The herald., 1898-08-05
THE CIRCULATION DELUsIoN

The only way to determine, even ap-
proximately, the amount of money ir
circulation is to subtract from the tota
amount in the country the gross sum
held in the Federal treasury. That this
is untrustworthy is evidenced by the fact
that into the calculation enter millions
of dollars hidden away by people who
are unable or unwilling to find safe In
vestments for 1t, people who are afraid
of banks and trust companies. and who
habitually retain possession of their sur
plus. The fact that two hundred millions
have Just been invested in the new gov
eminent per cents mainly by poor peo-
pie and those of only moderate means
without any noticeable decrease IN the
enormous holdings of the savings banks
shows to what extent individuals Sc
cretly hoard wealth. The savings banks
of this country now hold over two bill
lions of dollars, and all Of this Is counted
as being in the circulation, although 1t
is VIGOROUSLY not so.
The difficulty, especially since 1893, of
securing satisfactory loans for this enor-
nous surplus has been so great that In
terest rates have steadily declined.
Hetty Green has just loaned the city OF
New York s., 900 900 at per cent. Eight
per cent realty loans had no attractions
for her. The surplus reserves in the
banks at all the money centers were
never so large as at the present time,
and, notwithstanding the decline in the
interest rate, they continue to pile up.
There is. indeed, so much money out OF
circulation that many of the large bank
ing institutions of the country are send
ing their surplus to London and Amster-
dam for investment. And it is notorious
that, notwithstanding the enormous bal
ance of trade in our favor for the fiscal
year ended the 30th of June last, it is
still mainly held by the banks of the
continent, gold imports on that account
having only just begun.
No less distinguished a financial au-
thority than John Sherman declared,
during his administration of the treas
ury, that the natural increase in popu
lation of the country justified the addi-
ton of $50 900, 900 annually to the circula-
ton, to accommodate expanding trade.
About that sum was then being added
to the volume of money in circulation,
through the coinage of four millions Of
silver dollars monthly. but that supply
has been stopped and no other channel
opened. On the contrary, with the de-
crease in the demand for money for in
dustrial undertakings, due to the steady
fall in prices, national bank circulation
was steadily withdrawn, while popula-
ton continued to increase as before.
from natural causes, if not from immi-
grafton.
Apparent per capita circulation Is too
elusive to safely base any economic the
ory upon. There is lots Of idle money
in the country, but it is in hiding. Those
who require funds need not be told how
difficult it has become to obtain them.
The lender demands security, in most
cases. of three times the value of the
loan. He doesn't want property of any
kind, because all kinds of property, save
gold are falling in value-he exacts Sc
curity sufficient to cover possible depre-
citation during the life of the loan.
Money not in use should not be re-
turned as 'in circulation" for it is not.
1t is amortized money, and is as if never
created. And money which cannot be
procured at rates which honest indus
trial profits will justify should be
counted as retired from circulation.
The immediate future gives little prom
Use of a change. Idle money is looking
forward to new fields in conquered coun-
tries, with vague and underlined hope
that the conditions for it's employment
will somehow be different from those
that have obtained in the United States.
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