BOOKLAND and Thereabout

Maoriland Worker, Volume 6, Issue 244, 20 October 1915, Page 5

BOOKLAND and Thereabout

THE EVOLUTION OF BANKING

' prominent milestones which mark the path of progress from primitive bartor to an ideal financial system. The exporience thus gained aided in the ! furthor extension of tho uso of book I accounts in transferring credits or offsotting debts. ' "Tho traders of medieaval Europe 1 had ii method of offsetting debts that * closely resembles the modern system of cloa.ring checks by banks to-day. Th* 1 great faii-s that were formerly heJd nil through Europe during tho Middie Ages were attended by traders from many countries who came with long I caravans, and exchanged tho merchandise manufactured in their country for tho goods brought to the fair by the traders from other countries. The retail trade in these fairs bore only a small proportion to the whole volume, tho largest share of tho trade being in bulk between traders. At the close of the fair they niet in a large ! room for tho purposo of settling their ac-j I counts, and this was accomplished by mu-j tually offsetting their debts and credits ' with each other, only the differences, which were usually small, being paid in cash. Boisguilberfc tells of one fair hold at Lyons, France, at the close of which dobts to the amount of 80,000,000 francs were thus balanced against each other without the uso of a singlo coin. , "About tho year 1775 or 1780, after j the use of bank checks was introduced, ' tho clerks of some of tho London bankers, instead of going to each bank to collect the money ou the checks, made an arrangement with each other to meet at a certain place and "swap" their checks-, afterwards paying tho difference only in cash. Tho safety and convenience of this method led a few of the London bankers—then all private banker — to rent a room where their clerks could meet privately and exchango their checks, notes, and bills. It was kept ! a profound secret from the public, and ; j a number of bankers refused to join, as, I they believed it to bo a very question-; i able business arrangement. But as time ; went on tho economy of time, as well as work, together with tho elimination of tho risk consequent on uselessly transporting coins daily through the street from ono bank to Mother, and then buck again, won the day, and since then tho Clearing House has become a highly respectable institution. The Clearing House, as at first established, was a great labour-saving institution, j and saved the use of money between banks in the payment of checks, except for tho balances, which averagecf- only about 5 por cent of the total. But even this 5 per cent, is not now paid in the majority of Clearing Houses. In London all the member bauks, and the Clearing House itself, keep an account with the Bank of England, and tho differences are settled by means of checks, which transfer the amounts from one account to the other on the booke of the Bank of England. "It will thus be seen that the immense commerce of England is carried on by means of book bills of exchange, and checks, and these latter are paid and cancelled without the use of a single coin or bank bill. This also includes the country banks of England, who aro also members and whose checks are cleared through the Clearing House. "The same is truo to a largo extent in America. "\Yhilo in, some dealing Houses balances are presumably paid in cash, they are in a largo number of cases "traded"—tho banks having credit balances giving ordors on the Clearing House to the debtor banks with which to pay their debit balances. Thcso orders aro paid for by a cashier's check, which goes through tho Clearing House tho next day. "In tho Philadelphia Clearing House no money whatever is used, as they have adopted tho London system of paying balances by check. In the smaller towns the banks exchange checks with ono another and tho difference is sottled by giving a bank draft on Chicago or New York.' In times of panic the New York and Chicago Clearing Houses revert to the use of Clearing House certificates in place of money in paying balances. ■ "It ought to bo patent to any one watching the current of events that money iv the generally accepted sense, is becomiug obsolete as a means of exchanging services or commodities. This work, formerly done with a vast amount of labour and risk, is now being done in a convenient, safe and economical manner, by means of book accounts, bills of exchange, checks and tho clearing system. "Tho coins of America have almost entirely disappeared from circulation with the exception of the silver coins used in retail trade, and these are merely tokens and are worth ds bullion only about one-half their nominal value. The same is true of the nickel five cent pieces and the copper cents. These coins are used merely as counters. With

THE EVOLUTION OF BANKING, by Robert H. Howo (Chas. Korr & Co., (Jnicago). 50 cents. This is ono of the most useful books for the Socialist student. Tho author traces the production and exchange of commodities from tho dawn of history, when mankind was emerging from •avagory, and when commodities were hand made and exchanged by barter. "The division of Labour caused the invention of money. As soon as money was invented and camo into use to any considerable estent, means were taken, to introduce substitutes * or representatives which were of nominaJ value. Tho earliest mediums of exchange used wero the skins of animals, when these were too bulky and inconvenient to handle, a email irregular piece was cut>out of the skin. This was the token that tho skin belonged to the holdor of tlio email bib of leather, and ownership was proved by fitting it into tho place from which it had been out. Leather money was used by the Carthaginians and Romans and was in circulation in Russia as late as the reign of Peter tho Great. "Paper money was in circulation in China four or five hundred years before it was iseued by the Bank of England, end tho Emperor of Tartary issued both paper and leather money during tho fourteenth century. "The uso of skins as a medium of payment was nearly universal in the early history of America. The transactions of tbo Hudson Bay Company were based on 'skins.' One beaver skin was eupposed to bo worth two enillings; twenty skins would pay for a gun worth about forty shillings. Sometimes a gun was sold by standing it upright on the ground and piling skins beside it until the pile reached •a-s high as the muzzle-of tho gun. All kinds of skins were included and tho j pilo would contain not only coon, beav- j er and deer skins, but' often sea otter, i arctic fox and other rare and valuable ' furs. This method of dealing with tho Indians and trappers undoubtedly explains why tho guns of that period had such extraordinarily long barrels. "During colonial days in America, not only wero beaver and coon skins ■used as money, but also musket balls. .Wampum, which was mudo by the Indiana out of shells and which they Btrung in tbo shape of belts, was another medium of exchange, and was made legal tender in Massachusetts to the amount of forty shillings. Cows were also legal tender for taxes, but, a-s might be expected, the thrifty New Englanders always paid with the scrawniest specimens. "In Virginia and Maryland, on account of the scarcity of coin, corn and tobacco were used in payments of debts —the tobacco at 'the rate of thirty shillings per pound, and a refusal to accept carried a penalty of three years at hard labour. Women brought over from England by tho London Company were sold to the eettlers ac wives for one hundred pounds of tobacco. The prico was afterwards raised to one hundred and fifty pounds. "In the West Indies raw produce, euch as sugar, rum, molasses., ginger, indigo, and tobacco, was similarly used. In Newfoundland dried codfish was ■used at a very recent period. Every country of Europe and Asia gives evidence of the nso of vegetable and manufactured products as money. "Wheat from tho timo of ancient Greece to the present has been used, and in Norway it wa.s deposited in hanks and borrowed and lent. "Along the shores of the Mediterranean olive oil and in some places almonds were used, as was also in Abyseinia, Mexico and Sumatra, and in the latter country cubes of beeswax. "In Western China and Thibet tea pressed into small, hard cubes, callod 'brick tea, , passes currenti Fiji Islanders have a currency in whales' teeth, and one red ono is of tho same value as twenty white ones. "In passing from barter, or the uso of vegetable or manufactured articles, to metallic coins as money, an. evident attempt was made to connect the coin, either by shapo or design, with tho article it was supposed to represent. In China cloth and knives having to o> certain extent beeu used as a standard of value, the earliest coins were made to resemblo pieces of cloth, or knives. In ancient Homo tho substitution of coins for cattle was marked by the impressing upon the coin a design of an ox or a Sow. "The transportation of any considerable amount of gold or silver coins was attended with a large amount of labour and risk, and this was obviated by depositing the coins iv bank and transferring the title by moans of a bill of exchange. "Tho Bank of Venice and tho various banks of deposit in Europo aro

the elimination of gold coins t.ho last J vestigo of commodity money will have J finally dmappcared, at least Bo fur as i America ie concernod. ' "Any commodity which fluctuates in I value either from tho etl'eot of a dim-! ini&hing or increasing supplyi or from: the ine-rott-st) or deoroases in the cost, of production, is a poor instrument by which to measure the relative exousivii- ,- value of other commodities with itsolr or with each other. "The labour timo uecossary to pro-. duoe an -article will ultimately be the 6tandard by which its exchange value will bo estimated. ''Any financial legislation in the f n + ure must bo based on a full knowledge of tho history of money and banking. It must bo in harmony with tho evolutionary tendencies ascertained by a study of their development. Society must be protected from disastrous re-hiilt-ts such as w«i~ raiisnd by errors in the past, so tar us human intelligencecan be depended upon. "Constructive financial legislation can only be inaugurated now which will hasten the day when the exploita- ; tion of the working class will cease and : make the change from private ownership of the means of life to collective ownership e»sy and Motionless." j "The Evolution of Banking" teems j with detailed information, and not the j least interesting of its chapters is thsvtj !in Which the history of the Guernsey; I Market is told—a history that is well I worth studying, because, whatever its j shortcomings, it demonstrates how the I people can carry on their own business I without the intervention of the capi- '■ tulist. This excellent littlo book will shortly' be stocked by the literature secretaries of the S.D.P. at and Auckland.