Mr. Banker: That is so. My last protection is the American Reserve Bank, which actually holds reserves, real reserves, not United States bonds, United States notes, silver certificates, chips, and whetstones, nor any old thing; but gold, in unlimited quantities, to all intents and purposes.
Now don't you see, gentlemen, that if you will place me in that position, I will be absolutely free and independent of any bank in the United States, and of all banking influences of whatever kind—simply because my final appeal is to a great coöperative fund, in which I have a common interest with all my fellow-bankers, and I know that my protection is absolute?
Mr. Manufacturer: Yes, and I see another very important, all-important fact growing out of that situation; the complete liberation of every bank in that zone, as well as your bank; indeed, every bank in every zone would be absolutely liberated.
Mr. Merchant: Yes, and I see more than the liberation of all the individual banks. I see the complete liberation of every commercial zone or section of the country from every other commercial zone or section of the country; as each zone will look for its protection to the American Reserve Bank, the holder of the great coöperative gold fund, that is more than ample for any emergency that can possibly arise.
Mr. Lawyer: Mr. Banker, how would you fare under the Aldrich scheme, if you wanted $100,000 of currency to use to move the crops in the fall?
Mr. Banker: I am glad that you have asked for a comparison of our plan with the Aldrich scheme, under the same conditions.
I could not have any accommodation whatever, unless I first subscribed for an amount of stock in his scheme, equal to 20 per cent of my capital, and I had paid up 10 per cent, or one-half of it, or $10,000. Then, I must have a deposit or balance with his institution, possibly as much as $20,000, if I wanted to borrow as much as $100,000. Even then, I could not get any accommodation unless I had notes or paper that had less than twenty-eight days to run. But country bankers such as I am have no short time paper worth speaking of, and any of the paper or notes that might happen to be coming due within twenty-eight days would be the paper of people who do not want it sold and collected at some remote city. They usually want to pay a part and renew a part, so that, practically, I could not get any accommodation along that line.
Indeed, I do not believe that there is one bank in a hundred in the United States that could use the scheme at all directly. Now, if I should go into that scheme I would have to become a member of what they call a local association. If I had no twenty-eight day paper, I would then have to go to my local association with my hat in one hand, and my grip full of notes in the other, and ask them to guarantee my paper for me, by paying a commission for such guarantee. Of course, some of the officers of the local association would be from my particular neighborhood, and competing with me for business. I would not want to confess to my local fellow-bankers by asking their help in ordinary times, and I would not want to put into their hands the paper of my customers, and so expose their business to their neighbors. The result would probably be that I would resort to my correspondent banker, just as I am doing today. Of course, the large banks might have plenty of twenty-eight day paper, and could turn it over to the branch of Aldrich's Central Bank, and get some of the notes about which we have already heard something and supply me.
Now, let me suppose that I could use an average of $100,000 of currency throughout the year, and that I keep that amount of paper up all the time, for the purpose of supplying myself with currency of the Aldrich make; you can see that it would cost me 6 per cent upon $100,000, or $6,000 per annum.
Mark this, put it in your pipes and smoke it, that under our plan, allowing for the cost of my reserve of 15 per cent on $100,000 of notes, or 6 per cent on $15,000, or $900, and allowing my tax of 2 per cent on $100,000 of notes, or $2,000, it would make a total cost of only $2,900. My bank would, as you can see, be the loser of $3,100 by using the Aldrich scheme as against our plan. Do not fail to remember that the largest part of the 2 per cent tax on the notes under our plan will go to pay off the greenbacks.