The sun. [volume] (New York [N.Y.]) 1833-1916, 1898-06-20

forces which were not then taken into consider
alton have preoipitated the decline In prices
pointed out 40 impending, and have also car
Hied 1t lower than was expected. Mr.. Letters
wheat speculation has proved much more dis
astrouS for him than anybody supposed it would
be, and the disturbance Of the money market,
caused by preparations TO take the now Gov
ornmont loan. has been much greater. Those
Influences, combined with others Of limited APP
plication, have induced selling and discouraged
buying, so that, for tho moment, speculation
for q rise 10 at q standstill. and there IL no pros
peot Of Its immediate resumption.
The details Of Mr.. Letters operations in wheat,
which have come to light In consequence of his
failure, are startling In two respects. Instead
Of his having on hand only 5000, 900 bushels Of
the cereal, the loss on which was Offset by his
previous gains, his holdings turn out to have
been nearer $4,000, 900 bushels. his loss 50. 000.-
600 to So,O 600 900. and instead Of the immense
loans made to him by banks being secured by
pledges of marketable stocks. furnished by his
father, they now prove to have been made
upon the wheat itSolf. and with margins barely
sufficient to cover them. One Chioag o instltu-
zion alone had 81, DOC. 900 thus at risk; another.
OF which Secretary Gage was formerly Presi-
dent. had 81, 900, 900. and banks in Duluth.
Mimi, had. in the aggregate, over 81. 900, 900.
Altogether few banksin the Northwest are Mr..
Letters creditors to tho amount OF more than
Qlo.oo0.o0o upon which 1t 10 not yet certain
that q considerable loss will not BIO sustained.
Fortunately for those banks and fortunately,
also, for Mr.. Letter, his collapse has como at q
time whom the rest OF tho country is in n sound
financial condition. and the effect OF the catas-
trophe has. therefore. been confined to the To-
cality where 1t occurred. II, however. there
had been, as there were In 1893. thousands of
mon In various places operating in the same
manner as Mr.. Letter WAS. and thousands of
banks engaged In helping them, as the Chicago
and Duluth banks werc helping Mr.. Letter, the
consequence. it is plain, would have been as dis
astrous to the entire business community az
was the panic OF 1898. II in st. Louis. Cincin-
natl, Philadelphia and Now York tho banks had
been lending money. not only on wheat, but on
corn. pork, beef, cotton. iron and stocks, to
gamblers engaged in forcing up their prices to
the highest possible point, as Mr.. Letter was
forcing up tho price of wheat. 1t would have
been impossible to avert a widespread crash.
Close upon the heels of this striking demon.
Stration OF the reckless management Of banking
institutions. and of the unntness of their officers
TO be intrusted with the control Of financial Rf-
fairs. the Committee on Banking and Currency
OF tho House OF Representatives has reported
q fRvorably n bill, the object Of which Is. as they
declare, e the elimination of Government paper
money from circulation" and the issue of q
banking currency, based purely upon assets
without either bonds or reserve notes" which,
they have the audacity to assert, will involve
no risk Of undue imitation or Of loss to the note
holder" 1t is gratifying to learn, at the same
time. that a canvass of the House shows but l4o
members in favor OF tho bill. out of q total of
S57. 30 that it cannot even pass the House. to
say nothing OF it's certain defeat in tho Senate.
The same f~anatical faith In the efficacy Of
banksto remedy every financial evil, which re-
1enlbles more the reverence Of tho savage for
his fetish than tho conviction Of rational men,
wat shown in the Senate last Tuesday In the
debate upon a bill to incorporate tho Inter.
national American Bank. an institution designed
TO facilitate and increase the ommero of this
country with the countries Of South America.
At present our imports from that quarter OF the
globe amount in value to about S1lo. 900, 900
yearly, whereas our exports thither amount to
only about S35, 00O. 0O0. Consequently. in order
to pay to our South American creditors the diff
ference due them of $75, 600. 900 yearly, our
merchants are obliged to buy from the European
creditors Of those Same debtors claims to that
amount. in the shape of drafts arising out
Of the sale of European merchandise. We
send 10 Europe agricultural products, Europe
sends to South America manufactured goods.
and we take our pay from Europe. In the coffee.
india rubber, hides. and metals which we i'm
port from South America. Evidently 30 long az
we do not sell directly to South America enough
Of our own products to pay for the products we
buy. we must, of necessity, draw upon our
credits in Europe. Some Of our Senators. how.
over. fancy, that by establishing a great bank,
under q charter from Congress, we shall, in
some mysterious way, change the present con-
dition OF things. ThuS Senator Foraker in all
seriousness said to his fellow Senators:
why 10 1t that the United States iG at such 4 great
disadvantage in our International commerce with
thu South American States and republics? 1t IL
chiefly. or. at least. largely. due to the fact that in
England and In other countries they have larger
AggregatIOnso OF capital. by far. employed in the bust
ness of international banking than the aggregation OF
capital here suggested. l believe. ia England alone
the capital embarked In international banking enter
prises amounts TO $500. 900. 1000. We have no capital
at all so employed, and because ire haze no capita
90 employed when our merchants in the United States
want to transact business with tho other countries
they must transact 1t, so far as the financial features
OF the transaction are concerned. through great busI
ness houses abroad. one " the purposes Of thtI
, measure is 10 relieve US Of this disudvanta0e"
In tho same strain. Senator Frye remarked
"We paid Great Britain last year for exchange
alone on what little. miserable business we dc
with South America over So, 900. 900. VIII
should this great nation do thatf Why no
have our own bank 2" Why, indeed, excep'
that "our own bank" cannot create the OK
change which we now buy from Europe. 81
long as we buy from South America $75. 900. 00t
more In merchandise than VIC sell to 1t. no banl
here can furnish the drafts needed 10 pay Thu
S75. 600, 900. 1t Is pure fotishism to suppOs,
that a bank can reverse the laws Of trade anC
supply the means OF paying debts to people VIII
have nothing TO give for them.
The Same superstitious faith in tho omnipo
tence of banks dominated the Indianapoli
Bankers Convention OF January, 1897, at whicl
were adopted the resolutions out of which. b!
gradual steps. the currency scheme now befor
tho House of Representatives has been evolved
The grievance which that convention was spe
cially called TO redress was the lack of none
in tho West and the Southwest, and the meas
ure required for the purpose was unani
mously declared to be an increase In the nun
Der of banks and their wider distribution
II being admitted that banks in thes
destitute localities could not mako a Twin
by Legitimate banking alone the privileg