AMERICAN BANKING SYSTEM. 415 



the aid of law; when these great and grave facts are borne in mind, 

 it is clear that the countries where interest rules lowest are the most 

 civilized. The fall in the rate when a state of thorough security to 

 property, (which means personal liberty, commercial integrity, and 

 honest government,) has been developed, hastened and furthered by 

 the immigration of capital from less civilized countries. To the land 

 where he learns that his property will be secure, the owner in a 

 country where he feels that his tenure of it is unsafe, sends that 

 property for investment; and the monetary centers of such lands 

 overflow with capital seeking investment at rates astonishingly 

 low, for the sake of the security expected. Hence, for all proper 

 enterprises in such a nation, capital is readily obtainable at a price 

 that permits a development of her resources, compared with which 

 the plausible schemes that politicians propose for government to 

 execute, are as puerile as they are futile. 



It then argues that there is one important lesson to be deduced 

 from these facts, viz : That every one in the community, and every 

 law-maker especially, can help or hinder among ourselves the devel 

 opment of such a condition. Every man who faithfully pays his 

 debts and lives an honest life, helps to develop a great civiliza 

 tion, and renders real service to his country. Every man who com 

 mits fraud or robbery, does more to destroy confidence, to increase 

 the rate of interest, and to retard civilization, than two honest men 

 can do to help it on. Every law that practically protects men in the 

 possession of their own, operates to lower interest and build up 

 civilization; but every law that operates to make it less secure 

 tariffs, legal-tender acts, etc. raises the rate of interest, and post 

 pones the advance of civilization. 



The application of this test to our civilization does not give 

 a flattering result, and we must look into the reason. Five per 

 cent, is thought by good judges to be all that the producing 

 classes can afford to pay, and is more than they make, on the 

 average, out of their capital invested in farming. &quot; So long as 

 money-lenders receive a larger income on loans than can be 

 realized out of real estate, money cannot be obtained at a rea 

 sonable rate of interest. There is surely no good reason why 

 strips of paper, called money, should bring a larger income 

 than the same amount of money will bring when invested in 

 almost any productive industry.&quot; 



A look into our American banking system will not be un 

 profitable to the farmers of California; but first let us find out 

 what banks are, and how they originated. 



The word bank comes from the Italian for bench; the Lom 

 bard Jews of Italy, who were the first money-lenders in Europe, 

 having been accustomed to transact their business on benches 

 in the market places. When one of these men was detected in 



