Richmond dispatch. [volume] (Richmond, Va.) 1884-1903, 1884-08-09
BANKS AND PANICS.
MONETARY MATTERS DISCUSSED.
The Causes which Lead 10 Financial Fan
ios-The Relation the Bank Occupies 70
Deposition and borrower. etc.

The Causes which Lead 10 Financial Fan
ios-The Relation the Bank Occupies 70
Depositor and borrower, etc.
To the Editor Of the Dispatch
Runs are not contemplated as probable
occurrence in trade, aud any plan OF eircu-
lation 10 prevent their recurrence would
he futile, or at least suppressiye OF credit
and the utilities OF commerce. If a bank
ing institution must have ready at any and
all moments Of time the cash 10 redeem It's
circulation and pay back to It's deposisors
the sum total of their deposits. II dare not
turn wheel as bank OF circulation and
deposit. Certainly under such require
ments there would be no banks. and the
contingencies OF trade that would render
such disturbance OF its regularity and
heulthful condition frequent, or even prob
able, would lessen greatly tue bless
ings OF industry and the ends OF civili-
cation. In regard 90 deposits. the
banks are convenience for the safe
Keeping Of the money Of individuals
who deposit their funds with them
against the time they NAV need the same or
any part thereof. And the very act OF de-
po.t mean. that The depositors do not want
the money Immediately, but implies their
suspension Of its use for greater or lesser
period OF time. The banks are required
by law. for the public convenience, to take
such deposits when offered and tb. only
compensation they derive from their trans
action. in deposits Is the interest they re-
ceiye in the incidental Use Of such money
in loaning IL ont. They must. however.
bear In mind. and doubtless do so, that
such funds are liable TO be withdrawn, and
they can only loan out with safety the
average current balance Of these de-
posts. The current balance OF deposits
under the usual and heathiul operations OF
money ard business are almost uniform,
and can lie calculated with reasonable ac-
curaSy, SO that the banks exempt from the
cytraneOus yisitatiOns OF runs can safely
and with advantage TO the public and re-
payment TO thsmsel; rs for the trouble and
risk of taking deposits, loan out continuous.
ly the average balance Of such deposits.
The average demand OF dcpOsitors can be
calculated approximately true. The public
must anticipate the use OF money, and al
WAYS have il in advance Of the moment in
which il is to be applied TO the objects OF
investment or production. 50 the ave
rage sum Of money so held in anticipation
Of use is very great and constitutes an ever
present tunapprOprilted capital o! the public.
This capital the banks become the agents
for, loaning IL ont sdvantageOusly in diversi-
fed sums TO the borrowing public, and
thus give TO trade yigor and energy il
could not have with 80 much capital lying
dead III the recesses OF dwellings and pri-
ya,e desks ana trunks Of thousands OF pso-
pie who could not have the facilities for
loaning it out or knowledge OF the eondi-
tion Of borrowers necessary 10 promise
safety Of its return.
Now il this average balance OF deposltOrs
il all at once to be called for, there must he
some sufficient cause for It.. or it becomes
ono OF those "black vomltS in business
that inGict injury on those who make the
runs rs well as on the banks. The run IL
not made because the money Is needed Tor
investment or commercial transactions, but
for the qualification OF morbid sense OF
apprehension that would impel people TO
Jump INTO the sea when the safety Oh tho
vessel is questioned, and questioned Justly
or not, il is all the same, since under excite
mtnt reason loses control. II the safety oi
the hank is questioned without foundation,
then it Is foolish TO draw out the deposits;
il there il foundation for il, the scramble
for fragment Of what is left is heatheni1
and vulgar. for il may be done 1t leisure. II
at all. Ii would be wiser 10 wait develop
mcnt.. or nohler and more disinterested 10
take your chance equally with all others.
The disorder will be developed in due
time il il exists. II it do not, then
great lo.s NAV be needlessly inflicted on in
nocent and reliable debtors by a needless run
on monetary institutions tha, will assured
ly. in some way, also occasion loss 10 even
the depositors who NAV get back their
70 lagn aQ
likolv 10 do. they either lose interest or
whatever other property they may have Is
impaired by the lesSened capacity OF the
public TO consume productions, or 70 pay
rent. or b. embark in enterprise. ~ they
invest in real estate with ne motive but TO
avoid tho risk Of loaDing out their money,
they put the price up on themselves beyond
what il would lie from the ordinary de-
mand. for actu,l use.
II practicable to force any bank to suS
nend. The spontaneous snd impetuous
demand Of depositors for every dollar OF
their money az one aud the same tlmc
would generally force suspension. The
bank Of England has been forced to sus-
uenc pavment for periods o! twenty years.
and the United states Treasury would be
forced to cry for help il every dol ar oi the
liability OF the Government was demau Led
At once.
The outgoing can only be equal to the in-
coming Of bank. and 10 test it. facilities
Of paymcnt ncedle'siy. aud for the mere
purpo.e oi satisfying invisible doubt Oi it'
means, is tampering with dynamite that
NAV disturb the foundations OF the whole
society. IL i: not the bank that is In debt
So much. hut 1t u the public that are in
debted 70 one another. while the bank has
become the agency only for eifectinF
tie transactions between the debtor and
creditor classes. II we may sympathize
with ore another in consequence OF any
hardship or misfortune 20 great class ol
the public, OF one kind or another, we
msv equally well feel sympathy for those
who are suddenly called on to pay up the
loans Of the banks. to do which business
ard useful enterprise and industry must
he crippleG II not swallowed Up IN the
wild rant Of depositors for safety.
But. alter all. though such demonstrs-
tious in lie money markets a. runs canno'
be taken into the Observation-Disclosures
is an inevitable consequence OF It's opera
tions-the banks must make the Wise4'
di,rosal ~ them possible. and by c0ntnu
| irc their usual policy and business "a II no
| thing out Of the way was at hand, they vii
| lessen greatly the intemperance OF pubic
excitement and the apprehensionS OF tht
| Gepostors. The banks are no more IN
| dcbted 10 the ccpOsitor> than they are u
the borrowers. They have need oi thr
| borrowers; if not, and there were no bor
rowers, there would be no depositors. ioi
they (the deposiiors) would have 10 pay tC
get their money kept idle in the vaults o.
| The banks. The banks should discount oil
the good paper they c,n, ard renew, rs isl
az il is possible also; for to speculate or
their own fears by neryously demanding
| psyments OF loans because a run may TAX
| place will establish the run. Interest out
side OF the banks will run up, and deposit
ors vii! learn in most reliable way thi
tho banks are scared or weakening, anG
they will draw their money to make I'M
high interest or 10 store 1t away IN hiding
places.
We must suppose. even in this enlight
ened sge. the lack OF intelligence abou
banking Is considerable. and far TOO gen
eral for producing and commercial peo
! pl,. Money and credit, as provisions o
trade and industry. are regarded by many a
deserving es,relIon rather than 10 De ieil
like other things. 70 the laws OF supp.
and demand. Some people cry out agains
credit rs curse, and paper money {" q de
moralizing agent. OF course, then' III
banks. which are necessary to give eul
cheney n these hsndmsids OF industry, ar
| L. In fhasD