The times. [volume] (Richmond, Va.) 1890-1903, 1897-03-06

/
| these deposits are practically allowed 10
| ,emain ncrmancntiv on deposit. so Its
| officials feel safe I'm loanng this ~ per
cent. to responsible persons. willinS 10
| pay for its use.
/ Rut this money which II loans is not
| the banks money. II Is money deposited
for eafe-kecpng: the savings OF the COM
| rnunity. II the community has no saw
ings there Is no money TO loan
In only one sense do banks create what
may be called money. That IS, they
create substitutes for money that are just
as effective in performing the functions OF
money as money itself Is. but which are
always reiecmable in real money. That
| ,s the difference between bank notes and
fat money.
II q bank In n country district is allowed
TO put out as many OF its notes as IL
pleases. the directors soon find that thes
can put out notes much in excess OF their
capital and still be at all times ready 10
pay their notes in coin when coin ~ de-
manded The reason for this Is that the
notes get out amongst the country people
and stay there indefinitely, passing from
hand to hand. As long as the people have
confidence I'm the solvency of the banks
they are perfectly content with the notes.
and the consequence is the notes are rare
~ presented for payment. Before the
war some Of our banks had out as much
as IS of notes to one Of specie that they
held, yet these notes were never protest.
cd The reason was they circulated in
the mountain districts and the directors
found it perfectly safe TO issue In that
proportion. Now, ability TO do this.
makes banking in the country profitable
and as banking is made profitable, the
banker Is able TO reduce interest and as
he reduces interest the farmer Is better
served. The most important thing in this
world. TO a people is n bank at every
mans door so that bank accommodation
can be had by all and interest will be
brought down to the lowest possible point
We entirely agree 10 all our correspond
ent says of the importance Of saving
money. But how IS money TO be saved.
IL one Of the essential means for making
money is lacking?
When all the money and currency OF
an enormous country like ours is good at
its face all over the Union, this condition
Of things arises. The farmer sells some
thing for this good money" and spends
1t at the country store The storekeeper
deposits That money in his bank in Rich
mond. Lynchburg. Staunton or Danville.
A New York bank says 10 the Virginia
bank. keep your reserves with me and
will allow you interest on them and the
money is sent TO New York for the
use of stock and grain gamblers. The
good money" therefore all goes away
from that community and when the time
comes for putting in Z crop and the
farmer wants TO borrow for that purpose.
there is no money in the community for
him TO borrow. But If the currency
were that good money" we had before the
war, instead Of being sent to New York
when the farmer spent it at the country
store, it would be kept in Virginia and
Virginians with It would be running after
the farmers to borrow 1t from them at low
rates of interest. Then there would al
ways be an abundance of currency for all
men TO get what they needed for every
enterprise the saving farmer could al
ways work with knowledge that he
could get something to lay up and there
would be money accessible for him to
lay up as the result Of his labors.
As things now are there Is no money IN
his locality for him to use to make tho
money that he hopes to lay up. As
things We're before the war there was an
abundance Of currency all around him
and he could always get some of 1t at
moderate rates Of interest TO use in the
enterprises from which he hoped to make
the money that he expected to lay-up.
We commend to our correspondent and
to every one else the following facts
In 1850. the branch of the Farmers
Bank of Virginia at Blacksburg. Va.
which was village of DO few hundred
souls in the midst Of a superb bluegrass
grazing country had capital of $4,000
and a surplus fund of $5O0OO-SllO.OO 900 in
all. II had out notes to the amount of
sl4s,274 against which it held specie
reserve of S29.555 1t had. therefore.
$3.50. 900 OF bank resources and it kept re-
serve of only s29,555 of specie.
When we look to the other side OF the
account, we see that it had lent out TO I
the farmers around them s22l 900, and
that its deposits were only S0i2. When
properly viewed, this means. that with
$4,000 this bank furnished $4,000 for the
accommodation Of the people thereabouts
and that the people who borrowed the
money. misleading of depositing it in
bank and checking on 1t. carried it
out into their neighborhood in the form
OF notes and paid them out TO their neigh
bors and they circulated all around that
country and performed the functions OF
money as well as the best gold coin could.
now here was an immense and unmistak-
able advantage which these people enjoy
ed from a State bank and no one ever
lost dollar by it either What have
those people now?
COMMUNISM IN NEW YORK.