"It is also a a error to suppose that checks and drafts to any very great extent take the place of credit money. It facilitates business for a man to be able to carry his check book with him instead of the danger and inconvenience of carrying a large roll of bills; but the equivalent of each check he draws must be to his credit in bank to meet the check. If a man gives a check for $100, and that check is transferred to six different parties and pays in that way six different debts in the course of the day, it does no more than a $100 bill would have done. It, too, could have started on the rounds and paid the same number of debts. The check has no advantages over the bill in that respect.
"Where checks enlarge the use of credit money is in this: A bank may have had deposited with it $1,000,000. It only keeps say $400,000 on hand; the banking and check system give greater utility to the $1,000,000, but the necessity for actual money has not been decreased in the least—the expansion of credit money by substitutes only emphasizes its importance.
OUR FINANCIAL AND CREDIT SYSTEM
"Three lines of credits," continued Coin, "are built up on primary or redemption money.
"First: Credit money—paper bills and all forms of token money—all redeemable in primary money.
"Second: Checks, drafts, bills of exchange, and other forms of like paper, payable on demand.
"Third: Notes, bonds, accounts, and other forms of credit, payable at a particular day in the future, or upon the happening of some contingency.
"A reckless era of business that extends either or both the second and third lines of credit beyond their normal volume may create a panic. Notes, bonds and
