The midland journal. (Rising Sun, Md.) 1885-1947, 1893-06-02
The Recent Bank Failures.

WhiOh UIluo 0bOub cuSh ulooctOlcs
When those who are trained to the
business of banking are driven to the
wall it is time for those less learned to
consider the situation carefully. Within
the last 30 days nearly 200 banks and
their branches have failed in Australia,
the result being an almost complete
elimination of values in that country,
There is hardly nation in Europe
that has not reported failures in bank
ing establishments during the time
mentioned. Even England has fur
nished a number. In the United
States the aggregate is startling, more
than 100 national and private banks
having closed their doors. Such fnan-
cial disasters occurring in every civil
lied nation in times of profound peace
force the conviction that there is some
underlying cause, some controlling
factor that conspires to bring about this
unfortunate condition.
These failures can not all be attrib-
uted to dishonesty, or ignorance, hence
something beyond this must be respon-
sible. We believe that more business
and less money is really the great factor
in all this financial calamity.
The business transactions of the world
have multiplied with such rapidity as
to make cash transactions the exception
and credit the rule.
The money of the werld is inadequate
to furnish but small per cent of the
medium for these vast exchanges, and
hence a resort to credit currency is
necessary. Herein lies the root of the
whole difficulty, and at this point all
remedial measures must begin. The
panics of 1837-1s57 were brought
about by want of currency, and over
use of credit. The failures of 1873 are
traceable to the same source. And the
present financial situation is caused by
similar conditions.
The comptroller's report for 1892
gives the loans and discounts of
National banks $1,153, 49S, 1929
State banks, Loan and Trust
companies 2,209, 131 ,72S
Banks mol reported, esti-
mated at 100000, 900
Total $685., 629, 757
Here then is plain statement based
upon government reports and moder-
ate estimate which reveals a fearful
financial condition.
Commenting on the use of credit in
place of money the Comptroller says :
Oyer 90 per cent of all business transac-
tions are done by means of credit. When
the public lose confidence and credit is i'm
paired and refused, over 80 per cent of all
business transactions are directly affected.
1t is easy 10 realize how impossible ii is for
the remaining 10 per cent Of money to carry
on the business of the country without mon
etary stringency and financial distress.
On the other hand these same bank
ing institutions had on deposit
National banks $2,O22 SOC, 900
Trust companies, State and
Savings banks, Trust and
Loan companies 2,911 ,594 900
Other bank estimates l,OOO, coo, 900
Total SIS, 934, 940, 900
Since both loans and deposits are
purely credits the banking business
stands as follows:
loan credits S., 1862, 629, 757
Deposit credits 1884, 094 900
Total $ll, 1896, 723 .757
The most natural question connected
with the whole matter is, upon what is
all this vast credit primarially based !?
What is the real ultimate final agent
through which this enormous volume oil
credit is adjusted ? SquareIy answered,
it is the volume of money in circulation,
and by no other method. Can it be
done The failures that are now
takiDg place not only in banking
circles but iI all other lines of business
may be considered a correct answer.
Governm ent statistics show that there
ought to be about 81 0O,OOO,OOO of all
sorts of currency outstanding, and
assistant Secretary Nettleton in his
report says this should be reduced to
81 ,057 ,000,0 900 in circulation. We
claim that there is not over $310,0QO,-
900 that cal be used in liquidatiug this
great volums Of credit, in either case
the remedy for this evil that is now
threatening the financial world is an
immediate increase of debt paying
currency. Until this is done all
makeshifts will simply aggrivate instead
of paliate.-National Watchman.
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