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+The Project Gutenberg EBook of A New Banking System, by Lysander Spooner
+
+This eBook is for the use of anyone anywhere at no cost and with
+almost no restrictions whatsoever.  You may copy it, give it away or
+re-use it under the terms of the Project Gutenberg License included
+with this eBook or online at www.gutenberg.org
+
+
+Title: A New Banking System
+       The Needful Capital for Rebuilding the Burnt District
+
+Author: Lysander Spooner
+
+Release Date: November 1, 2010 [EBook #34187]
+
+Language: English
+
+Character set encoding: ASCII
+
+*** START OF THIS PROJECT GUTENBERG EBOOK A NEW BANKING SYSTEM ***
+
+
+
+
+Produced by Curtis Weyant and the Online Distributed
+Proofreading Team at https://www.pgdp.net (This file was
+produced from images generously made available by The
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+
+
+                                   A
+                          NEW BANKING SYSTEM:
+
+                                  THE
+                     NEEDFUL CAPITAL FOR REBUILDING
+                          THE BURNT DISTRICT.
+
+                          BY LYSANDER SPOONER.
+
+                                BOSTON:
+                       SOLD BY A. WILLIAMS & CO.
+
+                         135 WASHINGTON STREET.
+
+                                 1873.
+
+
+
+        Entered according to Act of Congress, in the year 1873.
+                          BY LYSANDER SPOONER,
+       in the office of the Librarian of Congress, at Washington.
+
+
+                               Printed by
+                           WARREN RICHARDSON,
+                           112 Washington St
+
+
+
+
+CONTENTS.
+
+
+                                                                  PAGE
+  CHAPTER I.--A New Banking System,                                  5
+  CHAPTER II.--Specie Payments,                                     12
+  CHAPTER III.--No Inflation of Prices,                             21
+  CHAPTER IV.--Security of the System,                              35
+  CHAPTER V.--The System as a Credit System,                        41
+  CHAPTER VI.--Amount of Currency Needed,                           48
+  CHAPTER VII.--Importance of the System to Massachusetts,          59
+  CHAPTER VIII.--The True Character of the "National" System,       70
+  CHAPTER IX.--Amasa Walker's Opinion of the Author's System,       75
+
+
+
+
+The reader will understand that the ideas presented in the following
+pages admit of a much more thorough demonstration than can be given in
+so small a space. Such demonstration, if it should be necessary, the
+author hopes to give at a future time.
+
+  _Boston, March, 1873._
+
+
+
+
+CHAPTER I.
+
+A NEW BANKING SYSTEM.
+
+
+Under the banking system--an outline of which is hereafter given--the
+real estate of Boston alone--taken at only three-fourths its value, as
+estimated by the State valuation[A]--is capable of furnishing three
+hundred millions of dollars of loanable capital.
+
+  [A] By the State valuation of May, 1871, the real estate of Boston
+      is estimated at $395,214,950.
+
+Under the same system, the real estate of Massachusetts--taken at only
+three-fourths its estimated value[B]--is capable of furnishing seven
+hundred and fifty millions of loanable capital.
+
+  [B] By the State valuation of May, 1871, the real estate of the
+      Commonwealth is estimated at $991,196,803.
+
+The real estate of the Commonwealth, therefore, is capable of furnishing
+an amount of loanable capital more than twelve times as great as that
+of all the "_National_" Banks in the State[C]; more than twice as
+great as that of all the "National" banks of the whole United States
+($353,917,470); and equal to the entire amount ($750,000,000, or
+thereabouts) both of greenback and "National" bank currency of the
+United States.
+
+  [C] The amount of circulation now authorized by the present
+      "National" banks of Massachusetts, is $58,506,686, as appears
+      by the recent report of the Comptroller of the Currency.
+
+It is capable of furnishing loanable capital equal to one thousand
+dollars for every male and female person, of sixteen years of age and
+upwards, within the Commonwealth; or two thousand five hundred dollars
+for every male adult.
+
+It would scarcely be extravagant to say that it is capable of furnishing
+ample capital for every deserving enterprise, and every deserving man
+and woman, within the State; and also for all such other enterprises in
+other parts of the United States, and in foreign commerce, as
+Massachusetts men might desire to engage in.
+
+Unless the same system, or some equivalent one, should be adopted in
+other States, the capital thus furnished in this State, could be loaned
+at high interest at the West and the South.
+
+If adopted here earlier than in other States, it would enable the
+citizens of this State to act as pioneers in the most lucrative
+enterprises that are to be found in other parts of the country.
+
+All this capital is now lying dead, so far as being loaned is concerned.
+
+All this capital can be loaned in the form of currency, if so much can
+be used.
+
+All the profits of banking, under this system, would be clear profits,
+inasmuch as the use of the real estate as banking capital, would not
+interfere at all with its use for other purposes.
+
+The use of this real estate as banking capital would break up all
+monopolies in banking, and in all other business depending upon bank
+loans. It would diffuse credit much more widely than it has ever been
+diffused. It would reduce interest to the lowest rates to which free
+competition could reduce it. It would give immense activity and power to
+industrial and commercial enterprise. It would multiply machinery, and
+do far more to increase production than any other system of credit and
+currency that has ever been invented. And being furnished at low rates
+of interest, would secure to producers a much larger share of the
+proceeds of their labor, than they now receive.
+
+All this capital can be brought into use as fast as the titles to real
+estate can be ascertained, and the necessary papers be printed.
+
+Legally, the system (as the author claims, and is prepared to establish)
+stands upon the same principle as a patented machine; and is, therefore,
+already legalized by Congress; and cannot, unless by a breach of the
+public faith, any more be prohibited, _or taxed_, either by Congress or
+this State, than can the use of a patented machine.
+
+Every dollar of the currency furnished by this system would have the
+same value in the market as a dollar of gold; or so nearly the same
+value that the difference would be a matter of no appreciable
+importance.
+
+The system would, therefore, restore specie payments at once, by
+furnishing a great amount of currency, that would be equal in value to
+specie.
+
+The system would not inflate prices above their true and natural value,
+relatively to specie; for no possible amount of paper currency, every
+dollar of which is equal in value to specie, _can_ inflate prices above
+their true and natural value, relatively to specie.
+
+Whenever, if ever, the paper should not buy as much in the market as
+specie, it would be returned to the banks for redemption, and thus taken
+out of circulation. So that no more could be kept in circulation than
+should be necessary for the purchase and sale of property at specie
+prices.
+
+The system would not tend to drive specie out of the country; although
+very little of it would be needed by the banks. It would rather tend to
+bring specie into the country, because it would immensely increase our
+production. We should, therefore, have much more to sell, and much less
+to buy. This would always give a balance in our favor, which would have
+to be paid in specie.
+
+It is, however, a matter of no practical importance whether the system
+would bring specie into the country, or drive it out; for the volume and
+value of the currency would be substantially unaffected either by the
+influx or efflux of specie. Consequently industry, trade, and prices
+would be undisturbed either by the presence or absence of specie. The
+currency would represent property that could not be exported; that would
+always be here; that would always have a value as fixed and well known
+as that of specie; that would always be many times more abundant than
+specie can ever be; and that could always be delivered (in the absence
+of specie) in redemption of the currency. These attributes of the
+currency would render all financial contractions, revulsions, and
+disorders forever impossible.
+
+The following is
+
+AN OUTLINE OF THE SYSTEM.
+
+The principle of the system is that the currency shall represent an
+_invested_ dollar, instead of a specie dollar.
+
+The currency will, therefore, be redeemable by an _invested_ dollar,
+except when redeemed by specie, or by being received in payment of debts
+due the banks.
+
+The best capital will probably be mortgages and railroads; and these
+will very likely be the only capital which it will ever be expedient to
+use.
+
+Inasmuch as railroads could not be used as capital, without a
+modification of their present charters, mortgages are probably the best
+capital that is immediately available.
+
+Supposing mortgages to be the capital, they will be put into joint
+stock, held by trustees, and divided into shares of one hundred dollars
+each.
+
+This stock may be called the PRODUCTIVE STOCK, and will be entitled to
+the dividends.
+
+The dividends will consist of the interest on the mortgages, and the
+profits of banking.
+
+The interest on the mortgages should be so high--say six or seven per
+cent--as to make the PRODUCTIVE STOCK worth ordinarily par of specie in
+the market, _independently of the profits of banking_.
+
+Another kind of stock, which may be called _Circulating Stock_, will be
+created, _precisely equal in amount to the_ PRODUCTIVE STOCK, and
+divided into shares of _one dollar each_.
+
+This _Circulating Stock_ will be represented by certificates, scrip, or
+bills, of various denominations, like our present bank bills--that is,
+_representing one, two, three, five, ten, or more shares, of one dollar
+each_.
+
+These certificates, scrip, or bills of the _Circulating Stock_, will be
+issued for circulation as currency, as our bank bills are now.
+
+In law, this _Circulating Stock_ will be in the nature of a lien on the
+PRODUCTIVE STOCK. It will be entitled to no dividends. Its value will
+consist, _first_, in its title to be received in payment of all dues to
+the bank; _second_, in its title to be redeemed, either in specie on
+demand, or in specie, with interest from the time of demand, before any
+dividends can be made to the bankers; and, _third_, in its title, when
+not redeemed with specie, to be redeemed (in sums of one hundred dollars
+each) by a transfer of a corresponding amount of the capital itself;
+that is, of the PRODUCTIVE STOCK.
+
+The holders of the _Circulating Stock_ are, therefore, sure, _first_, to
+be able to use it (if they have occasion to do so) in payment of their
+dues to the bank; _second_, to get, in exchange for it, either specie on
+demand, or specie, with interest from the time of demand; or, _third_, a
+share of the capital itself, the PRODUCTIVE STOCK; a stock worth par of
+specie in the market, and as merchantable as a share of railroad stock,
+or government stock, or any other stock whatever is now.
+
+Whenever PRODUCTIVE STOCK shall have been transferred in redemption of
+_Circulating Stock_, it (the PRODUCTIVE STOCK) may be itself redeemed,
+or bought back, at pleasure, by the bankers, on their paying its face in
+specie, with interest (or dividends) from the time of the transfer; and
+_must_ be so bought back, before any dividends can be paid to the
+original bankers.
+
+The fulfilment of all these obligations, on the part of the bank, is
+secured by the fact that the capital and all the resources of the bank
+are in the hands of trustees, who are legally bound--before making any
+dividends to the bankers--to redeem all paper in the manner mentioned;
+and also to buy back all PRODUCTIVE STOCK that shall have been
+transferred in redemption of the circulation.
+
+Such are the general principles of the system. The details are too
+numerous to be given here. They will be found in the "_Articles of
+Association of a Mortgage Stock Banking Company_," which the author has
+drawn up and copyrighted.
+
+
+
+
+CHAPTER II.
+
+SPECIE PAYMENTS.
+
+
+Although the banks, under this system, make no absolute promise to pay
+specie _on demand_, the system nevertheless affords a much better
+_practical_ guaranty for specie payments, than the old specie paying
+system (so called); and for these reasons, viz:
+
+1. The banks would be so universally solvent, and so universally known
+to be solvent, that no runs would ever be made upon them for specie,
+through fear of their insolvency. They could, therefore, maintain specie
+payments with much less amounts of specie, than the old specie paying
+banks (so called) could do.
+
+2. As there would be no fears of the insolvency of the banks, and as the
+paper would be more convenient than specie for purposes of trade, bills
+would rarely be presented for redemption--otherwise than in payment of
+debts due the banks--except in those cases where the holders desired to
+invest their money; and would therefore _prefer_ a transfer of
+PRODUCTIVE STOCK, to a payment in specie. If they wanted specie for
+exportation, they would buy it in the market (with the bills), as they
+would any other commodities for export.[D] It would, therefore, usually
+be only when they wanted an investment, and could find none so good as
+the PRODUCTIVE STOCK, that they would return their bills for redemption.
+And then they would return them, not really for the purpose of having
+them redeemed with specie, but in the hope of getting a transfer of
+PRODUCTIVE STOCK, and holding it awhile, and drawing interest on it.
+
+  [D] There would always be a plenty of specie for sale, in the
+      seaports, as merchandise.
+
+3. The banks would probably find it for their interest, as promoting the
+circulation of their bills, to pay, at all times, such _small_ amounts
+of specie, as the public convenience might require.
+
+4. If there should be any suspensions of specie payments, they would be
+only temporary ones, by here and there a bank separately, and not by all
+the banks simultaneously, as under the so called specie paying system.
+No general public inconvenience would therefore ever be felt from that
+cause.
+
+5. If the banks should rarely, or never, pay specie _on demand_, that
+fact would bring no discredit upon their bills, and be no obstacle to
+their circulation at par with specie. It would be known that--unless bad
+notes had been discounted--all the bills issued by the banks, would be
+wanted to pay the debts due the banks. This would ordinarily be
+sufficient, of itself, to keep the bills at par with specie. It would
+also be known that, if specie were not paid _on demand_, it would either
+be paid afterwards, with interest from the time of demand; or PRODUCTIVE
+STOCK, equal in value to specie in the market, would be transferred in
+redemption of the bills. The bills, therefore, would never depreciate in
+consequence of specie not being paid _on demand_; nor would any
+contraction of the currency ever be occasioned on that account.
+
+For the reasons now given, the system is practically the best specie
+paying system that was ever invented. That is to say, it would require
+less specie to work it; and also less to keep its bills always at par
+with specie. In proportion to the amount of currency it would furnish,
+it would not require so much as one dollar in specie, where the so
+called specie paying system would require a hundred. It would also, by
+immensely increasing our production and exports, do far more than any
+other system, towards bringing specie into the country, and preventing
+its exportation.
+
+If it should be charged that the system supplies no specie for
+_exportation_; the answer is, that it is really no part of the
+legitimate business of a bank to furnish specie for exportation. Its
+legitimate business is simply to furnish credit and currency for home
+industry and trade. And it can never furnish these constantly, and in
+adequate amounts, unless it can be freed from the obligation to supply
+specie on demand for exportation. Specie should, therefore, always be
+merely an article of merchandise in the market, like any other; and
+should have no special--or, at least, no important--connection with the
+business of banking, except as furnishing the measure of value. If a
+paper currency is made payable in specie, _on demand_, very little of it
+can ever be issued, or kept in circulation; and that little will be so
+irregular and inconstant in amount as to cause continual and
+irremediable derangements. But if a paper currency, instead of
+promising to pay specie _on demand_, promises only an alternative
+redemption, viz: specie on demand, or specie with interest from the time
+of demand, or other merchantable property of equal market value with
+specie--it can then be issued to an amount equal to such property; and
+yet keep its promises to the letter. It can, therefore, furnish all the
+credit and currency that can be needed; or at least many times more than
+the so called specie paying system ever did, or ever can, furnish. And
+then the interest, industry and trade of a nation will never be
+disturbed by the exportation of specie. And yet the standard of value
+will always be maintained.
+
+The difference between the system here proposed, and the so called
+specie paying system--in respect to their respective capacities for
+furnishing credit and currency, and at the same time fulfilling their
+contracts to the letter--is as fifty to one, at the least, in favor of
+the former; probably much more than that.
+
+Thus under the system now proposed, the real estate and railroads of the
+United States, at their present values, are capable of furnishing twenty
+thousand millions ($20,000,000,000) of paper currency; and furnishing it
+constantly, and without fluctuation, and every dollar of it will have an
+equal market value with gold. The contracts or certificates comprising
+it, can always be fulfilled to the letter; that is, the capital itself,
+(the PRODUCTIVE STOCK,) represented by these certificates, can always be
+delivered, _on demand_, in redemption of the certificates, if the banks
+should be unable to redeem in specie.
+
+On the other hand, it would be impossible to have so much as four
+hundred millions, ($400,000,000)--one fiftieth of the amount before
+mentioned--of so called specie paying paper currency; that is, a paper
+promising to pay specie _on demand_; _and constantly able to fulfil its
+obligations_.
+
+It is of no appreciable importance that a paper currency should be
+payable _on demand_ with specie. It is sufficient, if it be payable
+_according to its terms, if only those terms are convenient and
+acceptable_. For then the value of the currency will be known, _and its
+contracts will be fulfilled to the letter_. And when these contracts are
+fulfilled to the letter, then, _to all practical purposes, specie
+payments are maintained_. When, for example, a man promises to pay
+wheat, either on demand, or at a time specified, and he fulfils that
+contract to the letter, _that, to all practical purposes, is specie
+payments_; as much so as if the promise and payment had been made in
+coin. IT IS, THEREFORE, THE SPECIFIC AND LITERAL FULFILMENT OF
+CONTRACTS, THAT CONSTITUTES SPECIE PAYMENTS; AND NOT THE PARTICULAR KIND
+OF PROPERTY THAT IS PROMISED AND PAID.
+
+The great secret, then, of having an abundant paper currency, and yet
+maintaining all the while specie payments, consists in having the paper
+represent property--like real estate, for example--that exists in large
+amounts, and can always be delivered, on demand, in redemption of the
+paper; and also in having this paper issued by the persons who actually
+own the property represented by it, and who can be compelled by law to
+deliver it in redemption of the paper. And the great secret--if it be a
+secret--of having only a scanty currency, and of _not_ having specie
+payments, consists in having the paper issued by a government that
+cannot fulfil its contracts, and has no intention of fulfilling them;
+and by banks that are not even required to fulfil them.
+
+It is somewhat remarkable that after ten years experiment, we have not
+yet learned these apparently self-evident truths.
+
+The palpable fact is that the advocates of the present "National"
+currency system,--that is, the stockholders in the present "National"
+banks,--_do not wish for specie payments_. They wish only to maintain,
+in their own hands, a monopoly of banking, and, as far as possible also,
+a monopoly of all business depending upon bank loans. They wish,
+therefore, to keep the volume of the currency down to its present
+amount. As an excuse for this, they profess a great desire for specie
+payments; and at the same time practice the imposture of declaring that
+specie payments will be impossible, if the amount of the currency be
+increased.
+
+But all this is sheer falsehood and fraud. It is, of course, impossible
+to have specie payments, so long as the only currency issued is issued
+by a government that has nothing to redeem with, and has no intention of
+redeeming; and by banks that are not even required to redeem. But there
+is no obstacle to our having twenty times as much currency as we now
+have, and yet having specie payments--or the literal fulfilment of
+contracts--if we will but suffer the business of banking to go into the
+hands of those who have property with which to redeem, and can be
+compelled by law to redeem.
+
+It is with government paper, and bank paper, as it is with the paper of
+private persons; that is, it is worth just what can be delivered in
+redemption of it, and no more. We all understand that the notes of the
+Astors, and Stewarts, and Vanderbilts, though issued by millions, and
+tens of millions, are really worth their nominal values. And why? Solely
+because the makers of them have the property with which to redeem them
+in full, and can be made to redeem them in full. We also all understand
+that the notes of Sam Jones, and Jim Smith, and Bill Nokes, though
+issued for only five dollars, are not worth two cents on the dollar. And
+why? Solely because they have nothing to pay with; and cannot be made to
+pay.
+
+Suppose, now, that these notes of Sam Jones, and Jim Smith, and Bill
+Nokes, for five dollars, were the only currency allowed by law; and that
+they were worth in the market but two cents on the dollar. And suppose
+that the few holders of these notes, wishing to make the most of them,
+at the expense of the rights of everybody else, should keep up a
+constant howl for specie payments; and should protest against any issue
+of the notes of the Astors, the Stewarts, and the Vanderbilts, upon the
+ground that such issue would inflate the currency, and postpone specie
+payments! What would we think of men capable of uttering such
+absurdities? Would we in charity to their weakness, call them idiots?
+or would we in justice to their villainy, denounce them as impostors and
+cheats of the most transcendent and amazing impudence? And what would we
+think of the wits of forty millions of people, who could be duped by
+such preposterous falsehoods?
+
+And yet this is scarcely an exaggerated picture of the fraud that has
+been practiced upon the people for the last ten years. A few men have
+secured to themselves the monopoly of a few irredeemable notes; and not
+wishing to have any competition, either in the business of banking, or
+in any business depending upon bank loans, they cry out for specie
+payments; and declare that no _solvent_ or _redeemable_ notes must be
+put into circulation, in competition with their _insolvent_ and
+_irredeemable_ ones, lest the currency be inflated, and specie payments
+be postponed!
+
+And this imposture is likely to be palmed off upon the people in the
+future, as it has been in the past, if they are such dunces as to permit
+it to be done.
+
+It is perfectly evident, then, that specie payments--or the literal
+fulfilment of contracts--does not depend at all upon the amount of paper
+in circulation as currency; but solely upon the fact whether, on the one
+hand, it be issued by those who have property with which to redeem it,
+and can be made to redeem it; or whether, on the other hand, it be
+issued by those who cannot redeem it, and cannot be made to redeem it.
+
+When the people shall understand these simple, manifest truths, they
+will soon put an end to the monopoly, extortion, fraud, and tyranny of
+the existing "National" system.
+
+The "National" system, so called, is, in reality, no national system at
+all; except in the mere facts that it is called the national system, and
+was established by the national government. It is, in truth, only a
+private system; a mere privilege conferred upon a few, to enable them to
+control prices, property, and labor; and thus to swindle, plunder, and
+oppress all the rest of the people.
+
+
+
+
+CHAPTER III.
+
+NO INFLATION OF PRICES.
+
+
+SECTION 1.
+
+In reality there is no such thing as an inflation of prices, relatively
+to gold. There is such a thing as a depreciated paper currency. That is
+to say, there is such a thing as a paper currency, that is called by the
+same names as gold--to wit, money, dollars, &c.--but that cannot be
+redeemed in full; and therefore has not the same value as gold. Such a
+currency does not circulate at its nominal, but only at its real, value.
+And when such a currency is in circulation, and prices are measured by
+it, instead of gold, they are said to be inflated, relatively to gold.
+But, in reality, the prices of property are not thereby inflated at all
+relatively to gold. It is only the measuring of prices by a currency,
+that is called by the same names as gold, but that is really inferior in
+value to gold, that causes the _apparent_, not _real_, inflation of
+prices, relatively to gold.
+
+To measure prices by a currency that is called by the same names as
+gold, but that is really inferior in value to gold, and then--because
+those prices are nominally higher than gold prices--to say that they are
+inflated, relatively to gold, is a perfect absurdity.
+
+If we were to call a foot measure a yard, and were then to say that all
+cloth measured by it became thereby stretched to three times its length,
+relatively to a true yard-stick, we should simply make ourselves
+ridiculous. We should not thereby prove that the foot measure had really
+stretched the cloth, but only that it had taxed our brains beyond their
+capacity.
+
+It is only irredeemable paper--irredeemable in whole or in part,--that
+ever _appears_ to inflate prices, relatively to gold. But that it really
+causes no inflation of prices, relatively to gold, is proved by the fact
+that it no more inflates the prices of other property, than it does the
+price of gold itself. Thus we say that irredeemable paper, that is worth
+but fifty cents on the dollar, inflates the prices of commodities in
+general to twice their real value. By this we mean, that they are
+inflated to twice their value relatively to gold. And why do we say
+this? Solely because it takes twice as many of these irredeemable paper
+dollars to buy any commodity,--a barrel of flour for example,--as it
+would if the paper were equal in value to gold. But it also takes twice
+as many of these irredeemable paper dollars to buy gold itself, as it
+would if the paper were equal in value to gold. There is, therefore,
+just as much reason for saying that the paper inflates the price of
+gold, as there is for saying that it inflates the price of flour. It
+inflates neither. It is, itself, worth but fifty cents on the dollar;
+and it, therefore, takes twice as much of it to buy either flour or
+gold, as it would if the paper were of equal value with gold.
+
+The value of the coins--in any nation that is open to free commerce with
+the rest of the world--is fixed by their value in the markets of the
+world; and can neither be reduced below that value, in that nation, by
+any possible amount of paper currency, nor raised above that value, by
+the entire disuse of a paper currency. Any increase of the currency,
+therefore, by means of paper representing other property than the
+coins--but having an equal value with the coins--is an absolute _bona
+fide_ increase of the currency to that extent; and not a mere
+depreciation of it, as so many are in the habit of asserting.
+
+Practically and commercially speaking, a dollar is not necessarily a
+specific thing, made of silver, or gold, or any other single metal, or
+substance. _It is only such a quantum of market value as exists in a
+given piece of silver or gold._ And it is the same quantum of value,
+whether it exist in gold, silver, houses, lands, cattle, horses, wool,
+cotton, wheat, iron, coal, or any other commodity that men desire for
+use, and buy and sell in the market.
+
+Every dollar's worth of vendible property in the world is equal in value
+to a dollar in gold. And if it were possible that every dollar's worth
+of such property, in the world, could be represented, in the market, by
+a contract on paper, promising to deliver it on demand; and if every
+dollar's worth could be delivered on demand, in redemption of the paper
+that represented it, the world could then have an amount of currency
+equal to the entire property of the world. And yet clearly every dollar
+of paper would be equal in value to a dollar of gold; specie
+payments--or the literal fulfilment of contracts--could forever be
+maintained; and yet there could be no inflation of prices, relatively to
+gold. Such a currency would no more inflate the price of one thing, than
+of another. It would as much inflate the price of gold, as of any thing
+else. Gold would stand at its true and natural value as a metal; and all
+other things would also stand at their true and natural values, for
+their respective uses.
+
+On this principle, if every dollar's worth of vendible property in the
+United States could be represented by a paper currency; and if the
+property could all be delivered on demand, in redemption of the paper,
+such a currency would not inflate the prices of property at all,
+relatively to gold. Gold would still stand at its true and natural value
+as a metal, or at its value in the markets of the world. And all the
+property represented by the paper, would simply be measured by the gold,
+and would stand at its true and natural value, relatively to the gold.
+
+We could then have some thirty thousand millions ($30,000,000,) of paper
+currency,--taking our property at its present valuation. And yet every
+dollar of it would be equal to a dollar of gold; and there could
+evidently be no inflation of prices, relatively to gold. No more of the
+currency could be kept in circulation, than should be necessary or
+convenient for the purchase and sale of property at specie prices.
+
+It is probably not practicable to represent the entire property of the
+country by such contracts on paper as would be convenient and
+acceptable as a currency. This is especially true of the _personal_
+property; although large portions even of this are being constantly
+represented by such contracts as bank notes, private promissory notes,
+checks, drafts, and bills of exchange; all of which are in the nature of
+currency; that is, they serve for the time as a substitute for specie;
+although some of them do not acquire any extensive, or even general,
+circulation.
+
+But that it is perfectly practicable to represent nearly all the _real
+estate_ of the country--including the railroads--by such contracts on
+paper as will be perfectly convenient and acceptable as a currency; and
+that every dollar of it can be kept always at par with specie throughout
+the entire country--that all this is perfectly practicable, the author
+offers the system already presented in proof.
+
+
+SECTION 2.
+
+To sustain their theory, that an abundant paper currency--though equal
+in value to gold--inflates prices, relatively to gold, its advocates
+assert that, _for the time being_, the paper depreciates the gold itself
+below its true value; or at least below that value which it had before
+the paper was introduced. But this is an impossibility; for in a country
+open to free commerce with the rest of the world, gold must always have
+the same value that it has in the markets of the world; neither more,
+nor less. No possible amount of paper can reduce it below that value;
+as has been abundantly demonstrated in this country for the last ten
+years. Neither can any possible amount of paper currency reduce gold
+below its only true and natural value, viz.: its value as a metal, for
+uses in the arts. The paper cannot reduce the gold below this value,
+because the paper does not come at all in competition with it for those
+uses. We cannot make a watch, a spoon, or a necklace, out of the paper;
+and therefore the paper cannot compete with the gold for these uses.
+
+That gold and silver now have, and can be made to have, no higher value,
+as a currency, than they have as metals for uses in the arts, is proved
+by the fact that doubtless not more than one tenth, and very likely not
+more than a twentieth, of all the gold and silver in the world (out of
+the mines), is in circulation as currency. In Asia, where these metals
+have been accumulating from time immemorial, and whither all the gold
+and silver of Europe and America--except what is caught up, and
+converted into plate, jewelry, &c.--is now going, and has been going for
+the last two thousand years, very little is in circulation as money. For
+the common traffic of the people, coins made of coarser metals, shells,
+and other things of little value, are the only currency. It is only for
+the larger commercial transactions, that gold and silver are used at all
+as a currency. The great bulk of these metals are used for plate,
+jewelry, for embellishing temples and palaces. Large amounts are also
+hoarded.
+
+But that gold and silver coins now stand, and that they can be made to
+stand, as currency, only at their true and natural values as metals,
+for uses in the arts; and that neither the use, nor disuse, of any
+possible amount of paper currency, in any one country--the United
+States, for example--can sensibly affect their values in that country,
+or raise them above, or reduce them below, their values in the markets
+of the world, the author hopes to demonstrate more fully at a future
+time, if it should be necessary to do so.
+
+
+SECTION 3.
+
+Another argument--or rather assertion--of those who say that any
+increase of the currency, by means of paper--though the paper be equal
+in value to gold--depreciates the value of the gold, or inflates prices
+relatively to gold, is this: They assert that, where no other
+circumstances intervene to affect the prices of particular commodities,
+such increase of the currency raises the prices of _all_ kinds of
+property--relatively to gold--in a degree precisely corresponding with
+the increase of the currency.
+
+This is the universal assertion of those who oppose a _solvent_ paper
+currency; or a paper currency that is equal in value to gold.
+
+But the assertion itself is wholly _untrue_. It is wholly _untrue_ that
+an abundant paper currency--that is equal in value to gold--raises the
+prices of _all_ commodities--relatively to gold--in a proportion
+corresponding to the increase of the currency. _Instead of doing so, it
+causes a rise only in agricultural commodities, and real estate; while
+it causes a great fall in the prices of manufactures generally._
+
+Thus the increased currency produces _a directly opposite effect_ upon
+the prices of agricultural commodities and real estate, on the one hand,
+and upon manufactures, on the other.
+
+The reasons are these:
+
+Agriculture requires but very few exchanges, and can, therefore, be
+carried on with very little money. Manufactures, on the other hand,
+require a great many exchanges, and can, therefore, be carried on
+(except in a very feeble way), only by the aid of a great deal of money.
+
+The consequence is, that the people of all those nations, that have but
+little money, are engaged mostly in agriculture. Very few of them are
+manufacturers. Being mostly engaged in agriculture, each one producing
+the same commodities with nearly all the others; and each one producing
+all he wants for his own consumption, there is no market, or very little
+market, for agricultural commodities; and such commodities,
+consequently, bear only a very small price.
+
+Manufactured commodities, on the other hand, are very scarce and dear,
+for the sole reason that so few persons are engaged in producing them.
+
+But let there be an increase of currency, and laborers at once leave
+agriculture, and become manufacturers.
+
+As manufactured commodities usually bring much higher prices than
+agricultural, in proportion to the labor it costs to produce them, men
+usually leave agriculture, and go into manufacturing, to the full extent
+the increased currency will allow.
+
+The consequence is that, under an abundant currency, manufactures become
+various, abundant, and cheap; where before they were scarce and dear.
+
+But while, on the one hand, manufactures are thus becoming various,
+abundant, and cheap, agricultural commodities, on the other hand, are
+rising: and why? Not because the currency is depreciated, but simply
+because so many persons, who before--under a scanty currency--were
+engaged in agriculture, and produced all the agricultural commodities
+they needed, and perhaps more than they needed, for their own
+consumption, having now left agriculture, and become manufacturers, have
+become purchasers and consumers, instead of producers, of agricultural
+commodities.
+
+Here the same cause--abundant currency--that has occasioned a _rise_ in
+the prices of agricultural commodities, has produced a _directly
+opposite effect_ upon manufactures. It has made the latter various,
+abundant, and cheap; where before they were scarce and dear.
+
+On the other hand, when the currency contracts, manufacturing industry
+is in a great degree stopped; and the persons engaged in it are driven
+to agriculture as their only means of sustaining life. The consequence
+is, that manufactured commodities become scarce and dear, from
+non-production. At the same time, agricultural commodities become
+superabundant and cheap, from over-production and want of a market.
+
+Thus an abundant currency, and a scanty currency, produce directly
+opposite effects upon the prices of agricultural commodities, on the
+one hand, and manufactures, on the other.
+
+The _abundant_ currency makes manufactures various, abundant, and cheap,
+from increased production; while it raises the prices of agricultural
+commodities, by withdrawing laborers from the production of them, and
+also by creating a body of purchasers and consumers, to wit, the
+manufacturers.
+
+On the other hand, a _scanty_ currency drives men from manufactures into
+agriculture, and thus causes manufactures to become scarce and dear,
+from non-production; and, at the same time, causes agricultural
+commodities to fall in price, from over-production, and want of a
+market.
+
+But whether, on the one hand, agricultural commodities are rising, and
+manufactured commodities are falling, under an abundant currency; or
+whether, on the other hand, manufactured commodities are rising, and
+agricultural commodities are falling, under a scanty currency, the value
+of the currency itself, dollar for dollar, remains the same in both
+cases.
+
+The value of the currency, in either of these cases; is fixed, not at
+all by the amount in circulation, but by its value relatively to gold.
+And the value of gold, in any particular country, is fixed by its value
+as a metal, and its value in the markets of the world; and not at all by
+any greater or less quantity of paper that may be in circulation in that
+country.
+
+
+SECTION 4.
+
+But it is not alone agricultural _products_ that rise in price under an
+abundant currency. Real estate also, of all kinds--agricultural,
+manufacturing, and commercial--rises under an abundant currency, and
+falls under a scanty currency. The reasons are these:
+
+_Agricultural_ real estate rises under an abundant currency, because
+agricultural products rise under such a currency, as already explained.
+_Manufacturing_ real estate rises under an abundant currency, simply
+because--money being the great instrumentality of manufacturing
+industry--that industry is active and profitable under an abundant
+currency. _Commercial_ real estate rises under an abundant currency,
+because, under such a currency, commerce, the exchange and distribution
+of agricultural and manufactured commodities, is active and profitable.
+_Railroads_, also, rise under an abundant currency, because, under such
+a currency, the transportation of freight and passengers is increased.
+
+On the other hand, all kinds of real estate fall in price under a scanty
+currency, for these reasons, to wit: Agricultural real estate falls,
+because, manufactures having been in a great measure stopped, and the
+manufacturers driven into agriculture, there is little market for
+agricultural products, and those products bring only a small price.
+Manufacturing real estate falls, because, manufacturing industry having
+become impossible for lack of money, manufacturing real estate is lying
+dead, or unproductive. Commercial real estate falls, because commerce,
+the exchange and distribution of agricultural and manufactured
+commodities, has ceased. Railroads fall in price, because, owing to the
+suspension of manufactures and commerce, there is little transportation
+of either freight or passengers.
+
+Thus it will be seen that an abundant currency creates a great rise in
+agricultural products, and in all kinds of real estate--agricultural,
+manufacturing, and commercial, (including railroads); and, at the same
+time, causes manufactured commodities to become various, abundant, and
+cheap. While, on the other hand, a scanty currency causes agricultural
+commodities, and all kinds of real estate, to fall in price; and, at the
+same time, makes manufactured commodities scarce and dear.
+
+It is a particularly noticeable fact, that those who claim that an
+abundant paper currency inflates the prices of _all_ commodities,
+relatively to gold, never find it convenient to speak of the variety,
+abundance, and cheapness of manufactures, that exist under an abundant
+currency; but only of the high prices of agricultural commodities, and
+real estate.
+
+The whole subject of prices--a subject that is very little understood,
+and that has been forever misrepresented, in order to justify restraints
+upon the currency, and keep it in a few hands--deserves a more extensive
+discussion; but the special purposes of this pamphlet do not admit of it
+here. But enough has probably now been said, to show that the great
+changes that take place in prices, under an abundant currency, on the
+one hand, and a scanty currency, on the other, are not occasioned at all
+by any change in the value of the currency itself--dollar for
+dollar--provided the currency be equal in value to coin.
+
+Enough, also, it is hoped, has been said, to show to all holders of
+either agricultural, manufacturing, or commercial real estate (including
+railroads), that the greater or less value of their property depends
+almost wholly upon the abundance or scarcity of currency; and that,
+inasmuch as, under the system proposed, they have the power, in their
+own hands, of creating probably all the currency that can possibly be
+used in manufactures and commerce, they have no one but themselves to
+blame, if they suffer the value of their property to be destroyed by any
+such narrow and tyrannical systems of currency and credit as those that
+now prevail, or those that have always heretofore prevailed.
+
+By using their real estate as banking capital, they can not only get an
+income from it, in the shape of interest on money, but by supplying
+capital to mechanics and merchants, they create a large class who will
+pay high prices for agricultural products, and high prices and rents for
+manufacturing and commercial real estate; and who will also supply them,
+in return, with manufactured commodities of the greatest variety,
+abundance, and cheapness.
+
+It is, therefore, mere suicide for the holders of real estate, who have
+the power of supplying an indefinite amount of capital for mechanics and
+merchants--and who can make themselves and everybody else rich by
+supplying it--to suffer that power to be usurped by any such small body
+of men as those who now monopolize it, through mere favoritism,
+corruption, and tyranny, on the part of the government, and not because
+they have any claim to it.
+
+
+
+
+CHAPTER IV.
+
+SECURITY OF THE SYSTEM.
+
+
+Supposing the property mortgaged to be ample, the system, as a system,
+is absolutely secure. The currency would be absolutely incapable of
+insolvency; for there could never be a dollar of the currency in
+circulation, without a dollar of capital (Productive Stock) in bank,
+which _must_ be transferred in redemption of it, unless redemption be
+made in specie.
+
+The capital _alone_, be it observed--independently of the notes
+discounted--must always be sufficient to redeem the entire circulation;
+for the circulation can never exceed the capital (Productive Stock). But
+the notes discounted are also holden by the trustees, and the proceeds
+of them must be applied to the redemption of the circulation. Supposing,
+therefore, the capital to be sufficient, and the notes discounted to be
+solvent, the redemption of the circulation is doubly secured.
+
+What guarantee, then, have the public, for the sufficiency of the
+mortgages? They have these, viz.:
+
+1. The mortgages, composing the capital of a bank, will be matters of
+public record, and everybody, _in the neighborhood_, will have the means
+of judging for himself of the sufficiency of the property holden. If
+the property should be insufficient, the bank would be discredited at
+once; for the abundance of solvent currency would be so great, that no
+one would have any inducement to take that which was insolvent or
+doubtful.
+
+2. By the Articles of Association, all the mortgages that make up the
+capital of a bank, are made mutually responsible for each other;
+because, if any one mortgage proves insufficient, no dividend can
+afterwards be paid to any of the bankers (mortgagors), until that
+deficiency shall have been made good by the company. The effect of this
+provision will be, to make all the founders of a bank look carefully to
+the sufficiency of each other's mortgages; because no man will be
+willing to put in a good mortgage of his own, on equal terms with a bad
+mortgage of another man's, when he knows that his own mortgage will have
+to contribute to making good any deficiency of the other. The result
+will be, that the mortgages, that go to make up the capital of any one
+bank, _will be either all good, or all bad_. If they are _all good_, the
+solvency of the bank will be apparent to all _in the vicinity_; and the
+credit of the bank will at once be established _at home_. If the
+mortgages are _all bad_, that fact, also, will be apparent to everybody
+_in the vicinity_, and the bank is at once discredited _at home_.
+
+From the foregoing considerations, it is evident that nothing is easier
+than for a _good_ bank to establish its credit, _at home_; and that
+nothing is more certain than that a _bad_ bank would be discredited, _at
+home_, from the outset, and could get no circulation at all.
+
+It is also evident that a bank, that has no credit at home, could get
+none abroad. There is, therefore, no danger of the public being swindled
+by bad banks.
+
+A bank that is well founded, and that has established its credit at
+home, has so many ways of establishing its credit abroad, that there is
+no need that they be all specified here. The mode that seems most likely
+to be adopted, is the following, viz.:
+
+When the capital shall consist of mortgages, it will be very easy for
+all the banks, in any one State, to make their solvency known _to each
+other_. There would be so many banks, that some _system_ would naturally
+be adopted for this purpose.
+
+Perhaps this system would be, that a standing committee, appointed by
+the banks, would be established in each State, to whom each bank in the
+State would be required to produce satisfactory evidence of its
+solvency, before its bills should be received by the other banks of the
+State.
+
+When the banks, or any considerable number of the banks, of any
+particular State--Massachusetts, for instance,--shall have made
+themselves so far acquainted with each other's solvency, as to be ready
+to receive each other's bills, they will be ready to make a still
+further arrangement for their mutual benefit, viz: To unite in
+establishing one general agency in Boston, another in New York, and
+others in Philadelphia, Baltimore, Cincinnati, Chicago, St. Louis, New
+Orleans, San Francisco, &c., &c., where the bills of all these
+Massachusetts banks would be redeemed, either from a common fund
+contributed for the purpose, or in such other way as might be found
+best. And thus the bills of all the Massachusetts banks would be placed
+at par at all the great commercial points.
+
+Each bank, belonging to the association, might print on the back of its
+bills, "_Redeemable at the Massachusetts Agencies in Boston, New York,
+Philadelphia, &c._"
+
+In this way, all the banks of each State might unite to establish a
+joint agency in every large city, throughout the country, for the
+redemption of all their bills. In doing so, they would not only certify,
+but make themselves responsible for, the solvency of each other's bills.
+
+The banks might safely make _permanent_ arrangements of this kind with
+each other; because the _permanent_ solvency of all the banks might be
+relied on.
+
+The permanent solvency of all the banks might be relied on, because,
+under this system, a bank (whose capital consists of mortgages), once
+solvent, is necessarily forever solvent, unless in contingencies so
+utterly improbable as not to need to be taken into account. In fact, in
+the ordinary course of things, every bank would be growing more and more
+solvent; because, in the ordinary course of things, the mortgaged
+property would be constantly rising in value, as the wealth and
+population of the country should increase. The exceptions to this rule
+would be so rare as to be unworthy of notice.
+
+There is, therefore, no difficulty in putting the currency, furnished by
+each State, at par throughout the United States.
+
+At the general agencies, in the great cities, the redemption would,
+doubtless, _so far as necessary_, be made in specie, _on demand_;
+because, at such points, especially in cities on the sea-board, there
+would always be an abundance of specie in the market as merchandise; and
+it would, therefore, be both for the convenience and interest of the
+banks to redeem in specie, on demand, rather than transfer a portion of
+their capital, and then pay interest on that capital until it should be
+redeemed, or bought back, with specie.
+
+Often, however, and very likely even in the great majority of cases, a
+man from one State--as California, for example,--presenting
+Massachusetts bills for redemption at a Massachusetts agency--either in
+Boston, New York, or elsewhere--would prefer to have them redeemed with
+bills from his own State, California, rather than with specie.
+
+If the system were adopted throughout the United States, the banks of
+each State would be likely to have agencies of this kind in all the
+great cities. Each of these agencies would exchange the bills of every
+other State for the bills of its own State; and thus the bills of each
+State would find their way home, without any demand for their redemption
+in specie having ever been made.
+
+Where railroads were used as capital, all the banks in the United States
+could form one association, of the kind just mentioned, to establish
+agencies at all the great commercial points, for the redemption of their
+bills.
+
+Of course each railroad would receive the bills of all other roads, for
+fare and freight.
+
+Thus all railroad currency, under this system, would be put at par
+throughout the United States.
+
+
+
+
+CHAPTER V.
+
+THE SYSTEM AS A CREDIT SYSTEM.
+
+
+SECTION 1.
+
+Perhaps the merits of the system, as a credit system, cannot be better
+illustrated than by comparing the amount of loanable capital it is
+capable of supplying, with the amount which the present "National" banks
+(so called) are capable of supplying.
+
+If we thus compare the two systems, we shall find that the former is
+capable of supplying more than fifty times as much credit as the latter.
+
+Thus the entire circulation authorized by all the "National" banks,[E]
+is but three hundred and fifty-four millions of dollars ($354,000,000).
+
+  [E] Exclusive of the so-called "gold" banks, which are too few
+      to be worthy of notice.
+
+But the real estate and railroads of the country are probably worth
+twenty thousand millions of dollars ($20,000,000,000). This latter sum
+is fifty-six times greater than the former; and is all capable of being
+loaned in the form of currency.
+
+Calling the population of the country forty millions (40,000,000), the
+"National" system is capable of supplying not quite _nine_ dollars ($9)
+of loanable capital to each individual of the whole population. The
+system proposed is capable of supplying five hundred dollars ($500) of
+loanable capital to each individual of the whole population.
+
+Supposing one half the population (male and female) to be sixteen years
+of age and upwards, and to be capable of producing wealth, and to need
+capital for their industry, the "National" system would furnish not
+quite eighteen dollars ($18) for each one of them, on an average. The
+other system is capable of furnishing one thousand dollars ($1,000) for
+each one of them, on an average.
+
+Supposing the adults (both male and female) of the country to be sixteen
+millions (16,000,000), the "National" system is capable of furnishing
+only twenty-two dollars and twelve and a half cents ($22.12-1/2) to each
+one of these persons, on an average. The system proposed is capable of
+furnishing twelve hundred and fifty dollars ($1,250) to each one, on an
+average.
+
+Supposing the number of _male_ adults in the whole country to be eight
+millions (8,000,000), the "National" system is capable of furnishing
+only forty-four dollars and twenty-five cents ($44.25) to each one. The
+other system is capable of furnishing twenty-five hundred dollars
+($2,500) to each one.
+
+The present number of "National" banks is little less than two thousand
+(2,000). Calling the number two thousand (2,000), and supposing the
+$354,000,000 of circulation to be equally divided between them, each
+bank would be authorized to issue $177,000.
+
+Under the proposed system, the real estate and railroads of the country
+are capable of furnishing one hundred thousand (100,000) banks, having
+each a capital of two hundred thousand dollars ($200,000); or it is
+capable of furnishing one hundred and twelve thousand nine hundred and
+ninety-four (112,994) banks, having each a capital ($177,000), equal, on
+an average, to the capital of the present "National" banks. That is,
+this system is capable of furnishing fifty-six times as many banks as
+the "National" system, having each the same capital, on an average, as
+the "National" banks.
+
+Calling the number of the present "National" banks two thousand (2,000),
+and the population of the country forty millions (40,000,000), there is
+only one bank to 20,000 people, on an average; each bank being
+authorized to issue, on an average, a circulation of $177,000.
+
+Under the proposed system, we could have one bank for every five hundred
+(500) persons; each bank being authorized to issue $200,000; or $23,000
+each more than the "National" banks.
+
+These figures give some idea of the comparative capacity of the two
+systems to furnish credit.
+
+Under which of these two systems, now, would everybody, who needs
+credit, and deserves it, be most likely to get it? And to get all he
+needs to make his industry most productive? And to get it at the lowest
+rates of interest?
+
+The proposed system is as much superior to the old specie paying system
+(so called)--in respect to the amount of loanable capital it is capable
+of supplying--as it is to the present "National" system.
+
+
+SECTION 2.
+
+But the proposed system has one other feature, which is likely to be of
+great practical importance, and which gives it a still further
+superiority--as a credit system--over the so-called specie paying
+system. It is this:
+
+The old specie paying system (so called) could add to the loanable
+capital of the country, _only by so much currency as it could keep in
+circulation, over and above the amount of specie that it was necessary
+to keep on hand for its redemption_. But the amount of loanable capital
+which the proposed system can supply, hardly depends at all upon the
+amount of its currency that can be kept in circulation. It can supply
+about the same amount of loanable capital, even though its currency
+should be returned for redemption immediately after it is issued. It can
+do this, because the banks, _by paying interest on the currency returned
+for redemption_--or, what is the same thing, by paying dividends on the
+PRODUCTIVE STOCK transferred in redemption of the currency--can postpone
+the payment of specie to such time as it shall be convenient for them to
+pay it.
+
+All that would be necessary to make loans practicable on this basis,
+would be, that the banks should receive a higher rate of interest on
+their loans than they would have to pay on the currency returned for
+redemption; that is, on the PRODUCTIVE STOCK transferred in redemption
+of the currency.
+
+The rate of interest _received_ by the banks, on the loans made by them,
+would need to be so much higher than that _paid_ by them, on currency
+returned for redemption, as to make it an object for them to loan more
+of their currency than could be kept in circulation. Subject to this
+condition, the banks could loan their entire capitals, whether much or
+little of it could be kept in circulation.
+
+For example, suppose the banks should pay _six_ per cent. interest on
+currency returned for redemption--(or as dividends on the PRODUCTIVE
+STOCK transferred in redemption of such currency)--they could then loan
+their currency at _nine_ per cent. and still make _three_ per cent.
+profits, even though the currency loaned should come back for redemption
+immediately after it was issued.
+
+But this is not all. Even though the banks should _pay_, on currency
+returned for redemption, precisely the same rate of interest they
+_received_ on loans--say _six_ per cent.--they could still do business,
+if their currency should, on an average, continue in circulation _one
+half the time for which it was loaned_; for then the banks would get
+three per cent. net on their loans, and this would make their business a
+paying one.
+
+But the banks would probably do much better than this; for bank credits
+would supersede all private credits; and the diversity and amount of
+production would be so great that an immense amount of currency would
+be constantly required to make the necessary exchanges. And whatever
+amount should be necessary for making these exchanges, would, of course,
+remain in circulation. However much currency, therefore, should be
+issued, it is probable that, on an average, it would remain in
+circulation more than half the time for which it was loaned.
+
+Or if the banks should pay _six_ per cent. interest on currency returned
+for redemption; and should then loan money, for _six_ months, at _eight_
+per cent. interest; and this currency should remain in circulation but
+one month; the banks would then get eight per cent. for the one month,
+and two per cent. net for the other five months; which would be equal to
+three per cent. for the whole six months. Or if the currency should
+remain in circulation two months, the banks would then get eight per
+cent. for the two months, and two per cent. net for the other four
+months; which would be equal to four per cent. for the whole six months.
+Or if the currency should remain in circulation three months, the banks
+would then get eight per cent. for three months, and two per cent. net
+for the other three months; which would be equal to five per cent. for
+the whole six months. Or if the currency should remain in circulation
+four months, the banks would then get eight per cent. for the four
+months, and two per cent. net for the other two months; which would be
+equal to six per cent. for the whole six months. Or if the currency
+should remain in circulation five months, the banks would then get eight
+per cent. for the five months, and two per cent. net for the other
+month; which would be equal to seven per cent. for the whole six months.
+
+The banks would soon ascertain, by experiment, how long their currency
+was likely to remain in circulation; and what rate of interest it was
+therefore necessary for them to charge to make their business a paying
+one. And that rate, whatever it might be, the borrowers would have to
+pay. Subject to this condition, the banks could always loan their entire
+capitals.
+
+
+
+
+CHAPTER VI.
+
+AMOUNT OF CURRENCY NEEDED.
+
+
+It is of no use to say that we do not need so much currency as the
+proposed system would supply; because, first, if we should not need it,
+we shall not use it. Every dollar of paper will represent specific
+property that can be delivered on demand in redemption of it, and that
+will have the same market value as gold. The paper dollar, therefore,
+will have the same market value as the gold dollar, or as a dollar's
+worth of any other property; and no one will part with it, unless he
+gets in exchange for it something that will serve his particular wants
+better; and no one will accept it, unless it will serve his particular
+wants better than the thing he parts with. No more paper, therefore, can
+circulate, than is wanted for the purchase and sale of commodities at
+their true and natural values, as measured by gold.
+
+Secondly, we do not know at all how much currency we do need. That is
+something that can be determined only by experiment. We know that,
+heretofore, whenever currency has been increased, industry and traffic
+have increased to a corresponding extent. And they would unquestionably
+increase to an extent far beyond any thing the world has ever seen, if
+only they were aided and permitted by an adequate currency.
+
+We, as yet, know very little what wealth mankind are capable of
+creating. It is only within a hundred years, or a little more, that any
+considerable portion of them have really begun to invent machinery, and
+learned that it is only by machinery that they can create any
+considerable wealth. But they have not yet learned--at least, they
+profess not to have learned--that money is indispensable to the
+practical employment of machinery; that it is as impossible to operate
+machinery without money, as it is to operate it without wind, water, or
+steam. When they shall have learned, and practically accepted, this
+great fact, and shall have provided themselves with money, wealth will
+speedily become universal. And it is only those who would deplore such a
+result, or those who are too stupid to see the palpable and necessary
+connection between money and manufacturing industry, who resist the
+indefinite increase of money.
+
+It is scarcely a more patent fact that land is the indispensable capital
+for agricultural industry, than it is that money is the indispensable
+capital for manufacturing industry. Practically, everybody recognizes
+this fact, and virtually acknowledges it; although, in words, so many
+deny it. Men as deliberately and accurately calculate the amount of
+machinery that a hundred dollars in money will operate, as they do the
+amount of machinery that a ton of coal, or a given amount of water, will
+operate. They calculate much more accurately the amount of manufactured
+goods a hundred dollars will produce, than they do the amount of grain,
+grass, or vegetables an acre of land will produce. They no more expect
+to see mechanics carrying on business for themselves without money, than
+they do to see agricultural laborers carrying on farming without land,
+or than they do to see sailors going to sea without ships. They know
+that all mechanical, as well as agricultural, laborers, who have not the
+appropriate capital for their special business, must necessarily stand
+idle, or become mere wage-laborers for others, at such particular
+employments as the latter may dictate, and at such prices as the latter
+may see fit to pay.
+
+All these things attest the perfect knowledge that men have, that a
+money capital is indispensable to manufacturing industry; whatever
+assertions they may make to the contrary.
+
+They know, therefore, that prohibitions upon money are prohibitions upon
+industry itself; that there can be no such thing as freedom of industry,
+where there is not freedom to lend and hire capital for such industry.
+
+Every one knows, too--who knows any thing at all on such a subject--that
+it is, intrinsically, as flagrant a tyranny, as flagrant a violation of
+men's natural rights, for a government to forbid the lending and hiring
+of money for manufacturing industry, as it is to forbid the lending and
+hiring of land, or agricultural implements, for agricultural industry,
+or the lending and hiring of ships for maritime industry. They know
+that it is as flagrant a tyranny, as flagrant a violation of men's
+natural rights, to forbid one man to lend another money for mechanical
+industry, as it would be to forbid the former to lend the latter a house
+to live in, a shop to work in, or tools to work with.
+
+It is, therefore, a flagrant, manifest tyranny, a flagrant, manifest
+violation of men's natural rights, to lay any conditions or restrictions
+whatever upon the business of banking--that is, upon the lending and
+hiring of money--except such as are laid upon all other transactions
+between man and man, viz.: the fulfilment of contracts, and restraints
+upon force and fraud.
+
+A man who is without capital, and who, by prohibitions upon banking, is
+practically forbidden to hire any, is in a condition elevated but one
+degree above that of a chattel slave. He may live; but he can live only
+as the servant of others; compelled to perform such labor, and to
+perform it at such prices, as they may see fit to dictate. And a
+government, which, at this day, subjects the great body of the
+people--or even any portion of them--to this condition, is as fit an
+object of popular retribution as any tyranny that ever existed.
+
+To deprive mankind of their natural right and power of creating wealth
+for themselves, is as great a tyranny as it is to rob them of it after
+they have created it. And this is done by all laws against honest
+banking.
+
+All these things are so self-evident, so universally known, that no man,
+of ordinary mental capacity, can claim to be ignorant of them. And any
+legislator, who disregards them, should be taught, by a discipline
+short, sharp, and decisive, that his power is wholly subordinate to the
+natural rights of mankind.
+
+It is, then, one of man's indisputable, natural rights to lend and hire
+capital in any and every form and manner that is intrinsically honest.
+And as money, or currency, is the great, the indispensable
+instrumentality in the production and distribution of wealth; as it is
+the capital, the motive power, that sets all other instrumentalities in
+motion; as it is the one thing, without which all the other great
+agencies of production--such as science, skill, and machinery--are
+practically paralyzed; to say that we need no more of it, and shall have
+no more of it, than we now have, is to say that we need no more wealth,
+and shall have no more wealth, and no more equal or equitable
+distribution of wealth, than we now have. It is to say that the mass of
+mankind--the laborers, the producers of wealth--need not to produce, and
+shall not be permitted to produce, wealth for themselves, but only for
+others.
+
+For a government to limit the currency of a people, and to designate the
+individuals (or corporations) who shall have the control of that
+currency, is, manifestly, equivalent to saying there shall be but so
+much industry and wealth in the nation, and that these shall be under
+the special control, and for the special enjoyment, of the individuals
+designated; and, of course, that all other persons shall be simply their
+dependants and servants; receiving only such prices for their property,
+and such compensation for their labor, as these few holders of the
+currency shall see fit to give for them.
+
+The effect of these prohibitions upon money, and consequently upon
+industry, are everywhere apparent in the poverty of the great body of
+the people.
+
+At the present time, the people of this country certainly do not produce
+one third, very likely not one fifth, of the wealth they might produce.
+And the little they do produce is all in the hands of a few. All this is
+attributable to the want of currency and credit, and to the consequent
+want of science, skill, machinery, and working capital.
+
+Of the twenty million persons, male and female, of sixteen years of age
+and upwards--capable of producing wealth--certainly not one in five has
+the science, skill, implements, machinery, and capital necessary to make
+his or her industry most effective; or to secure to himself or herself
+the greatest share in the products of his or her own industry. A very
+large proportion of these persons--nearly all the females, and a great
+majority of the males--persons capable of running machinery, and of
+producing each three, five, or ten dollars of wealth per day, are now
+without science, skill, machinery, or capital, and are either producing
+nothing, or working only with such inferior means, and at such inferior
+employments, as to make their industry of scarcely any value at all,
+either to themselves or others, beyond the provision of the coarsest
+necessaries of a hard and coarse existence. And this is all owing to
+the lack of money; or rather to the lack of money and credit.
+
+There are, doubtless, in the country, ten million (10,000,000) persons,
+male and female--sixteen years of age and upwards--who are naturally
+capable of creating from three to five dollars of wealth per day, if
+they had the science, skill, machinery, and capital which they ought to
+have, and might have; but who, from the want of these, are now creating
+not more than one dollar each per day, on an average; thus occasioning a
+loss, to themselves and the country of from twenty to forty millions of
+dollars per day, for three hundred days in a year; a sum equal to from
+six to twelve thousand millions per annum; or three to six times the
+amount of our entire national debt.
+
+And there are another ten million of persons--better supplied, indeed,
+with capital, machinery, &c., than the ten million before mentioned--but
+who, nevertheless, from the same causes, are producing far less than
+they might.
+
+The aggregate loss to the country, from these causes, is, doubtless,
+equal to from ten to fifteen thousand millions per year; or five, six,
+or seven times the amount of the entire national debt.
+
+In this estimate no account is taken of the loss suffered from our
+inability--owing simply to a want of money--to bring to this country,
+and give employment to, the millions of laborers, in Europe and Asia,
+who desire to come here, and add the products of their labor to our
+national wealth.
+
+It is, probably, no more than a reasonable estimate to suppose that the
+nation, as a nation, is losing twenty thousand millions of dollars
+($20,000,000,000) per annum--about ten times the amount of our national
+debt--solely for the want of money to give such employment as they need,
+to the population we now have, and to those who desire to come here from
+other countries.
+
+Among the losses we suffer, from the causes mentioned, the
+non-production of new inventions is by no means the least. As a general
+rule, new inventions are made only where money and machinery prevail.
+And they are generally produced in a ratio corresponding with the amount
+of money and machinery. In no part of the country are the new inventions
+equal in number to what they ought to be, and might be. In three fourths
+of the country very few are produced. In some, almost none at all. The
+losses from this cause cannot be estimated in money.
+
+The government, in its ignorance, arrogance, and tyranny, either does
+not see all this, or, seeing it, does not regard it. While these
+thousands of millions are being lost annually, from the suppression of
+money, and consequently of industry, and while three fourths of the
+laborers of the country are either standing idle, or, for the want of
+capital, are producing only a mere fraction of what they might produce,
+a two-pence-ha'-penny Secretary of the Treasury can find no better
+employment for his faculties, than in trying, first, to reduce the rate
+of interest on the public debt one per cent.--thereby saving twenty
+millions a year, _or fifty cents for each person, on an average_! And,
+secondly, in paying one hundred millions per annum of the principal;
+that is, _two and a half dollars for each person, on an average_! And he
+insists that the only way to achieve these astounding results, is to
+deprive the people at large of money! To destroy, as far as possible,
+their industry! To deprive them, as far as possible, of all power to
+manufacture for themselves! And to compel them to pay, to the few
+manufacturers it has under its protection, fifty or one hundred per
+cent. more for their manufactures than they are worth!
+
+He has been tugging at this tremendous task four years, or thereabouts.
+And he confidently believes that if he can be permitted to enforce this
+plan for a sufficient period of years, in the future, he will ultimately
+be able to save the people, annually, _fifty cents each, on an average,
+in interest_! and also continue to pay, annually, _two dollars and a
+half for each person, on an average_, of the principal, of the national
+debt!
+
+He apparently does not know, or, if he knows, it is, in his eyes, a
+matter of comparatively small moment, that this saving of $20,000,000
+per annum in interest, and this payment of $100,000,000 per annum of
+principal, which he proposes to make on behalf of the people, are not
+equal to what _two days_--or perhaps even _one day_--of their industry
+would amount to, if they were permitted to enjoy their natural rights of
+lending and hiring capital, and producing such wealth as they please for
+themselves.
+
+He apparently does not know, or, if he knows, it is with him a small
+matter, that if the people were permitted to enjoy their natural freedom
+in currency and credit, and consequently their natural freedom in
+industry, they could pay the entire national debt three, four, or a half
+dozen times over _every year_, more easily than they can save the
+$20,000,000, and pay the $100,000,000, annually, by the process that he
+adopts for saving and paying them.
+
+And yet this man, and his policy, represent the government and its
+policy. The president keeps him in office, and Congress sustain him in
+his measures.
+
+In short, the government not only does not offer, but is apparently
+determined not to suffer, any such thing as freedom in currency and
+credit, or, consequently, in industry. It is, apparently, so bent upon
+compelling the people to give more for its few irredeemable notes than
+they are worth; and so bent upon keeping all wealth, and all means of
+wealth, in the hands of the few--upon whose money and frauds it relies
+for support--that it is determined, if possible, to perpetuate this
+state of things indefinitely. And it will probably succeed in
+perpetuating it indefinitely--under cover of such false pretences as
+those of specie payments, inflation of prices, reducing the interest,
+and paying the principal, of the national debt, &c.--unless the people
+at large shall open their eyes to the deceit and robbery that are
+practised upon them; and, by establishing freedom in currency and
+credit--and thereby freedom in industry and commerce--end at once and
+forever the tyranny that impoverishes and enslaves them.
+
+
+
+
+CHAPTER VII.
+
+IMPORTANCE OF THE SYSTEM TO MASSACHUSETTS.
+
+
+SECTION 1.
+
+The tariffs, by means of which a few monied men of Massachusetts have so
+long plundered the rest of the country, and on which they have so
+largely relied for their prosperity, will not much longer be endured.
+The nation at large has no need of tariffs. Money is the great
+instrumentality for manufacturing. And the nation needs nothing but an
+ample supply of money--in addition to its natural advantages--to enable
+our people to manufacture for themselves much more cheaply than any
+other people can manufacture for us.
+
+To say nothing of the many millions who, if we had the money necessary
+to give them employment, might be brought here from Europe and Asia, and
+employed in manufactures, more than half the productive power of our
+present population--in the South and West much more than half--is
+utterly lost for the want of money, and the consequent want of science,
+skill, and machinery. And yet those few, who monopolize the present
+stock of money, insist that they must have tariffs to enable them to
+manufacture at all. And the nation is duped by these false pretences.
+
+To give bounties to encourage manufactures, and at the same time forbid
+all but a favored few to have money to manufacture with, is just as
+absurd as it would be to give bounties to encourage manufactures, and at
+the same time forbid all but a favored few to have machinery of any kind
+to manufacture with. It is just as absurd as it would be to give
+bounties to encourage agriculture, and at the same time forbid all but a
+favored few to own land, or have cattle, horses, seed corn, seed wheat,
+or agricultural implements. It is just as absurd as it would be to give
+bounties to encourage navigation, and at the same time forbid all but a
+favored few to have ships.
+
+The whole object of such absurdities and tyrannies is to commit the
+double wrong of depriving the mass of the people of all power to
+manufacture for themselves, and at the same time compel them to pay
+extortionate prices to the favored few who are permitted to manufacture.
+
+When tariffs shall be abolished, Massachusetts will have no means of
+increasing her prosperity, nor even of perpetuating such poor prosperity
+as she now has,[F] except by a great increase of money; such an increase
+of money as will enable her skilled laborers and enterprising young men
+to get capital for such industries and enterprises as they may prefer to
+engage in here, rather than go elsewhere.
+
+  [F] I say "poor prosperity," because the present prosperity of
+      Massachusetts is not only a dishonest prosperity, but is also
+      only the prosperity of the few, and not of the many.
+
+Even if Massachusetts were willing to manufacture for the South and
+West, _without a tariff_, she could hope to do so only until the South
+and West should supply themselves with money. So soon as they shall
+supply themselves with money, they will be able to manufacture for
+themselves more cheaply than Massachusetts can manufacture for them.
+Their natural advantages for manufacturing are greatly superior to those
+of Massachusetts. They have the cheap food, coal, iron, lead, copper,
+wool, cotton, hides, &c., &c. They lack only money to avail themselves
+of these advantages. And, under the system proposed, their lands and
+railroads are capable of supplying all the money they need. And they
+will soon adopt that, or some other system. And they will then not only
+be independent of Massachusetts, but will be able to draw away from her
+her skilled laborers, and enterprising young men, unless she shall first
+supply them with the money capital necessary for such industries and
+enterprises as may induce them to remain. They will, of course, go where
+they can get capital, instead of staying where they can get none.
+
+So great are the natural advantages of the South and West over those of
+Massachusetts, that it is doubtful how many of these men can be
+persuaded to remain, by all the inducements that capital can offer. But
+without such inducements it is certain they will all go.
+
+And Massachusetts has no means of supplying this needed money, except by
+using her real estate as banking capital.
+
+It is, therefore, plainly a matter of life or death to the holders of
+real estate in Massachusetts to use it for that purpose; for their real
+estate will be worth nothing when the skilled labor and the enterprising
+young men of Massachusetts shall have deserted her.
+
+All this is so manifest as to need no further demonstration. And
+Massachusetts will do well to look the facts in the face before it is
+too late.
+
+
+SECTION 2.
+
+What prospect has Massachusetts under the present "National" system?
+
+The Comptroller of the Currency, in his last annual report, says, that
+of the $354,000,000 of circulation authorized by law, Massachusetts has
+now $58,506,686. He says, further, that this is more than four times as
+much as she would be entitled to, if the currency were apportioned
+equally among the States, according to population; more than twice as
+much as she would be entitled to, if the circulation were apportioned
+among the States, according to their wealth; and three times as much as
+she is entitled to upon an apportionment made--as apportionments are now
+professedly made--half upon population, and half upon wealth.
+
+The Comptroller further says, that a law of Congress, passed July 12,
+1870, requiring him to withdraw circulation from those States having
+more than their just proportion, and to distribute it among those now
+having less than their just proportion, will require him to withdraw
+"from thirty-six banks in the City of Boston, $11,403,000; [and] from
+fifty-three country banks of Massachusetts, $2,997,000."
+
+Thus the law requires $14,400,000 to be withdrawn from the present banks
+of Massachusetts.
+
+When this shall have been done, she will have but $44,106,686 left. And
+as this will be more than three times her just proportion on a basis of
+population, and nearly twice her just share on a basis of wealth, there
+is no knowing how soon the remaining excess over her just share may be
+withdrawn.[G]
+
+  [G] If the excess mentioned in the text should not be withdrawn,
+      it will be only because the system is so villainous in itself,
+      that other parts of the country will not accept the shares to
+      which they are entitled.
+
+By the census of 1870, Massachusetts had a population of 1,457,351. She
+has now, doubtless, a population of 1,500,000. Calling her population
+1,500,000, the $58,506,686 of circulation which she now has, is equal to
+$39 for each person, on an average. When $14,400,000 of this amount
+shall have been withdrawn, as the law now requires it to be, the
+circulation will be reduced to less than $30 for each person, on an
+average. If the circulation should be reduced to the proportion to which
+Massachusetts is entitled, on the basis of wealth--that is, to
+$25,098,600--she will then have less than $17 for each person, on an
+average. If the circulation should be reduced to the proportion to which
+Massachusetts is entitled on a basis of population--that is to
+$13,879,778--she will then have a trifle less than $9 for each person,
+on an average.
+
+For years the industry of Massachusetts has been greatly crippled for
+the want of bank credits, although her banks have been authorized to
+issue their notes to the amount of $58,506,686; or $39 to each person,
+on an average. What will her industry be when her banks shall be
+authorized to issue only $44,106,686, or $30 for each person, on an
+average? What will it be, if her bank issues shall be reduced to her
+proportion on a basis of wealth, to wit, $25,098,600; or less than $17
+for each person, on an average? Or what will it be, if her bank
+circulation shall be reduced to her proportion on a basis of population,
+to wit, to $13,379,778; or less than $9 for each person, on an average?
+
+In contrast with such contemptible sums as these, Massachusetts, under
+the system proposed, could have nine hundred millions ($900,000,000) of
+bank loans;[H] that is, $600 for every man, woman, and child, on an
+average; or $1,500 to each adult, male and female, on an average; or
+$3,000 to each _male_ adult, on an average.
+
+  [H] Since the notes on page fifth were printed, the _Boston Journal_,
+      of Jan. 11, 1873, says that, by the valuation of 1872, the real
+      estate of Massachusetts is $1,131,306,347.
+
+Which, now, of these two systems is most likely to secure and increase
+the prosperity of Massachusetts? Which is most likely to give to every
+deserving man and woman in the State, the capital necessary to make
+their industry most productive to themselves individually, and to the
+State? Which system is most likely to induce the skilled laborers and
+enterprising young men of Massachusetts to remain here? And which is
+most likely to drive them away?
+
+
+SECTION 3.
+
+But the whole is not yet told. The present "National" system is so
+burdened with taxes and other onerous conditions, that no banking at all
+can be done under it, except at rates of interest that are two or three
+times as high as they ought to be; or as they would be under the system
+proposed.
+
+The burdens imposed on the present banks are probably equal to from six
+to eight per cent. _upon the amount of their own notes that they are
+permitted to issue_.
+
+In the first place, they are required, for every $90 of circulation, to
+invest $100 in five or six per cent. government bonds.[I] This alone is
+a great burden to all that class of persons who want their capital for
+active business. It amounts to actual prohibition upon all whose
+property is in real estate, and therefore not convertible into bonds.
+And this is a purely tyrannical provision, inasmuch as real estate is a
+much safer and better capital than the bonds. Let us call this a burden
+of _two per cent. on their circulation_.
+
+  [I] At first they were required to invest only in _six_ per cent.
+      bonds. But more recently they have been coerced or "persuaded"
+      to invest sixty-five millions ($65,000,000) in _five_ per
+      cent. bonds. And very lately it has been announced that "The
+      Comptroller of the Currency will not hereafter change United
+      States bonds, deposited as security for circulating notes of
+      national banks, except upon condition of substituting the new
+      five per cents. of the loan of July 14, 1870, and January 20,
+      1872."--_Boston Daily Advertiser of February 5, 1873._
+
+      From this it is evident that all the banks are to be "persuaded"
+      into investing their capitals in _five_ per cent. bonds.
+
+Next, is the risk as to the permanent value of the bonds. Any war, civil
+or foreign, would cause them to drop in value, as the frost causes the
+mercury to drop in the thermometer. Even any danger of war would at once
+reduce them in value. Let us call this risk another burden of _one per
+cent. on the circulation_.
+
+Next, every bank in seventeen or eighteen of the largest cities--Boston
+among the number--are required to keep on hand, at all times, a
+reserve--_in dead capital_ (legal tenders)--"equal to at least
+twenty-five per centum," and all other banks a similar reserve "equal to
+at least fifteen per centum," "of the aggregate amount of their _notes
+in circulation, and of their deposits_."
+
+Doubtless, two thirds--very likely three fourths--of all the bank
+circulation and deposits are in the seventeen cities named. And as these
+city banks are required to keep a reserve of dead capital equal to
+twenty-five per cent., and all others a similar reserve equal to fifteen
+per cent., _both on their circulation and deposits_, this average burden
+on all the banks is, doubtless, equal to _two per cent. on their
+circulation_.
+
+Next, the banks are required to pay to the United States an annual tax
+of one per cent. on their average circulation, and half of one per cent.
+on the amount of their deposits.
+
+Here is another burden equal to at least _one and a half per cent. on
+their circulation_.
+
+Then the capitals of the banks--the United States bonds--are made liable
+to State taxes to any extent, "not at a greater rate than is assessed
+upon the monied capital in the hands of individual citizens of such
+State." This tax is probably equal to _one per cent. on their
+circulation_.
+
+Here, then, are taxes and burdens equal to _seven and a half per cent.
+on their circulation_.
+
+Next, the banks are required to make at least _five_ reports annually,
+to the Comptroller of the Currency, of their "resources and
+liabilities." Also reports of "the amount of each dividend declared by
+the association."
+
+Then, too, the banks are restricted as to the rates of interest they are
+permitted to take.
+
+Then "Congress may at any time alter, amend, or repeal this act;" and
+thus impose upon the banks still further taxes, conditions,
+restrictions, returns, and reports. Or it may at pleasure abolish the
+banks altogether.
+
+All these taxes, burdens, and liabilities, cannot be reckoned at less
+than _eight or nine per cent. on the circulation of the banks_; a sum
+two or three times as great as the rate of interest ought to be; and two
+or three times as great as it would be under the system proposed.
+
+And yet the banks must submit to all these burdens as a condition of
+being permitted to loan money at all. And they must make up--in their
+rates of interest--for all these burdens. Under this system, therefore,
+the rate of interest must always be two or three times as high as it
+ought to be.
+
+The objections to the system, then, are, first, that it furnishes very
+little loanable capital; and, second, that it necessarily raises the
+interest on that little to two or three times what it ought to be.
+
+Such a system, obviously, could not be endured at all, but for these
+reasons, viz.: first, that, being a monopoly, those holding it are
+enabled to make enormous extortions upon borrowers; and, secondly, that
+these borrowers--most of whom are the bankers themselves--employ the
+money in the manufacture and sale of goods that are protected, by
+tariffs, from foreign competition, and for which they are thus enabled
+to get, say, fifty per cent. more than they are worth.
+
+In this way, these bank extortions and tariff extortions are thrown
+ultimately upon the people who consume the goods which the bank capital
+is employed in producing and selling.
+
+Thus the joint effect of the bank system and the tariff is, first, to
+deprive the mass of the people of the money capital that would enable
+them to manufacture for themselves; and, secondly, to compel them to pay
+extortionate prices for the few manufactures that are produced.
+
+Under the system proposed, all these things would be done away. The West
+and the South, that are now relied on to pay all these extortions, would
+manufacture for themselves. Their lands and railroads would enable them
+to supply all the manufacturing capital that could be used. And they
+could supply it at one half, or one third, the rates now required by the
+"National" banks. Of course, Massachusetts could not--under the
+"National" system--manufacture a dollar's worth for the South and West.
+She could not keep her manufacturing laborers. They would all go where
+they could get cheap capital, cheap supplies, and good markets. And then
+the manufacturing industry of Massachusetts, and with it the value of
+her real estate, will have perished from the natural and legitimate
+effect of her meanness, extortion, and tyranny.
+
+Looking to the future, then, there is no State in the Union--certainly
+none outside of New England--that has a greater interest in supplying
+her mechanics with the greatest possible amount of capital; or in
+supplying it at the lowest possible rates of interest. And this can be
+done only by using her real estate as banking capital.
+
+
+
+
+CHAPTER VIII.
+
+THE TRUE CHARACTER OF THE "NATIONAL" SYSTEM.
+
+
+SECTION 1.
+
+Under the "National" system there are less than 2,000 banks. But let us
+call them 2,000.
+
+Calling the population of the country forty millions, there is but one
+bank to 20,000 people.
+
+And this one bank is, _in law_, a person; and only a single person. In
+lending money, it acts, and can act, only as a unit. Its several
+stockholders cannot act separately, as so many individuals, in lending
+money.
+
+So far, therefore, as this system is concerned, _there is but one money
+lender for twenty thousand people_!
+
+Of these 20,000 people, ten thousand (male and female) are sixteen years
+of age and upwards, capable of creating wealth, and requiring capital to
+make their labor most productive.
+
+Yet, so far as this system is concerned, there is but one person
+authorized to lend money to, or for, these ten thousand, who wish to
+borrow.
+
+And this one money lender is one who, proverbially "has no soul." It is
+not a natural human being. It is a legal, an artificial, and not a
+natural, person. It is neither masculine nor feminine. It has not the
+ordinary human sympathies, and is not influenced by the ordinary human
+motives of action. It is no father, who might wish to lend money to his
+children, to start them in life. It is no neighbor, who might wish to
+assist his neighbor. It is no citizen, who might wish to promote the
+public welfare. It is simply a nondescript, created by law, that wants
+money, and nothing else.
+
+Moreover, it has only $177,000 to lend to these 10,000 borrowers; _that
+is, a fraction less than $18, on an average, for each one_!
+
+What chance of borrowing capital have these ten thousand persons, who
+are forbidden to borrow, except from this one soulless person, who has
+so little to lend?
+
+If money lenders must be soulless--as, perhaps, to some extent, they
+must be--it is certainly of the utmost importance that there be so many
+of them, and that they may have so much money to lend, as that they may
+be necessitated, by their own selfishness, to compete with each other,
+and thus save the borrowers from their extortions.
+
+But the "National" system says, not only that the money lender shall
+be a soulless person, and one having only a little money to lend,
+but that he shall also have the whole field--a field of 10,000
+borrowers--entirely to himself!
+
+It says that this soulless person shall have this whole field to
+himself, notwithstanding he has so little money to lend, and
+notwithstanding there are many other persons standing by, having, in the
+aggregate, fifty times as much money to lend as he; and desiring to
+lend it at one half, or one third, the rates he is demanding, and
+extorting!
+
+It says, too, that he shall have this whole field to himself,
+notwithstanding that ninety-nine one-hundredths of those who desire to
+borrow, are sent away empty! and are thereby condemned--so far as such a
+system can condemn them--to inevitable poverty!
+
+
+SECTION 2.
+
+But further. Each one of these 2,000 legal, or artificial, persons, who
+alone are permitted to _lend_ money, is made up of, say, fifty actual,
+or natural, persons, to whom alone, it is well known, that this legal
+person will lend it!
+
+These 2,000 legal persons, then, who alone are permitted to lend money,
+are made up of 100,000 actual persons, who alone are to borrow it.
+
+These 100,000 actual persons, who compose the legal persons, do not,
+then, become bankers because they have money to lend to others, but only
+because they themselves want to borrow!
+
+Thus when the system says that they alone shall lend, it virtually says
+that they alone shall borrow; because it is well known that, in
+practice, they _will_ lend only to themselves.
+
+In short, it says that only these 100,000 men--or one in four hundred of
+the population--shall have liberty either to lend, or borrow, capital!
+Such capital as is indispensable to every producer of wealth, if he
+would control his own industry, or make his labor most productive.
+
+Consequently, it says, practically--so far as it is in its power to
+say--that only one person in four hundred of the population shall be
+permitted to have capital; or, consequently, to labor directly for
+himself; and that all the rest of the four hundred shall be compelled to
+labor for this one, at such occupations, and for such wages, as he shall
+see fit to dictate.
+
+In short, the system says--as far as it can say--that only 100,000
+persons--only one person in four hundred of the population--_shall be
+suffered to have any money_! And, consequently, that all the property
+and labor of the thirty-nine million nine hundred thousand (39,900,000)
+persons shall be under the practical, and nearly absolute, control of
+these 100,000 persons! It says that thirty-nine million nine hundred
+thousand (39,900,000) persons shall be in a state of industrial and
+commercial servitude (to the 100,000), elevated but one degree above
+that of chattel slavery.
+
+And this scheme is substantially carried out in practice. These 100,000
+men call themselves "_the business men_" of the country. By this it is
+meant, not that they are the producers of wealth, but only that they
+alone handle the money! Other persons are permitted to sell only to
+them! to buy only of them! to labor only for them! and to sell to, buy
+of, and labor for, them, only at such prices as these 100,000 shall
+dictate.
+
+These 100,000 so called "_business men_," not only own the government,
+but they _are_ the government. Congress is made up of them, and their
+tools. And they hold all the other departments of the government in
+their hands. Their sole purpose is power and plunder; and they suffer no
+constitutional or natural law to stand in the way of their rapacity.
+
+How many times, during the last presidential canvass, were we told that
+"_the business men_" of the country wished things to remain as they
+were? Having gathered all power into their own hands, having subjected
+all the property and all the labor of the country to their service and
+control, who can wonder that they were content with things as they were?
+That they did not desire any change? And their money and their frauds
+being omnipotent in carrying elections, there was no change.
+
+These 100,000 "business men," having secured to themselves the control
+of all bank credits, and thereby the control of all business depending
+on bank loans; having also obtained control of the government, enact
+that foreigners shall not be permitted to compete with them, by selling
+goods in our markets, except under a disadvantage of fifty to one
+hundred per cent.
+
+And this is the industrial and financial system which the "National"
+bank system establishes--so far as it can establish it. And this is the
+scheme by means of which these 100,000 men cripple, and more than half
+paralyze, the industry of forty millions of people, and secure to
+themselves so large a portion of the proceeds of such industry as they
+see fit to permit.
+
+
+
+
+CHAPTER IX.
+
+AMASA WALKER'S OPINION OF THE AUTHOR'S SYSTEM.
+
+
+As Mr. Amasa Walker is considered the highest authority in the country,
+in opposition to all paper currency that does not represent gold or
+silver actually on hand, it will not be impertinent to give his opinion
+of the system now proposed.
+
+He reviewed it in a somewhat elaborate article, entitled "_Modern
+Alchemy_," published in the _Bankers Magazine (N. Y.)_ for December,
+1861.
+
+That he had no disposition to do any thing but condemn the system to the
+best of his ability, may be inferred from the following facts.
+
+After describing the efforts of the old alchemists to transmute the
+baser metals into gold, he represents all attempts to make a useful
+paper currency as attempts "_to transmute paper into gold_." He says
+that the idea that paper can be made to serve the purposes of money is
+"_a perfectly cognate idea_" with that of the old alchemists, that the
+baser metals can be transmuted into gold. (p. 407.)
+
+He also informs us that--
+
+     "It is perfectly impracticable _to transmute paper into gold_
+     to any extent or degree whatever, and that all attempts to do
+     so (beneficially to the trade and commerce of the world) are
+     as absurd and futile as the efforts of the old alchemists to
+     change the baser metals into the most precious." (p. 415).
+
+These extracts are given to show the spirit and principle of his
+article, and the kind of arguments he employs against all paper that
+represents other property than coin; even though that property have
+equal value with coin in the market.
+
+Yet he says:--
+
+     "One thing we cheerfully accord to MR. SPOONER'S system--_it is
+     an honest one_. Here is no fraud, no deception. _It makes no
+     promise that it cannot fulfil._ It does not profess to be
+     convertible into specie [on demand]. It is the best
+     transmutation project we have seen." (p. 413).
+
+When he says that "it is the best _transmutation_ project he has seen,"
+the context shows that he means to say that it _comes nearer to
+transmuting paper into gold_, than any other system he has seen.
+
+This admission, coming from so violent an opponent of paper currency,
+may reasonably be set down as the highest commendation that _he_ could
+be expected to pay to any _paper_ system.
+
+He also says:--
+
+     "Many schemes of the same kind have, at different times, been
+     presented to the world; but none of them have been more
+     complete in detail, or more systematically arranged, than that
+     of MR. SPOONER. (p. 414).
+
+But by way of condemning the system as far as possible, he says:--
+
+     "MR. SPOONER, however, can, we think, make no claim to
+     originality, so far as the general principle is concerned. The
+     famous bank of JOHN LAW, in France, was essentially of the same
+     character." (p. 413.)
+
+No, it was _not_ essentially of the same character. One difference--to
+say nothing of twenty others--between the two systems was this: that
+LAW'S bank issued notes that it had no means to redeem; whereas MR.
+WALKER himself admits that "MR. SPOONER'S _system makes no promises that
+it cannot fulfil_." That is to say, it purports to represent nothing
+except what it actually represents, viz.: property that is actually on
+hand, and can always be delivered, _on demand_, in redemption of the
+paper. Is not this difference an "essential" one? If MR. WALKER thinks
+it is not, he differs "essentially" from the rest of mankind. What fault
+was ever found with JOHN LAW'S bank, except that it could not redeem its
+paper? Will MR. WALKER inform us?
+
+
+
+
+
+End of Project Gutenberg's A New Banking System, by Lysander Spooner
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