New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1893-07-17
HOU THE UEST CPIPPLES ITSELF.


The frantic uttcrances Of some silver men
the past week have made perfectly evident
their almost nconccvabe error in suppoSing
that the country is offering for lack OF money.
The truth is as official reports prove, that
money is accommodating because there Is less
demand for it in business and that the vol
ume of business is restricted, not by the lack
of currency or coin for payments. but by the
lack of credits with which to make purchase
or undertake new operations. As this is some
times misunderstood in Wall Street * well as
at the West, some explanations may he oil
service
The volume of business transacted in the
country is not definitely known, but recorded
payments through bank exchanges OF about
seventy cities exceed 100000 ,00o,0oO IN
amount. 1t may be inferred that at least hall
as much more business is transacted without
settlement at these few points, or settled not
through exchanges there, making the aEgfc-
cate something like 100000, 100000. Inns
NAV be roughly taken as an indication OF the
volume of credits by means of which business
is carried on Similar indication Is afforded
bv the record of failures. The average Ia
bilities Of firms remaining solvent are prop
ably not less than the average OF those llII-
inc. which approached $4,000 for the last
oual4er 4 similar average for million
firms in business would make current Liabilities
of S3S 600 600 600, of which Il large pant Is
repeatcd two or three times in a year Ont
of something like $50. 600 ,000. 600 credits OK
tended during a year, or $500 100000 a
month, clearing house returns prove that only
with %
kind Settlement of the rest is effected by
cancelling one form of obligation against an
other. What then determines the magnitude
Of the business undertaken? Not the amount
of money, but the amount of credits obtained
or expected When merchant considers how
much he will buy, the determining fact is not
the amount of money he has in hand, nor even
the amount he then has TO his credit at any
bank but the amount Of all credits he can
command from the manufacturer, from other
merchants or from banks. When he knows
that credits are and will be greatly restricted
he is forced to buy less even though he may
have living idle i'll bank larger sum than
usual
The same principle applies TO all sorts OF
new undertakings, from the building OF
small house TO the building OF railroad or
the opening of a mine The cash on hand
PLAYS an insignificant part in the matter The
question is whether sufficient credit can be
secured from banks or sellers of supplies or
contractors. If So the work is undertaken
and there is employment for hands, and bust
ness Tor those who have materials or supplies
to sell If not, the work is not undertaken,
and there is n smaller demand for labor, ma
tcrials and supplies. Thus when business
credits are restricted there must be less work
for hands, and therefore less money needs to
be paid for their labor less trade for materials
and supplies and less demand for money with
which to purchase them. In a large share OF
transactions somebody is paid at an early date,
while a greater part is deferred for consid-
cradle time. Thus when credits are cut down
the current settlements on the past and new
business together may for while decrease
much less The settlements through banks in
June were only 0 per cent smaller than last
year though the decrease in new business or
work undertaken was probably as much as 90
per cent. But even Of these bank settlements,
say 81 800. 0OO, 900 in June, against 5000,
100000 last year, not more than tenth is
paid in any kind of money. Thus perhaps
$50, OOO, 900 less actual money was required
or used last month than in the same month a
wear ago, while the nero reduction in amount
of credits upon which new business is based
NAV have been fifth, or something like
$1,000, OOO, 900 in single month.
When the West disturbs the confidence of
the business world in the currency or the
future prosperity of the country it cuts off
the credits on which new business or work
amounting to $500, 900, coo in a month may
be undertaken. Compared with that tremen-
dous change any variation in the circulating
money is a mere fea-bite The issue or the
failure to issue 81 100000 in paper for silver
bullion is relatively too insignificant to be con-
sidered.