46 MUTUAL BANKING. 



to the bank, then nobody owes anything to the bank, and the bank 

 owes nothing to anybody. 



In case some of the debtors of the bank redeem their notes, not 

 in bills of the Mutual Bank, but in bills of specie-paying banks, 

 then those bills of specie-paying banks will be at once presented for 

 redemption at the institutions that issued them; and an amount of 

 specie will come into the hands of the Mutual Bank, precisely 

 equal to the amount of its own bills still in circulation; for since 

 the Mutual Bank never issues money, except in discounting notes 

 running to maturity, the notes of the debtors to the bank precisely 

 cover the amount of the bank's money in circulation. When this 

 specie comes into the hands of the bank, it deposits it at once in 

 some other institution; which institution assumes the responsibility 

 of redeeming at sight such of the bills of the closed bank as may be 

 at any time thereafter presented for redemption. And such institu- 

 tion will gladly assume this responsibility, since it is probable that 

 many of the bills will be lost or destroyed, and therefore never pre- 

 sented for redemption; and such loss or destruction will be a clear 

 gain to the institution assuming the responsibility, since it has spe- 

 cie turned over to it for the redemption of every one of the bills 

 that remains out. 



Finally: let us conceive, for a moment, of the manifold imper- 

 fections of the existing system of banking. In Massachusetts, the 

 banks had out, in the year 1849, nine and one-half dollars of paper* 

 for every one dollar of specie in their vaults wherewith to redeem 

 them. Can any thing be more absurd than the solemn promise made 

 by the banks to redeem nine and one-half paper-dollars with one 

 dollar in specie? They may get along very well with this promise 

 in a time of profound calm; but what would they do on occasions of 

 panic'?t 



The paper issued under the existing system is an article of mer- 

 chandise, varying in price with the variations of supply and de- 

 mand: it is, therefore, unlit to serve as a medium of exchange. 



The banks depend on the merchants; so that, when the mer- 

 chant is poor, it falls out that the bank is always still poorer. Of 

 what use is the bank, if it calls in its issues in hard times— the very 

 occasions when increased issues are demanded by the wants of the 

 community? 



The existing bank reproduces the aristocratic organizations; it 

 has its Spartan element of privileged stockholders, its Laconian 

 element of obsequious speculators, and, on the outside, a multitude 

 of Helots who are excluded from its advantages. Answer us, read- 



♦Countlng, of course, the certificates of deposit wliich are convertible 

 Into specie on demand. 



tNotwlthstanding the fact that this work was written in criticism of 

 the banking system In vogue In IH.'jO, most pi'oi)le jjorslst In calling: it a 

 "revival of the old wild-cat banks that e.xisted before the war."— Editor 



