The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1865-10-28
RinaneIal and Commercial matters be-
tween theEast and west.
FnO1a Ghs ctneFny,1rtf G1yette

Recent events In financial matters
show that the West has become algreat
power In the money market. New
York formerly ruled the whole eOdu-
try. A close money market there
meant a close market everywhere, and
vice versa, but circumstances have
changed all this. New York, by pay
ing interest ON deposits, has attracted
the surplus means and reserved funds
OF individuals and bankers throughout
the country. Upon these immense de
poSits a large discount business Is bas-
ed. This works very well until these
deposits begin to be Withdrawn. Then
sudden stFingencyi occurs in theInon-
ey market, and a paniclly feeling is de-
veloped in all departments OF trade.
We have had an illustration Of this
lately. ThesNeW York market ruled
easy; speculations was brisk; prices Of
stocks and commodities were adyanc-
ing, and the papers were writing that
this ease would continue, that prices
mustgo still higher, and assigned as one
reason for this that w Western credits were
largely in favor of New York. At that
very time exchange was tumbling at
Cincinnati and Chicago, and within a
| few days declined to " dis. Western
bankers, In order to secure relief or
| 3ered currency from New York, and in
one week the banks of that city, not i'm
Guiding private bankers and other In
stitutions outside of the Associations,
lost over eight millions in currency.
This caused q sudden contraction of the
money market, and In a few days there
was a change in tone from ease to
StEtngency-almost from one extreme
to tho other. This was foreshadowed
by the Western movements to which
we have referred, but New York per-
sisted in believing that 1t was not pos
sible for the West to disturb Wall
street. The time was when the West
WIS a fly on the Wall street wagon
wheel, but that time has passed. New
Workers, by inviting deposits from tho
West; by doing what Western banks
generally refuse to do-Paying Interest
on current deposits-Rre vastly in
crensing tho power of the West;
and IL they should succeed in getting
the banking law amended so as
to compel National Banks to keep their
reserves on deposit there, their present
liability to sudden changes will be
doubled. The safe course Is TO have the
deposits scattered, SO that there shall be
no necessity for the sudden adjustment
of balances. The policy OF paying in
terests on deposits is n bad one, because
1t places the party holdingthe moneyat
the mercy of the depositors. The money
is permitted TO remain until ceeded by
the owner, and then 1t is drown out uIi-
ceremOniOusly. It amounts to borrow
ing on call at 4n5 per cent. for the pur-
pose of re-lending at 6a7 per cent The
margin isentirely too small for the risk,
and yet the New York banks thnt pay
interest are bound to keep their money
ont close in order to avoid n loss in their
! interest accounts. When drawn upon
by their depOsitOFs, as in the late furry,
they are forced to call in their loans
suddenly, contracting the market,
4 which, only n week before'they were ex-
4 pauding, and throwing business
/ into n pinchy condition. This is the
inevitable result of the New York poll
cy, and if the Inter is persisted in; it
| will end at last in n crash, and deposit-
Ors will lose more of the principal than
| they will gain in the way of Interest.
In view of these fncts, the West, of
course, will oppose the centrllli1fnG
| policy TINT New York Is preparing to
I press upon Congress, in regard TO Ma
ttonnl Banks. The country should not
| put all its eggs in one basket; and the
true policy, therefore, is to preserve the
law regulating redemPtiOns precisely
AS IL is now. a
| We have seen to what extent the
\ West influences New York. The mon.
| ctary pinch here, and the consequent
decline i'll exchange, meant a close
money market i'll New York. This
was realized. Now the scale has
turned here. Currency is easier, and
exchange has advanced. Consequent
~, the West Is no longer drawing cur
rency from New York, and it is posi-
shipments OF currency from the West.
This means an easy money market in
| New York, with all its results.