The times., 1899-06-08

I
ing them that the agitation of silver was
disturbing the confidence of the country
ana that they would not be able to ex-
tend the accommodations previously af-
! forded TO the South and West until the
sherman Purchasing Act was repealed
ana confidence restored. That circular had
! considerable effect which eliminated
when, in June. 1893, the banks combined
TO call all call loans. This action threw
| on the market immense blocks of secur-
ities, which were necessarily sacrificed
and which alarmed the whole country ex-
tremely Preceding this financial tragedy
the country was full of rumors and i'm
pending panic. Confidence having been de-
stroyed in this manner, deposits went out
with a rush. Thousands of boxes in safety
deposit vaults were engaged in which 10
lock up currency. No way had been pro-
! Yided by the Government for expanding
tne currency to meet a withdrawal of this
| character The consequence was that the
panic, with its enormous destruction of
! commercial life, the shrinkage OF prop
| erty values, and the great evils with
winch the country is familiar necessarily
followed. The property values of the
united States on the present gold basis
may be fairly estimated at S10O coo. .OOO,-
900. The people of the United States carry
IN deposits exceeding per cent of this
sum- The banks of the United States had
less than one-half Of 1 per cent of this
sum in currency in 1898, and the ratio
has not greatly changed since.
1t is perfectly manifest that the cur-
rency could be quickly and safely expanded
ny issuing Treasury notes against standard
securities put up as collateral with the
treasury of the United States. In this
manner the sudden withdrawal of deposits
ana the shrinkage of the narrow margin
OF currency available to the banks. could
be supplemented as above stated. without
forcing into liquidation at such an un-
I fortunate time any borrower An issue of
this kind could be made under proper,
safeguards with sliding scale of interest
against the party drawing Treasury notes
on such collateral, and the redemption of
such securities promptly secured when the
Government desired it. These Treasury
| notes could be designated as domestic cur
rency. made legal tender and their with
drawal left to the option of the Govern
ment. There Is no doubt whatever that
the people of the United States in time of
panic would be glad to get such notes;
not the slightest fear need be entertained
that they would be discounted because of
the Government retaining the option of
their withdrawal. The withdrawal of de-
posits in the panic of 1893 was over In less
than six months. and the actual currency
held by the banks during that period was
increased above the normal so that judg-
ing the future by the past. such an issue
OF notes would not be needed for period
| exceeding six months.
The fact is that when the people know
that good and sufficient means for avoid
ing panic has been provided the fear
which inspires them, and by which means
they are induced to withdraw their de-
| posits will cease. and the cause of the
panic be removed. No man. knowing that
/ there Is means of escape, will be alarmed.
Fear alone creates panic. The ingenious
| system of drafts and checks and cash items
and clearing house exchanges and accept
ances make the currency we have ex-
! ceedingly fluent, so that the people could
carry on their commercial life without in
| terruption if they were protected from the
| fear OF panics The reason a man with
] draws his money from the bank is be-
cause he fears that the bank is no longer
safe He hears talk Of panic. he sees in
! the metropolitan press daily reports about
/ the gold in the Treasury of the United
| States going to Europe; that the gold
reserve is falling below the danger point:
| that 1t is less than S100 900 900; that il is
S96, ,000; that it is s92, COO 600; that it is
SIS 900 900; that it is sS4. 900 900: that it is
| SIS. 900 600: that the gold is going away
| and he infers that our Government is
/ In tottering condition. Those who de-
! sire the Government to issue bonds assist
| in alarming the country for the purpose
I of justifying the Executive in his own
mind and in the opinion of the people In
! issuing bonds for the purpose of pro-
tecting the Federal Treasury.
| But while they are doing this they are
| laying the foundation of a panic, and
since it takes only 10 per cent of the with
drawal of deposits to consume all of the
cash the banks have on hand, it is not
difficult to alarm the banks and each
banker in the country. when sufficiently
alarmed. quietly and calmly and conscien-
tiously takes his weakest debtor by the
throat and pushes him firmly and judi
ciously TO the wall at time when he can
not possibly borrow from any other bank.
1t is very good plan to destroy the
American citizen at the weakest point and
take away hope and light and life from
the class of men who need gentler and
fairer treatment. Their destruction vigor-
ously reacts upon the body polite and di-
minishes the power and the strength and
the glory of our Government. Every little
captain of industry who is thus strangled
has a little company behind him to whom
he gives employment, and the destruction
of one man grinds the face of many. 1t
means hard suffering and despair to many
an honest fellow who is anxious to work
and to do his full share in the life of an
Industrious and active citizenship.
It is the duty of the United States to
provide a means by which the periodical
panics which shake the American Republic
and do it enormous injury shall be stopped
They are easy to prevent. The remedy IS
perfectly simple. Provide a means for
quickly expanding the currency when
financial fear threatens the country. Pro-
vide a means by which the timid depositor
4 fIs
his money shall not frighten that banker
out OF his wits. Provide means by
which that banker can, upon the strength
OF adequate security obtain a temporary
accommodation OF money with which TO
meet his frightened depositors. In a time
of panic man cannot borrow money If he
put up gold dollars as collateral. for the
manifest reason that it is not security
but currency which is then required. The
banker has not the currency to lend and
he cannot lend that which he has not no
matter what the security. You cannot then
borrow on Government bonds IL you put up
$4,000 for 81 COO II is the duty of the
United States to protect the commercial
life of its citizens against this senseless,
unreasoning. destructive fear that seiZes
the depositor when he has been suffi-
ciently hypnotized by the metropolitan
press with indiscreet suggestions.
An important auxiliary to the remedy
proposed would be to establish postal saw
ings banks in which the cowardly depositor
could place his money. and in this way re-
move from the banks that class of deposit
ors who are dangerous. The timid de-
pOsitor is not very likely to be afraid of
the Government. while at times he may
become distrustful OF his local banker.
Such postal savings could by proper means
be utilized as a basis for quick expansion
of the currency by issuing notes against