The Wheeling daily intelligencer. [volume] (Wheeling, W. Va.) 1865-1903, 1895-05-29
A FINANCIAL CA1ECAISM.
ny FRED. FERRY POWERS.


1891, amounted 10 more than two
billion dollars, and all tho money In tho
country outside OF tho treasury was only
little more than slx,oon hundred
millions. .t
Whose money aud credit do thoy
loanP
Their own capital aud tho money that
other people deposit with them. Tho
capital Of tho national banks in Octo.
Dor, 1894, was loss than sevun hundred
millions, aud tho deposits were nearly
seventeen hundred and fifty millions.
How do tho banks "cornor" money ?
They don't Corner it; they can't
corner" it. Most Of the money they
hold belongs to othor people who cam
draw 1t out whenever IL is Tor their in.
terest to do 80.
Are the banks debtors to tho amour:
Of their deposits?
Thoy arc. and would be benefited like
other debtors II thoy could repay in
cheaper dollars than they received.
Then why do they not favor cheap
dollars2
Because, II their dopositors got an
idea that II they did not hurry thoy
might be paid in cheap dollars they
would hasten to take out their deposits
and thus ruin the banks.
But do not tho banks mako money
dear?
No; money is dear when there Is an
exceptional demand for it, or when dc.
positors arc scared and withdraw their
funds so that the banks have little 10
lend.
What does Cheap money" mean, any
way?
In the money market "chcap money"
is money loaned at low rates OF interest.
Sometimes ''chcap money" ia spoken OF
as though II meant money OF which a
lit.lo merchandise would buy great
deal in other words. high prices. The
two things are very different.
Is credit used because there Is not
enough currency?
No. II is used TO supplement capital
because men try TO do all the business
they can; all they have cash for aud all
they have credit for. 1t is used to sup.
plenent currency because 1t is cheaper.
How cheaper?
Money is tho only form OF property
which yields no return. II man had
100000 in currency, bu. his business
did not imperatively demand that he
have over $4,000 on hand at all times.
he would put $4,000 into hi.
stock OF goods. or his plant" or ex-
change it for some sort OF certificate or
security that would bring him interest.
And then il he had to pay ont $4,000
all u, once, how would he do it?
D'aw 4 check on his credit at the
bank.
And does tho banker keep on hand
the money OF all the depositors SO that
he can pay all their checks?
Oh, no; in that case he would have
nothing to loan. II dozen mcn make
deposits, the banker feels safe in lend.
ing the deposits OF eich. or nine OF
them, because not more than three or
four will want ,hoir money at any one
time.
Is it for the interest OF banks to have
times OF panic and striucency?
Such periods are disastrous to banks,
Tor then they cannot collect the money
thev have loaned, and their depo'itors
withdraw thei T deposits and the sccur-
iiios they hold depreciate.
But what about tho maleyolent inhu-
cnces OF wall street"
"Wall street. sometimes means lesit-
innate banking aun sometimes the oper-
atoms on the Stock Exchange. The
two things arc wholly different. Bank
ers do not approve OF stock specula-
tions. though the truth is that the Stock
Exchange reflects rather than causes
the state busiuess.
Is not gold monometallism in the in.
terest Of creditors?
Confidence and security is peculiarly
important 10 debtors. The rate OF in.
terc-t is declining while the price oil
labor is goinrup. Ia other words. man
is worth more and money is worth less.
Interest is particularly low in England
md i. has not been unfayorably affected
by tho prevalence OF tho gold standard
Before 1874 tho discount ratio OF the
Bank OF England several ,imcs rose to s
and evGn 10 per cent Since 1874 II has
only twice risen to q per cent. Free
coinage OF silver was stopped in India
Sherman law, in 1898; in the year from
February -, 1891, to February ~, 1895,
the bank ratio never varied from por
cent: not only was the rate very low,
bu, it was the first time for eighteen
years that the bank rate had remained
unchanged for twelve months.
Is not tho gold standard raising tho
rate OF jn,rrost here
No. Tho census table shows that OF
all tho rea estate mortgages in 1850.
49, per cent wore al D, 6 and Z per cent
interest, 9i.d per contat s per cent. and
~ per con, were mt 3, 10 and T. per
cent interest. In 1889 tho pr0nortion
ut S per cent hal not changed; the pro-
portion ut ), and 7,pcr cont had in.
creased to 6i.6 per cent. and the propOr-
ton Mt ., 10 aud T. per cent Ind dc.
creased 10 Is por cent OF tho Total.
Who're ia tho ratio OF interest tho
loweet?
Where the accumulations OF capital
arc largest, aud whore tho security OF
the Investments il the most perfect.
Would It DO good policy for the deb.
tors to shave their obligations 30 per
cent il they got tho chance?
II they got the chance it would be
human nature to 90 It, but il they ware
continuously borrowing, 1t is not cor.
tain TINT it would pay them to do 1t,
Who can borrow on the best terms +?
individuals and communities who uro
tho most certain to pay In full and on
time.
Is tho debtor generally poor man
A man cannot borrow money unioss
he eau give security, or has II place IN
business hat commands confidence.
Who arg tho creditors?
More than cightmilion people in this