Dakota farmers' leader. (Canton, S.D.) 1890-19??, 1897-03-05

issued against deposits of bills receivable.
To the issue of these certificates, which
even to forcing due bills redeemable in
these certificates upon their depositors in
lieu of money Of the United States, there
is practically no limit. The Clearing
House banks issue to themselves the re-
quired amount to tide them over. But it
is only the banks congregated in the
large cities that can make use of this
device. The banks in the smaller towns,
members Of no large clearing house at
all, cannot avail of this means of substi.
tuting a currency of their own for the
national currency upon which they have
builded their credit fabrics, and which
being pulled away, leaves them with no
foundation at all. In short, the country
banks do not have it in their power to
break the law, and so when the inevi-
table collapse, sure to come from carry
ing a superstructure Of undmlnished
weight on weakened foundation, recurs
they are put to great loss in building up
their reserves through a sacrifice Of their
assets, or by borrowing on such assets,
| if, indeed, they are not actually forced TO
suspend. Thus it is that the country
banks, unable to break the law, are often
forced into bankruptcy, while the New
II q q
themselves. on top Of which they set
themselves up as models Of solidty.
And vet these New York banks are
often themselves the direct cause of the
failure of the country banks. The
National Bank act authorizing the keep
ing of three.tifths Of the required re-
serves of the country banks, and one.half
of the reserves OF the reserve city banks
on deposit in New York, leads to a CEN
tering of the moneys held as reserve by
the banks of the rest of the country in
New York. And when, in time of need,
the outside banks draw on these reserves.
and the New York banks tell them, no,
we will not pay your drafts in money,
we will pay them on', in Clearing House
Certificates, such reserves become next to
| useless, absolutely SO as reserves, for the
country banks cannot meet the drafts of
their own depositors by drafts on New
York payable in Clearing House Certii-
Gates.
The rendering of Clearing House Ger
ti6cates to the country banks, IN need of
their reserves, amounts to simply this.
1t is notice to the country banks that
there is no money in the New York banks
which they can have. but that if they
doubt the solvency of the bank in which
they have deposited their reserve they
can transfer 1t to any other bank in New
York that they see fit. That is all they
can do with Clearing House Certificates.
And so it comes about that the New
York banks save themselves by breaking
the law. and at the expense Of the coun-
try banks. And all the while they are
building uL their own profits. In the
first place, the practice of outside banks,
both national and other. 10 keeping their
reserves in New York leads to an undue
accumulation of money in the New York
banks. which places an undue share Of
money in the hands Of the latter banks
for loaning. The result is they are put
IN position to make large advances
to stock gamblers, and thus stimulate
speculative enterprises, speculations in
which, we fear, the directors of the banks
are too often directly interested. So, in
the first place, the New York banks
profit from the use of an undue share Of
the country's money which they use to
promote their own speculative operations.
The deposits of banks, national and other.
in New York, aggregate on the average,
close to 5000, 900, 900. or 10 per cent. Of
the total deposits of the New York banks.
and they loan close to this amount on
stock exchange securities.
And in the second place, the New
York banks profit from their usurpation
of sovereign power by building up a
monopoly. As the New York CORE
spondent to the Philadelphia Press wrote
the other day: 1T (the New York Clear
ing House) has power by usurpation
"that is even greater than that OF Treas.
ury Department, for 1t can issue its own
credits and find them accepted for almost
all the purposes for which money is used.
As 1t has the power, now and then used,
to prevent or stop financial panics. it also
has the power to cause much convulsion
if it chooses to do 80. 1t may. at least.
by indrection increase or lower the price
that must be paid for money, and through
its influence a money monopoly may be
temporarily, at least, obtained"
And it is practically to this Clearing
House Association that usurps upon
occasions the issue of currency and
establishes a currency monopoly, that
maintains it's own solvency only by
breaking the law and substituting a
fictitious for our national currency as a
basis for our credit fabric, that, in the