People's Pilot, Volume 6, Number 44, Rensselaer, Jasper County, 22 April 1897 — GOVERNMENT BANKS. [ARTICLE]

GOVERNMENT BANKS.

A MEDIUM FOR CIRCULATING MONEY. Che Parties Who Clamor Most for Gold Are Those Who Advocate a Credit System Lark of Money Causes Panics. E. E. Ewing in Silver Knight Watchman: That the money shall be issued by the government without the intervention of banks of issue is the demand of the Chicago platform, and the People's party St. Louis platform. And that there shall be a sufficient volume of money put into circulation to do the business of the country as nearly on a cash basis as possible. This is about as far as those and former platforms of the People’s party have gone. How that right quantity of money is to be measured, put into circulation and kept there has not been considered other than by an individual here and there. It is so self-evident that there is not gold and silver sufficient to answer as money to transact the vast business of any civilized country that no one has even raised the question. The parties who clamor most for gold are those who propose to make the least use of the yellow metal. They advocate a monetary system that Is almost entirely of credit. They constantly insist that money is less needed than ever before, that a system of checks and credit has superseded the necessity of a large volume of money. While the gold standard and credit-ln-place-of-money advocates are busy filling the ears of the public with their pernicious sophistry, their opponents stand still, as it were, and wage the battle for the remonetization of silver and government issue of all the paper money, without attempting to demonstrate to the people how they propose to conduct business without the “intervention of banks of issue.” The banks issue but a mere bagatelle now, a matter of a couple of hundred millions, and yet they manage to be as great a disturbing element as when the state banks were issuing currency ad libitum. A system of postal savings banks is advocated, but the popular Idea of a savings bank is a bank to receive small deposits of surplus money of the working people, the wage-earners, and pay the depositors a little interest on them. Business people know that kind of bank would never supply the demands of business for bank facilities, and consequently the postal savings bank fails to arrest public attention. The modern bank of deposit, loan and discount is the engine of business, and the people will submit to all of its exactions, robbery and cyclonic disturbances in trade, rather than attempt to do without it. And when the platforms resolve against the Interventions and issues of banks their declarations have but little influence on the public. If the gold trust credit financial system which is now in full swing, and has been so long that the people have come to believe it is an absolute necessity and nothing can be devised to take its place, is not met by the friends and advocates of a purely government banking system, the usurers, having possession, which is claimed to be nine points of an advantage out of ten, will be able to hold their ground. The business class of the people, those who are compelled to use a great deal of borrowed money in transacting business, should be shown the great gain to them that would result in the government handling the money of the country through a system of public or government banks. The first gain to this class would be the saving of immense sums of interest that now go to swell the cost of their business which would be the difference between what they have to pay and the bare cost to the government for clerk hire and the necessary cost of distribution which is done by banks. This would be a clear gain to every large business establishment of many thousands of dollars annually. Another gain would be the safety of deposits. No depositor would ever lose his money if deposited in a government bank. No panics to business could occur, which would be so tremendous a gain to the people by a perpetual reign of uninterrupted business as can scarcely be realized by a community that has been visited every few years by blighting financial panics. It is always the lack of money that causes panics. The banks have loaned their depositors’ money till they dare not stretch their credits any further. The business that has been set to run on a certain plain of credits, fails all at once to be supplied by the banks, and has to suddenly contract or altogether close up. Those having business transactions with the unfortunate firm are injured. The banks knowing how ticklish a foundation they rest upon begin to refuse loans, and depositors discovering very suddenly they want their money, commence drawing from the banks, and the panic spreads. Such buslnesl crashes could not occur if the money of the country was handled by government banks. The quantity of money demanded by the volume of legitimate business would always be determined to a dollar. As long as the borrowers furnished the required security for the return of the loans or renewal at maturity, would prove an unfailing business barometer, and the government loans would be of money not purely credit .based on collaterals or securities of those Who had borrowed bank credit, and this is what bank credit loans are based on credit, the supposed ability of borrowers to pay. The loans by a government bank would be based on the ability of the government. The back loans a second, third.

fourth, etc., borrower credit on the first and subsequent borrowers security. The government as banker for the people would always know the amount of money the business of the country required by the demand backed by undoubted security. When business slacked up there would be no temptation to invest depositors’ money in speculative enterprises as practiced by many of the banks and assisted by all, while the officers share the winnings and depositors stand the losses. The government would have no necessity to pile up hundreds of millions of dollars in sub-treasury vaults as at present. Over two hundred millions are now locked up in the treasury which would be in circulation were the government its own and the people’s banker. Government taxes, state, national and municipal would go to swell the general line of deposits and be in constant use. The clearing houses of the country give the public somo inkling of the immense amount of wind or credit money used in place Of real money, when they report fifty to sixty billions of business going through them yearly. There is not more than $500,000,000 of actual money in circulation, if so much as that, and a thousand million held as reserve to protect the wind or credit money, which is forced on the people by the banks, costing them fabulous sums In interest. There is no other way by which the money can be Issued direct to the people except through a system of government banks. There is no other way by which it can be determined how much money is required to transact the business of the country except through a system of government banks, where the security offered to guarantee payment at maturity of loans would always gauge the amount that business required and the ability of borrower? to pay.