 
 bank by its depositors, were notes of the Bank 
 of Dover, and, as profit-making bills while in 
 its vaults, were as valuable to that bank as if 
 in the pockets of the various members of the 
 community of Dover. To lend its credit to 
 persons engaged in developing the business 
 possibilities of the vicinity of Dover, was abso- 
 lutely necessary for the existence of that bank, 
 and consequently the most active motive of its 
 officers was to induce persons to encourage 
 the business activity in the vicinity of Dover. 
 
 Under the banking system of to-day, be- 
 yond the encouragement that interest-making 
 may prompt bank managers to extend ac- 
 commodations to their depositors, there is no 
 motive to prompt managers of banks to dis- 
 criminate between lending money to the busi- 
 ness men of their own centers and to a man in 
 a center hundreds of miles away. 
 
 It is urged, as an objection to any form of 
 free banking, that there is too great an in- 
 ducement to an overissue of bank bills. Ful- 
 lerton, in his " Regulation of Currency," p. 
 83, says: ''It may be stated, therefore, as a 
 settled principle, that the efforts of banks of 
 issue to extend their circulation know no re- 
 mission; that the whole system, in fact, is 
 continually on the stretch, and that but for 
 
134 FREE BANKING. 
 
 the antagonistic force which is always in 
 action to correct and repress it, the overflow 
 of notes would be irresistible. Upon this 
 ground alone, then, there seems to me to be 
 an effectual negative to the supposition that 
 the fluctuation of the bank-note circulation 
 depends on the discretion of the bankers. A 
 man who always puts forth his whole strength 
 has no further effort left to make." 
 
 Bankers who purpose to make a profit from 
 the sale of their financial credit cannot afford 
 to impair that credit, and from that '' force " 
 — antagonistic to an overissue of bills — they 
 will not lend their credit — their bills — to those 
 thiey believe will not return it or proper sub- 
 stitutes in payment of the discounted notes on 
 which the loan was made. They will not will- 
 ingly make unsafe loans, because they cannot 
 conduct their bank successfully if they do. 
 There can be no stronger reason given why 
 an overissue of currency bills is nearly 
 impossible. Should the bank officers at- 
 tempt an overissue, by lending money to 
 reckless men, it would at once impair 
 the credit of the bank to such an extent 
 that depositors would decline to do business 
 with it, and reputable business men who bor- 
 row from banks on the semi-official assurance 
 of its managers — that at the time of payment 
 their paper will be extended if conditions be 
 
FREE BANKING. 135 
 
 favorable — would not trust their enterprise on 
 the promise of such men. Consequently, 
 such a bank could not keep its notes in circu- 
 lation or do a banking business. A banker 
 cannot sell his credit to a community that has 
 no faith in the integrity or good judgment of 
 the banker; because that credit is of no value. 
 Bills issued by such a banker would not pass 
 current in the community — consequently 
 could not be put into circulation. Even such 
 good paper currency as that of Canada cannot 
 be circulated in the United States. Therefore 
 the assumption that irresponsible bankers can 
 circulate their notes is an absurdity. 
 
 While the active motive that controls the 
 banker is to issue as many bills as possible, 
 he is, nevertheless, restrained by well-estab- 
 lished business principles of value for value 
 from overissuing them. Hence there would 
 be issued, even under such a "wild-cat" bank- 
 ing system as that of the illustrative Bank of 
 Dover, only the amount of currency demanded 
 by the safe business interests of the com- 
 munity in whose interest the bank had been 
 organized. No more, no less. And the ex- 
 pansion and contraction of the circulating cur- 
 rency in such a community would be governed 
 entirely by the safe business requirements of 
 that community. 
 
 The local bank, whether a State or a private 
 
136 FREE BANKING. 
 
 bank, the payment of whose notes is not guar- 
 anteed by the Government of a great central 
 bank is, for reasons already shown, the most 
 desirable bank to promote business possibili- 
 ties in the locality in which it is situated. 
 And, further, as it works no unjust disadvan- 
 tage to any other bank located within its own 
 or any other locality, it is therefore the best 
 possible form of banking for that locality. 
 Collectively, such banks are the best adapted, 
 justly and vigorously, to develop the business 
 possibilities of the entire country. 
 
CHAPTER VII. 
 
 In dealing with the currency question it is 
 proper, it is imperative, that the question 
 should be considered from the view-point 
 of justice. If justice demand the demoni- 
 tization of silver, with its subsequent ap- 
 preciation of the purchasing power of 
 gold, then, only lasting good can come 
 to the country from placing our currency 
 on the basis of gold. If, on the other 
 hand, the unlimited coinage of silver, with 
 its consequent debasement of purchasing 
 power of our unit be just, the nation should 
 at once resort to free coinage, and coin into 
 money all the silver that would be offered to 
 it for that purpose, and in the coinage use 
 such energy that all the silver offered for 
 coinage should be converted into coin at the 
 speediest possible rate. 
 
 There can be no doubt that to make those 
 silver dollars fast enough, such unlimited 
 coinage of silver, which permitted a holder 
 of one thousand dollars' worth of silver 
 bullion to pay. two thousand dollars of 
 debts, would make great demands upon the 
 137 
 
138 FREE BANKING. 
 
 facilities of the mints. There is but little 
 doubt that silver bullion would advance in 
 price; for a time, at least. If, therefore, the 
 purchasing power of silver bullion should, 
 under such influence, steadily increase until 
 sixteen ounces of it would purchase the same 
 quantity of commodities that one ounce of 
 gold would, the purchasing power of gold not 
 having been disturbed in the meantime, no 
 permanent enhancement of other values 
 would, of course, take place, and, conse- 
 quently, only the few who pay their debts, 
 and the bullion holders, and the silver miners 
 would be benefited by the free coinage of 
 silver. If the purchasing power of gold 
 would be depreciated under the influence of 
 free-silver coinage, and the values of other 
 commodities be appreciated, as would proba- 
 bly be the case, all possessors of commodities 
 would reap a benefit that probably might 
 greatly stimulate business. 
 
 There are two distinct classes in every civi- 
 lized land, and doubtless such classes will 
 exist as long as civilization lasts; they are the 
 debtor and the creditor. The misfortunes of 
 the debtor class offer no logical reason why 
 superior advantage should be granted to 
 them; nor do the wealth and the influence 
 that wealth gives offer any reason why 
 such advantage should be given to the 
 
FREE BANKING. 139 
 
 creditor class, although they may be, as 
 many of their friends assert they are, God's 
 natural leaders of the people. If to frame 
 laws to provide currency for the people it is 
 necessary that special privileges should be ex- 
 tended to the one or the other of these two 
 classes, it is proper, then, that we determine 
 which of these two classes best serve the in- 
 terest of the country. If, in the considera- 
 tion of this matter, we would be governed by 
 the words of the Divine Master, there is then 
 no question that we should legislate so that 
 the burden would fall lightly, if at all, upon 
 the debtor class. Philanthropy, Christianity, 
 and selfish brutality, on the other hand, all 
 unite in declaring that if either the debtor or 
 the creditor class must sufifer by currency 
 legislation, the burden should fall entirely 
 upon the creditor class. 
 
 However, before arriving at a conclusion, 
 it is well first to consider which of the two 
 classes are of the greatest benefit to the entire 
 people; which of these two classes add to the 
 country's ornamentation, to the glories that 
 clothe our person in comfort and fill our soul 
 with pride. Is it the debtor or the creditor 
 class? Is It the user or the lender of money? 
 
 Of the people endowed by their Creator 
 with a modicum of common sense but few 
 assert that such credit belongs principally to 
 
I40 FREE BANKING. 
 
 the creditor class. This, of course, is not in- 
 tended as a reflection on that class. For the 
 man who has reached that point in life at 
 which he can begin to lend money, and thus 
 become a creditor, is to be respected, if, of 
 course, he have reached that point by indus- 
 trious and honorable methods. Nor is he to 
 be despised because some energ-etic ancestor 
 provided him with the privilege of being a 
 creditor all the days of his life. But to as- 
 cribe superior usefulness to such persons is 
 simply adulation, absurdity, or imbecility. 
 
 The creditor seeks to lend money, and the 
 energy used in seeking such investments is, 
 more frequently than otherwise, a hired agent 
 of the creditor. Consequently, a creditor 
 does not seek to lend his money in order that 
 some enterprise, needed to develop the coun- 
 try, should be promoted, but rather that to 
 the creditor there should be a handsome re- 
 turn for the money advanced. It is true that 
 there are a few men in the land possessed of 
 capital who would prefer lending money in 
 their own country to lending it to people liv- 
 ing in other countries for higher rates of 
 interest when absolutely certain that the in- 
 vestment in either country would be safe. 
 The generous public denominates such men 
 cranks. Not one-hundredth part of one per 
 cent, of the capital of the country held by the 
 
FREE BANKING. 141 
 
 creditor class would be lent for business 
 operations in the country if it were given an 
 investment as absolutely safe, and as con- 
 venient, outside the country at a higher rate 
 of interest. Therefore, to claim that the 
 creditor class is entitled to special benefits, 
 because it is the leader selected to direct the 
 business of the country in such channels as are 
 calculated to make it prosperous, is simply 
 absurd. 
 
 For the same selfish reasons, perhaps, the 
 man of the debtor class who borrows money 
 does so that he may grow richer and have 
 more comforts. But to do so it is then neces- 
 sary for him to put forth an hitherto undevel- 
 oped energy ; an energy that can be developed 
 only by the help of additional capital. He 
 does not, it is true, seek to build up a great 
 factory and extend his operations over the 
 States and Territories for the sole purpose of 
 advancing the prosperity of the country, but 
 he does advance it, nevertheless, and he has 
 no opportunity to shift his field of operation, 
 as the creditor has. He stands very much in 
 the same position that the boy did who was 
 digging out the woodchuck — had to get that' 
 woodchuck; because, '' no woodchuck, no din- 
 ner." So it is, therefore, from the energy and 
 intelligence of the debtor class that the ma- 
 terial prosperity of the land must come. 
 
142 FREE BANKING. 
 
 Nor is the creditor class essential to the 
 material prosperity of the land. The great 
 West was built up and made rich and fertile 
 without any assistance from the creditor. And 
 after it had become rich, after its miles upon 
 miles of prairie lands were made fertile, under 
 the manipulation of earnest energy, after 
 towns and cities had covered it, capital was 
 directed thither largely from the East; and the 
 Western people to-day assert that the intro- 
 duction of money-lenders among them was the 
 beginning of the ruin and disaster that have 
 laid the West in the position it now occupies 
 — of almost enslavement to Eastern capital. 
 
 If, in legislating, we should be governed by 
 the principle of '' the greatest good to the 
 greatest number," we would be induced to 
 lend the greatest assistance to the debtor class. 
 To just what extent the debtor class outnum- 
 bers the creditor class, or that part of it that 
 sells or rents to others the use of money, it is 
 difficult to ascertain. But that it does out- 
 number them — and very largely so — is a fact 
 no one can gainsay. Therefore, " good poli- 
 tics " would direct that legislation on the 
 subject of currency should be toward lessen- 
 ing the burdens of the debtor class. It is not 
 easy to determine who are the debtors and 
 who are the creditors; for in every avenue of 
 trade the products of the operator become 
 
FREE BANKING. I43 
 
 his debtor, and he is the creditor of his 
 products. 
 
 The builder of machinery who spends days 
 and weeks in developing a machine finds, 
 when he finishes it, that all the energy he has 
 expended is represented in the machine that 
 he has produced. That machine is his 
 debtor, he is the creditor. If legislation is so 
 shaped — assuming that legislation can affect 
 the value of that machine — that the result of 
 this man's labor is enhanced in value, he 
 reaps a greater reward as creditor; but if, to 
 the contrary, legislation is so manipulated 
 that the value of the machine is depreciated, 
 he becomes so much the poorer. This illus- 
 tration is used to demonstrate the fact that, if 
 even but one individual be working as his own 
 master to produce commodities that other 
 men require, he may be seriously afifected by 
 pernicious laws. 
 
 The farmer who spends a year's labor, or at 
 least waits a year to produce his crop, also 
 finds himself either reaping the reward or 
 suffering the calamities that arise from favor- 
 able or unfavorable legislation. He pur- 
 chases his fertilizers in the month of August, 
 at a price that is made by a given standard. 
 He lends it to the land, to be repaid for it by 
 the crop harvested in the following July. If 
 the standard of value, by any cause whatso- 
 
144 FREE BANKING. 
 
 ever, be changed within that year, the farmer 
 receives his pay from the harvest at a different 
 rate, unless that which he produces should 
 have its value appreciated exactly in the line 
 with the change in the value of the measure — 
 money. 
 
 However, if that farmer should contract to 
 pay for the fertilizers to be used on his 
 ground with the proceeds of the sales of the 
 harvest, and the standard of value should, in 
 the meantime, be changed in a direction that 
 made it more difficult for him to obtain the 
 money, or, in other words, that compelled him 
 to sell more of the products of his farm and 
 labor to procure it than at the time of the pur- 
 chase, it follows, then, that the farmer has an 
 additional burden imposed upon him, — a re- 
 sult of such changes in the money measure 
 that he was not called upon to contemplate at 
 the time he made his contract, and which 
 strict justice does not demand that he should 
 pay. 
 
 If the manufacturer of the fertihzers should, 
 by the very reverse of this change in the value 
 of money, be compelled to receive less than 
 the existing conditions then made just, an 
 injustice would be done to the manufacturer 
 of the fertilizers. 
 
 There is another large class of business 
 men that it would be very difficult to class 
 
FREE BANKING. 145 
 
 either with the debtors or the creditors. They 
 are those dealers in merchandise who possess 
 stocks of goods, who owe money for goods 
 purchased, who have money owing to them 
 for goods sold. It is fair to assume that, 
 aside from the inconvenience that arises 
 — we may say momentarily — in settling bal- 
 ances among the class of men above de- 
 scribed, no serious inconvenience could be 
 felt by them either by the appreciation or the 
 depreciation of the purchasing power of the 
 gold dollar. 
 
 From the appreciation of the value of the 
 dollar, the wage-earner derives an advantage 
 for such a length of time only as may be re- 
 quired to adjust wages to the old unfortunate 
 standard, namely, inst as small a sum as wage- 
 payers can induce wage-earners to work for, 
 which sum is usually measured by the mini- 
 mum of man's wants. 
 
 Any depreciation of the value of the Ameri- 
 can dollar would work to the disadvantage of 
 the American wage-earner, thereby materi- 
 ally lessening his ability to procure those 
 things that go to make life comfortable. The 
 enforced idler can derive little, if any, advan- 
 tage from it — none, when his money gives out. 
 If the old wages should be maintained when 
 that dollar had depreciated to its lowest limit, 
 then wage-earners would be reduced to a 
 
146 FREE BANKING. 
 
 greater degree of privation than that they now 
 are compelled to endure. If the depreciation 
 of the dollar be carried to an extent beyond 
 his ability to purchase those comforts of life 
 that would but satisfy his wants, he would 
 then simply begin an aggressive movement 
 for increased wages, and would resort to those 
 measures that in the past have been success- 
 ful in attaining such objects. And from the 
 time of the beginning of the depreciation of 
 the purchasing power of the dollar, to the 
 time that resulted in an adjustment of the 
 w^ages, and back again from that period 
 until he had succeeded in placing himself on 
 the same plane of the purchasing power of 
 wages that he stands on to-day, he would be 
 the loser by the depreciation of the purchas- 
 ing power of our dollar. 
 
 A uniform fall in prices is not the result of 
 overproduction of commodities, — if such an 
 economic condition be possible, — but of an 
 appreciation of the value of the standard 
 measure. Trading with the assistance of 
 money is but improved bartering. 
 
 If, for example, certain men had horses 
 that they valued at one hundred units, 
 and other men possessed oxen that they 
 valued at the same number of units, 
 and these valuations were mutual, what 
 difference would it make to these men if. 
 
FREE BACKING. 147 
 
 when they desired to exchange horses 
 for oxen, those horses and oxen were valued 
 a year previously at one hundred and fifty 
 units? And if all the other commodities use- 
 ful to man had from the preceding year depre- 
 ciated to a greater or less extent than horses 
 and oxen, men would perforce use more of 
 those commodities than in the preceding year. 
 There would be no overproduction. But if 
 there had been an increased demand for one 
 of those commodities — gold — useful to man, 
 and that commodity had been selected as the 
 standard, the demand then for debt-paying 
 and interest requirement would compel many 
 people to sell their oxen and horses so as to 
 procure gold to meet those requirements. 
 Men could not exchange oxen for horses; 
 they would each probably be compelled to ex- 
 change the greater part of their oxen and 
 horses for gold, to obtain money with which 
 to pay their indebtedness; an indebtedness 
 contracted when those oxen were worth one 
 hundred and fifty units. 
 
 Falling prices, measured by labor's com- 
 pensation, invariably cause much hardship to 
 those of our citizens who have borrowed 
 money for industrial improvements. On the 
 other hand, they certainly add to the reward 
 of those who live upon the energy of others. 
 Every man, woman, and child, and their pet 
 
148 FREE BANKING. 
 
 animals live upon the energy of others who 
 derive their income from bonds, mortgages, 
 and rents. Nor are those the only ones liv- 
 ing upon the energy of others. The fact that 
 men, by energy and sagacity, may reach a 
 condition in this life by which they may live 
 comfortably and honored upon the energy 
 of others is perhaps the most active, the 
 most useful force at work to make them pro- 
 gressive. 
 
 The creditor class, which largely controls 
 the use of money, is composed of those people 
 who own bank stock and railroad stock, who 
 hold mortgages against other property, and 
 own real estate, and owe practically no debts. 
 While this class is not numerically very large, 
 it has for the last thirty years largely influ- 
 enced the legislation of our country. It is un- 
 questionably true that nearly all men who be- 
 long to this class are in favor of any currency 
 that will make it more difficult for the debtor 
 class to pay interest on any debts other 
 than those guaranteed by safe security. There 
 is a consensus of opinion among them, 
 doubtless, that the demonetizing of silver and 
 the adopting of gold as the single standard of 
 measure would best serve their ends. 
 
 A large percentage of debtors is composed 
 of those who have secured loansi upon real 
 property, that they assume they will not be 
 
FREE BANKING. 149 
 
 compelled to pay for so long as they pay the 
 interest demanded for the loan, and maintain 
 the property offered as security in the same 
 valuable condition as it was at the time 
 the loan was effected. This represents the 
 enterprising, struggling man; this repre- 
 sents those who have purchased lots upon 
 which they have built homes, expecting to 
 pay off their mortgages a little at a time until, 
 from their savings, they may be enabled to 
 liquidate the entire indebtedness and become 
 sole owner of the property. In this class are 
 many small dealers, struggling professional 
 men, and wage-earners. Another portion, and 
 a very large portion, of this class may be 
 found in the agricultural districts, where 
 young, enterprising men have purchased 
 tracts of land more or less improved, paying 
 only a part of the purchase money, and placing 
 a mortgage on the property for the remainder. 
 When these mortgages are made on such 
 given property by young men, they, more fre- 
 quently than otherwise, calculate, when mak- 
 ing that purchase, that it will be the struggle 
 of their life to release themselves from this 
 indebtedness. In other words, the mort- 
 gaged farm stands to them in the same rela- 
 tion that the savings bank stands to the wage- 
 earners; it is the means by which they can 
 gradually save their earnings. 
 
15° FREE BANKING. 
 
 Hence, it requires but very little effort of 
 the human mind to reach the conclusion that 
 the class of men here defined as the debtor 
 class is the class from which we must hope that 
 the material prosperity of our country shall be 
 advanced; specially when we add to it another 
 portion of the debtor class — the manufactur- 
 ers — which erects large plants for producing 
 those commodities that society demands for 
 its comforts. These factories are almost uni- 
 versally erected by men who invest less than 
 one-half the cost of them; who go into debt 
 for the other part. Were they possessed of 
 the idea that the money they borrow for the 
 beginning of such industries would be de- 
 manded in a few months, or even a few years, 
 many of those enterprises would never be be- 
 gun. Therefore, it is a fair assumption to say 
 that the material progress of our country de- 
 pends upon the energy displayed in the future, 
 as in the past, by men w^ho voluntarily enter 
 the debtor class. 
 
 If currency legislation must be so shaped 
 that to one or the other of these classes 
 special privileges are extended, then com- 
 mon reason demands that the privilege should 
 be extended to the debtor class. 
 
CHAPTER VIII. 
 
 The value of money, like that of any 
 other commodity, is affected by the law of 
 supply and demand. Those whose wealth is 
 all in money have an advantage over those 
 whose wealth is in another commodity. The 
 owners of money may readily effect an ex- 
 change for any one or more of the thousands 
 of kinds of commodities that constitute the 
 wealth of the world; while the owners of 
 those other commodities can exchange theirs 
 for money only, unless — which so frequently 
 happens — they can satisfactorily barter with 
 their neighbors, or resort to warehouse- 
 exchange system, by giving to a middleman a 
 part of their commodities, to effect for them 
 acceptable exchanges. The latter system is 
 practically that of the country stores already 
 described. Under it, communities may pros- 
 per, people be healthfully fed, comfortably 
 housed and clothed, made happy and fairly 
 contented. There can, however, be no 
 marked progress in such communities, a dis- 
 advantage, perhaps, compensated for by the 
 general exemption from poverty; for usually 
 
152 FREE BANKING. 
 
 there is in unprogressive communities no ab- 
 ject poverty unless there is retrogression, or 
 as a consequence of dissolute living. But this 
 latter is not commonly indulged in where such 
 communities exist. 
 
 Money, although it is a commodity, pos- 
 sesses a privilege or a purchasing power other 
 commodities do not possess. It is this privi- 
 lege money possesses that should be restricted 
 within its legitimate sphere. If a certain 
 number of money-owners — necessarily but few 
 — control the supply of money so as to arti- 
 ficially take from other commodities a part of 
 their value, which the law of supply and de- 
 mand for those commodities would not have 
 reduced, it follows, then, that business princi- 
 ples, truth, and justice alike, demand that such 
 power of money should be limited to a mini- 
 mum if, by the condition of things, it be 
 impossible to restrict it entirely. Money can- 
 not be made to affect the values of other com- 
 modities so long as it remains an unchanged 
 measure; but, unlike the yardstick, the unit 
 of money is not an inflexible standard. 
 
 Gold, to-day, is the money measure of the 
 world; it matters not which metal may be 
 the standard of a nation. Gold measures the 
 value of other commodities, not as the index 
 figures on the thermometer indicate the de- 
 gree of heat, but rather as the mercury meas- 
 
( 
 
 OF THg 
 
 FREE BANKINGr%S. , .^l^\<^ 
 
 ures the temperature. The figures of the 
 thermometer are inflexible. But the mercury 
 in the glass tube is not more flexible in indi- 
 cating the temperature than is gold in meas- 
 uring commodity values. So energetic, in 
 fact, is the fluctuation of the value of gold 
 that, probably, were it possible to gauge it, 
 not a minute of time would fail to disclose a 
 change. Yet, doubtless, it is as staple in its 
 value in relation to the mean values of all 
 other commodities as any other single com- 
 modity could ever be expected to be, and if 
 a single commodity be most desirable as a 
 basis for money, gold, doubtless, is the very 
 best that could be selected. The advantage 
 of using more than one metal as a basis for 
 money, if there be such advantage, lies in the 
 fact that there is less likelihood to be any 
 violent changes in the value of each of the 
 metals at the same time; and, again, that the 
 money-dealers cannot so readily command the 
 world's production of two commodities as 
 they can of one. It may be forcibly urged 
 that, if to the world's debtors there be given 
 always the option of the two metals they may 
 use for the paying of their debts, they will 
 invariably use the cheaper; and that at times, 
 when extraordinary productions of the one 
 and not a lessening of the productions of the 
 other cause a cheapening of the value of that 
 
154 FREE BANKING. 
 
 metal, the debtors would not be obliged to 
 make full payment for values received. In- 
 deed, if an option of paying their debts with 
 the cheapest of these metals had been given 
 tO' the debtors by the laws of the world dur- 
 ing the past twO' hundred years, the basis, 
 then, of the world's money to-day would be 
 copper; if for two thousand years, it would be 
 iron. 
 
 Iron, copper, brass, wood, woven fabrics 
 are all used as substitutes for the standard 
 yardstick. In our country it is also the right 
 of every purchaser of commodities that are 
 sold by the yard, tO' demand that the yard- 
 stick used in measuring shall be of exactly 
 the same dimensions — or value as a measure 
 — as the standard yardstick kept by the Gov- 
 ernment, which is securely guarded at Wash- 
 ington. That yardstick is never used except 
 to measure the accuracy of other yardsticks. 
 The yardsticks in use are made of almost 
 every conceivable material, and are all sub- 
 stitutes for the yardstick. Even those that 
 have been officially stamped as yardsticks, 
 may be questioned as accurate standard meas- 
 ures; but doubtless ninety-nine per cent, of 
 the volume of business transacted in the 
 United States where yardsticks are needed, 
 is done by the use of unstamped and un- 
 guaranteed yardsticks. On the other hand, 
 
FREE BANKING, 155 
 
 the proportion of short measurement — ^be- 
 cause of wantonly-debased yardsticks — is so 
 small that figures will scarcely express the 
 minuteness of the percentage. 
 
 It is just as easy to use a substitute for 
 money as for the yardstick. In fact, the mer- 
 chants of the present time would scarcely be 
 able to transact business without a substitute 
 for money. So any measure that seeks to 
 prevent a man from substituting anything that 
 will more expeditiously enable him by the use 
 of money to effect exchanges of commodities, 
 when such substitutions deprive no other man 
 of a just right, is a measure of oppression, and 
 should not, therefore, find a place in the eco- 
 nomic system of any, much less of a free, 
 people. 
 
 Upward of two hundred years ago Sir 
 Thomas Gresham, after a careful study 
 of the logic of the question and of the 
 facts presented to him as a merchant in 
 money, formulated the law that bears 
 his name. No man of to-day who gives 
 serious thought to the subject can rea- 
 son himself into the belief of a possibility of 
 Gresham's proposition not being correct. 
 Upward of two thousand years before 
 Gresham was born there was a civilization on 
 earth that few will dispute was even more ad- 
 vanced in civilization — save in the science of 
 
156 FREE BANKING. 
 
 war and destruction — than was England in 
 Gresham's time. 
 
 Among the great masters of thought of that 
 day was one of whom England has yet failed 
 to produce his superior, or even his equal — 
 the great Plato. It is said of Plato, that after 
 years of thoughtful observation of the use of 
 money and its various substitutes in Athens, 
 he formulated a law that, although well-nigh 
 forgotten, may be of even more importance to 
 the economic world than was Gresham's law. 
 In effect, Plato's law declared that '' the 
 money best calculated to develop the material 
 welfare of communities was a money that, 
 in such communities, could readily be ex- 
 changed at its face value for the best money 
 of the world, but of so little value intrinsically 
 that it would not be attracted away from the 
 community in which it was issued." It was 
 for the convenience of the Athenians that 
 Plato advocated the use of a money that would 
 possess all the value in Athens that the best 
 money could possess, but could not be made 
 as valuable in Athens or elsewhere when 
 melted in the pot. 
 
 There are many substitutes for money. 
 That which now serves best as a substitute is 
 the check, and as a means of effecting changes 
 of credit in the system of bookkeeping to 
 which banks of deposit have perfected it, it is 
 
FREE BANKING. 157 
 
 invaluable. The extent to which it may be 
 advantageously used is possibly scarcely yet 
 conjectured. In China, where the population 
 is dense and transportation is slow, it is almost 
 the only means of paying debts, and checks 
 are used there in paying the very smallest ac- 
 counts. Europe is much indebted to Asia for 
 its intellectual development; and, doubtless, 
 Europe may still learn from Asia much more 
 that will be useful. In the arts and science 
 of war and destruction of man's creations, the 
 Europeans are masters. But are they in the 
 science of peace? Money of gold and silver 
 is the money of war. Paper money and bank 
 checks are the substitute for money, which 
 peace promotes and war destroys. And 
 why? The value of gold and silver money 
 rests upon the value of the metal used. Wars 
 do not disturb it. The value of paper money 
 rests entirely on the public's confidence in the 
 ability of its makers to pay on demand the 
 amount named on the face of the paper. War 
 impairs that confidence. 
 
 Paper issued as money by a government 
 that guarantees its redemption in coin, can- 
 not be classed as a substitute for money, but 
 rather as money itself. Paper issued and 
 serving in the place of money not made legal 
 -tender by State or nation is a substitute for 
 money. Paper used as money that may be 
 
158 FREE BANKING. 
 
 issued by State or nation, and receivable 
 for taxes, would also be a substitute for 
 money. 
 
 There can be no doubt that paper bills that 
 are not legal tenders may successfully and ad- 
 vantageously be used in business, which no 
 creditor is under obligation to take. But no 
 such paper will be accepted by a creditor who 
 does not feel confident that such paper will be 
 redeemed by its maker for its full face-value 
 on demand. There can be no doubt that so 
 far as the business affairs of the United States 
 are concerned, paper money, not legal tenders, 
 has frequently been most advantageously 
 used; notably, the generous use of Clearing 
 House certificates in 1893. There is no rea- 
 son for believing that its use has been less ad- 
 vantageous to the other commercial nations 
 of the world. 
 
 In small communities substitutes for money 
 have an advantage over money itself that 
 makes them an invaluable aid in the building 
 up of agrarian interests. Thus, communities 
 that produce large supplies of those com- 
 modities that society needs, should not be 
 impoverished by such great production. 
 Nothing but unnatural causes will produce 
 the condition ol poverty now existing in such 
 communities. Under the present monetary 
 system of civilization it frequently happens 
 
FREE BANKING. i59 
 
 that many die of hung^er, surrounded by 
 an '* overproduction " of food. They die 
 also for the want of clothing, surrounded 
 by an *' overproduction " of clothing. They 
 sicken and suffer, too, in the stifling atmos- 
 phere of the accursed tenement-houses, sur- 
 rounded by an '' overproduction " of houses. 
 In the agrarian districts, however, few suffer 
 for the want of plenty of air. They do 
 suffer, though, for want of Wholesome food 
 and want of comfortable clothing. And 
 that, too, in communities where they have per- 
 formed their full share of labor in producing 
 an abundance of those commodities that could 
 usually be produced advantageously in the 
 community in which they live. 
 
 No man will attempt to justify the system 
 that causes men to suffer for food and clothing 
 who have faithfully and successfully labored 
 to produce those commodities they had every 
 reason to suppose would command for them 
 those things necessary for comfort. 
 
 No man will fail to condemn a system that 
 he believes will be instrumental in preventing 
 men from enjoying the fruit of their labor, 
 unless he have a selfish motive for such 
 prevention. 
 
 When the Government of the United States 
 enforces its declaration that no money, or sub- 
 stitute for money, not equal in value to the 
 
l6o J^REE BANKING. 
 
 best money issued by the Government, which 
 is a gold dollar, shall be used in the States, 
 it then places an impediment in the way of 
 the people of Illustrateville to enjoy the fruits 
 of their labor. 
 
CHAPTER IX. 
 
 Illustrateville is a town, let us say, 
 of about three thousand inhabitants, sur- 
 rounded by fertile farms. It was settled 
 upward of a hundred years ago by a 
 class of worthy, frugal, industrious young 
 farmers. At least, those settlers possessed 
 themselves of the lands comprised within 
 the community of which Illustrateville is 
 the center. The town itself was a result 
 of this settlement. To-day two or more 
 competing railroads pass through it, offer- 
 ing to its citizens as favorable opportuni- 
 ties — such as cheap passenger and freight 
 rates — as are possessed by any other town of 
 its size in the country. 
 
 The growth of the town was slow; no arti- 
 ficial boom developed it unnaturally. A half 
 dozen or more young farmers a hundred years 
 ago^ — each with his wife and small family, and 
 a family outfit, more or less elaborate — had 
 traveled overland from the place of their birth 
 until they had reached this place. Each man 
 had, as his great ambition, the desire to till 
 his own farm, to rear his children to honesty 
 
 i6i 
 
1 62 FREE BANKING. 
 
 of purpose, justly to perform the duties of life, 
 to be respected by his neig'hbors, and to pro- 
 vide a comfortable sustenance for his family 
 against the time when old age would deprive 
 him of physical power to produce further. 
 
 The land was fertile, the climate agreeable, 
 and many things about the country were so 
 pleasing that these early settlers sent to those 
 they left behind such information about the 
 settlement that others were induced to come. 
 
 Soon the need of a school was felt; a con- 
 venient spot was selected by a committee ap- 
 pointed for the purpose; and everyone united 
 to do his portion toward the erecting of the 
 schoolhouse. It stood completed, the first 
 house built in Illustrateville. One of the 
 farmers, whose house was near the school, de- 
 cided that the demand of the new community 
 required a store. This he opened, together, 
 possibly, with a public house. The school- 
 house had served as a place of public worship, 
 but the demands of the advanced prosperity 
 of the settlement required a church and a 
 resident pastor. The agriculturists' require- 
 ments for a blacksmith had induced a smith 
 to set up his forge near the church, and in a 
 little while a wheelwright shop was connected 
 with the blacksmith shop, and a resident 
 wheelwright was added to the community. A 
 post office had already been established by the 
 
FREE BANKING. 1 63 
 
 Government, and a stage-route to a larger 
 supply town became a necessity. An ener- 
 getic and restless printer had entered the com- 
 munity and set up a printing office, which was 
 but the prelude to a newspaper. A resident 
 physician had long before been added to the 
 community. Following the issuing of a news- 
 paper came also the lawyer. 
 
 It had, as may be surmised, taken a decade 
 or more before the town had reached this 
 state of development. 
 
 Later, then, some of the more thrifty or more 
 fortunate of the farmers had concluded that 
 they would give up their farm to a son, and 
 move into the town, there to spend their re- 
 maining years in retirement from active labor. 
 Each of this class built for himself in the town 
 a more or less pretentious house; and so the 
 town grew, until, after many years, six or 
 seven hundred houses had been erected in 
 Illustrateville. In many of these houses, 
 and, in fact, in most of them, dwelt young, 
 active persons, children or dependents of the 
 household, who longed for the opportunity to 
 earn a livelihood. Illustrateville had indeed 
 many charms for them, and the mere thought 
 of leaving it and going out among strangers 
 was generally oppressive. At home nearly 
 everybody knew them. It was known that 
 they had been reared in eminently respectable 
 
l64 FREE BANKING. 
 
 homes; known, too, who their grandparents 
 were, as well as their parents. Everybody, 
 in fact, knew the eminent respectability of 
 their lineage. Sufficiently informed by edu- 
 cation to know the consideration that they 
 received in Illustrateville was because of their 
 respectable lineage, the same would not, 
 they knew, be accorded them elsewhere, and 
 that if they were of what is termed '' the 
 humble class " their lines of life, if sustenance 
 could there be obtained, would run smoother 
 in Illustrateville than elsewhere on earth. 
 
 So long as the sole industry was simply 
 purveying tO' the needs of the agriculturists 
 who surrounded the town, it was necessary 
 for a majority of these young people to go 
 away to the larger towns and to the cities. 
 To prevent this exodus of the very best 
 material for commercial developments that 
 the town possessed, measures were sought to 
 establish industries in the town for the pro- 
 duction of those commodities other than their 
 own community would consume. Illustrate- 
 ville and its vicinity possessed the ma- 
 terial, the skill, and the labor essential to the 
 manufacturing of several important and 
 much-used commodities, which could readily 
 be sold for use in other communities. The 
 town had the reputation of being a rich com- 
 munity; and, in truth, it w^as rich. Nearly 
 
FREE BANKING. 165 
 
 every man lived in his own house, around 
 which was more or less fertile and highly 
 cultivated land. The houses were well sup- 
 plied with comfortable furniture; a large num- 
 ber of the householders were owners of one 
 or more horses, and nearly all had a sum of 
 money saved by — hidden away in some secure 
 place. Want and privation were truly stran- 
 gers in Illustrateville; although not one of 
 its inhabitants would have been called a capi- 
 talist by those w^ho fully understood what that 
 term implies. 
 
 At a meeting of the business men and prop- 
 erty-holders, called to discuss plans for pro- 
 moting new industries in Illustrateville, it 
 became apparent that the wish that such 
 manufacturing industries should be estab- 
 lished as would keep the young and ener- 
 getic men and women at home, was practically 
 unanimous. Discussion of the question of the 
 ways and means of accomplishing that object 
 revealed that there was not sufficient cash 
 capital in the town to be of much service 
 toward securing the object sought after; yet 
 there was an abundance of wealth. There 
 were very few mortgaged houses in the com- 
 munity, but those few served to measure the 
 available worth of the town. It was found 
 that fifteen or twenty of the community's citi- 
 zens could readily borrow, on the security of 
 
1 66 FREE BANKING. 
 
 their farms and buildings, upward of one 
 hundred thousand dollars. 
 
 Under existing conditions, had those fifteen 
 or twenty men determined to establish given 
 industries necessary to keep the young energy 
 of the town at home, it would have been 
 necessary for them to organize a company. 
 To secure the cash capital necessary for its 
 establishing, they would have had to go to 
 some distant and more general business cen- 
 ter, and there, on the security of mortgages on 
 their individual holding, borrow the necessary 
 money. The men who would organize such 
 a business, and by such methods, would not 
 be old men of conservative habits, who, satis- 
 fied with their accumulation, were perfectly 
 willing to hve in a simple way and aid younger 
 men; they would, on the contrary, be the 
 speculative men of the community, who would 
 intend actively to manage the business that 
 they organized. Whether they organized 
 that business from the purest philanthropy or 
 from the basest selfish motives, the conditions 
 confronting them would be the same. Under 
 existing conditions they could not have bor- 
 rowed the money except at a time when there 
 was a redundancy of money in the great busi- 
 ness centers; for, under no other conditions 
 of the money market could such loans be 
 effected on country property. 
 
FREE BANKING. 167 
 
 It may be well to examine what has been 
 the result in the United States during the last 
 thirty-five years, of nearly all manufacturing 
 industries, that have been established by the 
 efforts of the more prosperous and enterpris- 
 ing members of communities such as Illus- 
 trateville, to promote home industries. In 
 times of sluggish business conditions through- 
 out the country but few such industries were 
 ever established; in times of panics and busi- 
 ness depression, none it is safe to say has ever 
 been organized. Only at such times as 
 business activity and prosperity caused in the 
 great centers the accumulation of more money 
 than the capitalist could lend in those centers 
 to those they believed it safe to trust, could 
 the enterprising men of the country borrow 
 money on the security of their farms and their 
 town property. When the active business 
 men of those large communities made such 
 sales of the commodities in which they dealt, 
 and the purchasers of such commodities 
 quickly paid for them, the banks were fre- 
 quently unable to lend the money of their 
 depositors; it remained idle in the vaults. At 
 such times the managers of these banks 
 turned their search for users of their money to 
 centers other than their own. All the great 
 commercial and financial centers were alike 
 affected with a redundancy of money. Hence 
 
1 68 FREE BANKING, 
 
 it was the weaker centers toward which 
 those bank managers then looked for users of 
 their money. To follow step by step the proc- 
 ess by which their financial eyes rested upon 
 Illustrateville is not necessary. We will, 
 however, turn to the method by which they 
 reached a like community. Some fifteen or 
 twenty miles away from such a community — 
 in a country town, perhaps — were long estab- 
 lished and thoroughly responsible banks. To 
 the managers of those banks word was can- 
 veyed, by methods known to the money-lend- 
 ers, that they could go to the great cities and 
 borrow such sums of money, limited only by 
 their credit, at very low rates of interest; this 
 money they could have the use of for an in- 
 definite time, subject, however, to a call-notice 
 that must be given sixty or ninety days pre- 
 viously to the time when payment might 
 be demanded. Flattering inducements were 
 made frequently to the country banker: it 
 would be many months, perhaps years, be- 
 fore the loan would be called in. Why? The 
 city-bank managers bad faith in the financial 
 integrity of the country banker, and so 
 felt perfectly safe in making such loans. In 
 many cases banks borrowed money for less 
 than two per cent. It was in such financial and 
 business conditions of the country that many 
 country banks aided in the organization of 
 
FREE BANKING. 169 
 
 home industries. They lent on bonds and on 
 mortgages on real estate the amount required 
 to equip the plants and to purchase raw ma- 
 terial for beginning operations, charging the 
 legal interest — from two to six per cent, profit 
 — for such loans as they had made of the 
 money they had borrowed. Imagination may 
 be left free to conjecture the oiliness of the 
 country bankers' tongues when they aided in 
 the promotion of enterprises in which they saw 
 an opportunity for their banks to make a 
 profit of three or four per cent, on the capital 
 of the enterprise; promoted, too, without in- 
 curring a probable financial risk. 
 
 When the money of the business men of the 
 great centers — deposited and not used in the 
 great banks of the city, and not needed by 
 them — had found its way through the coun- 
 try banks into the hands of the owners of 
 country property, manufacturing industries 
 were begun, and the towns in which such in- 
 dustries were started became apparently pros- 
 perous. These industries gave not only em- 
 ployment to the labor and the skill available 
 in the community in which the town was situ- 
 ated, but they also drew citizens from other 
 communities. As rapidly as finished the 
 manufactured goods were sold readily and 
 profitably, and the demand for more goods 
 than the capacity of the plants could produce 
 
lyo FREE BANKING. 
 
 frequently led to the enlargement of the fac- 
 tories. More money then was borrowed. 
 
 Why not? Satisfactory profits had been 
 made; the town had been improved; all its 
 people had become active workers at profit- 
 able occupations; why should not the mana- 
 gers of the industry borrow more money, 
 enlarge their opportunity for profit and for the 
 development of the town? That was the way 
 business was done in the great cities; that 
 was the only way that men in manufacturing 
 avocations had ever lifted themselves from 
 lowly conditions to great wealth. 
 
 Generally, about the time that the additions 
 toi the plant had all been finished, the man- 
 ager of it discovered he had greater difficulty 
 in effecting sales; it was quite possible, in fact, 
 for the old plant to have produced all of the 
 commodities that they could sell at a profit. 
 Collections became more difficult, and those 
 whom they owed were more anxious to make 
 collections. For a new tariff bill had been 
 projected by men of influence in the land; or 
 some hot-headed naval or commercial officer 
 in foreign lands had been subjected to some 
 indignity, to avenge which the *' honor of the 
 nation " demanded that war should be de- 
 clared. Or some great political organization 
 had determined that the best policy for the 
 Government to pursue in regard to its mone- 
 
FREE BANKmC. 17 1 
 
 tary system was something radically different 
 from the existing system; or one of a multi- 
 tude of other causes had affected public con- 
 fidence in business men's ability to fulfill their 
 contracts. 
 
 That lack of confidence would be indicated 
 first in the great centers. The most cowardly 
 thing of all things cowardly is money; and 
 the larger the amount of rroney, the bigger 
 the coward. The great banks of the city 
 would very early in the disturbance call in 
 their loans to the country banks. And the 
 country banks would have no option in the 
 matter. Not only would they be compelled 
 to refuse to the country factory further aid, in 
 the shape of new loans and discounts, but the 
 country bank would be compelled to demand 
 the payment of most of the mortgages given 
 by the individual stockholders of the factory 
 on their private holding. Before anyone but 
 the skillful financial operator of the great cities 
 had learned that a depressed condition of busi- 
 ness might be expected, the manufacturing 
 enterprises of the town in illustration would 
 be financially ruined. By the ease with which 
 they borrowed money they had been 
 *' charmed " into an unnatural development 
 of industries in their town; ''charmed" into 
 additional improvement by the apparently 
 satisfactory profits on the earliest efforts ; they 
 
172 FREE BANKING. 
 
 had stretched their credits to the uttermost, 
 and when the frost of business depression fell, 
 they were powerless. The commodities they 
 had manufactured in excess of orders — and 
 under the conditions it was quite natural that 
 the supply should be large — were forced upon 
 the market at ruinous prices, to meet pressing 
 demands for money. The works were closed, 
 because goods could not be sold at even the 
 cost of production; the vast plant became of 
 no value unless the business could be con- 
 tinued; not ten per cent, of its cost could be 
 realized under a forced sale. Although the 
 factory became idle, the interest-account 
 never ceased to grow, except when payments 
 on it were made. The people who had been 
 attracted to the town when the business of the 
 factory was active could not pay rents, and 
 houses became unoccupied and dilapidated 
 rapidly. People who had become educated 
 to active work and good v/ages became 
 idlers and grumblers; the merchants of the 
 town, one by one, were compelled to give 
 up business or make terms with their cred- 
 itors. 
 
 In communities where such disaster pre- 
 vailed real estate would naturally depreciate. 
 Measured, too, by the ability of its owners to 
 borrow money on it, the depreciation would 
 be to a point below that which existed at the 
 
FREE BANKING. I73 
 
 time the promoting of manufacturing indus- 
 tries there was first discussed. 
 
 This is not a fanciful illustration; it is real. 
 And it is within the bounds of truth to say that 
 upward of a thousand of such communities 
 exist to-day in the United States. And too 
 frequently the blighted hopes of the business 
 men who promoted those industries, united 
 with the great disappointment of the wage- 
 earners of the community, have resulted in a 
 perceptible lowering of the moral condition 
 of those communities. 
 
CHAPTER X. 
 
 We will now return to Illustrateville, during 
 the prevalence of a monetary system predi- 
 cated on justice; a system that gives oppor- 
 tunity to all and is unjust 1o none, whether the 
 measure of value be of gold or of silver. This 
 the Government regulates as it regulates the 
 yardstick. Upon the latter the Government 
 stamps its guarantee of the accuracy of the 
 measure, and charges those who may need it 
 the cost of the stamping. But, as the cost of 
 coining gold is an infinitesimal part of the 
 value of the metal used, there may perhaps be 
 no objection to Governmental free coinage. 
 
 For the convenience of interstate travel- 
 ers, and men of other businesses who might 
 demand money that could be used throughout 
 the country, the United States might issue 
 paper bills about equal in volume to the issue 
 of the silver notes now in circulation; bills 
 that would be received by the Government for 
 taxes and custom duty, but not necessarily to 
 be legal tender for any other purpose. And 
 it would be more desirable if the issue of such 
 paper-substitute for money be limited to at 
 174 
 
FREE BANKING. I75 
 
 least one-half of the annual expenses of the 
 general Government. 
 
 Such bills of the Government — because of 
 their convenience for so many purposes 
 where gold coins would be inconvenient — 
 would, anywhere in the United States and 
 at all times, be equal in value to the standard 
 money. It is assumed that the standard will 
 be the present gold dollar. Of such limited 
 paper money not enough could be had 
 by taxpayers with which to pay all taxes 
 and customs, and the amount of such sub- 
 stitutes for money furnished by the Gov- 
 ernment should always be so limited that 
 not enough of it could be had at any time to 
 meet the requirement of the taxpayers. This 
 would require that taxpayers pay some part 
 of their taxes in gold dollars. It would 
 be a faulty monetary system should the Gov- 
 ernment require that a part of the taxes be 
 paid in gold. When offered by the taxpayer, 
 the Government should accept its tax notes in 
 full payment; but if the issue of these notes 
 were limited to one-half the annual budget, 
 there would be a constant flow of gold into the 
 Treasury, and, in all probability, a percentage 
 of taxes would be paid in that metal far greater 
 than by the use of tax notes. These not 
 being legal tenders, could be put into circu- 
 lation only by the Government using them — 
 
176 FREE BANKING. 
 
 to purchase commodities and pay for services 
 rendered to the Government. To the Gov- 
 ernment might safely be given the option of 
 paying its debts with these tax notes, except- 
 ing those already contracted for, and for which 
 gold payment was pledged. For govern- 
 ments should always redeem their pledges. 
 There would be no trouble, however, to get 
 the notes into circulation. They would readily 
 be accepted in this country by all to whom 
 they were offered ; and it is quite possible that, 
 at times, they might command a premium of 
 a fraction f one per cent. For, so long as the 
 Government lasts and receives them for taxes 
 they would never be discounted. This truth 
 is so axiomatic that any argument to prove it 
 would be ridiculous. The tax note would 
 never menace the credit of the nation. The 
 Government would be under no obligation to 
 redeem any of its circulating tax notes, ex- 
 cept as they flowed into the Treasury through 
 the channels of taxation. Its credit, there- 
 fore, would not be disturbed by any effort of 
 the owners of gold coins and of bullion to dis- 
 turb the value of that metal. These owners 
 could appreciate or depreciate the metal used 
 for standard coin without any disturbance to 
 the Government's finances, although any dis- 
 turbance of the value of the metal of the 
 standard would affect the business operations 
 
FREE BANKING. 1 77 
 
 of the country more or less seriously. But all 
 would be affected alike — from the Atlantic to 
 the Pacific, from the Gulf to the Great Lakes. 
 
 When the measure of value was the present 
 gold dollar, Illustrateville organized to pro- 
 mote home industries. The Government's 
 only paper issues were tax notes, redeemable 
 by the Government only for taxes and cus- 
 toms dues, and not legal tenders for any other 
 obligations of the people; when no obstruc- 
 tions in the way of private or of State banks 
 were imposed by the United States; when the 
 Government of nation or State did not guar- 
 antee the redemption of paper money, and to 
 make a bank bill sound used no methods 
 besides those used to secure the payment of 
 any other kind of an I. O. U. 
 
 In fact, any other kind of Government 
 paper money that would serve the purpose of 
 currency that tax notes accomplish, would not 
 interfere with the operations of banks like the 
 one under illustration. 
 
 The necessity to provi le useful and profit- 
 able occupations for tl e young men and 
 women of Illustrateville (for upward of four 
 hundred of them in the community were so 
 anxious to do something for themselves that 
 they were preparing to go away to larger 
 business centers, or to the great cities) had 
 been long discussed by lawyers, doctors, min- 
 
178 FREE BANKING, 
 
 isters, merchants, mechanics, and farmers of 
 the community. Those discussions were 
 keenly Hstened to by the young people who 
 loved so well the place of their birth. But 
 they felt impelled by necessity to leave it for 
 opportunities to earn a sustenance; and so it 
 was with the keenest delight that they hailed 
 the crystallization of that long discussion — a 
 real effort to establish a factory in lUustrate- 
 ville. 
 
 Of the community of which lUustrateville 
 w^as the center the more enterprising citizens, 
 who possessed valuable real estate and im- 
 provements thereon, met in the town hall, 
 or, perhaps, in the schoolhouse, to discuss 
 plans. 
 
 Soon it was ascertained that there were not 
 sufficient gold dollars or tax notes in the pos- 
 session of the community to accomplish any- 
 thing of a practical nature. It was suggested 
 that some of the real-estate holders borrow 
 money on their real estate, and lend it to the 
 proposed company, on the security, perhaps, 
 of the stock of the company. The objection 
 to this plan was soon apparent. No property- 
 owner would incur the risk of borrowing 
 money to lend to a prospective company, un- 
 less he could, to a great extent, control the 
 company. And none among those best able 
 to raise money by mortgaging their real 
 
FREE BANKING. 179 
 
 estate, cared to impose upon themselves the 
 burden of a business of which they knew prac- 
 tically but little. 
 
 It was determined finally to organize a 
 bank. It was not necessary to have any gold 
 or tax notes. The possession of a few thou- 
 sand dollars' worth would be an advantage, 
 but not a real necessity. It was, however, 
 necessary to have honest and capable man- 
 agers of that bank; men well known to the 
 community of Illustrateville for their keen 
 business perspicuity, sterling integrity, and 
 sobriety. 
 
 To avoid difficulties, annoyances, and dis- 
 turbance of business it was determined that it 
 would be better to organize the bank as a cor- 
 poration rather than as a firm. These annoy- 
 ances and difficulties would necessarily occur 
 whenever death claimed one of the members 
 of the firm, and that would be likely to occur 
 frequently, as there would necessarily be a 
 large number of members of the banking 
 company, and they would almost all be men 
 who had practically fought the battles of life 
 and were retired veterans. 
 
 The charter of the Bank of Illustrateville 
 was secured. A vigorous man of the town 
 was made president. Years of careful atten- 
 tion to his business — that of a country mer- 
 chant, perhaps — and a life of sobriety, in- 
 
i8o FREE BANKING. 
 
 dtistry, and integrity, had won for him success 
 and the confidence of the pubhc generally. 
 
 He WIS selected by a board of directors, all 
 men well known in the community, and gen- 
 erally respected for their many good qualities. 
 A cashier was then appointed, a young man of 
 honesty and sobriety, whose father and grand- 
 father had been well acquainted with most of 
 the older men of the community, and were 
 known to be honest and worthy. All the em- 
 ployees of the bank were well known, at least 
 to the business people of Illustrateville; conse- 
 quently, when the bank opened its doors, the 
 character of its officers had inspired the pub- 
 lic with the belief that so long as the bank re- 
 mained under the same management, nothing 
 would be done to impair its credit. Those 
 citizens who aided in the organization of that 
 bank did not care a rap about establishing a 
 credit for the bank elsewhere than in the com- 
 munity, for whose convenience, and for the 
 promoting of new industries of which, it had 
 been organized. Those of the management 
 who were anxious for profits could not have 
 been induced to resort to unnatural means to 
 establish a credit elsewhere, as there would 
 be no possibility of making profits from pro- 
 moting such credits sufficient to compensate 
 for any expense of artificially doing so. For, 
 having no money to lend, nor seeking to bor- 
 
FREE BANKING. i8l 
 
 row, there would be no way by which profits 
 for the bank could be realized from distant 
 centers. The great object of the bank was to 
 promote home industries, not to make profits 
 by lending money, although profits could rea- 
 sonably be expected by the bank's manage- 
 ment as the result of the promotion of those 
 industries. 
 
 The plans for promoting those industries 
 were very simple. Within the community of 
 Illustrateville raw material — for the purpose 
 of manufacturing the articles that were pro- 
 posed should be manufactured at home — 
 could, it was known, be readily obtained. The 
 skill and labor were there, largely in idleness, 
 and all that was necessary to make the finished 
 article was to provide the ways and means by 
 which skill and labor could so manipulate the 
 raw material as to produce the finished prod- 
 uct. It would not be necessary that all the 
 raw material should be accessible within the 
 limits of the community, because the bank's 
 credit was sufficient to bring it from other sec- 
 tions, and the finished product of the factory 
 could readily be exchanged for gold money. 
 
 The bank was organized by issuing stock 
 to those possessors of real estate in the com- 
 munity who wished to become stockholders. 
 The stockholders paid for their shares of stock 
 by giving to the bank mortgages — always the 
 
I02 FREE BANKING. 
 
 first — on their real-estate holding. Stock 
 would not be issued on real estate for more 
 than one-third or less of its market value. 
 Such mortgages did not bear interest, and 
 could at any time be liquidated by the holder 
 of such mortgages paying to the bank in gold 
 or tax notes, or notes of the bank, the amount 
 of the mortgage, or by surrendering the stock. 
 
 But the bank agreed that money so paid 
 should be re-lent, as expeditiously as safety 
 would permit, to some real-estate owner who 
 would accept the stock of the bank in ex- 
 change for the mortgage. It would be very 
 rare when there would be any such transfers of 
 mortgages, for the selling value of such mort- 
 gaged places would be more likely to advance 
 in price than be affected otherwise. The 
 stock issued against the mortgaged property 
 would naturally be transferred to any pur- 
 chaser of such mortgaged property, and, being 
 profit-making stock, it would generally add 
 additional value to the mortgaged land. 
 Various other valuable plans for organization 
 of the Bank of Illustrateville might have been 
 accepted by its originators, inasmuch as at 
 the time the bank was organized there were 
 no laws standing as impediments in the way 
 of banks whose capital was gold or any other 
 commodity established. 
 
 But, there was very little cash capital 
 
FREE BANKING. 183 
 
 available in the community, and as the com- 
 modity of gold served no better purposes in 
 promoting financial credit than improved 
 real estate, these holders of real estate, and not 
 of gold, chose real estate to be the basis of 
 their financial credit. When the bank was 
 finally established, these holders held mort- 
 gages to the amount of one hundred thousand 
 dollars against from three to four hundred 
 thousand dollars' worth of real estate, all of 
 which was improved and occupied. 
 
 Probably the stock was distributed among 
 fifty holders. None held very large amounts. 
 Those who aided in the bank's organization 
 were men past middle age; they had grown up 
 in the community and knew every stockholder 
 in the bank; knew every foot of land against 
 which these mortgages rested Not one could 
 neglect his holding or, by inattention or any 
 other cause, permit it tO' depreciate without 
 all the other stockholders being made ac- 
 quainted with the facts. All were keenly alive 
 to the importance; all were interested; each 
 should maintain the value of the real estate 
 against which the bank held mortgages. 
 Under such system the bank possessed the 
 power to call in the mortgages, and to demand 
 payment in stock — the stock issued in ex- 
 change for the mortgages — therefore, a depre- 
 ciation of the securities constituting the bank's 
 
1 84 FREE BANKING. 
 
 capital was impossible. Should the bank be 
 overtaken by disaster, its stock would, to the 
 extent of its full face-value, be made available 
 to pay its liabilities. But disaster was almost 
 impossible, as will be shown later. 
 
 The bank was successfully organized. 
 Had there been any necessity for the use of 
 money, the credit and the character of the 
 men who managed it, aided by the valuable 
 mortgages they held, would have secured a 
 loan of the necessary amount. But in the 
 case of the industry proposed, when almost 
 the entire cost was for labor and rav^^ material, 
 which the community possessed, money was 
 not necessary, but for the convenience of all 
 the people of the community of which lUus- 
 trateville was the center, the bank issued a 
 substitute for money that was nothing more or 
 less than a bank bill that none were compelled 
 to take as payment for commodities sold or 
 services rendered, but which all dwelling in 
 the community, for whose convenience it was 
 issued, would, nevertheless, readily accept. 
 On its face it read, " The bank of Illustrate- 
 ville will pay to bearer, on demand, the sum of 
 one dollar." Everyone there felt confident 
 that when a demand was made on the bank 
 for that dollar it would be satisfied, and that, 
 every dollar called for on the face of the note 
 would be paid in gold dollars or tax notes. A 
 
FREE BANKING. 185 
 
 demand for the dollar, under such circum- 
 stances, would seldom be made; only when 
 people wanted to go away from Illustrateville 
 would they demand gold, or request tax notes, 
 in exchange for their bank bills. 
 
 Four or five active, intelligent, industrious, 
 sober, and honest young men — no other kind 
 would receive any attention from the bank 
 officers — proposed to erect in Illustrateville a 
 factory, in which to manufacture fruit baskets 
 and plaque ware. This will prove as good 
 an industry for illustration as anything 
 else. Other men would organize for the 
 manufacture of other commodities. The 
 young men were known to the managers of 
 the bank. It would be useless for any whose 
 character could not have stood the most rigid 
 investigation to have applied to the bank for 
 financial aid. The success of the bank de- 
 pended upon the character of the men finan- 
 cially aided by it, as well as upon any other 
 kind of securities. Hence, sobriety, industry, 
 intelligence, and integrity, when united in one 
 individual, became capital worth more to that 
 bank than any other kind of capital, because 
 it possessed brains and energy. Such men 
 could, with advantage to themselves, to the 
 bank, and to the community, use those bank 
 notes or certificates of credit that the bank 
 must lend to realize profits. 
 
1 86 FREE BANKING. 
 
 For the erecting of the factory building but 
 little money was needed. The bank notes 
 would be received by the owners and the cut- 
 ters of the timber and lumber used in the con- 
 struction of the factory. All artisans and 
 laborers engaged upon it accepted payment 
 in the bank's notes; the merchants of the com- 
 munity readily accepted them in payment for 
 those commodities that they sold. Money 
 necessary for the purchase of the machinery 
 could be furnished by the bank in notes given 
 as security and secured by the indorsement of 
 such men of property as might be interested 
 in the success of the enterprise, and were 
 acceptable to the managers of the bank. 
 
 As soon as the factory had been put into 
 operation, the sale of its products would 
 necessarily return to the town as much or 
 more money than would be needed, so long as 
 the bank's notes were freely accepted. The 
 treesi, from which the slats and veneering were 
 procured, had been paid for with notes of 
 the bank. The labor of cutting the trees from 
 the stump had been paid for in those notes. 
 The labor of manufacturing had been paid for 
 by bank notes; also the labor of boxing and 
 loading into cars, together with the skill that 
 directed the work. All had been paid for with 
 these notes. Only the nails and metal needed 
 in the manufacturing had required any kind 
 
FREE BANKING, 187 
 
 of money other than money's substitute in the 
 character of those bank notes. The railroad 
 company might or might not demand gold or 
 tax notes in payment of freight; but of that 
 invoice, amounting to one thousand dollars in 
 value, the goods of which had been shipped 
 to a great center and sold by the managers 
 of that factory, all the expenses incurred in 
 producing them and in placing them on the 
 market in which they were to be consumed 
 were — excepting perhaps fifty or seventy-five 
 dollars at the utmost — liquidated by the use of 
 those notes that had been issued by the Bank 
 of Illustrateville, and readily received by the 
 people of that community as of equal value 
 with the gold money of the Government. 
 They were accepted wherever received, be- 
 cause they would purchase as much commodi- 
 ties or labor as money of gold would procure. 
 Here we have an illustration of a com- 
 munity that possesses all materials — the prod- 
 ucts of nature and idle men and women — as 
 possibilities for the production of wealth. As 
 long as the labor remained idle there could be 
 no production of wealth, and, of course, little 
 or no progress. The community could not 
 command gold or money to set energy in mo- 
 tion to produce wealth. Had money been 
 advanced by capitalists from other centers, 
 it is true wealth would have been produced; 
 
l88 FREE BANKING. 
 
 but at what cost to that community? The 
 labor employed by those capitaHsts would 
 have been wage-earning, and to the extent 
 that wage-earning benefits communities 
 Illustrateville would have been improved. 
 Labor's share of gross earnings is rarely more 
 than twenty-five per cent, of the wealth it 
 creates in factories. All profits from such fac- 
 tories, which outside capital would have 
 operated in Illustrateville, would have gone 
 away from the town most probably, and no 
 improvement to the community would result 
 from the profits realized by such manu- 
 facturing. The products of nature — a part, 
 and frequently an important part, of the wealth 
 of a community — would also have been taken 
 from it; and to that extent, at least, the com- 
 munity would have been impoverished. 
 
 Being in possession of the right to organ- 
 ize a bank, and by organizing one for the loan 
 of its credit, in shape of currency-demand 
 notes, the people were enabled to convert 
 products of nature, practically useless to them 
 in the shape that nature finished them, into 
 valuable commodities, by employing idle 
 labor that, when idle, was a disadvantage to 
 the community. By combining nature's 
 products, by the employment of an impover- 
 ishing population, — idle people, — they practi- 
 cally increased the wealth of the community 
 
FREE BANKING. 189 
 
 to the full extent of the value of the com- 
 modities created, less the expenses of market- 
 ing them. This would be true absolutely in 
 the case in illustration if the laborers, when 
 employed, consumed no more commodities 
 than when idle, and when no one hitherto 
 employed was engaged in producing those 
 commodities, but had been living upon the 
 product of the labor of others of that com- 
 munity. 
 
 Illustrateville manfactured not only baskets 
 and plaque ware; various other industries 
 were promoted by the bank; fully enough to 
 keep at home all who wished to remain in 
 the place of their birth and be profitably em- 
 ployed. It had a foundry there that utilized 
 the old iron mechanism that had been dis- 
 carded and was practically useless. The new 
 pig iron necessary for the new business would 
 probably have to be bought with money other 
 than the bills of the bank. All other cost of 
 the finished product of the factory could un- 
 questionably have been bought by the bank's 
 notes. The products of its brickyards were 
 created solely by the bank's credit currency. 
 In extent and in embellishments Illustrate- 
 ville grew rapidly. The factories created 
 practically from nothing — unused natural 
 products and hitherto idle labor — perhaps 
 as much as four dollars' worth of commodities 
 
19° FREE BANKING. 
 
 per day for each person employed, or nearly, 
 or quite, two thousand dollars daily of really 
 substantial wealth, one-fourth of which, under 
 ordinary circumstances, would be accumu- 
 lated in the shape of new or improved posses- 
 sions of the people of the community that 
 created the wealth. The interest paid to the 
 managers of the bank, the profits realized by 
 the managers of the factories, together with 
 the wages and salaries paid, all would be re- 
 tained in Illustrateville, a town of three thou- 
 sand people, the center of a community of 
 perhaps not over ten thousand. Thus, from 
 their manufacturing industries alone, they 
 would realize a profit of six or seven hundred 
 thousand dollars per year above what they 
 could possibly have accumulated had not 
 such a bank as described promoted and devel- 
 oped those factories. 
 
 Nor would that measure the extent of the 
 benefit to the community from such a source ; 
 because the seven thousand people living 
 around about Illustrateville w^ould also have 
 received many benefits — a result of the pros- 
 perity of the town. No argument is neces- 
 sary to prove this ; its truth must be admitted 
 by the thoughtful. 
 
 The town and community would prosper so 
 long as markets could be found for their 
 wares; they would be in a condition to manu- 
 
FREE BANKING. 1 91 
 
 facture at a minimum cost so long as the raw 
 material could be produced in the community 
 as cheaply as elsewhere, and so long as there 
 was not an excessive demand for labor there. 
 Labor could not command more wages than 
 the profits from the sales of the wares would 
 permit the manufacturers to pay. There is a 
 period that seems inevitably to occur in every 
 business when the product of factories can- 
 not be sold at a profit, because in the markets 
 are offered, at a price that will not return 
 profits to the manufacturers, more of the 
 goods than consumers can use. 
 
 When that period arrived, the manufac- 
 turers of Illustrateville would either shut 
 down their works or reduce the output, by 
 shortening hours of work, or by employing 
 fewer workers, until scarcity of their wares in 
 the market would raise the selling price to a 
 point where profits would be returned to 
 them. 
 
 This they could readily do. The bank held 
 their obligations; the management of the bank 
 would never have permitted them to extend 
 their business beyond a legitimate risk. The 
 money they had borrowed was the credit of 
 the bank. The bank had borrowed no money 
 to promote those industries; no capitalists, no 
 other bank, could demand of the Bank of Illus- 
 trateville the amount of money that that bank 
 
192 FREE BANKING. 
 
 had lent to those manufacturers of the town 
 to promote the industries now embarrassed 
 for the lack of customers. It was a necessity 
 of the bank to maintain the various industries 
 that its credit had promoted. It might pos- 
 sess the power to close some of them out, per- 
 haps all of them, but it could not be to its 
 advantage to do so; it would, probably, be to 
 its disadvantage. I'he bank could make profits 
 only by lending its credit, excepting from that 
 little that could be made by lending its ex- 
 cess deposits. Unless, indeed, factories were 
 to be operated in the future, the bank could 
 not hope to find a future market for its credit. 
 
 Should the bank close any one of the indus- 
 tries it had promoted, it would have to do so 
 because the management of that industry had 
 failed, in some way, to show good business 
 qualities, or, in the minds of such m«en as the 
 banks must lend its credit to, it would impair 
 faith in the fairness and in the good business 
 qualifications of the bank's management. 
 Without this faith in the bank no man of such 
 capabilities as the bank must necessarily use 
 would undertake to build an industry pro- 
 moted by it. 
 
 The bank, being under no pressure from 
 without, could afiford to permit all of these in- 
 dustries to remain idle. Its stock cost nothing; 
 stockholders would simply have less profits; 
 
FREE BANKING. 193 
 
 their stock would be unimpaired; it was really 
 only a part of their farms and houses. They 
 could be put to only a slight cost even if the 
 bank remained in idleness, together with 
 the factories; for the expense of maintaining 
 the bank would be light. The money that the 
 bank had borrowed, if any, upon which inter- 
 est was being paid, could readily be returned 
 or lent elsewhere, to produce interest with 
 which to pay interest. The currency of the 
 community would be bank bills of Illustrate- 
 ville, so long as the people of the community 
 had faith in the integrity of the bank, and 
 those bills would reach the bank only to 
 pay an indebtedness to the bank or as a de- 
 posit. If each man in the community had in 
 his possession ten dollars of these bills, there 
 would be not over twenty or twenty-five thou- 
 sand dollars of them out. The merchants of 
 the community might have as much more 
 again on deposit in the bank. All of these 
 bills — those in circulation and those in the 
 bank — might be interest-earning to the bank, 
 but the bank's liabilities for i*- circulating 
 notes would not be one-tenth of its real assets. 
 Every obligation of the bank would be repre- 
 sented by its circulating notes and its de- 
 posits. It would rarely lend anything but its 
 credit — as represented by these notes — to 
 those to whom it extended a credit. It never 
 
194 FREE BANKING. 
 
 borrowed. For all the notes it issued, or lent, 
 it received pledges of security that they, or 
 legal-tender money, would be returned to the 
 bank in liquidation of the lo'-n. 
 
 The bank managers would not consent to 
 have manufactured products sold at ruinous 
 prices to provide the manufacturer with means 
 to pay his obligations to the bank. Nor 
 would they consent to excessive or speculative 
 productions. To do so would not be good 
 business. If a manufacturer were in posses- 
 sion of sufficient wealth to do this without the 
 bank's aid, then the bank would have no 
 further use of him; and his failure, therefore, 
 could not affect the bank. If he persisted in 
 manufacturing with his own means, or means 
 borrowed from outside capitalists, the bank 
 would not lose anything from a disaster that 
 might overtake him, and Illustrateville would 
 be benefited to the extent to which outside 
 capital may have been absorbed by the town 
 in such unprofitable productions, less such 
 interest that may have been paid for the use 
 of that outside capital. 
 
 It will be seen, then, that it is possible to 
 have a bank of issue that will provide a 
 medium of exchange ; that will enable hitherto 
 idle labor to manipulate nature's products into 
 useful commodities, without that bank having 
 any capital other than real estate. This, 
 
FREE BANKING. 195 
 
 of course, any community of civilization can 
 furnish. It has been shown that, in the com- 
 munity in which the bank is situated, and for 
 the convenience of which it was estabHshed, 
 such a bank can provide a currency equal in 
 value to the best currency of the world, but of 
 so little value elsewhere that it will not be re- 
 ceived as money by anyone who does not 
 intend to use it in the vicinity of the bank 
 that issued it. And no one excepting the 
 management of the bank, and then only at the 
 office of the bank, is compelled to accept it. 
 
 The history of lUustrateville demonstrates 
 that such a currency can practically produce 
 wealth from that which is more worthless for 
 the time being than nothing — useless natural 
 products and idle labor; that it can stimu- 
 late industries to a point the commercial world 
 is pleased to term overproduction, and can 
 then in safety stop the business of production 
 until a scarcity of products in communities 
 creates wants that will return profits, and dur- 
 ing the period of waiting nothing of past 
 labor's productions is sacrificed. It has been 
 demonstrated also that under that system, the 
 condition of labor has been so advantageous 
 that only the most wretched recklessness, due 
 to accumulated rewards, could have prevented 
 the employee from awaiting the coming 
 of the revived business. It has been shown, 
 
196 FREE BANKING, 
 
 too, that during the period of manufacturing 
 activity, under the system described, the 
 accumulation; of wealth have been reserved 
 for the people of the communities that created 
 it, and distributed it, as fairly as under any 
 system of economy yet devised. 
 
 It has also been shown that, under the 
 system of money now prevalent in the world, 
 and particularly in the United States, the 
 profit realized for most of the industries de- 
 veloped in the country districts, — more espe- 
 cially those remote from great centers, — have 
 been taken from the communities that yielded 
 them; that frequently more than profits have 
 been absorbed by other communities; that the 
 accumulation of those instrumental in organ- 
 izing, in a limited way, small industries, have 
 gone to those who aided them with capital to 
 extend their plant, and that when the period 
 of *' overproduction " and stringent money 
 market came the industries have frequently 
 been crushed out, the community impover- 
 ished, and the people demoralized. But the 
 great centers have grown in extent of terri- 
 tory, of magnificence, rich men, poverty, crime, 
 and degradation. 
 
 When the Government is confined to its 
 legitimate functions, completely separated 
 from the banking business, a paper currency, 
 as has been shown, can be issued that will 
 
FREE BANKING. 197 
 
 afford to all sections of our country a safe and 
 elastic bank currency. But not one uniform 
 and under Government supervision, and where 
 there is also no need of the Government to 
 exert itself tO' measure the volume by the 
 needs of business. 
 
 If the civilized governments will confine 
 their monetary laws to defining the quantity 
 of the measuring metal the unit of value 
 must contain, and permit the methods of ex- 
 pediting exchange of commodities to be ad- 
 justed by tradesmen's business necessities and 
 capabilities, a paper substitute for money will 
 be provided that will be as effective in pro- 
 moting exchanges as any other possible 
 means. Of this there can be no reasonable 
 doubt. 
 
 The needs of business will do its own meas- 
 uring accurately, while the Government's 
 would never be correct unless by an oc- 
 casional accident. It would be a paper cur- 
 rency, not made legal tender for public and 
 private debts, but as good, where issued, as 
 the best money of the world. Under a per- 
 fectly free banking system the volume of 
 currency in circulation would be regulated 
 entirely by the demands of communities for it. 
 Those communities that might at one sea- 
 son of the year demand the use of $150,000 of 
 circulating bills, and at another time not 
 
198 FREE BANKING. 
 
 $50,000, would be accommodated with cur- 
 rency by the free banks according to the com- 
 munity's wants. When the community needed 
 $150,000 of the currency bills, the bank 
 would lend its credit to that amount, and 
 from the loan of its credit make the same 
 profits that it could have made from the loan 
 of $150,000 of gold coin. But as gold would 
 have been capable of earning interest without 
 the bank's credit sustaining it, the bank would 
 be compelled to lose whatever interest its gold 
 was capable of earning when it retained the 
 gold in its vault, or whenever it was unlent. 
 
 Not so with its credit bills. If the interest 
 on loans were six per cent., as long as 
 the bank could lend $150,000 of currency 
 notes, it made from the loans of its credit 
 $750 per month, less the bank's expense; — 
 not from the loan of accumulated wealth. 
 When the business of the community de- 
 manded only a few thousand dollars' worth 
 of currency notes, the bank's profits would 
 be little or nothing. But why should the 
 bank derive a profit from its business with a 
 community so embarrassed for the want of 
 consumers of its wares as tO' be compelled 
 to resort to idleness to avoid losing the 
 wealth it had already accumulated; a com- 
 munity forced to idleness that economies 
 essential to its future prosperity might be 
 
FREE BANKING. 199 
 
 accomplished? Why should the commodity 
 of money, or the commodity of land — the 
 bank's capital — possess a privileg: not com- 
 mon to all other commodities? 
 
 It may occur to some minds that the Bank 
 of Illustrateville might, at some period in its 
 history, when it had issued a very large 
 amount of currency notes, be embarrassed by 
 an impairment of its credit, and it might even 
 have the greater part of its notes offered at 
 its counter for redemption in gold; but such 
 a condition would be only a remote possibility 
 to the bank. Should outside capitalists, seek- 
 ing to injure it, be willing to pay dearly for the 
 pleasure of doing so, it might cause the bank 
 to close its business for a time; but so long as 
 the bank's managers possessed the confidence 
 of the trading public of their town, the incon- 
 venience to the business of the bank and the 
 community would be but for a short time. 
 
 The bank could readily realize sufficient 
 cash on its valuable holdings of real estate 
 and other collaterals, which it had taken from 
 every man to whom it had issued a note ; and 
 when it had done so, its notes could all be 
 paid. It then would not owe a dollar. The 
 money it had borrowed to redeem its notes 
 would have been repaid from the collections 
 of the debts owed to the bank, which would 
 be in exactly the same condition to do busi- 
 
200 FREE BAA' KING. 
 
 ness as it had been on the day it first opened 
 its doors. If outside capitaHsts had been able 
 to command one hundred thousand dollars 
 of the notes, they could have accumulated 
 those notes only by slowly purchasing and 
 by holding them. The Bank of Illustrate- 
 ville would probably be making interest on 
 these notes all the while that those seeking- 
 to injure the bank were holding them. For 
 those notes might be interest-making so long 
 as they remained outside of the 1)ank that 
 issued them. They could be had only by 
 purchase at their full face-value. The gold 
 with which they would have to be purchased 
 would go to those in Illustrateville who used 
 the bank's circulating notes, and in the usual 
 course of business would naturally go into the 
 bank's vaults through the channel of bank 
 deposits. This would to a great extent fur- 
 nish the bank with gold to meet any demands 
 made upon it for the redemption of its notes. 
 The managers of the bank would know when- 
 ever such an efifort to secure an extraordinary 
 amount of its notes was being made, because 
 the needs of the business of the town for cur- 
 rency notes would be apparent to them, and 
 whenever an excessive number of their notes 
 were in circulation they would well know that 
 an unusual and senseless movement was tak- 
 ing place; they would therefore naturally re- 
 
FREE BANKING. 201 
 
 serve a corresponding amount of the gold that 
 those persons who were hoarding their notes 
 fooHshly provided the bank with. 
 
 It is not to be supposed that the officers, 
 whose quahfications and integrity had inspired 
 confidence among the people of a community 
 to accept their currency notes at a value equal 
 to the best money in the country, would lend 
 those notes on the security of irresponsible 
 people, just for the sake of getting those notes 
 into circulation. The bank could not make 
 anything by it. It is quite possible that if they 
 did lend their notes recklessly, the bank would 
 not be able to collect a dollar from those irre- 
 sponsible persons to whom they made the 
 loans. It would rather be compelled to pay 
 out a gold dollar for each dollar's worth of 
 those notes that it had lent to irresponsible 
 persons. The managers of the bank, there- 
 fore, would be just as particular regarding the 
 responsibility of those to whom they lent their 
 credit notes as they would if they had had 
 nothing but gold money to lend. 
 
 Irresponsible men could not organize such 
 banks. As it has already been said: having 
 no credit, they could not sell credit. No one 
 would take their notes. They could not cir- 
 culate currency. The conditions would not 
 be those that existed in the United States in 
 i860, when there was no paper money that 
 
202 FREE BANKING, 
 
 was good money in every community of the 
 entire country, and when the conveniences for 
 the use of gold and silver were not nearly so 
 great as now, and when there was almost no 
 clearing-house system for the banks of the 
 country. But with a national paper money 
 as good as gold, although not a legal-tender 
 money, with a telegraphic and telephonic sys- 
 tem, that practically brings in twenty-four 
 hours at the most any bank of the country into 
 communication with that bank that is furthest 
 away from it, there can be no such confusion 
 as that which was so objectionable in the old 
 State banks. If the people of the United 
 States will not accept a bank bill of Canada, 
 which is redeemable in the United States gold 
 dollar, it is unreasonable to assume that the 
 people of New York would accept a bank bill 
 of a private bank of Philadelphia, or even of 
 Newark, N. J., in payment of a debt due them, 
 when they have a right to demand, and can 
 readily get, money that would be perfectly 
 acceptable to them. To a creditor no bills 
 would be acceptable that he did not feel con- 
 fident could be exchanged for an equal 
 amount of the best money in use. No credi- 
 tor would take money of any kind that was 
 not so good as the standard money. 
 
 Banks, as a matter of self-interest — under a 
 system where all bank-note currency is fur- 
 
FREE BANKING. 203 
 
 nisbed by free banks — would, as speedily as 
 possible, return to the banks that issued 
 them the notes that came to them in the usual 
 course of business. The notes of other banks 
 could not conveniently nor profitably be used 
 by the bank that received them, hence they, 
 with the speediest dispatch possible, would be 
 returned to the bank that issued them for 
 redemption. They would be treated just as 
 checks drawn on other banks are now treated, 
 and a demand for payment in gold would at 
 once be made on the issuing bank. The 
 reason is very clear. Banks, under a free- 
 banking system, can make more profit from 
 lending their credit in the shape of their 
 currency notes than from any other loans 
 they can make. To pay out to depositors 
 the notes of other banks only reduces their 
 own opportunity to lend their own notes, for 
 their notes are lent and are earning interest 
 whenever in the hands of others as circulating 
 notes. If other notes displace theirs, they fail 
 to make profits, to the extent that such circu- 
 lation of other notes or money prevents their 
 own notes from earning interest. 
 
 A few words shall be said here that may 
 lead some who are doubtless prejudiced 
 against free banking — because of their recol- 
 lection of the bank notes that served the 
 United States with currency from 1832 to 
 
204 FREE BANKING. 
 
 1863 — to a more careful analysis of the con- 
 ditions of the people of the agrarian districts 
 of this country during those years. 
 
 New England had during that time become 
 a great cotton-manufacturing community, 
 rivaling England in the world's market for 
 cotton fabrics. Pennsylvania had so ad- 
 vanced her industries in iron that the finished 
 articles of her industries in that metal were to 
 be found in use in all quarters of the globe, 
 and American railroad engines v^^ere exten- 
 sively used in Europe, specially in Russia. 
 
 American clocks were, during that time, 
 sold in all parts of the world, even in Switzer- 
 land to a very great extent. American ships 
 carried the flag of the American commerce 
 wherever there was a navigable sea or a chan- 
 nel for trade. American prosperity invited 
 the best blood of Europe to our shores, which 
 aided to build up a mighty empire west of the 
 thirteen original States. In that period a 
 cable v/as laid across the Atlantic Ocean by 
 American enterprise, uniting us in closer ties 
 to the civilizations of Europe. Thousands of 
 miles of railroads were built and operated, 
 bringing under cultivation millions of acres of 
 hitherto unproductive lands. The free-school 
 system could be found in every community, 
 and together with the church extension and 
 the development of the printing press, the 
 
FREE BANKING. 205 
 
 young of the land were thereby taught prin- 
 ciples of sobriety, integrity, and industry. 
 And when the calamity of the Civil War fell 
 upon the land it disclosed that never before in 
 the history of the world had a people been 
 more perfectly instructed in those cardinal 
 virtues. They fought battles for principle, and 
 not because of hate. And when the war ended, 
 the contending forces clasped hands across 
 the bloody chasm, and, as friendly rivals, be- 
 gan a new contest for the restoration of a 
 common country tO' prosperity and greatness ; 
 a contest in which sword and cannon gave 
 place tO' a geater force, — sobriety, integrity, 
 and industry in concert. 
 
 Now it would not be fair to assert that all 
 the greatness and prosperity that our country 
 enjoyed during the period when banking was 
 comparatively free in the United States, was 
 the result of that banking system. It is never- 
 theless fair to contend that the free-banking 
 system that prevailed, when only States au- 
 thorized those banks that furnished all the 
 paper currency in use, did not retard the prog- 
 ress of the country; that the system did not 
 develop poverty and crime; did not lower the 
 standard of morals and education, and did not 
 oppress any community of the country. 
 
 It is true that some unwise men and women 
 received in payment, during the period of 
 
2o6 FREE BANKING. 
 
 wild-cat money, some bills that were not 
 worth anything; but it by no means follows 
 that because of this the benefit derived from 
 free banking was not far more than com- 
 pensation for its defects. The person who 
 pays to another a worthless bill, however 
 innocent of an intention to do so, is not re- 
 lieved from the debt, and he must give good 
 money for the worthless money before the 
 debt can be liquidated. To make laws to pre- 
 vent men from being swindled has never been 
 successfully accomplished. To make laws to 
 punish swindlers is an easy task. 
 
 There seems always to have been a large 
 class of people who have shown great in- 
 genuity in discovering new ways to be swin- 
 dled. The swindlers of the world are not half 
 so prolific in inventing new schemes of swin- 
 dling as these who seem desirous of being 
 swindled are in arriving at the means by which 
 they can enjoy that sensation. To incon- 
 venience one hundred men in order to pre- 
 vent one from being imposed upon, is not 
 good ethics. There are those who will never 
 learn from the wisdom of others, but will in- 
 vestigate for themselves. The bunco steerer 
 is perhaps, all things considered, a useful 
 teacher of many who were once his victims. 
 It is even possible that he has taught so many 
 useful lessons that he has benefited more than 
 
FREE BANKING. 207 
 
 injured society. His victims needed more 
 thorough instruction than pubhc schools and 
 books and newspapers could give them; and 
 they needed that instruction badly. 
 
 A people who acknowledge themselves to 
 be so stupid that they fear to trust them- 
 selves to determine the value of a currency 
 note, but demand that a good, attentive pater- 
 nal Government shall do it for them, need 
 possibly the bunco steerer as a teacher before 
 they can be put into possession of enough in- 
 telligence to enable them to produce their own 
 sustenance. And a people who demand that 
 laws be passed to make them good, will prob- 
 ably steadily degenerate. Persons who assert 
 that they themselves are perfectly good, but 
 demand laws to be enacted to compel others 
 to do right, need watching to keep them out 
 of lunatic asylums or out of prisons. 
 
 The natural man is too independent and 
 self-reliant to listen willingly to the command 
 ** thou shalt not," while the admonition 
 " thou shouldst not " appeals to his reason. 
 He can be persuaded more readily than driven. 
 The man that must be driven to do a generous 
 deed can never do it without feeling a degree 
 of resentment, which is most likely to result 
 in his doing a most ungenerous deed to 
 compensate him for what he believed he 
 had lost. 
 
208 FREE BANKING. 
 
 Police laws should be made with the sole 
 view of punishing criminals. It is almost a 
 waste of time, thought, and material to formu- 
 late them to prevent men from committing 
 crime. Education must do that. It is also a 
 waste of time, thought, and energy to formu- 
 late laws to prevent foolish people from buy- 
 ing worthless commodities. Education alone 
 can do that. As certainly as the threat of 
 eternal punishment does not prevent those 
 who believe in such punishment from break- 
 ing all of the Decalogue, nor that of death 
 prevent murder, so certain is it that no threat- 
 ened punishment will prevent foolish bargain 
 hunters from purchasing useless and worth- 
 less commodities. 
 
 Paternalism in government has always 
 retarded progress, and so long as it exists 
 it will continue to do_sO'; to debase man's 
 mental forces, enlarge immorality, and in- 
 crease poverty and crime. Wherever those 
 conditions exist in Christian lands, where 
 good strong locks or guards are required to 
 keep the public from stealing the church 
 Bible, there will probably be found a good 
 strong paternal government. 
 
 There are a thousand and one good reasons 
 why the Government should keep its hands 
 off the banking business, and permit the 
 people to manage their own affairs. There is 
 
FREE BANKING. 209 
 
 not one good reason why it should conduct 
 a banking business or seek to control those 
 who do. 
 
 There is, very generally, among business 
 men and bankers, an objection to using real 
 estate as security for currency circulation. 
 But why should there be? There is doubly 
 as much paper money in use in the world as 
 there is gold with which to redeem it, and the 
 gold is in such shape and under such control 
 that it is quite probable that, if the entire 
 world could, at the same time, be affected by 
 such a scare as that given to the business men 
 of the United States in October of last year, 
 two-thirds of the gold would get into hands 
 that would not permit it to be used in redeem- 
 ing currency notes. The men who control 
 the vast gold holdings of our country, of Eng- 
 land, of France, of Germany, of Austria, and 
 of Russia would stop paying gold when it 
 should become apparent to them that a de- 
 mand for the redemption in gold of the paper 
 money in circulation would exhaust all their 
 stores of gold, and still leave much paper 
 money, representing millions of dollars of 
 value, unpaid. And if it were necessary to 
 conserve the interest of the large holders of 
 gold early in the movement, means would be 
 found to stop the redemption of the notes. It 
 is not at all improbable that the very gold 
 
210 FREE BANKING. 
 
 pledged to redeem the paper money might 
 frequently be used to buy the discredited 
 money; that profits also might be realized, 
 just as the gold reserved by State banks in 
 1863 was used by those banks to buy legal- 
 tender Government money at a discount, with 
 which to redeem their own notes. 
 
 At the close of the last century, the 
 banks of England were permitted to suspend 
 specie paymient for nearly twenty years, the 
 gold of the banks being used for purposes 
 other than to redeem notes with. Govern- 
 ments have always shown a remarkable 
 promptness in aiding the owners of gold 
 and silver to avoid fulfillments of contracts 
 that are likely to deprive them of their 
 specie, and the reason for so doing is readily 
 apparent. Most of the governments of the 
 world that afford us any knowledge of their 
 monetary system have been monarchies, or 
 governments of a privileged class, and such 
 governments owe much of their existence to 
 those who possess the money of the country, 
 and it is but natural that the rulers should at- 
 tend closely to the personal interests of those 
 upon whom they depend so much to continue 
 as rulers. 
 
 Real estate, pledged for the payment of a 
 specific debt, cannot so readily escape the bur- 
 den placed upon it as long as those obliga- 
 
FREE BANKING. 21 1 
 
 tions, in the shape of currency notes, rested 
 against a bank the capital of which was real 
 estate. If mortgaged for that specific pur- 
 pose, the payment of those notes would be 
 assured if the value of the real estate mort- 
 gaged was sufficient to realize the value of the 
 circulating notes. The facts in regard to the 
 volume of notes issued, and to the value of the 
 real estate pledged, would be best known to 
 those people living in close contact with the 
 bank. Because of their faith in the ability of 
 the bank to meet its notes on demand, they 
 would readily be accepted as money when 
 issued. And because such a faith can be sus- 
 tained only by a knowledge of the facts, and, 
 as those people living remote from the bank 
 would not possess those facts, such notes 
 Avould not be accepted by them as money. 
 
 Thieves may rob a bank of its gold reserve, 
 and wreck it. Banks have been robbed of 
 millions of their money and securities. The 
 bank whose capital is mortgages on real 
 estate cannot be robbed of its capital, and 
 thieves have no use for unissued bills of a 
 bank; they can scarcely use them as money 
 without being detected in the crime of rob- 
 bery. 
 
 It may be urged that such banks as that of 
 Illustrateville are better suited to promote the 
 industries of small communities than of great 
 
212 FREE BANKING. 
 
 cities. That is true; and that is their real 
 merit; but they do no injustice to the great 
 cities. Strong financial communities, like 
 great cities, can readily take care of them- 
 selves. They need no outside help, but they 
 should never be permitted to put to an un- 
 just cost outside communities. Injustice to 
 themselves they can stand, and even be strong, 
 but they nevertheless should not be sub- 
 mitted to such injustice. 
 
 They can have their own strong confedera- 
 tion of banks, the capital of which may be 
 gold. Government and other such securities, 
 or real estate; and they may have paper cur- 
 rency, common to all, or to individual banks. 
 There would be no difficulty whatever in 
 operating such banks in large cities. But it is 
 for the people of those cities to say how they 
 shall do business that does injustice to none. 
 And to interfere with them is not the business 
 of the Government. 
 
 THE END. 
 
14 DAY USE 
 
 RETURN TO DESK FROM WHICH BORROWED 
 
 LOAN DEPT. 
 
 This book is due on the last date stamped below, or 
 
 on the date to which renewed. 
 
 Renew^lfrnhfiJiSe subject to immediate recall. 
 
 (ft StAUKS 
 
 
 MAR 2 1 1961 
 
 
 
 
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