The midland journal. (Rising Sun, Md.) 1885-1947, 1892-02-05
Warehousing as Managed by the
Banks.

Warehousing as Managed by the
Banks.
We have all witnessed the unfeigned con-
tempt and dersion which The farmers pros
posal to warehouse their non-perishable
products as security for short time loans Of
legal tender notes (money) from the govern
ment has met with. How the newspapers
and political howlers in the interes; of the
banks and other monopolies fairly Kissed
their derision Of the proposition. Not
one Of these howlers, however, uttered a
word of condemnation in the fall of 1890
when the associated banks Of New York
adopted this same plan to escape the ruin
which threatened them when the Earrings
failure precipitated panic and made il
impossible to secure money to conduct their
business. There are number Of national
banks and state banks associated in New
York which settle their accounts with each
other by clerk from each bank in the
association meeting at central place every
day to clear up or square their accounts.
The sub-treasury in New York is also a
member Of this clearing house association.
When the panic came on in November 1890
the association appointed Eye of their MEM
bers 10 determine what collaterals-bills
receivable and other securities--should be
received from banks on which certificates
should be issued BY the Association, such
certificates 10 be received as money in the
transaction of their business. $3l 200, 900
of such certificates were issued by these
associated banks and they we're loaned TO
s1ch as where in need Of money to pay their
obligations; and the promissory notes Of
their customers, and stocks, such as were
marked good by the FIVE directors or COM
lnittee appointed for that service, were
taken as security for this certificate money
issued without any legal authority what
ever. When the banks borrowing this asso-
citation money We're able to realize from the
notes of their cnstomers-in other words
when merchants and other business men,
customers of the banks we're able TO pay
back the money they had borrowed, the
banks paid off the association, returned the
certificates and received their collaterals.
The United States through its sub-treas
ury in New York was partner in this
business, by which sub-treasuring, or depos-
ling the promissory notes of the banks
customers, loans we're received Of money OF
their own making, on which the borrowers
paid an interest of six per cent. Seventy
five per cent Of the face value of the "bills
receivable and other securities" was loaned
of this association money. and by this device
thousands Of failures of banks aud indiyid-
uals throughout the country were prevented.
This new money was called "loan certif-
icates." The issue was all returned by
February 7th, 1891, having been in use
nearly three months.
The point we wish the reader to partic-
ularly note is this. The scheme the asso.
ciated banks resorted to to save many OF
them from utter ruin is precisely the same
in principle which the farmers propose TO
save themselves from the grasp Of specu-
lators and ruin by glatted markets. The
banks warehoused the securities they held
and borrowed rs per cent on them of money
created by an association Of bankers; and
the association issued $3l ,000,000 of that
illegal money. The farmers ask to have
the government issue under legal act,
certificates, or legal tenders 10 them for a
limited time on their depositiDg their coll
laterals which are the products Of their
farms, to be redeemed when those products
find a market and are converted into cash.
The banks can do this thing with the
government as a partner, and moi word Of
protest is heard, but when the farmers ask
to enjoy and share the same privilege, the
newspapers and attorneys in Congress In the
interest OF the banking class raise storm of
abuse against them. Is it not time the
producing classes were standing together to
defy this money oligarchy