DISCOUNTS. 421 



out of his bed and say to him, &quot;For God s sake, let the Bank of 

 England issue more notes, and we shall be saved.&quot; Banking has 

 nothing to do with money, except in one single point. I cannot 

 thoroughly explain that now. If you tell a banker to issue notes, 

 he of course sells them to the public. Every note that is issued by 

 the Bank of England, or the United States Government, or by a 

 private individual, is sold. The customers of this banker are the 

 buyers. He collects their bills and he pays them in his bills. To 

 that extent there is a resource in the banker who lends upon dis 

 count. That extent we know is limited in many cases. It has dis 

 appeared in England from the country banks. In the case of the 

 Bank of England, that power of selling notes to the public is lim 

 ited to about 15,000,000. By that means it has the power of lend 

 ing upon discount. But otherwise banking has nothing to do with 

 currency. It is very true that the banker is bound to pay his debts 

 in currency, but so am I. So are Baring Brothers; so is every 

 trader in the kingdom. It is perfectly possible that to-morrow 

 morning at ten o clock every creditor in the kingdom can ask for 

 gold. He would have to take a bank note, but he can get the 

 money from the Bank of England. 



Now, what is the good of all this investigation ? What reference 

 has it to crises? This: that, as I said before, as banking is the re 

 gion for the commercial typhoons and hurricanes, it is essential to 

 see the causes that act upon banking, and it is not from such rub 

 bish as a certain quantity of bank notes, certain things in the 3 

 in the hundred; it is from these ninety-seven things; and they are 

 goods, are property, are goods sold, parted with, and the contract 

 expressed on pieces of paper to pay money on demand or at the 

 time specified. That is the force &quot;of banking, and, therefore, if 

 banking is abundant, it is because many goods have been sold, 

 and the sellers of these goods do not want to buy much. Let me 

 repeat it. Banking is easy, discount is easy, the rate of interest is 

 low, in the proportion that men have given away their goods and 

 are not disposed to buy to a corresponding full extent of other 

 goods. Then bankers have much to lend. But when this is the 

 other way; when the farmer has spent all his capital in caring for 

 his farm, and the bad and naughty weather comes in August, and 

 the corn is spoiled, then the poor farmer is in very different circum 

 stances with his banker. &quot;With a good harvest Jie has plenty of time 

 to wait. When he has no wheat, or little to sell, he goes into town 

 perhaps has his old horse to replace with a new one and he 

 puts nothing in his banker s hands, and very possibly he asks him 

 to lend him, money. Look at the effect upon the banker. His 

 means are reduced because the farmer deposited nothing, and per 

 haps wanted money, and to whom lie must lend. That is abundant 

 means for banking and poor means for banking. 



Now, this making of railroads, warehouses, beautiful towns, etc., 

 are not foolish things, but they are things which destroy and do not 

 replace, and that is poverty. Poverty means that there are no goods 

 to sell, and when there are no goods to sell there are no goods to 

 buy with. The banker s resources fail, therefore. Then come the 

 crises. They are the consequences of the destruction of property 

 which is not replaced. They are the true children of poverty, and 



