THE PRIVATE BANKING SYSTEM.
The system of private or corporate banking is an example in point. Why do individuals want a gold basis upon which to issue currency? To get the privilege to levy interest on many times as much currency as they have capital invested. A bank with an actual capital of $100,000 in gold could issue $300,000 in currency, all which it could loan out together with nearly all the deposits that it could secure, which, in some instances, have been known to amount to ten times the capital. Why should not a class of men, if the people are blind enough to let them do it, speculate upon the credulity of the public through the idea that they are rendering a public service? Why should they not desire to “bank,” when by banking they can receive interest on $1,000,000, when otherwise they could collect it upon $100,000 only? The same idea is the inspiration of national banking, and of those who oppose a national currency. The banks bought, say $100,000 of United States bonds from the Government for $60,000. These bonds they deposited with the treasurer, and the people were required to pay $6000 a year interest on them, while the banks received from the Government $100,000 in national bank currency with which they were set afloat. These notes were loaned to the people, who again paid an interest on the same capital of $6000, or 20 per cent. per annum—$12,000 on $60,000; and yet the bank men have made the people think that they are offering them great accommodations. “Oh,” says the National Bank legislator, “we must get rid of these abominable, depreciated, irredeemable greenbacks, and make room for more national banknotes.” Do you know for what that legislation is bidding? He wants, if he has not already got it,—from some national bank man in his district, or else he has an interest in some bank. What is the security of national bank notes? United States bonds deposited in the Treasury. What is the security of the bonds? The public faith of the United States. What is the security of the greenbacks? The public faith of the United States. What difference in this respect, then, is there between national bank notes and greenbacks? None. Then as a currency there is this difference between the bank notes and greenbacks: If greenbacks were to take the place of the bank notes, the bank men would not get 20 per cent. interest on their capital, and the privilege of receiving and loaning the deposits of the people.
But look at it in another light. Suppose the security of the national bank notes were their own capital instead of the bonds, who would not prefer to trust the faith of the United States, rather than that of any individual in these times of Credit Mobilers, Tweed and whiskey rings? Then, again, why should individuals furnish the circulating medium of the people, when the people can furnish it themselves and save the expense? $1,000,000,000 is as small an amount of currency of all kinds as will transact the business of the country properly. Why should not the $60,000,000, which the people would have to pay the banks for interest on this, be paid to the Government for greenbacks? And more! Why should not all the interest that is now paid to individuals and banks for private loans, be paid to the Government? It is estimated that the average amount of private loans for the whole country is not less than $5,000,000,000 upon which, at even 6 per cent. interest, the people are taxed $300,000,000. Is there any valid reason why the Government should not loan this money and receive this interest? Yes, for if it did, the rich could not live in luxurious idleness, while the poor are obliged to labour twice the natural time to subsist the world.