Excerpt from A New Chapter Added to Political Economy: Pointing Out a 100 Million Dollars Capital That May Be Made Available to Canadian Industries by the Establishment of a Mortgage Bank of Issue

Second - Debts payable on time; these include all ordinary mercantile business, where a certain amount of capital is pledged to make good losses. In such cases time is given to realize by the sale of assets to pay Off maturing Obliga tions. The amount of capital necessary to insure success is settled by agreement between debtor and creditor. When one applies to a wholesale merchant for credit he is met with the enquiry - W hat is your capital? And is generally credited In pr'oportion. If, in starting business with a $1, 000 cash, goods valued at double that amount may at least be had - the business ability and character of the purchaser being Considered. Failure in this class of business cannot affect the general trade. That is credit business.

Third class, - Debts payable on demand, or currency; an adequate capital has to be pledged for the immediate payment of debts denominated currency. A bank of issue is simply a commercial company, but differing from the second class in that its debts are payable on demand. It must have a capital to do as it promises or failing that, its assets should be, under all circumstances, adequate security for speedy payment. It is not sufficiently noted by writers that as discounts create deposits, as well as circulation, they both are virtually circulation, if payable on demand.

Beyond these three classes there Is no conceivable transaction, excepting it may be a national currency, that is, a debt without any conditions of payment Paper currency cannot be money, but only a debt payable in money. The mint does not give value to gold, but makes it money by designating the fineness and quantity in the sovereign. A promise signed by the Government and not issued on capital, therefore, is not a proper currency. The Government has no capital. A Government issue is well defined as the promissory note of your hired man! A sound currency must either be capital, or an equivalent of capital, to be a perfect medium of exchange, or measure of value.

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