Pittsburg dispatch. [volume] (Pittsburg [Pa.]) 1880-1923, 1891-12-28
TIGHTNESS OF MONEY
And DullneSs of Trade Always Lock
Up So Much Good Cash.
BANKS WITH MORE THAN NEEDED.
Matthew Marshall Doesn't Think 1t Augurs
Well for the Future.
COLLIPSES RESULTING In CAUTION

Matthew Marshall writes as follows Tor TO-
morrow's SIN:
cannot express too emphatically my dis
seRting opinion, which seems to have con-
siderable vogue that the present growing
accumulation of currency in the banks oil
this city is q favorable business symptom.
As facilitating speculation, by making it
easy to borrow at low rates of interest, and
as stimulating it by creating willingness
on the part of capitalists to purchase doubt
ful securities for the sake of the larger In
come which they promise, plethora OF
loanable funds has its merits but indicates
a staSnation or at least dullness OF general
trade, which is not gratifying to those who
1rok beyond the horizon of the Stock EX-
change and of Wall street in making their
estimate of the business condition of the
country.
saturdays bank statement showed a total
OF deposits in the New York banks of S455,-
SOG 500 against one of S3S2, ,049, 800 the cores
ponding saturday year ago: being an in
crease of SIS AS, 600. The aggregate of legal
tenders and specie in the banks also showed
an increase IN year from SloS2S7, M a 800 to siSo
s43O00.OOO of increase in deposits being mere
book credits, arising from an equal amount
of increase in loans.
Banks Can't Use All Their Money.
1t thus appears that the banks nre unable
to employ fully all the money at their dis
noSal and, as a matter of fact, they had, on
saturday. above their required 25 per cent
lawful money reserve, surplus of SIS, ,l61,-
500: whereas their similar surplus year ago
was s7725,l75. was at first inclined to e1-
plain this result by reference to the years
issue of S54 600 600 silver bullion notes under
the act of July IA, 1890, but against this ele-
ment was Obliged TO offset the shipments
or gold to Europe, the decrease OF national
bank currency, the growing business of the
country. and especially the increase of this
YEAR, eNpoItabie crop surplus.
NJ, inOui1ies among nv business friends
have also brought out the TACT that trade
throughout the country, Notwithstanding
the abuG dance OF the crops, has not been so
CuoG this year as it was last year. 1t would
seem that the scare OF the Barring collapse
had partially paralyzed enterprises all over
the world, and that our people had suffered
frCm ii Hike the rest.
Tie tendency of the human mind is to go
frcm oae extreme to smother, and it takes a
long time TO build up confidence after it
has once been destroyed. In 1889 and 1880
people were too eager to embark in new un-
dertakinGs and to spend both their own
money and all the money of other people
that they could borrow. This year they
have been reversing their policy, and have
rot only StoDped increasing their debts, but
have tried TO reduce them. This is proper
8 nd praise worthy, but it does not make trade
lively.
England Far the Worse OFF.
As might be expected from the bad har-
there is much worse than it is with u.s. since
1t suffers nor only from the discouragement
produced by the Barring collapse, but also
from the actual want of means to purchase
on the part of a large number of people.
The official returns show that owing to the
crop failures the imports of food into Great
Britain for the month of November last
exceed in value those Tor November, 1890,
by 81 077. SIS and for the first IL months of
the Nearthey are 60 AGA, ,4S6 in excess of those
Of last year during the same months.
At the same time the exports of home
manufactured products for this November
ere les than those OF November. $780, by
80 25f ,604 and for the first Ii months of the
year. fll,72512 less, showing a decrease,
either OF productive capacity Or OF foreign
demand due to causes like our new tariff and
the domestic troubles of the South Ameri-
can states.
1t should never be forgotten that the usual
talk about money tends to confuse in the
mind the distinction between actual wealth, !
which is capable of heing made to include |
pleasure or profit directly. and tine ma
Ch5aeTy of currency, by which only industry
and the exchange of the products of industry
are facilitated.
Failures of Eminent Economists
Adam Smith was the first thinker to ex-
pose scientifically the fallacy that the
wealth OF a nation was to be estimated by
the quantity of gold and silver which it DOS
scsscd: but in spite of his efforts and OF
taoSc Of thousands OF eminent financiers
and economists WHO have sought to enforce |
his conclusions by argument and br illus
trstion it has proved impossible TO estab-
lish them completely in the place OF the op-
nusitP errors. hear and read every day ut |
terauces bv men high in the business and |
the political world, basefl upon the medieval |
assumption thaS the more coin and paper |
money q country has the richer it is, and a +!
ClalHGr 5Or more currency is set up regu-
larly at every session of Congress
Evidently gold and silver apart from the !
use they serve when made into articles OF |
luNury ana crnament-tne total value of /
which j. only small percentage OF the en- |
tire proGncT OF the mines-are wealth only 4
50 Tar as they will procure by exchanging |
other articles of utility or luxury. Paper 1
money certainly. is irtrinsically valuable |
only bT virtue of its purchasin, power since |
even tu attempt 20 change its form destroys l.
u. An lncreas Sc in the volume OF currency,
therefore, unless il is accompanied by an
increase of the supply OF the commodities
Whfch currency can buy, is augmenta-
Uu4 % real wealth. and, cuIiously enough, |
g".a and silyeTproducing regions, being
usually GgEfcalturally barren and deficient |
ln manufacturing industry, are the poorest |
10 the world
Labor the Best Source of Wealth.
The most satisfactory source of wealth is
labor. skilfully directed and industriously |
applied directly to the creation of those
commodities which men rega I'd AS desirable |
because of their ability to satisfy their
wants When such labor is active it pro-
duces wealth rapidly: when it slackens its
efforts its product is diminished accord
inyly. Without its cooperation the owners
uf the precious metals and of the DaDer |
money representing them would be pa ripers. /
4 man with tons of gold and silver could
not satisfy ms hunger nor clothe his body. |
unless some of his fellow men labored to |
create food and clothing and sell it to him,
ANY more than if he owned all the railroad |
cars in the country he could supply his
wants unless somebody worked 10 furnish
the articles with which the cars could be
laden.
This. by the way. suggests a tolerably good
illustration, though not a perfect one OF the
function of money and the reason Whv
congestion of it such as prevails at present
1T this financial center is a result and an in
dicat.on of dali trade. When men are busy /
in producing and exchanging commodities |
they require more money for the purpose
than when they are idle, Just as more cars /
arc wanted when many articles are to be
transported than when there are few
Banks Depleted at Harvest Time.
Thus, when the crops are harvested, as
they are every summer and autumn, a de-
maud springs up for money with which to
buy them from the agriculturists and bring
Them TO market. The banks are called upon
to furnish 1t, and their stock of it is depleted
accordingly.
When manufacturers have plenty of or
derS they use money in buying raw mate
rials and in paying their hands, and they,
too, absorb it from the banks. Hence the
rate OF interest or the price of the rent of
money, and of credits which supplement-
money, goes up when the manufacturing
business l. lively, and goes down when it is
dull 1t l. just aS II is with railroad cars.
No one supnoses for a moment that
scarcity OF sncn cars indicates anything but
an actiyc carrying business, nor that
road lia ceniers is due 9en to any @' Cause la
bat want Of freight to carry. Yet for a rail- |
road company to boast of the immense