Orleans County monitor. [volume] (Barton, Vt.) 1872-1953, 1895-05-27
EMERGENCY CURRENCY.
INELASTICITY OF OUR NATIONAL
BANK CURRENCY.

in August and September, 1898.
sThe Currency Famine of 1898" il
the title of an interesting pamphlet
by the Hon. John Dewitt Warner. Ii
is No. 6 of s'Sound Currency" pub
lished by the Reform Club, of New
York. It contains besides detailed
sketch of this crisis, fac-simi1es OF
about fifty different kinds of paper
substitutes for money that tided many
business industries over the panic and
kept thousands of mills running, and
millions of men employed who would
otherwise have been idle. Compare
lively few persons, outside Of banking
and commercial circles, und erst God
the peculiar conditions as regards our
currency, that accompanied the hard
times that began in 1898.
Industrial panics occur about every
ten years. Hence, one was due in
1898, and probably would have ar
rived before 1895, even if our cur
rency had been entirely sound It
would, however, probably have been
delayed a year or two and have been
less severe-as in Canada and England
had our currency system been on a
sound basis and permitted of greater
elasticity. Our currency was bad
enough in 1890, when the passage of
the Sherman Silver Purchase act be-
gan to make it worse. The coinage
of 81, 100000 of silver each month
then began to still further dilute
currency already well watered by
greenbacks and cheap silver dollars.
Investors became more and more
timid; gold began to be considered
the only thoroughly sound money,
and people began to lock il up and
hoard it :; the gold clause began to be
inserted in new mortgages and old
mortgages renewed; credits of all
kinds began to contract; the shrink
ing surplus in the Treasury added to
the general alarm; attempts to sell
stocks and other forms of credits
caused shrinkage of values and in
creased the apprehension of creditors.
All of these processes, going on with
accelerating speed, reached a critical
point in 1898. The withdrawal of
many kinds of credits which, in ordin-
airy times, perform the work of money,
and the practical retirement of gold
demand for other forms of, currency.
When it came time to move the crops,
in July and August, 1898, our cur
rency system proved to be entirely in
adequate. Suddenly everybody want
ed currency and nobody wanted cred
it's of any kind, no matter how ssgilt-
edged" AS Mr.. Warner says:
Currency was boarded until it be-
came SO scarce that it had to be
bought as merchandise at premium
of 1 per Tcent. to 3 per cent. in
checks payable through the clearing
house; and to enable their families to
meet petty bills at the summer resorts
the merchants and professional men of
the cities were forced to purchase and
send by express packages of bills or
coin; while savings banks hawked
their Government bond investments
about the money centers in vain
effort to secure currency.
ssNo civilized Nation has ever ex-
perienced such currency famine.
None has ever found itself SO fettered
by positive law in it's efforts to rescue
itself. None ever SO promptly arose
to the emergency. Never was there
so prompt return to normal condi-
TONS"
The only means of legally providing
II II 1o1
through additional issues of Natio nal
bank notes. The result demonstrated
the worthlessness of our National
banking system. The National banks
were unable to give any relief until
the need of more currency was passed.
The National banks were able to in
crease their outstanding notes only
from SITS, 713, S72 on July 1, 1893, to
$183, 1885, 47 on August /, and to
$198, $50, 1858 on September 1. This
increase, as Mr. Warner remarks,
sswas far less than the amount by
which the banks of single city vlrtu-
ally increased it by clearing house
certificates alone and was in great part
accomplished only after the necessity
for it was over, millions of dollars of
the additional currency taken out be-
ing returned to the Treasury with the
packages unbroken.'
Our currency system not being elias
tic, like Canada's (which responds with
in few days to any change in demand),
and there being no legal way to secure
the extra currency suddenly de-
manded, did our business men cease
operations and wait supinely until
our National bank laws could be
abolished? No. In defiance of these
laws they set to work in different
localities to devise substitutes for
money. Their Yankee genius was
everywhere successful, and millions
of wheels were kept going that must