New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1899-08-03
CAPITAL ABSORBED.

The ancient and familiar misunderstanding
crops out again In the letter Of n correspondent
who treats all capital" as money" Asking in
formation about "The Absorption Of Capital by
Industries" he questions whether the amount
absorbed in fixed forms is in any way rendered
unavailable for lending, and says:
Whether It be paid out for either labor or ma
terias does Il not Immediately, unless boarded
by those TO whom 1t may be at first paid find it's
way through banks of deposit or savings or
other usual channels. into the so called money
market? Unless currency is in large or small
amount boarded and withdrawn from circua-
ton. not all financial transactions in prac-
tce merely transfer Of balances from one to
another account, and do NOT all expenditures for
improvement result only in the same transfers,
with but little more delay?
The amount of loanable capital differs by sew
eral billions from the amount of money The
| man who has not cent In his pocket may lend
n million by drawing n check He cannot draw
checks against the land and houses he owns his
mines or quarries or vessels, his products In
transit to markets or goods on his shelves await
ing customers, his securities or mortgages or
debts from other people. Part Of the wealth
represented by these he can lend only by Dor
rowing first from somebody who has loanable
capital. If he finds the man and borrows, it
does not matter whether he receives any money
at ALL or only a check or draft: part OF the loan
able capital of the country is placed at his COM
mand, and can by him, in turn, be loaned.
For convenience the date Of the last census
may be taken, when the wealth Of the country
was reported as S65,037 100000, including only
ST. $500 1000 in gold and silver coin and bull
Ion, about $685., 10000 being held by the Treas
ury OF money in the shape of specie there was
in circulation not one hundred and thirieth
part Of the Nations wealth. OF all forms outside
the Treasury, including notes, the circulation
was 81 ,43l 900 600 or about 50 20 for every
500 Of the Nations wealth. But at that same
time individuals could have drawn checks for
81 O19 100000 held on deposit in National State,
savings and private banks and loan and trust
companies. Small duplication In these official
statements need not here he corrected, as it is
quite enough 10 show that available capital was
at that time about Sc 10 for every 800 OF the
National wealth Part Of this capital was needed
In various forms of business, and without i'm
perilling interests could not be loaned; but that
does not alter the fact that the amount which
owners could lend II they chose was several
times the amount of all currency in circulation.
When man buys stocks in an Industrial
company he usually pays checks against part
Of his available capital. II does not matter II
he has to mortgage or hypothecate something
IN order 10 borrow the amount, for 1t comes In
any case out of the loanabe capital of the coun-
try. The company turns that amount into a
new building or mine. Perhaps 1t pays over
the same check directly to contractor, who then
distributes the amount drawn from the loan
able capital Of the country. The form does not
matter The contractor spends the capital grad
ually for materials and for the sustenance and