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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