Money belt

“ If your chits at one single shop run into large amounts, the collector generally brings along with him a coolie or a wheelbarrow with which to lug away the weight of dollars that you pour into his hands, and when two or three collectors come in together the office reminds one of a “money-’changer’s. Counterfeit [24] money is so prevalent that one after the other of your callers bites the silver or drops it on the floor to detect lead, and to listen to the resulting sound is not to feel complimented by their opinion of your integrity. ”

“ Young merchants, and some old ones, think there is no living without banks—no transacting business without a paper money currency. Have these persons ever heard of Holland, where there are merchants dealing in tens of millions, and all of it in gold and silver? Have they ever heard of Liverpool and Manchester, where there was no bank of circulation, not even a branch of the Bank of England; and whose immense operations were carried on exclusively upon gold and the commercial bill of exchange? ”

“ Unlike gold and silver, the new currency possesses no intrinsic value, but it consists simply of orders or cheques drawn on the State as the sole possessor of all articles of sale.
Every labourer in the service of the State receives once a fortnight a series of money certificates in the form of a coupon booklet. The name of each holder is printed on the cover, and with a view to preventing the use of the coupons by other persons, it is enacted that the photograph of every individual holder be attached to his book of coupons. ”

“ Such a volume of hard money would supply the best obtainable guarantee against currency disturbances.
That, if relieved from the function of furnishing wage and pocket money, a bank currency, suited for the larger operations of trade, and yet not handicapped with the obligation of special bond deposits, could be established with safety, may be asserted. That banks of issue can be safely conducted and furnish a sound currency has been sufficiently shown under conditions far more unfavorable than now obtain in the United States. ”

“ For small trading and at home, metal money answers well. But there is great trouble and risk in sending coin hundreds of miles to pay for goods bought at a distance. An easily carried substitute for gold and silver is the bank-note, a promise to pay so much, issued by the treasury or some banker, and passing as money from hand to hand. ”

“ The fact is, I don't mind tellin' you I've a deal on, an' I've undertaken t' put up this money in cash—to-night."
The banker ruminated for a few minutes. Experience had told him that with a certain class of men money in bills was more valuable than money in a cheque or draft. The very bulk of the currency seemed to impress them. He had seen an old-timer refuse a twelve-hundred-dollar marked cheque for his property, and yet surrender greedily at the sight of a thousand one-dollar bills piled on a table before him. ”

“ Money is also conveyed from province to province by these Tartars, when, if the amount is large, several horses are strung together, and are escorted by mounted police. The currency in the interior being silver coins of the size of our five-shilling pieces, the jolting and friction occasioned by the drive are likely to tear ordinary bags, so the latter are enclosed in a special rope-bag, which is neatly and compactly knitted over them. Gold coin is put up in leather, which is puckered up to form a bag, and tied and sealed on the top. ”

“ They came from either an irredeemable currency, which became worthless in the hands of the holder, or from expanded credit, based upon reckless enterprises which, failing, destroyed confidence in all industries. Stringency followed failure and reckless speculation. This panic occurs when money is more abundant than ever before. Our circulating notes to- day are sixty millions more than one year ago. It is all good—as good as gold. No discrimination is made between the gold and silver dollar, or between the United States note, the treasury note, the silver certificate, or the gold certificate. ”

“ It must be something which has a value abroad as well as at home, by which foreign as well as domestic debts can be satisfied. The precious metals alone answer these purposes. They alone, therefore, are money, and whatever else is to perform the functions of money must be their representative, and capable of being turned into them at will. So long as bank paper retains this quality, it is a substitute for money. ”

“ Then all our bank reserves will, practically, be in gold coin or gold certificates, because the silver certificates will be cut up into one and two dollar pieces and will be token money, in the pockets of the people, the tills of the stores and will constitute small cash for the banks. ”

“ At such times the need of leaning upon the solid foundation of metallic currency is felt with a new intensity; and when, with a blindness resulting from overconfidence, this need has been neglected, when, from a disregard of the functions of money, a crisis is brought about by the violent rupture of the equilibrium of credit, gold at once resumes its rights, is sought for on all sides, and, according to the seriousness of the offence, exacts complete amends, with the honors of a premium as high as it may choose to make. ”

“ You can empty all of the pockets of the people of the world of their silver, the bank vaults, the merchants' money drawers, the sub-treasuries, the children's safes, all India, Mexico, South America, England, France, Germany, Russia, Italy, Austria, the Netherlands, British America, China, Japan, and the islands, big and little, of the oceans, and you can put it all into this room, or in the basement of the Treasury building of the United States. ”

“ Under its grinding “punch” our poor little dollar goes, and with it a hundred dollars beside. With a savage accuracy it stabs two holes through every one. This is done for the purpose of absolute cancellation. Then each bundle is returned to its box, the messenger picks it up, the counter follows, and both hasten to the cash-account clerk of the division, whose business it is to see if all the money received and delivered to the counters, has been returned and accounted for. ”

“ I suppose, that the statesman perceiving that the constant circulation of the coin insensibly wears it away, and reflecting that the value of it is entirely in proportion to its weight, and that the diminution of the mass must be an effectual diminution of the real riches of his country, shall call in the metals and deposit them in a treasure, and shall deliver, in their place, a paper money having a security upon the coin locked up. ”

“ Of course, with such security, the fiat dollar ought to be worth its face in gold, and thus you may think of foreclosing that mortgage on the wealth of the country. Maybe you are a laboring man who have some money in a savings bank, which formerly was worth enough to buy a little house with, but in its fiat condition, money being plenty, appears just sufficient to pay for a jack-knife. You may go to the next best public building to see whether you can find any of the wealth of the country there, which is security for your fiat money, to lay your hands upon. ”

“ One need not believe it whole. A much more probable explanation is what any highwayman knows. He might make off with a dozen [Pg 34] of those strong boxes and then be no richer than he was before. They contain no money at all, but stocks and bonds, numbered and registered, which represent wealth reduced to an impalpable, theft-proof form. A railroad may lie in one of those boxes. But if you ran away with the box you would have neither the railroad nor anything you could turn into cash. The lost stock and bond certificates would be cancelled and new ones issued in their place ”

“ But as the currency involved in so much of the transaction as occurred after the cloth was made into clothing was neither gold nor any thing which represented gold, nor any other valuable commodity, and therefore, like a ship without a rudder, or a locomotive without a track, was sure to be unreliable as an exchanging instrumentality, the seller knew to a certainty that what he was to receive in payment of his goods, three, six, or nine months afterward, would not have the same value or purchasing power that it had on the day the debt was contracted. It might be greater, it might be less ”

“ Not so, however, with an inconvertible paper currency. Excepting the specie used in the payment of customs and the interest on our public debt, we are cut off from the money currents of the world. Our currency resembles rather the waters of an artificial lake, which lie in stagnation or rise to full banks at the caprice of the gate-keeper.
335“Gold and silver abhor depreciated paper money, and will not keep company with it. If our currency be more abundant than business demands, not a dollar of it can go abroad; if deficient, not a dollar of gold will come in to supply the lack. ”

“ It is this that renders it unnecessary to lock up the money of the country to accumulate for months successively, in order to the periodical payment of interest. The other is this: that his arguments, to show, that treasury-orders and bills of exchange, from the course of trade, will prevent any considerable displacement of the metals, are founded on a particular view of the subject. ”

“ Bryan's “fit” work? The sudden disappearance of our gold from circulation would produce the most stringent contraction of the currency on record. Business men who owe money and at the same time have money due them will be forced to collect that money by every means at their disposal. Nobody will be inclined to lend out any money except upon extraordinary security. The banks will naturally consider it their duty to keep themselves strong, and therefore to call in loans and to restrict their discounts and advances to business men with the utmost caution. ”

“ His pocketbook only contained ten dollars in small bills. The balance of his money he had deposited for safe keeping in the inside pocket of his vest. This he had placed under his pillow, and so it had escaped the notice of the thief. ”

“ The paper money, according to the universal law, that an inferior currency always crowds out the superior one, will circulate alone. Suppose, then, it appears that the paper circulation alone is in excess of the real requirements of the business of the country, what then? Then something like the amount of that excess will go to the Treasury for redemption, and the coin paid out in that redemption being over and above the volume of the circulation required by the business of the country, will again either be hoarded or go into our foreign commerce and flow out. ”

“ If, after the restoration of specie payments, my opinion could be made to prevail, no bank in the United States, nor the Government itself, should be permitted to issue a note of a denomination less than five dollars. "What!" I hear the inflationists exclaim, "you would take the convenience of small notes from the people?" Yes, I would let them have something better. They should handle gold and silver. It is the small currency that most circulates among the people of small means, and it is of vital importance to them that that small currency be most secure in its value. ”

“ Such promises to pay as greenbacks and national-bank notes are withdrawn to make room for fiat money. It will not be necessary to make any provision for the withdrawal of gold and silver, for the precious metals, finding no further employment, will take leave of themselves, and go abroad, where they are wanted. Now the fiat money is master of the field. It goes into circulation, and for some time it will indeed circulate, for, it being the only tool of exchange left to you, you will have to take it and use it ”

“ Small retail business is not done with hundred dollar bills, nor are stocks and bonds bought with pennies. Limiting the size of bank-notes to five pounds in England compels the use of a large amount of gold for smaller transactions, and keeps a larger amount of gold in use than would otherwise be the case. Expanding business draws cash from the banks for circulation, trenching on reserves. ”

“ This was shown in 1893-94 when the Street, with a strong repugnance to investing money in useful enterprises, and having a prodigious accumulation of funds on hand, concluded that a sale of Government bonds was necessary for the “national honor.” To this end the managers began to pull the treasury. In that institution a large sum of gold was stored, wholly without warrant of law. The people needed the gold beyond measure—that is, they needed the money; and gold is one form of money. ”

“ Payments, passed in 1797, had led to fewer large amounts in coin being carried about their persons by unprotected travellers. Nothing was more remarkable than the great sums of money that seem to have been carried by all classes in the periods already discussed; and in those circumstances lay the highwaymen's opportunity. But now they had fewer and smaller takings in coin, practically a choice only between watches and jewellery and bank-notes: very dangerous classes of property to handle unlawfully. ”

“ It provides for a system of twelve competing banking institutions which shall control the currency supply of this country, and over which there shall be no controlling body with power sufficient to compel them to regard the national welfare in the issue of currency and in the extension of their credit. It is taken for granted that the financial welfare of the people [Pg 756] will be safe provided that these competing regional banks are required to hold gold or lawful money reserves of 35 per cent. against deposits and 40 per cent. ”