, 1872-12-05
MONEY AND COMMERCE..
MONETARY.

?
"WEDNESDAY EVENING, Dee. 4.
We find no appreciate Abatement - .10
striuceucy in tho local money inarheI. In'
maud for accommodation at panA ~ s'1n 4a4s.s
in excess Of the ability or dlspos't1on u 'no
hanks to meet and obligations matur1ne a1
banks are not promptly met. a cannoe pay oe-
cause he cannot collect from ~ anu cannos
49, hec,nse he cannot collect from G, and
p 1900 mr. because he cannot collect from D.
~ conrse If this is traced back far enough, it
would como ut last to some debtor who cannot
nav BECAUSE he has either lost his means Of
naTmcnt or cannot sell what he has on hand. We
t1ink these final debtors who cannot pay are
the farmers, who have realized nothing
from their corn crop, but little from
their wheat, and have only begun to realize on
their hogs and cattle. There is reason to be-
lieye, however, that the marketing of hogs and
cattle will soon set the process OF liquidation In
motion. very small amount of ready money
placed in the hands Of the farmers VIII pc me
means of iquidating dozen times as much IN
debtedness in q few weeks.
In the open market prime business paper sells
at IL to 2 per cent.
New York exchange was hrmer to-day, though
moet sales we're made at yesterday price, which
was par. ..-.....
CLEARING HoUsE INVESTIGATIONS.
The Clearing House Association Of any city
is an association Of banks who have confidence
enough in each other to make mutual inter-
change Of checks drawn by the customers Of
each bank, holding the checks over until the next
days clearings. Of course, this interchange
Of checks is based on the presumption that
both the drawer Of each check and
this way every bank is guaranteeing. every day,
that the drawer Of q check and the bank upon
which it is drawn will continue as good until the
next day as each we're at the time the check WAS
drawn. For at least twenty hours, therefore,
every bank member of clearing house associa-
ton guarantees the character Of every other
bank. and every customer of every other bank
of the association shall become no worse. This
guarantee, continued from day to day, is o con-
tinuous Endorsement by the association Of the
character Of the individual banks, and makes
the association to some extent responsible for
them, at least in the public estimation. In this
view of the case, we hold that it is the duty
of the clearing house association to have such
E knowledge of the condition OF each OF
the associate banks as will warrant the conf
dence OF the public invited by the admission Of a
bank to the association. It is pretty well under
stood that for over year there have been
several banks members Of the Chicago Clearing
House that have no rightto be there: The reasons
for this are different III the case OF each bank.
reason is that both their capital
and business are too small to put them On an
equality with other members; but whatever rea-
sons may be found, it is evidently the duty of
the Association to Investigate and know. Within
week two banks have found it convenient to
"withdraw" J" from the Association, and, though
no general movement of Investigation has been
made, we hold that it should be done; perhaps
two or three more of the q small fry" would
find it convenient to withdraw.
INTEREST ON DEPOSITS.
The Comptroller Of the Currency calls atten-
ton, in his report to the ilegitimate accumula-
ton Of county bank deposits in the New York
banks in the dull seasons of the year, and the
effect which this has to induce the loan of the
money by the New York banks on doubtful col
laterals, and thus stimulate tho speculation in
npon n1osa1 the est stock Board ITO To- unsettle ae
values throughout the country, and alternately
decrease and depress the value OF every COM
modify"
It cannot be denied that the payment Of in
terest on deposits is q pernicious practice. in
compatible with sound principles OF banking,
and that it has some effect IN the direction lndl-
Gated by the Comptroller, though We ne are IN
isr is1' Or y @ss BY tie y public sic sll ssnsraiy
One evidence Of this is, that the most gigantic
epeculations Of Wall street have, for couple of
years past, been inaugurated and carried to
their highest pitch, where they absorbed the
most money, just at:the season when there was
ewn da9 to be of q The s0qa1 ea esad ea
day, 1869, and the recent corner in
Northwestern stock and another in the same
As for these specnlations g. unsettling the value
Of every commodity throughout the country"
Ee do not think any such effect will be admitted
by those who recognize that the value Of COM
and the supply to meet the demand, and that
demand aud supply of commodities is in
no way affected By the gambling in
railway stocks in New York. When the gam
direction, but very little. It WAS well known
that the great gold gamble in September, 1869,
when gold was artihcially advanced to 1852, did
not affect the relative values OF greenbacks and
well known that the price Was abnormal and
that this high price could be had only OF few
Individuals who had no power to depress the
Government credit
ment Of interest on deposits is pernicious prac-
tica. which does the bank which pays it more
harm than any one else, let us consider the
Comptroller's proposed plan for correcting it:
One part Of this plan is, that country banks,
by which ne presume he means banks outside Of
the redemption cities, and Of whom only O
Is per cent reserve is now required by
law, shall be required to keep a larger pro-
portion OF reserve on hand This is undoubtedly
move in the right direction. Not only is the
proportion OF reserve which the country banks
keep on hand too small (only about Z per cent?,
but even the total amount of reserve required
might, with propriety, be increased to at least is
per cent OF circulation and deposits. But the
Comptroller proposes also to offer the country
banks an inducement, in other words to 1rabe
them, to comply with the proposed requirement
Of tile law, and to offer this lnducement in the
way of the reissue Of the per cent certificates,
which are now just about all retired, in accord
ance with the act Of July, 1870. He proposes
IA Government issue bearing low rata OF
interest, to be counted as certain proportion Of
the reserves OF country banks"
Unless discrimination were made in favor of
country banks in the issue and availability Of
these proposed certificates for reserve the city
banks would be much more ikely to gobble up
the new issues as an Investment for the surplus
deposits they get from the country banks. II
the discrimination was made md the certificates