"Of course the illustration which I gave is not exactly accurate, for the reason that you could not get from your bank the exact amount of the valuation of whatever realty changed hands. The bank advanced about seventy percent of the appraised value, with certain exceptions. This also was in no wise different from the way our ancestors were accustomed to do, because in the old days such a transaction would simply have been called a mortgage. The important difference, however, later on, was that the valuation was made by the state and such valuation was final. This tended to stabilize real estate and property valuations.
"Merchandise, today, is bought and sold the same as it was bought and sold centuries ago, and that is by check. So is everything else, including labor. Every workman is, of course, paid by check, which check he can use either in his own bank account or for buying merchandise from his grocer or tailor, getting the difference in a check or otherwise in fractional paper tape coin.
"These government paper tape coins and banknotes—the few that are being used—instead of being covered by gold and silver bullion, are now covered by real estate bonds or other tangible property."
"But," Alice asked, "suppose there were a panic, as described in some of the ancient books, and everybody ran to the bank at once to get his money, what would happen?"
"Nothing," said Ralph. "Absolutely nothing. Suppose there was a 'panic,' as you call it. In the first place, why should there be one? There is no reason for it and no one nowadays would think of running to the bank and getting his or her 'money.' There is no 'money,' as you call it.
"Remember, the banks are all under government control, and if a bank should fail, which no bank has done for the last four hundred years, the government would be obliged to make good the shortage out of its own resources. If everybody ran simultaneously to every bank throughout the country, a bank would simply make out a check for each total balance, and pass out a check for the amount. Then the next morning, as the people could not eat their checks for breakfast, they would have to do one of two things: either take the check back to the bank and redeposit it, or exchange the check for commodities.
"That means that within twenty-four hours all the checks would have found their way back to the banks and things would be just exactly where they had left off before the 'run' on the bank. As banks are no longer under the necessity of paying in coin or banknotes, but under the law can pay by check, there is no reason why any one should wish to make a 'run' on the bank, simply to get a check."
"But," Alice persisted, "suppose you draw out more than you have to your credit? Suppose you write out a check for more than you have in the bank? What happens then?"
"You probably can answer that just as well as I can," replied Ralph. "To do so is a prison offense, and again, it would do you no good, because following the first offense you would get a warning from the government, and at the second such offense you would get a still stronger warning, and on the third, you would go to jail, because the first two offenses could perhaps be mistakes, but the third could not. On top of this, your account would be withdrawn from all banks and you would not be able to open another account again for ten years, because all checks as you know, are identified with fingerprints in addition to the signature. The fingerprint experts of the government would prevent you from opening another account in any bank anywhere in the country. So no one abuses his checking privilege and writes out checks when there are no funds to his credit."
A few days later Ralph took Alice to one of the great industrial artificial cloth works. They flew to Pennsylvania, where the great artificial silk, cotton, and wool mills were located. Ralph explained that during the 20th century silk had finally been made artificially from wood and chemicals. This was then known as artificial silk. But only during the last century had it been possible to manufacture artificial cotton and artificial wool, synthetically from wood and other chemicals. Moreover, they wore better than real cotton and real wool.