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thing. They have learned, first of all, that paper money is essential; that it is one of the greatest inventions of modern times. Secondly, they have learned that inconvertible paper money is a delusion and a snare. Thirdly, they have learned that paper money should be convertible, at the option of the holder, without discount or difficulty, into gold. They demand, therefore, that one dollar of the people's money shall be as good as any and every other dollar. They will never be satisfied with a fifty-cent dollar for the South and West, a hundred-cent dollar for the Central States, and a hundred-and-five-cent dollar for the East.

We may then assert, with a good deal of confidence, that the currency should be reformed by substituting for the six different kinds of paper money now in circulation,-gold certificates, silver certificates, currency certificates, greenbacks, treasury notes of 1890, and national bank notes,one kind of paper money only, that shall circulate among all classes, in all parts of the country, and be everywhere exchangeable on demand for gold. A thousand millions of such dollars would greatly simplify our financial system, and be a sound basis for renewed business activity and a marvelous creation of wealth.

Thus far we may well be agreed, but here the question in dispute arises, Who shall issue this money? Some say, Let the banks issue it; others say, Let the government issue it.

I. Why should not the banks issue it? Among those who insist that the government should let the banks issue all the paper money are two classes,-those who favor state banks, and those who favor national banks.

It is evidently impossible that state banks, instituted by laws drawn up by forty-five different state legislatures, could issue $1,000,000,000 in paper money, so that one dollar would be as good as another. Those who advocate.

state banks urge, as an advantage, that thus could the new states provide themselves with money that would remain within their own borders. They object to national banks, because, no matter how much money the Texas bank may issue, it is transferred to the North and East. The money of state banks would stay near the point of issue, for the sole reason that the farther away it is taken the greater must be the discount. A system of state banks would inevitably produce forty-five different sorts of money,—good, bad, indifferent,-much of it a curse to all touching it. Those who remember "wildcat" banking of the days before the war will never consent to the issue of the paper money of the country by state banks.

But why may not our system of national banks issue the $1,000,000,000? As now constituted these banks cannot issue all the paper money the country demands: all admit this, for the reason that the total amount of United States bonds outstanding is less than $850,000,000, not to mention other good reasons. The national banking system then must be changed, if the banks are to issue this paper money. The first fundamental change should be the relief of the government of all responsibility for the redemption of the $1,000,000,000. As it now is, the credit of the government stands pledged for the payment in gold of every dollar of national bank currency: that is the evil complained of the government, it is said, must go out of the banking business. This cannot mean that the government is to go out of the banking business by giving all the profits of the issue of paper money to the banks, while it rẻtains the responsibility for the payment in gold of these paper dollars.

The problem then is, that Congress shall pass a national banking act, which shall give these banks the right to issue at least $1,000,000,000 of paper money, and as much more or less as the business of the country demands; and

at the same time provide that these dollars shall always and everywhere, within the United States, be as good as gold, redeemable in gold on demand; and finally prevent the banks from inflating the currency on the one hand, or unduly contracting it on the other hand.

Now to draw up and pass and execute such a law as this is no easy task, even if all were agreed as to its possibility and expediency. In the present condition of parties it would seem to be hopeless. Some things, however, are certain: (1) The value of this currency, including its redemption in gold, its elasticity, its freedom from inflation and from undue contraction, will depend upon the banks and the bankers who manage them. (2) The banks and the bankers will be governed by the law, or else they will be a law to themselves.

There is great danger that bankers with a thousand millions of dollars in their hands of the people's money, to expand or contract as they see fit, will be a law unto themselves that with this great money power they would hire lawyers to instruct the judges how to interpret the law, and elect congressmen to pass amendments to the law to suit them. This great danger was seen in Jackson's time, and led to the overthrow of the National Bank. The attitude of the bankers toward the government in Lincoln's day was one factor which led to our present national banking system. The dictatorial power of the bankers of Europe towards the control of peace and war and national policy is notorious. The opposition of the labor unions and farmers' alliances and populist party against national banks to-day is a significant fact. We cannot afford to admit that bankers will be a law to themselves. It remains, therefore, to insist that banks and bankers will be governed by the law; that they will issue money or withdraw it; that they will pay gold or suspend specie payment, as 'Congress directs.

Therefore (3) it is certain that the $1,000,000,000 of paper money, issued by national banks, will be just as really dependent for its value and contraction and inflation upon the government as it would be if it were all issued by the United States treasury.

Devise what scheme you will for paper money, issued by national banks, it all rests for its basis upon the action of the United States government. National bank money is found to be, in spite of all appearances, political money; for its creation, its preservation, its amount, its value, depend upon laws of Congress as enacted and amended by dominant parties and enforced by the courts, the opinion of whose judges is sooner or later made to yield to the persuasion of the lawyers receiving the largest fees, or else changed by the removal of one set of judges for another set whose interpretation of the law harmonizes with the policy of the party in power.

If, then, national bank money must in reality be political money, it is a great disadvantage that the responsibility for it should not be fixed definitely where it belongs. If there should be manifest evils, the bankers would say, It is not our fault, but is the fault of the law. If the fault is charged upon the government, it would say, The government has gone out of the banking business: the banks are to blame. Between the two parties, both shirking responsibility, the people's money would soon come to be an instrument of evil.

The financial history of England teaches that the issue of paper money is not a necessary function of banking. By, the act of 1844 no London bank, nor any bank chartered after 1844, is permitted to issue paper money; banks organized before 1844 and allowed by their charters to issue money were limited to the amount then in circulation. The bank of England is the chosen agent of the government, really a government bureau, for the issue of paper

money, its issue department being kept entirely separate from its banking department. Bonamy Price says of the bank of England, "Two amendments would render the act complete. The office of issue should be placed in Somerset House or Whitehall: the world would then understand that the State is the real issuer. And, secondly, in the weekly reports the bullion which belongs to the issue department should be kept strictly apart from the bullion which belongs to the bank of England."

The history of American banks, especially of our national banks, teaches the same lessons. Our banks have found the issue of paper money that is as good as gold to be unprofitable. It is only when paper money issued is not as good as gold that the banks have found a profit in it: then the bank's profit has been the people's loss. As it now is, it is more profitable for the banks to loan out the money of their depositors, which costs them nothing, than it is to loan their own banknotes, which cost them something. The richest bank in New York city will not issue paper money. No system can be devised by which a bank can issue paper money of its own creation that shall be as good as gold, day after day, and year after year, and at the same time have such money cost them little or nothing. In every case the bank that issues its own bills and at the same time loans its deposits will find its deposits far more profitable than its notes. The inevitable tendency will be to neglect its issues or else to make some one else pay the expense of the issue.

If the banks issue a $1,000,000,000 of paper money, they should deposit collateral somewhere of the value of the money: of what shall it consist? If it be of greater value than the money, to secure against fluctuations in value, then the profit of the paper money is consumed, as now. If all sorts of stocks are accepted, at a less value than the money, then to that extent the paper money rests upon the

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