The herald. [microfilm reel] (Los Angeles [Calif.]) 1893-1900, 1895-10-25
WHO ARE THE DEBTORS?
BY ABBOT KINNEY

would be- in the probable arrangement
and uncertainties of a change in the ex-
change or money standard, we may very
we'll inquire who the debtors really are
and who the people arr, If there are any.
who would be benefited by a modified ex-
preston of trade values.
| The street car companies in the United
States alone owe more money than the
| entire funded debt of the United States.
| There is one little fact to connder. Our
great corporations are our great debtors.
There is another; if we casually inc
| conditions in California, we find at once
that the enormously rich men of the
state are the enormous debtors of the
state. Take the Huntington Southern
Pacific syndicate. Their com bine is es-
timated to owe directly or indirectly
more money than all the public and all
the small private debts of the community
put together. The Market Street Rail-
road company, under its new name, alone
owes more than the state of California
and all OF the cities and counties in it
com bined together. A careful considera-
ton of debts will show that these are
owed by the rich rather than by the poor.
Where the debtor is not of the corporation
class, he is in one of three other classes
with few exceptions:
First-En terprising business men on
short bank credits.
Standardization on such credit as
they can obtain.
Third -Hom buyers on the install
ment plan.
These three classes have short time
debts, rarely running over year, except
in Installment ones. ALI of them de-
pend on stability OF values for the means
of carrying on business, or to hold en-
Payments out Of which the debts must
be paid. During the usual ST. ort time of
most private debts no material change in
its value can take place except by revo-
luton of standards. The land speculAtor
who bites eff more than he can chew has
somewhat longer time debts, but he. like
all other debtors, depends on continued
confidence and expanding desire to real
ize his dreams OF fortune.
The domestic workers, laborers, clerks,
mechanics, etc., are generally creditors
and are always so when prudent and
economical. 1t is these people who
make up the vast capital of our savings
banks. They ale all primarily creditors.
The great land mortgages lenders are the
savings banks-that is to say, b. matter
of fact, our laborers, clerks and mechan-
les. Land mortgages are really all Que to
mems holding more land than they can
auvantageously use. Men constantly ex-
haust their capital and credit in acquir-
ing control Of land which from that very
fact they back capital to uti lie. Take
the great mortgage on the Baldwin
ranches in the San Gabriel valley. 1t is
clear that the Liberation of that land and
of the capital that now enables it to be
held would be of the highest advantage
to the community. Little as people
think it, there are few large estates in
-. TO-. .I.L& D.~h
ably every one of the great California for
tunes is due to greater or less tent to
borrowing. The use of other peoples cap
ltal for a reasonable compensation, when
judiciously done to further productive
enterprise, is wise means to achieve re-
suits both for the individual and the
community. The returns on judciOusly
undertaken enterprises ara always based
on stability of standards of value. When
the value of the money unit Is f1uctuat-
ing or uncertain, such enterprises will not
be undertaken. because in the readjust
Eent necessary in a changed standard
confidence is diminished or loGt, living
standards are 10 yered to meet general
liquidation and desire, the great market
maker is not expressed in acts.
Human desire, or if you like. demand
is the creator of value. If there is no de-
mand there Is no value. With the cry 10
assist debtors there goes one against the
out we would find the savings banks ex-
cluded and generally the banks of the city
of the anti bank man.
For instance, Los Angeles silver stan
dard man following the accepted rule OF
attack on banks would probably exempt
Los Angeles commercial banks from the
wickedness of those say in New York.
The real fact al bout com m rcial banks is
that their whole profit grows out of their
debtor condition. The bank of deposit
borrows on callGts depositors are all cred
ltors on CALI and lenos on time. The
panics and distress said by come to has
been deliberately promoted by banks can
not BIZ reasonably presumed to have been
! so caused. Simply because such condi-
ton reduces deposits and profits.
A panic may create calls for all the
| bank deposits at once. No profitablv con-
| Quoted pank on earth can meet such con-
dition. The general radical view that
| bankers profit by distress and that credit
ors profit by shrinkage in values has to
my mind no merits. The banks as
class beins debtors themselves, and de bt.
ors too in the most delicate position
debtor can be in, viz: to return the loan
| on demand. cannot be thought of as seek
| ing their own destruction.
| AS for other lenders, a general collapse
does not suit them at all, but in reality
frightens the life nearly out of them.
There is no class so timid as the lenders.
| Whatever gain we admit say of mort
| gage creditor, through the shrinkage of
| value in the security he has taken for his
| loan, is manifestly much more than offset
| by the collapse of enterprise and industry
| and consequent failure to pay debts in
| full or at all.
rThe creditor class cannot BIZ deemed the
promoters of panic. Such O suppositlon
isfso totally at variance with the creditors
interest that such a folly is unsupposa5le.
| There Is another question that | should
, ike to see examined in the theory of
money, viz: per capita circulation. This
Is clai-led 10 govern the value and vol
/ ume of business. In 1865 at the close of
our civi. war the collapse OF the cunfed
eracy Was accompanied by the destruc-
| The renewal of the union raw no increase
in money, but it increased the area and
population served by the federal money
about one-third. The fact then was that
the per capita circulation diminished in
America by Just the addition of people
the renewal of the union brought into it's
service. Th fact that business ENTERPRISE
and profits increased after the war and
maintained their increase substantially
to 1873. with an interlude in 1869, goes to
Indicate that there is some defect in this
per capita theory. Another instance of
something being wrong with IL is the
history of the great Australian smash of
1875. The per capita circulation in that
country and in others of that time was
Australia. $1s5; United KINGDOM, Sl2O:
United States, $50; Denmark $55; France
$50; Canada, $3l: Germany, sos; Austria
SIS; Italy. $40; Russia. $3.50.
Australia money was good as we'll as