The morning news. [volume] (Savannah, Ga.) 1887-1900, 1897-02-09
cutting Down The Circulation.

to the fact that there Is more money in
/ the country than is needed for legitimate
! business purposes. At least the city banks
have more money than they can loan at
a profitable rate of interest. In our dis
/ patches a day or two ago il was announc-
/ ed that the banks were reducing their
/ circulation. They are giving up a por-
ton of their notes and receiving back
/ bonds deposited with the government as
! security for these notes.
The law provides that not more than
So 100000 of national bank notes shall be
surrendered during any one month. The
purpose of this provision of the law is to
prevent too rapid contraction Of the
currency. During January $30O0,0OO in ma
tional bank notes was surrendered. AL
ready this month offers to surrender much
more than that sum have been made. No
better roof is needed than than this, that
on approved security borrowers in the
chief cities can obtain ali the money they
want at a low rate of interest.
No doubt this surrendered bank note cur
rency will be reissued when business inn
proves. and the demand for money in
creases. Just now, however, it pays the
banks better to give up a portion of their
circulation than TO keep it, because the
tax on their circulation is quite an item in
their fixed charges, and when it is earn
ing nothing it is the source of considera>
Bile loss to them.
Another reason perhaps for reducing the
volume of the currency is the fear that
an unnecessary amount Of it may cause
gold 10 be shipped abroad. The London
Staust exresses the opinion that gold viii
be shipped to Europe from this country
soon, not as the result of distrust, but be-
cause of a plethora of money" In its
comments on this matter, it says: 1.-THE
accumulation of unemployed money in
New York viii contnue-usualy it goes
on until the spring is wen advanced.
Therefore the surplus reserve may be ex-
pected to grow. and it is reasonable to ex-
pect that in about month or so ship
ments of gold from New York to Europe
will begin.
after a crisis there is always an accu-
mutation of unemployed money; which
means, firstly, that coin and notes return
from the interior to the great banking
centers; and, secondly. that new enter
prise is stopped and that business re-
mains exceedingly quiet for a considerable
time. This has always happened in every
country in the past, and therefore it may
be predicted safely that It viii happen in
the United States in fact. it is happening
there at the present moment"
While it is a fact that money is con-
gested in the banks of the east to such an
extent that it is loaned on call at 2 per
cent. and on farm mortgages in the east
ern states at per cent, the rate of in
( terest on farm mortgages in, the south is
s per cent or more, and in some of the
western states per cent. while the dis
count rate is Il per cent. in some parts Of
the west. In both the west and the south
the security offered is ample.
| Such a wide difference in the interest
rate causes discomfort, and seems to justi-
| fy the conclusion that there is something
radically wrong with our currency system
In the farming districts of Canada-dis-
| triets that are as new and as far away
| from the money ceuters as are the Dako-
| tas, the rate of interest is per cent. less
than it is in the Dakotas. Canada's bank
/ ing system appears to give much better
satisfaction than our system. Are not our
/ financiers as capable of suggesting a bank
ing system that will give satisfaction to
the people distant from the money centers
as those of Canada? We do not like to
believe that the Canadians are superior to
us in any respect but we must admit that
they have better monetary system.
This currency question is the source of
more dissatisfaction than any other public
question, and congress should give its at
tention to it without unnecessary delay
Il is far more important than the tariff.