With our present system
the amount in the country remains the same throughout the entire year,
resulting in an accumulation of all the surplus capital of the country
in a few centers when not employed in the moving of crops, tempted
there by the offer of interest on call loans. Interest being paid,
this surplus capital must earn this interest paid with a profit. Being
subject to "call," it can not be loaned, only in part at best, to the
merchant or manufacturer for a fixed term. Hence, no matter how much
currency there might be in the country, it would be absorbed, prices
keeping pace with the volume, and panics, stringency, and disasters
would ever be recurring with the autumn. Elasticity in our monetary
system, therefore, is the object to be attained first, and next to that,
as far as possible, a prevention of the use of other people's money in
stock and other species of speculation. To prevent the latter it seems
to me that one great step would be taken by prohibiting the national
banks from paying interest on deposits, by requiring them to hold their
reserves in their own vaults, and by forcing them into resumption,
though it would only be in legal-tender notes. For this purpose I would
suggest the establishment of clearing houses for your consideration.
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