Richmond dispatch. [volume] (Richmond, Va.) 1884-1903, 1899-09-17
THE RECENT "sauEEzE.v

| OF the country generaiy' are NV 40" -
seek. The squeeze was the logical result
of our illogical financial system. In the
first MACE. the interior banks. which in
the less active season keep their uhuseo
cash reserves IN New York banks In or
dor TO maintain credit In New iorh
have been drawing upon these banks LOT
funds with which 10 move the crops. III
the second place. during the pres'n'
month there have been exceedingly heaVy
internal revenue collections, and as
consequence inland banks that are de-
positories Of such collections have peen
accommodating internal revenue deposits
I'm excess OF the amount OF bonds re-
ouired to be entrusted to the government
IA secure them. The law provides that
when this condition is reached the de-
positories must settle with the govern
ment. and hence we have here another
source Of drain upon the New YORK
banks. through the medium OF the inte-
rior banks. In the one case the money
has gone temporarily to the South ana
| the West In the other, IT has been 'och-
ed ND in the Treasury. And what, as
third operation, naturally followed these
| two? Why. the New York banks. Tor the
purpose of meeting the demands in ques-
ton called loans, liquidation of spec
ulative stocks was forced, and there was
an all-'round pressure in wall street
which was felt everywhere else.
# mas been SAID mat the first factor
ssCnnqGZqf a
healthy sign. the idea intended to be con-
veyed by that expression being mat II
marked the regnancy Of the sound over
the unsound in the use Of money, the
| legitimate ever the "illegitimate," busl-
ness over speculation. That is true. But
| the situation can only obtain for the
nonce. As soon as the money sent South
and West has performed the function it
was sent to those sections to perform, 1t
will return to New York and other CEN
| tres of congestion, and again be applied
to unsound. "fllegitimate," speculative
uses. 1t will again be at the service Of
wall street on call. to stimulate iicti-
tious credit, while the country at large
suffers from "dearth of currency"
And dearth of currency, which is con-
sequenu upon the existing banking and
currency system. is at last the root of
the evil. The operation we have named
nrst-the drain for moving the crops-is
a recurrent one. and shows plainly that
there is not enough money in the country
| to meet the demands of business. More
over. so long as our present currency
system obtains the inadequacy Of the cur
rency 10 meet the necessities Of business
must increase pro rata with the volume
Of business. Recognition Of this we ina
in a proposition said to be under con-
sideration by the Treasury Department.
1t is stated that in addition to having
determined to renew the effort to have
Congress reduce the tax on national bank
circulation and permit the emitting of
notes to the face value of bonds, the
| Treasury officials are considering the adj
| visibility of charging depository banks
| interest on government funds. The the
DRY as to reduction of tax on circulation
| and issue up TO bond face value Is, or
course, that circulation would then pay
the banks better than now. The theory
as to charging interest on government
funds is that, as the banks would find it
less profitable to lock up bonds to secure
deposits, they would deposit more bonds
| TO secure circulation.
But all this would be merely tinkering
with the evil. At superficial glance it
would seem that the consummation OF
these plans would tend to increase circu-
lation. but when the schemes are exam
ined carefully, and the other side is
heard. the more than reasonable deduc-
ton is that they would AFFORD little, If
any. relief. With the present returns
from bonds, and which must grow small
CT in future, the margin Of profit on cir
culation is very narrow, and pro rata
with the dminution of these returns
there is a growing disposition on the part
| Of the banks to reduce their circulation
70 the minimum, and use the value of the
bonds in other ways. 1t has been figured
by those who have studied TIE subject
carefully that even with the circulation
tax reduced and the face value privilege
granted, the banks could use the money
tied up in bonds to better advantage
than as a basis for note circulation.
Touching the theory of interest on gov
eminent deposits, it is pointed out that
the same rule would work. Furthermore,
there is, as the New York Journal Of
Commerce puts it, this TO be reckoned
with: IF the deposits are reduced, either
By the surrender by the banks or by the
Withdrawals of the Secretary, the effect
must be the accumulation of funds in the
Treasury, and if 1t should result in in
creasing the bank circulation the net re-
suit would be substantially unchanged"
Bringing the matter, therefore, down to
its last analysis, the recent squeeze
but emphasizes in any light we view the
operations Of our banking and currency
system the necessity for thorough and
radical reform Of the system. 1t is full
of lessons for the honest and earnest
banking and currency reformer. And II
ought TO prove pregnant with incentive
to those who were betrayed into believ-
ing that the Republican party would ever
do aught in the matter of currency re-
form" but juggle with the existing sys-
tom.
]
ELECTROLYsIs AND STREET-CARS,
a number of Richmond councilmen
have been heard to say they are opposed
to acting upon the Main-street franchises
until they have more information than