The midland journal. (Rising Sun, Md.) 1885-1947, 1891-05-29
NINETY PER CENT.

Statistics inform us tnat Ninety ] er cen'
of the business of the country is done on
credit. The associated banks Of New York
report seven per cent Of cash employed in
transacting their business. Their peculiar
business requires vastly less cash than the
miscellaneous, and widely business
of the continental space covered BY all kinds
Of business. But let us ascertain what ninety
per cent of credit means. 1t simply means
that the 1870 billions Of business transactions
in this country during the year, pays inter-
est on ninety per cent of this amount. Bus
mess cannot be conducted without cash.
Ready money must be In the hand Of The
employer TO pay labor and for material
demanded in the line Of business he is
prosecuting. The interest, which is never
less than six per cent, is-it must be-
added to the other expenses incurred and
charged against labor and profits, and con-
tributes in curtaiIing the wages of labor and
narrowing the margin of profit.
Let US endeayor to trace this interest
which is created by and taken out of the
products Of labor, and see if we can fnd
where it stops. Very nearly all of the
money employed in active business is bor-
rowed from banks, and returns 10 them in
steady daily stream. The money that is
borrowedto pay current expenses finds its
way back to the banks in few hours after
being drawn out. When the products Of
labor have been exchanged for cash the
whole sum, great or small, is placed in
bank. From this constantly returning
stream the bank makes its loans, retaining
in its vaults fifteen to twenty-five per cent,
which is found sufficient to meet the de-
malds of aepositors. Now We have located
the place where interest stops, except that
portion which goes to pay mortgage indebt-
edness, rents and long time loans which
money, too, soon finds its way back 10 the
bank and helps to make up the sum of
general deposits, which in turn gauges the
general loaning fund with which the bank
Accommodates" its customers.
The long time loans, largely from private
lenders, such as loans on mortgage and
notes secured by collaierals or endorsers
and extending through periods of greater or
less time; The interest OH such evidences of
debt is paid to the lenders who hold these
evidences Of debt, but the money these debts
represent has long since gone into the
channels of trade and found its way into the
banks where it is helping to swell the
deposits and providing the surplus from
which the bank is authorized TO make loans.
II is apparent at glance that this cease
less borrowing causes steady and severe
drain on the products of labor. Labor
cannot be prosecuted without capital, and
the steady drain of interest in some lines Of
industry takes more than labor and capital
combined are able TO add to the fund. This
isnoiably SO in agriculture. The average
earnings Of agriculture is ascertained to be
three per cent, while-a all the monty that is
required to conduct the business is costing
not less than six per cent. This unequal
contest between capital and agriculture
must eventually end in the absorption OF all
the agricultural lands, stock and other APP
purtenances belonging TO the farm and the
labor which is required 10 conduct agricui-
fHre, become virtually species of wage
slavery, unless change is effected that will
assist agricultural labor TO extricate ITSELF
There are two classes of money loaners as
We have above stated; the corporation or
bank loaner and the private individual
loaner. The latter can loan his money but
to one person at time and it must be his
own money. The bank loans not its own
funds. but those of its depositors. 1t not
only loans the ne money once but the
same money to several persons at the same
lime. The following is the modus operandi
of the transaction. A makes a deposit Of
- dollars B borrows the same money,
seyenty-fve per cent of AS deposit, before
A has left the bank, possibly. B expends.
pays out, the borrowed money Immediately
in his business, and by o'clock the same
money is in the bank again, and much
more, some Of it placed there by depositors
who haye no occasion to borrow and this
money brings the bank funds up to the
maximum. So the AS are depositing money
daily and the BIS are borrowing. In the
course of sixty days the AZ have deposited
Say 500, 000-though the amount is in many
banks hundred times that much-and the
borrowing BIS have taken on! from IS to 95
per cent of these peposits, for the bank
statements often show the loans well up to
or equal their deposits. At The end of
sixty days many Of the BIS are unable 10
pay their notes and ask for a renewal. 4 This
is granted if conditions warrant, and the
note is renewed by B paying interest and
incidenlals." The money which was
loaned B No. l. sixty days previously il
not paid him again. All the money which
changes hands at this renewal is the interest
for another sixty days and the bonus and
I" expenses" If The amount named in the
note happens TO be small the bonus to pay
for clerk hire, book. keeping, &C., may
amount to rate of 20 to so per cent per
annum. There are hundreds of borrowers
from country banks whose notes run from
ten TO twenty dollars, which are con-
stantly being renewed and the charge is
forty or fifty cents. These are small tran