Wood County reporter. [volume] (Grand Rapids [i.e. Wisconsin Rapids], Wis.) 1857-1923, 1893-08-10
ONE REASON.
Why We Have Had Such a FURRY
Here,

Here.
One great cause of the present none
tary disturbance, says the Milwaukee
News, is the Australian bank failures.
1t may be. that this cause is passed
over in silence on account of the fact
that a large class of Americans wait
to take their opinions at second hand
from London, which they seem to re-
gard not only as the seat of wisdom
in regard to suit checks and rolling
up of pants, but also Of financial mat
tiers.
The English press has maintained an
extraordinary silence about the col
lOsSa1 destruction of bank credit in
England's Australian dependency, pre-
ferring to convince the AnglO-maniacS
of this country that the whole trouble.
lay in the United States government in
veSting in a few million dollars worth
of silver annually
And yet probably nothing in the
way Of bank failures ever before oc-
Cured on so magnificent a scale. Over
$5OO,Oo0,O00 were lost to the depositors,
hopelessly and irretrieVably lost, with
in the past half year. This is a sum
of money probably ten times as great
as all Of the bank deposits of Wiscon-
sin, in country with but little more
than double the population of this
state
The national debt of the United
States is less than twice as large a
sum, and all of the silver certificates
outstanding against the United States
amount to. only Il little more than half.
as much.
Where did adj this money come from :?
At least three-fOurtlfs: of it from Grea T.
Britain. The people Were taught by
the same London papers that are now
giving financial wisdom in such large
hunks, to the people of the United
States that Australia was a much safer
country to invest IN than this country
And. the Australians did their best
to encourage this idea. They had a
new system of banking, and, by the
way, what haven't they a new sys-
TEN for? This consisted in paying in
terest on deposits in proportion to the
length of time they were to be left
in the bank custody. Thus for one
year deposits the bank paid per cent
for two years per cent, for four years
@ per cent and for five years 10; per
cent.
Money thus deposited could only be
withdrawn at the end of the term for
which it was deposited, and then. only
by giving notice. This did away with
all danger of bank runs and it enabled
the Australian bankers to do without
a reserve. They could thus earn in
tereszs Oh all their deposits.
{ Of course the system had it's defects,
but the London papers were singularly
silent on these. A minor one was that
in order to pay such high interest
doubtful discounts had to be taken
But, as borrowing scheme, it worked
admirably. There was a fatal defect
which, like most fatalities, Gid not dis
close itself until the end. This was
that the borrowers were unable to re
turn the principal or to continue pay
ing the interest. This was a contingent
cy the Australian banking system had
HOI idheH luIO cOuSluGEd ZION anu CQey
did about the only thing left them to
do-went into bankruptcy.
Nearly S4OO,OOO,OOO were thus lost
TO Great Britain, and as these colossal
monuments to British greed and guilt
bility went down one by one in rapid
succession, fear of banks was engen-
dered in the United States that led to
at least large proportion Of the bank
failures.
The question arose, 'tIf banks in
Australia fail like this, why may not
ours be unsound too?' and the an
swer came from England echoed in
the east, ''Of course they are unsound;
the United States is bound to drop to
a silver standard and then where will
its monetary system be?'
Of course, there were other causes
at work, too, such as the failure Of
the Reading, with it's influence on the
anthracite coal trust, the cordage trust
and the embarrassment of two or three
other trusts, but the Australian bank
failures were on a grand enough scale
to do the mischief alone.