First: Any Government issue of bills, or of I.O.U.'s such as these are, must be very limited, if they are kept as good as gold.
Second: The United States Notes do not spring into existence in connection with business transactions, as the right kind of a currency always does.
Third: It costs those who use it, as currency, five times as much as currency should.
It is precisely as Mr. Manufacturer over there asserted a moment ago. Any system of currency that is of necessity limited in amount, and fixed as these United States Notes must be from the very nature of the case, breeds panics, because everybody realizing that the amount is limited, begins to scramble for cash upon the first intimation that there is any business trouble brewing. For this reason, they are utterly unfit as a system of currency.
Again, a right currency system is the natural product of business, and the amount of the currency will always rise and fall with the demands of trade. This can never be the case with the United States Notes, and they are on that account utterly unfit for currency.
And finally, certainly, if they cost the users of currency five times as much as the right kind of currency would, then we should replace them at once with the right kind of currency. Now, let me illustrate and demonstrate this.
If, over at my bank, we are compelled to furnish an average of $10,000 in currency a week, our average expense for the year will undoubtedly be $10,000 invested for that purpose. And if money is worth 6 per cent interest, it will cost us $600 to supply that amount of currency. If we can buy United States Notes as cheap as any other kind of currency, and we should carry them in stock, they will cost us $600 per annum. Now, our bank, being a country bank, we carry 15 per cent of all our deposits to meet current demands. Is it not a perfectly simple and self-evident fact that if instead of being compelled to buy this $10,000 of United States Notes every week, and so keep $10,000 invested all the year around at a cost to us of $600, the interest on $10,000, we could convert $10,000 of our deposit debts into $10,000 note debts of the bank it would only cost us 6 per cent on $1,500, the amount we are carrying as reserve against our deposits of $10,000, or only $90. In other words, we would save $510 on the transaction. Of course, if we have to pay out $510 more in the one way than in the other, we will have to get it back from Mr. Merchant here, Mr. Manufacturer, Mr. Lawyer, Mr. Farmer and Mr. Laboringman; and if we should collect it from Mr. Merchant and Mr. Lawyer, they will in turn take it out of Mr. Farmer and Mr. Laboringman.
Mr. Farmer: You bet they will. We always get the gaff in the end.
Mr. Laboringman: Where do I come in? I don't come in anywhere except to carry the load, as usual. I come out at the little end of the horn, as always heretofore.
Uncle Sam: Well, fellows, you see, don't you, that everything gets back, sooner or later, to the producer? He carries the load.