42 MUTUAL BANKING. 



will be able to make purchases to the precise extent that they are 

 able to make sales. The mutual money will therefore prove to 

 them an unmixed benefit; it will be entirely independent of the old 

 money, and will open to them a new trade entirely independent of 

 the old trade. So far as it can be made available, it will unques- 

 tionably prove itself to be a good thing; and, where it cannot be 

 made available, the inhabitants will only be deprived of a benefit 

 that they could not have enjoyed — mutual money or no mutual 

 money. Besides, the comparative cost of the mutual money is al- 

 most nothing; for it can be issued to any amount on good security, 

 at the mere cost of printing, and the expense of looking after the 

 safety of the mortgages. If the mutual money should happen, at 

 any particular time, not to be issued to any great extent, it would 

 not be as though an immense mass of value was remaining idle; for 

 interest on the mutual money is precisely 0. The mutual money is 

 not itself actual value, but a mere medium for the exchange of act- 

 ual values— a mere medium for the facilitation of barter. 



We have remarked, that when the trader, who does the out-of- 

 town business of the inhabitants, buys coffee, sugar, etc., he does 

 not pay cash for them, but buys them at, say, six months' credit. 

 Now, the existing system of credit causes, by its very nature, peri- 

 odical crises in commercial aflfairs. When one of these crises oc- 

 curs, the trader will say to the city merchant, "1 owe you so much 

 for groceries; but 1 have no money, for times are hard: I will give 

 you, however, my note for the debt. Now, we leave it to the reader, 

 would not the city merchant prefer to take the mutual money of 

 the town to which the trader belongs, money that holds real estate 

 and produce in that town, rather than the private note of a trader 

 who may fail within a week? 



If, under the existing system, all transactions were settled on 

 the spot in cash, things might be different; but as almost all trans- 

 actions are conducted on the credit system, and as the credit system 

 necessarily involves periodical commercial crises, the mutual 

 money will find very little diihculty in ultimately forcing itself into 

 general circulation. The Mutual Bank is like the stone cut from 

 the mountain without hands, for let it be once established in a sin- 

 gle village, no mattc^r how obscure, and it will grow till it covers 

 the whole earth. Nevertheless, it would be better to obviate all 

 difTiculty by starting the Mutual Bank on a sufficiently extensive 

 scale at the very beginning. 



TIIK MKA8URE OF VALUE. 



The bill of a Mutual Hank is not a standard of value, since it 

 is itself measured and determined in value by the silver dollar. If 

 the dollar rises in value, the bill of the Mutual Bank rises also, 

 since it is receivable in lieu of a silver dollar. The bills of a Mutual 

 Bank are not standards of value, but mere instruments of exchange; 

 and as the value of mutual money is determined, not by the demand 

 and supply of mutual money, but by the demand and supply of the 



