St. Paul daily globe., 1893-06-15
COMMON SENSE ABOUT THE
BANKS.

Just now the banks are catching it"
from people who consult their preju-
dices Oftener than their judgments;
who, in fact, mistake the former for the
latter. They are charged with being
the cause OF the depression. but they
are simply doing what prudent men
should do, protecting their depositors.
Demagogues denounce banks as the
money power" as if they owned all
the money they control. Look at the
report Of the condition OF any bank and
you will find among its liabilities ''due
depositors. - If you will examine the
report, you will be struck by the enor-
nous discrepancy between the amount
of these deposits and the capital stock
and property of the bank. The former
is the money of the people of the COM
|, munity; the latter is the property of
the money power" 1t IS only cents of
capital to dollars of deposits.
Look at the schedule of assets and
see the item of "loans and discounts"
a mountain beside the other items.
What is this? 1t is the money of the
depositors loaned out by the banks to
other people in the community. What
are banks, then? Nothing but money
merchants. grocers, clothierS, wheat
and stock buyers; taking in charge
property of one class of men, sellers of
money, and selling it to another class,
buyers of money. All these amounts
''due depositors" are liable to call on
10 ho Il -
the depositors', and they are entitled
to it whenever they demand it. A bank
is bound in honor and law to be ready to
answer the demand whenever it is
made. 1t "fails" when it cannot. A
run" on bank means merely that the
people are coming after their money in
more than usual numbers.
Money plenty invites speculation.
Money is worthless unless it is doing
something productive, just like farm.
Men, as they accumulate money, look
for places to plant it. Fellows with
schemes and no capital find places.
BoomS in town sites, booms in city lots,
booms in 'industrials," are all only indi-
cations of speculative period and of the
surplus of money hungry for invest
meEt and gain. The final stage is when
credit comes in to take the place of
money; when business is transacted on
margins; when promises to pay in notes
or stocks or bonds take the place of
money-the period of fictitious values.
This is the period of financial debauch,
and. like every other spree, it comes to
an END.
The end comes because there is re-
action of common sense. Men begin to
doubt the solvency of the booms. These
are,exploited until they destroy conf
dence. Then credit shrinks, and de-
mands for actual money rise. The su-
preme duty of the banks at this moment
is to protect their depositors; that is, be
ready to give them their money when
they call for it. They ought to be shot
if they did not do it. They call III their
loans. and refuse to lend more until they
have sufficient margin of cash on hand
to meet even extraordinary calls. The
fault is not the banks save as they may
have promoted the wildcat schemes. the
booms; but it is in the chronic, c,inveterate
and natural disposition of men to keep
their money growing. and the further
disposition to take risks in planting it.
which plain people call gambling. Prob
ably if banks were always and every
where conservative. and refused aid to
pure speculation, there would be less of
it; but anyway, they are not the cause
of financial depressions or hard times.
The fault lies back of them in unsound
fiscal policies and in the folly of men.
1t is time that the people have less mis-
information about banks.