Americans Will Never Make A Bank Run
There may be runs on banks, but they won't come from American depositors. The following is an excerpt from Harangue by Garet Garrett. It will explain the matter.
She felt a little awe of him. Of old men she knew almost nothing and a man of this kind, old or young, was outside her experience. It had occurred to her to mention the fact that her banker in New York knew him and spoke most excellently of his character. When she came to say it there seemed no point to it. It was unimportant.
She said, "Mr. Plaino, do you know the condition of the People's Bank?"
"I do," he said, "and so do you."
"You know it perhaps much better than I do," she said.
"Much better," he said.
"Are you going to attack it?" she asked.
He looked at her for a long time through his glasses, holding them at arm's length. Then he said, "'For the Lord hath created a new thing in the earth. A woman shall compass a man.'"
"I didn't realize," she said, "how abrupt that question would sound. The reason I ask is this. I want to save the bank if possible. I feel some responsibility for it. It isn't a question of money. I am willing to put the money in. You know what the question is. I had thought of asking you to take charge of it, or to form a committee of bankers for that purpose, but that seems not to be feasible. There are difficulties in the law. The legislature names the directors and the directors name the president. What I have come to ask you for is advice."
He kept looking at her through his glasses, holding them far and near. His fingers were uncommonly long and thin, hardly wider than the thickness of his wrists. It was not there his strength lay.
"I am going to attack it," he said.
"Even though I tell you I am willing to help it through."
"The daughter of David Saint-Leon does not want advice," he said, thoughtfully. "That is not what she comes to me for. She wants information. They have been telling her she must save the bank. They have been telling her that unless she fills its till again with money it will fail. They speak to her in dread accents of a run. I tell her better. They walk in lies. 'T'aint that they are afraid of. Their fear is that when they have no more money to lend the people will turn against them."
"I must be very stupid," said Jael. "Somewhere I lose the point."
"This is not a bank like any other bank," he said. "If it were, Anx. Plaino should not attack it. Never. Shall iron break iron? 'T'aint natural. 'T'aint in the writing. What do they say? They say if a run started on their bank they couldn't last an hour. That's true. But it can't happen. When we speak of a run on a bank what do we mean? We mean the depositors get scared and come all at one time and demand their money back. If the bank can't give them their money it fails. This bank has no money. Its till is empty. Yet I tell you if that fact were published in the newspapers, still there would be no run on the bank. Why not? You want to know why not? Why, because the people already have the money. The bank does not owe the people. The people owe the bank. [emphasis added] Can you imagine people coming in a panic all at one time to pay the bank what they owe it?"
"But the bank does owe a great deal of money," said Jael.
"Not to the people," he said. "That's the riddle. Now follow me. To whom does a bank owe money? Any bank? To its depositors. You know that. Very well. But who are the depositors in this bank? Not the people, mind you. You are one. I think you are the only private depositor it has. You are not going to demand your money back, are you? You are not going to start a run on the bank, are you? Who are the depositors? They are the counties, the towns, the townships, the schools districts, the state itself, all required by law to keep their funds on deposit there. Those funds are gone. The bank is liable for them. Follow me. To whom is it liable? Not to persons. A county is not a person, is it? A town is not a person. The state is not a person. They are political forms, these depositors, with no blood to run cold, no organs of fear, nothing of their own to lose. They are not going to make a run on the bank. Don't you see what's happened? The counties, the towns, the state - they have been collecting taxes from the people and putting the money - the people's money - into this bank; and the bank has ladled it out to the people as if it were fable honey. When the peopele come awake to the fact that it was their own labor, not fable honey, they were beguiled to consume in a delirium of extravagance they will destroy the bank. [emphasis added] You cannot stop them. Nobody can. It will be an act of political sanity. Meanwhile there will be no run on that bank. Don't let them befuddle you on that point. The people have eaten their honey."
That passage is taken from pages 174-177 of Harangue: The Trees Said to the Bramble Come Reign Over Us written in 1927 by Garet Garrett. It is the only historical account I can find about the Socialist Revolution that swept North Dakota from 1918-1921. The records of this period, like the records of all failed socialist experiment worldwide leave a black hole of history. The individuals, their accomplishments and failings, and day-to-day life of the people is nearly wiped from the earth.
The governor, a minor character in the book, was the first, and until Gray Davis, the only governor ever recalled from office. The Socialist People's Bank was pronounced insolvent in 1921. Do you see the similarities between their style of finance and the workings of America's financial system. Eat your fabled honey now, but understand that it has a price. You've already paid for it with your labor, but not your past labor, your future labor. So get back to work slaves. You owe the banks some money.
The only thing the government fears is that the people will realize there is no more money to lend them.
David in Qatar