24 MUTUAL BANKING. 



could you suspend? You agree to pay specie; for specie is the only 

 legal tender and when you don't pay that, you don't pay anything. 

 When you don't pay that you break. Why don't you own up at 

 once? But while I am about it I will give you a piece of ray mind; 

 this extra note which you have issued beyond your capital is a vain 

 phantom, a hollow humbug and a fraud. And as for your bank, 

 you would better take in your sign; for you have broken." "These 

 be very bitter words," as said the hostess of the Boar's Head 

 Tavern at Eastcheap. 



John is right. Peter's capital is all gone and the note for 

 twenty- Ave cents, which professes to represent specie in Peter's 

 vaults, represent the tangibility of an empty vision, the shadow of 

 a vacuum. But which bank is it that is broken? Is it the bank 

 that does business on a specie capital, or the bank which does 

 business on the notes of the debtors to the bank? Evidently it is 

 the bank that does business on the specie capital that is broken; it 

 is the specie- paying bank that has ceased to exist. 



John understands this very well notwithstanding his violent 

 language a moment since, he knows that his is the only bill which 

 Peter has in circulation, and that Peter owes, consequently, only 

 twenty-five cents; he knows also that the bank has owing to it one 

 dollar and twenty-five cents. Peter owes twenty-tive cents and 

 has owing to him a dollar and twenty-five cents. John feels, 

 therefore, perfectly safe. What is John's security? Is it the spe- 

 cie capital? Not at all. James has taken the whole of that. He 

 has for his security the debts which are owing to the bank. Peter's 

 bank begins now to be placed in a sound, philosophical condition. 

 At first he promised to pay one dollar and twenty-tive cents in 

 specie, while he actually posessed only one dollar with which to meet 

 the demands that might be made upon him. How could he have 

 made a more unreasonable promise, even if he had tried? Now 

 that he has suspended specie payments, he has escaped from the 

 nnphilosophical situation in which he so rashly placed himself. 

 Peter's bank is still in operation— it is by no means broken; hi.s bills 

 are good, guaranteed, and worthy of considerable confidence; only 

 his bank is now a simple and not a complex bank, being no longer 

 two banks in one, for the specie-paying element has vanished in in- 

 finite darkness. 



CURRKNCV. 



And here we may notice that Peter has solved, after a rough 

 manner indeed, one of the most difficult questions in political 

 fcoiiomy. His bill for twenty-five cents is curkkncy, and yet it is 

 not based upon specie, iiur directly connected in any way with 

 specie. We would request the reader to be patient with us and not 

 make up his mind in regard lo our statements until he has read to 

 the end of the chapter; it shall not be very long. Light bn^aks on 

 »js here, which we would endeavor to impart to the reader. The 

 security for the bill is legal value, the security in actual value hav- 



