The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1900-11-23

troller Eckels, in his report for 1896. gath
cred statistics from $3.50 banks all over
the Union ana they confirmed the results
OF inquiries less broad by Controller Knox
in 1881. Mr.. Eckels concluded that GA
per cent. OF retail trade is transacted by
means OF credit paper; that 9.3 per cent.
OF wholesale trade is so carried on; S.l
per cent of business other than mercan-
tile, and s52 per cent. OF all business
And yet the use of checks varies much
I'm different parts of the country, from o.
per cent. in Rhode Island TO % per cent.
Ia Minnesota. From Mr.. Eckels's discus
sion il may be inferred that the rate
stated for all business is higher than the
truth, and that 50 per cent. is more nearly
accurate.
In an interesting address before the
London Institute of Bankers in 1881 similar
statistics are collated for parts OF Great
Britain. For country banks in 26l places,
the writer, George III. Pownall, states the
burgh, s6.7s; for Dublin, 500. and for Lon
don, 97.2. In counties like Chester 5s.OS
per cent, and Halifax So, were exceptions.
for others were as high 1851 per cent
The figures agree fairly well with a state
ment of Sir John Lubbock in 1864, CIV
ing the total of checks In the transactions
of the Bank of England at 90.1 per cent.
THE records of the clearing houses OF
our great cities are models of analysis and
accuracy. Their managers, to whom nave
appealed. have courteously given the re-
suits of their work. In New York, since
1854 the balances paid In cash have varied
greatly in different years. The lowest were
2.99 per cent, in 1869, and the highest oil
per cent in 1895. with an average for for
| ty-seven years of AS per cent, making the
use of credit tokens 95.22 per cent. For Oc-
tober, 1900. the cash payments were BIC per
cent, showing 9l.A per cent. for checks
and drafts.
I'm Chicago, the clearing house has paid,
for three years, 9.5 per cent, 80 and per
cent, respectively, OF its total exchanges
in cash, thus showing between 30 and 81
per cent in credit paper. In st. Louis, the
ratio of cash to clearings has ranged from
15.4 per cent, in 1895, TO 1880 per cent, in
1898, and to lila per cent thus far in 1900.
The credit tokens have thus ranged from
IS per cent. to SS26 per cent. OF the ex-
changes.
NO CASH HANDLED.
"By the New Orleans clearing house and
by that of Indianapolis, no cash is handled.
The balances there and here are settled by
checks of the manager on the debtor banks
in favor of the creditor banks. This reli-
ance on credit tokens for all transactions
is unique.
while our data do not cover the whole
field. we may infer that credit tokens keep
on an even pace with general business.
growing with it, but not much supplanting
cash.
1.-The single snowflake falls alone from
the burdened cloud to waiver In midair or
be driven by wild winds hither and yon,
until the sky is hidden by its fellows, and
all reach the earth in their white depth
In the same way the single check starts
on its career, to pay for gas, or coal, or
-four or rent; or, again, for the pay rolls
OF vast concerns, or in larger sums TO COW
er stocks or bonds of immense enterprises
and reorganiZations. Thick as the leaves In
Valambrosa, they fertilize the soil. they
contribute TO fruit, and flower, and art
and beauty.
eral The piece put forth to-day passes
away tomorrow. 1t meets an exigency and
passes with Ii. The next moment, at the
same instant, million others are born and
die. Occasionally check or draft will pass
through many hands, may be slave to
thousands but its fate is to be charged
UP and Cancelled. Thus this greater cur
rency' doing four or four and half times
the work of all our money, is in the highest
degree elastic. The slightest need increases
it for single exchange. AS free the
wind 1T rises and falls at every impulse of
traffic.
"All governments recognize a difference
between checks and the paper called
money. The use of the former is private
and voluntary, of the latter public and ar
bitrary. For checks and drafts no statute
bank superintendent controller super
vises them. No provision is made by law
for their redemption. Yet in all civilized
lands governments do demand for paper is
sued as money security a safety fund,
tax, provision for redemption. They as
sumo supervision and control often a mo-
nopoly. This difference in treatment, this
absolute freedom gives abundant elasticity
to the instruments of 50 per cent. OF the
transactions of the country.
This greater currency depends for life
on four elements of credit; first, of the
drawer; second, of the indorser; third, of
the individual or institution asked to pay,
and fourth, on the manner in which pay
ment is to be made. The first three factors
may be strong, and the final payee may yet
be embarrassed. In 1893, in New York and
Philadelphia, some of the strongest banks
had printed on their checks payable only
through the clearing house OF their re-
spective cities. The effect was that only
credit, not cash. was given in adjustment.
Thus in instance under my own obser-
walton a check so restricted, drawn by one
of the richest concerns in Philadelphia, was
refused payment by the bank on which it
was drawn, except in credit. The result
was that the payee was compelled TO allow
3 per cent. on 10000 to secure the currency.
Credit tokens so restricted have serious
disadvantages.
CLEARING HOUSE CERTIFICATES.
Clearing house certificates are a form
of credit paper peculiar in many respects.
They are available only in settlement of
exchanges between members of the system.
They do not in any event command cash.
They are in the nature of due bills secured
by the loans of the several banks. issued
for the definite purpose of avoiding pay
ment in money. Only as they are with
drawn and Cancelled does cash return to the
channels of trade.
Credit tokens as a rule, however, are
meant TO be redeemed in cash. A check
may pass many times from hand to hand
of individuals, again between several banks
before 1t reaches the institution on which
1t is drawn This availability is the vital
force in all the greater currency and con-
tributes to the immense number of trans
actions conducted through Ii. Local checks
and foreign bills of exchange do not differ
in their nature. Charges for collection are
the primary type of rates OF exchange
enters into the question of parity, for
their final claim to favor is that they stand
for cash and will command II, and such
payment should be in the best money.
THE act of March IA. 1900, fixing the gold
standard declares: All forms of money
issued or coined by the United States shall
be maintained at parity or value with
this standard, and ii shall be the duty
of the secretary of the treasury TO main
tain such parity This provision is an ex-
pansion of the declaration of the act of
July a. 1890, that il is the established pol
icy of the United States to maintain the
two metals on parity with each other
upon the present legal ratio or such other
ratio as may be provided by law.
1.-The resumption act of Jan. IA. 1876. was
the cornerstone of all plans for the eleva-
a reserve of SOC. 900, 900 in gold was procured
and Jan. /. 1879, the task of redeeming
United States notes in that metal was
begun and the evil prophecies of financiers
of the old world and many OF our own
country were disproved. Until 1893 re-
demption suffered no check, but in three
years succeeding Ii was deemed necessary
fell Off Ia sail h1r,I H.