The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1843-06-18


consequently exchange cannot be less than that ow
t.nse bank credits not given moro will be pur
esed from the East than there produce pay for The
supply of bills will always very nearly equal the demand
The shipper of produce OF Louisville will then obtain par
for his bill of individual broker in Louisville Proba
bly, tn day. merchant having funds to remit to
New lies for the bill, and obtains II at per CT
bank cannot afford to work cheap it must charge u
per cent the BILL because has host Of clerks and
enormous expenses sustain. the supply Of bills too
great under bank she has only to increase her loans
the Dealers their purchases increase in proportion The
demand for bills grows in the ratio and the price
rises. The bank obtains profit the loans and better
one on the rise of its bills Let listen the Bank Of
Kentucky of the best in the country making its
swers to the Bank Commissioners =
The bank keeps separate interest and
profit purchase and sale of exchange ex
penses incurred that account 1t would require the
opening OF separate accounts in the bank and branches
and charging to each account the charges appropriate
that branch OF the business and pro charge the
other expenses of the bank and could not be made out and
qure great labor The bank usually expects that por
ton Of her engaged exchange yield greater
profit than that employed in the discount notes. but that
expectation ia not always realized, owing the huc
tuaons in exchange and the length OF time the money
seSiar motive to the exchange business the
dation of the customers OF the Bank the of the
State and the obtaining othe means Of maintaining
The profits of bank consist in the employment of It's
circulation and deposits. gives its bills which no
thing and which for 4years redeemed in Ken
lucky for bills drawn the proceeds Of the hard labor
OF the farmers. Let us hear again:-
This hank deems the exchange business essential to
their operations as bank Of circulation. Commerce.
which is the exchange Of the commodities Of country
Tor the commodities Of others, facilitated by OF
bills ofexchange, whereby the balances arising the in
points Of exports and imports The annul products of
each state and nation constitute its available to
purchase and exchange for the commodities of other
tries II Kentucky export $40 900 of her products
these products enable Kentucky to import $4,000 of the
products of other states end nations less the of
terest the debt ofthe State and the stock owned
othe Sate and the interest the debt of individuals and
the bills drawn by merchants who export the products OF
the State the points where sold and in
vest the proceeds bills on the points from whence the
inn made they have the Of paying for the
imports and this they do by furnishing exchange to the
importing merchants in exchange for the circulation
which is received from the Of the IMPORTS but
ifthe banks do purchase the bills Of the exporting
chant they will have OF furnishing erctange
the importing merchant, aud they must meet their crcula
ton nth specie and consequently could cir
culaon ond very limited amount. 1t is usual to
employ the funds ola bank of circulation
in The discount of notes and about one.hrd in the sale
AID purchase Of bills Of exchange and to extend the circu
lson o. the bank to the amount of specie on hsnd end
the bills of exchange drawn the exports of the
try and payabe without the State and where bank
mits her circulation to 90 much beyond this point she
ncurs great hazard in the event Of any revuon of bust
We do not think this bank could by eurtaing her
business in bills increase her business in the discount Of
change, diminishing the amount of bills would necessarily
lead 10 reduction the amount of notes which the bank
could safely discount and that such curtailiDg would ma
terally interfere with the of the State
being accustomed TO be carried on.
The trade of the country must constantly be stimu.
lated by the discount Of notes in order to keep pce
Of the bills and when in former years. this stimulation
is overdone ghe demand for bills outruns the supply
and the bank stops payment II then charges any price
it pIeases for the bills, because there is alternative
The merchant get nothing ese consequently the rate
in March 1912 was per cent on New York. When the
bank compelled to pay specie in June the rate fell
to per cent The operation of resumption the bank de.
scrbes as icllows:-
The demand for specie was kept down by the banks
furnishing Eastern exchange at per cent and whilst
they able to furnish exchange at that rate little
specie drawn for the Eastern markets. but when the
exchange to and onehaf per cent the demand
the Eastern market manifested itself sensibly; end
when exchange between New Orleans and the Eastern
in favor of New Orleans demand for specie for the New
Orleans market manifested ITSELF and pressed the prn
cipal bank at Louisville such form ss to lead TO great
circumspection in the discount and business OF the
bank.
"whe they could get bills at rate" they did not
specie When they could not get specie, owing to
the fraud of the bank, they obliged TO give sto Is
per cent for bills The suspension was, however, for
the relief Of the dear people, will be observed that
the basis of all this is the labor OF the farmers
Their labor feeds and pampers bankers furnishes capital
to dealers and Spectators They endure all losses in
revusion and the bankers get all the profits in prosperity
Let us hear what part and lot they have in anking-
When bank is located of shipping and importing
point or at manufacturing point we find the exporting
porting merchants and manufacturers congregated
at those points, and those the persons who usually Dor
money and sell bls-they form the usual and con
slant customers Of the banks The merchants and manu-
facurers residing distant borrow Individuals
and make other arrangements, By Purchasing on credit
&c. in the transaction OF their business because OF the
trouble delay and Of bank accommodations made
adsance The farmers NOT usual borrowers from the
gency, except those persons who have combined mer
chandize, manufacturing trading with their business
their applications the bank by the congSity Of their
locations; but as an exception to this general rule per
in the immediate vcinfy of the banks have been Tenn
ted become borrowers OF their vicinity and they
hare been dracn in sndores and been compelled as
the debts"
What complicated machinery is here erected for no
other purpose enable large class of bankers to
accumulate wealth at the expense of the farmers. The
wealth Kentucky is earned by the latter Their tobac
CO, bale rope, mules and corn, will always command
money, hard CON- When they draw bill for that mo-
ney they refused 10 sell except to person who had the
money to give them for 1t, there would be difficulty.
limo purchaser found, they could order the guneas
from En- gland in exchange for their tobacco Goods and
merchandise would then seek them in shoals to obtain
part OF their money The sellers Of these goods would
buy their bills An individual broker would Immediately
appear who would form the focus for and sellers
Of bills, and the rate would never vary par per
cent. On the other hand, s the business of banks 10
make difficulty Int regular routine Of steady business
banks could mako no money 1t ia only by constant vas
con,ractions, when they want to buy bills in
the fall expansion, when they want to sell bem tina,
they keep the markets in icrment and succeed in lch
ing from the farmer halfhe proceeds of This labor
-ssea al tnc -sooa Exchange.
$1,000 NY7s, isis I07H 20 CITY Blk Io,x
900 d. g.. 1872 100 UIcl u Schen RR IN
as SSc c CHI S. e. ss0 ss 3 Ohio S
1900 DO 1870 1914 % Norwich " Wore 22L
2poo h'inci. spell I'd, b30 a3X "a Auburn R,ch p5