MONEY AND INTEREST.
would be that a great crop of fresh schemes would offer themselves to those desirous of intrusting any of their letters to others to carry. A very large proportion of these schemes—possibly the majority—would be unsound." Well, what of it? Are we on this account to give up freedom? No, says Mr. Fisher. But, then, what is the force of the consideration?
(8) Mr. Westrup's money not only shows that A has given B a conditional title to certain wealth, but guarantees that this wealth has been preserved. That is, it affords a guarantee so nearly perfect that it is acceptable. If you take a mortgage on a house and the owner insures it in your favor, the guarantee against loss by fire is not perfect, since the insurance company may fail, but it is good enough for practical purposes. Similarly, if B, the bank, advances money to A against a mortgage on the latter's stock of goods, it is within the bounds of possibility that A will sell the goods and disappear forever, but he will thus run the risk of severe penalties; and these penalties, coupled with B's caution, make a guarantee that practically serves. To be sure, Mr. Westrup's money does not assure the holder that the bank will deliver the borrowed articles on demand, but it does assure him that he can get similar articles or their equivalents on demand from any customers of the bank that have them for sale, because all these customers are pledged to take the bank's notes; to say nothing of the fact that the bank, though not bound to redeem on demand, is bound to redeem as fast as the mortgage notes mature.
(9) I perceive the perfect truth of Mr. Donisthorpe's remark, but I do not perceive its pertinence to the matter under discussion.
(10) Nor do I detect the bearing of the truisms which Mr. Fisher enunciates so solemnly. They certainly do not establish the absence of any necessity for enabling all wealth to be represented by money. This necessity is shown by the fact that, when the monetary privilege is conferred upon one form of wealth exclusively, the people have to obtain this form of wealth at rates that sooner or later send them into bankruptcy.
(11) I conclude by answering Mr. Fisher's questions.
The value of gold would be reduced by mutual banking, because it would thereby be stripped of that exclusive monetary utility conferred upon it by the State. The percentage of this reduction no one can tell in advance, any more than he can tell how much whiskey would fall in price if there were unrestricted competition in the sale of it.
Neither gold nor any other commodity is bought by people