MR. MERCHANT: I must confess that I never knew that before; such a scheme as that is perfectly rotten, and it seems to me as though something ought to be done to correct so obvious an evil. Why, gentlemen, these men who are using bank notes as reserves, must have known that they were driving just that much gold out of the country, and weakening the basis of credit to just that extent.
MR. BANKER: I don't know whether they know enough to know that or not, and I don't know whether it would have made any difference with them if they did. When a man's cupidity and greed make a slave of him, they drive all patriotism out of his soul, just as debts, promises to pay, or wind money drives the gold out of the country.
MR. MANUFACTURER: This scheme of banks exchanging their promissory notes or their debts for the purpose of making reserves is a new one to me, too. But, if any one thing can be much worse than another, it must be this scheme.
Gentlemen, a true reserve must be the measure and touchstone of credit, therefore a reserve cannot be a credit itself nor a debt created by granting credit. Now, what is the thing by which we are measuring the value of all credit? Indeed, the thing by which we are measuring the value of everything? It is gold, is it not? Then certainly gold is the only thing that ought to be considered as a reserve.
MR. BANKER: Right you are, Mr. Manufacturer, no greater economic truth was ever uttered, or better said, than you have just put this one. In support of that, I want to read something just written by Joseph T. Talbert, Vice-President of one of our greatest banks. It is this: "What is a Bank Note? It is the available gold behind a Bank Note that gives it value. Substitution of any form of credit paper, the greenback, for instance, is a substitution of a deferred promise of a thing, for the thing itself. A statute which forces such notes upon the people as a legal tender, works a fraud and vitiates all reason in regard to money and banking. It perverts the moral sense of right and justice."
MR. FARMER: There is no doubt whatever that all the true reserves that that little country bank really had, was only the gold and gold certificates amounting to $4,000 out of the total of $14,250, the rest being only a substitution of some form of credit which must itself be redeemed by gold which is certainly the only redeemer. We settled that a long time ago, but it never came home to me until right now. This thing is growing on me so rapidly that I shall soon be a real, unregenerate Gold Bug. I guess I am that now. But, how plain and self-evident that truth is when we get close to it. We are living and teaching a gigantic economic fraud, an economic lie.