Phillipsburg herald. [volume] (Phillipsburg, Kan.) 1882-1905, 1884-09-25
THE PRESENT MONETARY sTRIN-
GEECK.
with Some Remarks as to the Why's and
Wherefores.

eastern money markets, New 4Ork city,
in passing over has left in its track set
tied condition of stringency that is now
being every where felt. Our home peo-
pie are realizing it in finding a great
shortage of lOanable funds IN proportion
to the active demand for them. SO SEN
sitiVe is the composition of the Nations
prosperity and so dependent upon Tegu-
larity at our central financial headQuar-
ters that it Is only a question OF time,
till like the widening ripples on the
water which q stone cast therein Will
make, the furthermost bounds Of our con-
tinent feel any undulatOry swell started
at its opposite shores. With abundant
evidences of local prosperity on our
every hand, it seems hard to realize that
we here are now suffering nearly
money famine owing to a com blnat1On
of circumstances brought about by
no deficiency on our part, but
the result Of the recklessness and vii
lainy of desperate, speculative operators
nearly 1000 miles away, whose high
handed robbery and abuse Of the conf
dence of the people upon whom they so
mercilessly operated has through its
ramifcatiOns created the present general
distrust and want of confidence that has
put a death like grip upon the surplus
and loanable funds of the country that
at this season are so needed in the chan
nels of trade and to assist all our western
industries. Such eruptiOns have visited
US before, and will again as long as the
same principles upon which our business
is at present conducted remain without
alteration and modification, and so Sc
rious are the after consequences which
always occur following all panicky pc
RODS when the progress of the country
is checked, only slowly to revive again
that if a change in our business modes
could in some degree remedy and miti-
gate or rather tend to prevent these sud
den and serious financial disasters 1t
seems about time that we have been
learned lessons enough to profit by the
experience therein taught and that
different tactics should be adopted.
The city of New York is our
money center as London is for Europe;
our monied reserves have been kept
there, for the conditions OF our business
are such that there must be one acknOWl-
edged center to draw on, and one point
on which exchange can be maintained
nearly all the time very close to par;
thus has tended to this point vast de-
posts of our general funds, which at
times, when Western and Southern de-
mands are light, grow into such huge
aggregatiOns, that the temptation to en-
plOy them so that they will earn the in
terest which is paid on them, as well as
make something for the profit account
so great that risky ventures and ques-
tiOnable schemes are embarked in,
stocks and securities of changing value
are dabbled with, and the regular policy
of conservatism is totally unObserVed.
On goes the speculative mania riOtlng IN
excessiveness until some firm goes down
with a crash, their complications break
another, then pandemOnium be-
gins and dire disaster spreads
widely out. The eyes of the great public
are suddenly opened to the fact that
their funds have been tempered with
The sOlvency of all mOnied
institutions is questioned, runs on
banks are lnaugurated, while
the country banks hastily withdraw
their Eastern balances and a irst-class
panic is thoroughly materialiZed. Con
fidence thus completely destroyed is a
long time and slow of restoration, and it
is during this period that currency which
is the only argument that satisfies a de-
position when he wants his balances
held on to firmly by all banks every
where, while to pile it up is the only
policy prevalent Discounting is sus-
pended maturing paper granted no re-
neWal favOrs, and many whom Ordl
nary accommodation would often tide
over are forced to the wall. The agony
is piled on layer upon layer, the end OF
the general calamity cannot be toretold
the suspense is intensified, and the list
of failures sWells.
To get in a ready relief at this supreme
moment is what the wise minds Of the
future must devise, and as desperate
cases require heroic and extra
ordinary remedies, such only may
do and would be only permissible
under such circumstances. Surely
now if ever letting out of some money
which is the only oil that can suddenly
Al III,
ed than the hand over hand hauling In
policy. Legitimate traders ought not Il
be allowed to sink because wildcat spec
ulators are being pulverized. And RICH
here, to a saving advantage, might thu
legal reserves of the National banks b.
permitted to be used, and new legisla
ton should say to what extent. Tn
Bank of England, with its powers to is
sue notes, has averted panic and helpeS
straighten out things summarily by lib
eral use of its paper when the LOndOl
market has been turned upside down
Other remedies to lessen the freQuenc
and tighten the severity Of our hnancia
tOrnadOes are also needed. 1t seem
patent indeed to us that if there wa
less inducement for so much of the Ma
TONS funds to tend at times to one com
mon center as now, that tn
dangers of temptation to nOn-COn
serVatlsm thus begOtten WOu nc
be so great. If the payment of intel
est on daily balances to outside banks O
individuals at homes or elsewhere wa
stopped by the banks of New York on
side deposits there would consequent
run down and banks all over the cOuntr
would keep more Of their funds in thei
own vaults, where when suddenly wan
ed they are at once available. With dC
posts in New York sufficient to do ia
exchange business of the country and n
cumulative funds as now, in panick
times even, no great withdrawal of larg
D. 4