Show somi SOME SILVER HISTORY we e must bear in mind that gold silver and paper are not the only kinds of money that act on prices bank credits or credits on the books of banks subject to check within certain limits the chief functions of money they not only take the place of money but they effect exchange sand close transactions the sa same me as actual morey and to the extent that they do this of course they affect prices the same is as so much money would then we bee that t the h e real effective currency acting on is is made up tip of gold silver paper and bank cre credits lits which might with propriety be called confidence money since its extent depends largely on the confidence people have in it the relative proportion of this credit currency to the actual money in inthe tho country is to state accurately nor cart can the relative efficiency of thi form of currency dollar for dollar be closely estimated but the report of the comptroller of the currency for 1893 pages and gives the deposits of state private and savings banks and trust companies as fol and fr for 30 national Nation SI maing M aing a total to lor all ilabe the bankson this the yat national ional banks held beld in lawful money and all the other banks ora or a total of thus altogether the banks held beld but of actual money 1 and I on this built up a structure of credit cradit currency of the real condition of the currency of the united states july 1893 may therefore be stated in round numbers as follon follo s aetna actual money in the hands bands of A the people actual money in the vaults of banks total actual money 1515 bank credits this is 13 currency as much as if notes were issued for the amount currency as much as were the old state bank issues artil and it inflates and contracts in the same sama way this volume of credit is ia a creation from nothing renting on eon con and amounts to more than eight dollars to one of the money it is based upon A withdrawal of of actual money from the banks therefore there foie compels the contraction of their credit volume of eight hundred huldred millian million it is clain I 1 enough to see that in this purely credit currency is where all the sudden contraction and aad expansion takes lake place it is i in this credit currency that all our troubles t originate and that all our panics begin the withdrawal of a large part of the reserves from the banks in the summer of 1803 practically extinguished for the time being b L in g a large part of this volume of b bank ank credits even in times of undisturbed confidence the relative efficiency of actual money and bank credits or confidence money is by no means equal dollar for collat if it were vere the proportion of the whole business done by each lind kind of currency cui rency would be in in the pro pation coition of il to tl 1 I GOO or 7 73 to 27 says one writer but bank credits says an authority on finances itie aie created and destroyed with each tion ion while actual money it on on all days and all seasons aud and the proportion of work actually done by money is is undoubtedly much larger than the above proportion and in times of panic the work falls mainly on ready money and so BO we see that the claim eo 0 o often made mada that 95 5 per cent of the business of the country is ione done by credit appliances all ces has no real foundation for in and by this volume of money money and bank credits all transactions of every nature and kind calling for money are liquid liquidated attil one thing is madle made apparent to a all I 1 reflecting minds by these propositions ions and by the experience of the people in 1873 and a again gain in 1893 that stability and security cannot be gained by narrowing the basis of actual money and increasing the superstructure of credit the so BO chilled sound money advocates who would Avith withdraw draw from the foundation of f our present currency one half the metallic money aud then proceed to raise higger the superstructure of credit cannot the best interests of the people it is by loaning this form of ore credit dit at interest that banks derive large dividends dividen 19 their loans must be largely on call so eo that when con confidence is shaken they can call in their loans and let the borrower take the consequences in III this way panics are brought about at the lifland will and pleasure of the shy locks of this and other coun countries counti tiles ies |