The morning news. [volume] (Savannah, Ga.) 1887-1900, 1897-01-13
An Object Lesson.

An ODJect Lesson.
The statements Of the New York banks
show that there are millions of dollars
on deposit in that city that cannot be
loaned at any rate of interest. The sixty
five banks of the clearing house associa-
tons have deposits to the amount Of $5is.-
O3S, 200. They have $l3,997 450 above the re-
serve OF Is per cent, which by law they
are required TO have. OF their deposits
100000 is lent at less than per cent.
and $i50O0,00O above their legal reserve
they are Offering at ~ per cent. on good
security. They cannot lend it at any
rate Of interest because there is abso-
lutely no demand for it. The rate of in
terest is much lower in New York city
than 1t is in London or Paris or Berlin.
Why is it that there Is such an accumu.
lation of money in New York city, when
western farmers are Offering 70 per cent
for money? Is it because there is some
thing radically wrong with our financial
system. or is It because the security o.
fered in the west is not satisfactory?
May it not be that there is not only some
thing wrong with our financial system, but
farmer offers is not good?
1t is admitted that much of the money
on deposit in the New York banks be-
longs TO western banks. The western
banks it seems. would rather have their
money on deposit in New York, drawing
a very low rate Of interest or no interest
at all, than to loan 1t to the farmers in
their vicinity at very high rate of in
terest, because they are afraid that il
they should loan it to farmers on real
estate security they would never get it
again.
But what kind of currency reform could
there be that would prevent money
from collecting in the New
York banks under conditions similar to
those which now exists? Is there any
body who can answer that question?
No doubt the sllverites. if they were
consulted, would offer free silver coinage,
and the populists, if their advice were
asked, would recommend hat paper money
but each would do so as an experiment.
Neither the silverltes nor the populsts
Feould give satisfactory reason why
money would not accumulate in New York
If their views In respect to the currency
were adopted. Without a satisfactory
reason it would be folly to legislate in ac-
cordance with their views.
If either the free silver coinage or the
fiat paper money policy were adopted the
precautions against losing money would
be just as great as they are now. If it
were safer therefore to loan money in
New York at 2 per cent, or even less,
than to loan it in the west on farm prop
erty at u per cent, money from all parts
Of the country would find its way to New
York.
Under a state banking system the ten
dency of the notes would be 10 remain In
( the vicinity of the banks issuing Them
particularly IL they were at a discount,
and under the reckless banking policy
that would probably prevail, the notes
of many of the banks would be below
par pretty much all the time.
No doubt there is going to be financial
reform of some kind before very Ions,
but wide difference of opinion exists as to
the kind of reform that should be adopted.
A general discussion of the subject may
enable fnanciers to see what is needed. 1t
is to be hoped 1t will. because it would
be the hight of folly to make change
without good and satisfactory reasons that
the change proposed would be for the bet
| ter.
In speaking of currency reform we do
not have in mind either free silver coin
| age or fiat paper money Either would
bring widespread financial ruin. We 90
not want a currency of less value than
that which we now have, nor is there
any reason for thinking that we want
an increase In the volume of the currency
/ This is the richest country in the world,
and its money should be the best, and
the fact that the volume of the currency
is large enough is shown by the state
ment that there are nearly $5O,0OO,OOO in the
New York banks which cannot be loaned
at any rate of interest.
-s-ap-@-