> bill fancher <fancher at pacbell.net> asks:
> <
>> on 5/22/00 6:20 PM, John K. Taber at jktaber at dhc.net wrote:
>>
>>> I'm fascinated that the quote appears to be spurious.
>>
>> What makes it appear that way?
>
> The fact that Michael Perelman said he couldn't find it
> in Paterson's writing(s?), and he seems to be substantiated
> by Michael Pollak's comments on Quigley.
>
I'd missed Michael Pollack's post. I'll comment here, under the present, more relevant, topic.
on 5/22/00 1:48 PM, Michael Pollak at mpollak at panix.com wrote:
> The full article this is excerpted from is available at:
> http://www.floodlight.org/theory/bofe2.html
>> If either Still, Griffin or Mullins
>> had bothered to check Quigleys accuracy, he would have found that
>> Paterson never made any such statement in the circular mentioned. The
>> circular that Quigley mentions was published in 1694, and took as its
>> title, A Brief Account of the Intended Bank of England.
This is peculiar in that Quigley doesn't mention a circular. The relevant passage:
"In effect, this creation of paper claims greater than the reserves available means that bankers were creating money out of nothing. The same thing could be done in another way, not by note-issuing banks but by deposit banks. Deposit bankers discovered that orders and checks drawn against deposits by depositors and given to third persons were often not cashed by the latter but were deposited to their own accounts. Thus there were no actual movements of funds, and payments were made simply by bookkeeping transactions on the accounts. Accordingly, it was necessary for the baanker to keep on hand in actual money (gold, certificates, and notes) no more than the fraction of deposits likely to be drawn upon _and cashed_; the rest could be used for loans, and if these loans were made by creating a deposit for the borrower, who in turn would draw checks upon it rather than withdraw it in money, such "created deposits" or loans could also be covered adequately by retaining reserves to only a fraction of their value. Such created deposits also were a creation of money out of nothing, although bankers usually refused to express their actions, either note issuing or deposit lending, in these terms. William Paterson, however, on obtaining the charter of the Bank of England in 1694, to use the moneys he had won in privateering, said, "The Bank hath benefit of interest on all moneys which it creates out of nothing." This was repeated by Sir Edward Holden, founder of the Midland Bank, on December 18, 1907, and is, of course generally admitted today."
While we might wish Quigley had provided a source, the question of whether banks create money (which they do, and which is the important point) has nothing to do with what Paterson may or may not have said.
In my experience, however, Quigley is quite accurate. Pending further evidence, I'll continue to accept the quote as genuine.
-- bill