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                                   A
                          NEW BANKING SYSTEM:

                                  THE
                     NEEDFUL CAPITAL FOR REBUILDING
                          THE BURNT DISTRICT.

                          BY LYSANDER SPOONER.

                                BOSTON:
                       SOLD BY A. WILLIAMS & CO.

                         135 WASHINGTON STREET.

                                 1873.



        Entered according to Act of Congress, in the year 1873.
                          BY LYSANDER SPOONER,
       in the office of the Librarian of Congress, at Washington.


                               Printed by
                           WARREN RICHARDSON,
                           112 Washington St




CONTENTS.


                                                                  PAGE
  CHAPTER I.--A New Banking System,                                  5
  CHAPTER II.--Specie Payments,                                     12
  CHAPTER III.--No Inflation of Prices,                             21
  CHAPTER IV.--Security of the System,                              35
  CHAPTER V.--The System as a Credit System,                        41
  CHAPTER VI.--Amount of Currency Needed,                           48
  CHAPTER VII.--Importance of the System to Massachusetts,          59
  CHAPTER VIII.--The True Character of the "National" System,       70
  CHAPTER IX.--Amasa Walker's Opinion of the Author's System,       75




The reader will understand that the ideas presented in the following
pages admit of a much more thorough demonstration than can be given in
so small a space. Such demonstration, if it should be necessary, the
author hopes to give at a future time.

  _Boston, March, 1873._




CHAPTER I.

A NEW BANKING SYSTEM.


Under the banking system--an outline of which is hereafter given--the
real estate of Boston alone--taken at only three-fourths its value, as
estimated by the State valuation[A]--is capable of furnishing three
hundred millions of dollars of loanable capital.

  [A] By the State valuation of May, 1871, the real estate of Boston
      is estimated at $395,214,950.

Under the same system, the real estate of Massachusetts--taken at only
three-fourths its estimated value[B]--is capable of furnishing seven
hundred and fifty millions of loanable capital.

  [B] By the State valuation of May, 1871, the real estate of the
      Commonwealth is estimated at $991,196,803.

The real estate of the Commonwealth, therefore, is capable of furnishing
an amount of loanable capital more than twelve times as great as that
of all the "_National_" Banks in the State[C]; more than twice as
great as that of all the "National" banks of the whole United States
($353,917,470); and equal to the entire amount ($750,000,000, or
thereabouts) both of greenback and "National" bank currency of the
United States.

  [C] The amount of circulation now authorized by the present
      "National" banks of Massachusetts, is $58,506,686, as appears
      by the recent report of the Comptroller of the Currency.

It is capable of furnishing loanable capital equal to one thousand
dollars for every male and female person, of sixteen years of age and
upwards, within the Commonwealth; or two thousand five hundred dollars
for every male adult.

It would scarcely be extravagant to say that it is capable of furnishing
ample capital for every deserving enterprise, and every deserving man
and woman, within the State; and also for all such other enterprises in
other parts of the United States, and in foreign commerce, as
Massachusetts men might desire to engage in.

Unless the same system, or some equivalent one, should be adopted in
other States, the capital thus furnished in this State, could be loaned
at high interest at the West and the South.

If adopted here earlier than in other States, it would enable the
citizens of this State to act as pioneers in the most lucrative
enterprises that are to be found in other parts of the country.

All this capital is now lying dead, so far as being loaned is concerned.

All this capital can be loaned in the form of currency, if so much can
be used.

All the profits of banking, under this system, would be clear profits,
inasmuch as the use of the real estate as banking capital, would not
interfere at all with its use for other purposes.

The use of this real estate as banking capital would break up all
monopolies in banking, and in all other business depending upon bank
loans. It would diffuse credit much more widely than it has ever been
diffused. It would reduce interest to the lowest rates to which free
competition could reduce it. It would give immense activity and power to
industrial and commercial enterprise. It would multiply machinery, and
do far more to increase production than any other system of credit and
currency that has ever been invented. And being furnished at low rates
of interest, would secure to producers a much larger share of the
proceeds of their labor, than they now receive.

All this capital can be brought into use as fast as the titles to real
estate can be ascertained, and the necessary papers be printed.

Legally, the system (as the author claims, and is prepared to establish)
stands upon the same principle as a patented machine; and is, therefore,
already legalized by Congress; and cannot, unless by a breach of the
public faith, any more be prohibited, _or taxed_, either by Congress or
this State, than can the use of a patented machine.

Every dollar of the currency furnished by this system would have the
same value in the market as a dollar of gold; or so nearly the same
value that the difference would be a matter of no appreciable
importance.

The system would, therefore, restore specie payments at once, by
furnishing a great amount of currency, that would be equal in value to
specie.

The system would not inflate prices above their true and natural value,
relatively to specie; for no possible amount of paper currency, every
dollar of which is equal in value to specie, _can_ inflate prices above
their