The Portland daily press., 1893-09-22
CURRENCY SCARCITY.
Some of the Causes and Some of the Rem
eties
Paper read before tile State Board OF Trade by
Jonn L. Crosby of Bangorl

Paper read before tile State Board OF Trade b
Jonn L. Crosby of BangorJ
Gentlemen of the Board OF Trade:
Your efficient committee of arrange
ments, without previous notification t.
myself, have announced that lam b
share i'll discussion of the following
question:
How cap the currency that is held il
Maine be kept in circulation in thu
State?D
NEUTRALITY-SUSPICIOUS. at disadvant
age it would be foreign to my habit to re
fuse duty, and I shall proceed, though
with no we'll defined plan, suggesting
with Robert Burns, that what have tt
say may
Perhaps turn out 81 song,
Perhaps turn out a sermon"
You are to be congratulated that ]
shall be Immediately followed by gen.
tlcman of extensive and enyiable reputa-
tion as q specialist and speaker on themes
of public moment, who may confidently
be expected to supply my deficiencies and
cover my failures.with..t he.generous man.
tie of oblivion.
The question before u.s. though plainly
stated, is one which can hardly be treat
ed with directness. Among the inconven-
fences accompanying recent financial dis
turbances, has been the difficulty expert
enced even by those persons and corpora
lions who are unquestionably solvent,
with undoubted credit, in procuring the
currency, either paper or metallic, neces-
sary for those uses in business transac-
| tons, which cannot be satisfied by checks
or drafts such as are used in exchanges
through the existing banking systems.
Statisticians tell us that of the amount
of financial operations in this and other
commercial nations, only about eight per
cent.is required in actual currency, the
remainder being matter of exchanges,
How closely this statement approximates
eXactness do not know, but it is proba-
bic that in Maine, where the volume of
mercantile business and accumulated
wealth bears less ratio to population
than in some other States, a larger pro-
1 portion of actual cash is needed. The
| labor of our farms, our factories, our
railroad enterprises, either IN construc-
tion or operation, the diversified indus
| tries of our citizens, make daily demand
| for remuneration in some form of lawful
money, for the supply Of daily needs.
1t has come within the experience of you
all during the past few weeks that for
some reason it hasssbeen exceedingly diff
cult to procure the necessary amount for
| your business demands. Your deposits,
| in perfectly solvent institutions have, in
many cases, not been obtainable, except
in the form of checks on other institu-
| tions equally solvent, and equally unable
to supply your wants. And while an i'm
proved condition of affairs now obtains,
and it is improbable that embarrassment
from this cause will soon be repeated, it
may not be improbable to recall some of
the phases in which this trouble has been
manifested.
For several years prior to the summer
of 1858 the average rate of interest has
been comparatively low, so that in the
money centres of the State, it has been
difficult to procure conservative invest
ments, at rates satisfactory to most in
vestors Savings banks whose accumula-
tions are mainly the aggregation of the
savings of small holders, which had
formerly been able so to invest as to
yield satisfactory dividends to their de-
positors, as their funds required rein
Yestment were obliged to reduce the rate
of dividends year by year, until the pres
sent year, a conservative selection of in
vestments of these funds, held in trust for
their depositors compelled the fixing of
dividend rates lower than ever before,
and not more than one half of that made |
twenty years ago.
This resulted, in many communities, |
in the withdrawal by scores and hun
dreds OF depositors of their balances, in |
the hope of securing more lucrative in
wise precaution, awaited themselves of |
temporary delay in payment of these |
drafts, for the perfection of their deposit |
tors, and to prevent unnecessary sacrifice i
of the securities in which the funds in |
trusted to them had been invested |
Many OF those who thus hastily withdrew |
their money were without the knowl- |
edge orsopportunity to re-invest wisely, |
and retained the currency for which |
they had had no immediate use, in their I
personal possession, surrounded by all |
the risks of loss from which it had pre-
viously been protected, and withdrawn
from all the avenues of active business,
dividends, the enforcement of .the State
law preventing summary withdrawal, I
while conservative and wholly in the in
terest of depositors, contributed to the
feeling of dissatisfaction and uncer-
tainty, and resulted in material reduction
OF currency available for ordinary bJfsi-
ness. 1t is idle to criticize or ridicule the
course of such depositors. 1t is not new
in the history of such periods as that of
1853 A gentleman long prominent in
financial aaffirs in this thriving city will
remember that during the monetary dis
turbances of 1878 from an institution
which has prospered under his accom-
plished administration for more than
two decades, sums of money were drawn,
held in possession by the demoralized
owners for several years, and then. re-
turned O the bank i'll exactly the same
form with seals unbroken, having been
held at constant risk of fire and robbers,
without interest for all that time. I'm
der such arrangement, for it is no less
than temporary alteration, the unreason-
ing action of persons of good sense in
ordinary matters, would be absurd, if it
were not pitiable. I have known recent
" of person holding certain securities, II
relia Bile, the income On
which had invariably been promptly
paid, proposing to exchange them for !
to be locked in a safe and thus
for the time, as valucless as
blank paper Others have drawn their
deposits from savings and other banks
aud placed them in vaults, and others
still have been dissusded from such J
course by parties from whom they pro- S
.oscd to lease similar accommodation.
do not wish to be understood as at s
;ributing the recent scarcity of currency
valuable for ordinary uses of trade, en-
;irely or mainly to the policy of the saw
ngs banks and have only dwclt upon J
hese facts, as among the conditions I'M
.voidablS contributing to the result al 9
uded to. There are more potent causes t
lrlsing in great money centres of the :
world The immense losses of European S