dividual who carries a pocketbook and who makes purchases, ought to know when a bank is a bank. They would then realize that a set of men behind a railing who invite you to leave your money there in return for a bank-book, either with a bait of 3 or 4 per cent interest, or on the plea of its being a convenient fund against which to run a buying account, do not make a bank. Several mercantile houses have recently. done and are doing this unfair and precarious thing. They have a right to give out notice that, to anyone who will loan to them his deposit account to use in their business, they will pay 4 per cent, thus letting the depositor know that he is what he is, i. e., a risking partner with the firm in their business, and that whether he ever gets his money back or not depends on how well the merchant does his business, but these firms have no right to deceive the people whose ignorance is their trap, by looking like a bank and acting like a bank or in calling themselves co-operative banks and using the language of banks to lure in depositors while say ing nothing of the real truth. These mercantile houses are themselves persistent borrowers of the banks and pay a rate usually of 5 or 6 per cent on what they borrow. Not only this, but their borrowings are restricted and are for short-time, at the end of which time they must either pay up or renew. By these deposits which they lure in from their customers they get unrestricted use of unlimited sums on long-time with a considerable margin to be employed permanently in carrying on their business. The merchant thus bor rows the absolutely ungoverned use of money from his customers (usually women) without security, which he could not do from any bank and at a per cent lower than any bank would give him. If the women who were the victims of the Siegel "crash," had acted from intelligence instead of from ignorance, they would have known this. The Siegel "Bank" was no bank at all and it was not co-operative to anyone except Siegel. That the victims of it were doing for him what no bank would do for him, and how much proof of his right to a loan banks exacted of him and how little right he had to anyone's loan, is best proven by the fact that he was convicted last March of obtaining a loan on a false credit statement. He has now, but recently, chosen, by preference, to serve ten months in Monroe County Penitentiary, N. Y., rather than divide up, as he had promised after his indictment to do, the $150,000 among the 14,000 depositors to whom he owed $2,224,000. This means that the amount which he could have paid, had he not chosen to go to jail, was over two millions short of the amount loaned him by customers and salespeople. Had anyone of them realized themselves merely partners to a scheme instead of imagining themselves depositors in a bank, they would have hunted out a real bank in the first place. It is to be hoped that, should it accomplish naught else, as the reader reads on through this article he will the more realize that no institution is a bank unless it functions for the people as well as out of the people. Also, that the progress and condition of the country depend absolutely and vitally upon a mechanism of credit being built up and maintained and that the basis for this credit is what is known as deposits and that the security guarantee for these deposits is the wealth. and industry of the nation. Thus it is that the mechanism of credit interlocks. As there is no other word which so acutely characterizes the instantaneous reaction of wealth and industry upon credit and of credit upon industry and wealth, this idea will persist throughout the article. A country which has no highly developed banking credit can have no highly developed industry. That is what is the matter with China. Her mechanism of credit is undeveloped because her industry is undeveloped. Immense fortunes are hidden away in hoards, which, if dug out of their musty hiding places, would furnish the basis for an enormous network of credit with which to activate industry. The financial processes of China are un-democratic for they may be considered but two,-crude and not co-operative; one, hoards take the place of deposit banking; two, the only credit to be obtained must come from the hoard-owners who then act in the role of moneyloaners who must be bribed by a terrific rate of interest before they will unlock their hoard. Interest paid to money-loaners has rightfully been termed "usury" adown the ages. It is as different from interest paid to a commercial bank as day from night. Interest paid to a commercial bank or to a trust company is but the rightful proportion of increment, according to the best judgment of the banker, which it takes to allow that sum, considering the best interests of community welfare, to go into that particular channel at that particular time. It is thus that credit and interest but increase the fund at the disposal of the people and it is thus that the money-loaner's gain is usury because it is but personal blood-money. Shylock was a notorious example of this art. tion has not slighted the money-loaner and the many successors throughout time, some of whom have risen to the stage of private bankers, have kept up his reputation. However, here in America, there have not been many instances of owners of enormous fortunes operating as or being known as money-loaners. The fortune of Hetty Green has been popularly said to have been operated by her thus. Fic This article refers only to strictly banking operations. The great private banks of today are brokerage houses. These, unquestionably, have a function in industry. In our own country, they include some of our strongest financial houses, and have afforded the basis of operation for some of our greatest and most constructive financiers. The tendency |