The Minneapolis journal. [volume] (Minneapolis, Minn.) 1888-1939, 1902-02-13
The Minneapolis Journals circula.
ton for January, 1902, averaged
WEATHERING A CRISIS

Inc report Ol Culleu SldLeS cOuSu4
General Mason of Berlin to the depart
ment Of state, just made public, contains
some interesting details about the bust
ness and financial depression in Germany
which for the past eighteen months has
wrought much distress, but is now pass
ing away the lowest point of depression
having bene reached a few months ago.
German financiers and business men have
been fearful of a general collapse. Dur
ing last year, up to Oct. 1, the deprecia-
ton in bank shares aggregated 1000, 0O0,-
600 marks ($476,OO0, 0O0). The stock of the
Dresden Credit bank, for instance, for
merly quoted at 1872, fell to 1926 in
August; Lepziger bank shares dropped
from 1914 to ga; the Muhlheim bank
shares, from 1873 to 43; the Prussian Mort
gage bank from 1873 to 6.9O and the shares
of the Mecklenberg-Strelit Mortgage
bank fell from IA to $50. These are
samples of the acuteness Of the crisis. 1t
was even apprehended that the power
full Berlin banks might succumb, but they
demonstrated the superiority Of the Ger
man banking system by pulling through
unimpaired and prepared to continue their
dividends. :
These great banks, like the Reichs-
bank, the Deutsche bank and others,
instead of increasing the panic by
reefng their pursestrings and tying
up money, strongly aided the weak
er banks to weather the storm and have
in brjD cin ohouf he m
restoration of confidence. The Rechs-
bank, at Berlin, which has 263 branches
throughout the German empire, has been
conspicuous during the long depression of
business in utilizing the provisions of the
law relating to periods Of money
stringency. The law allows the issue of
notes to the extent of nearly 300, 900, 600
marks, not secured by cash in hand, and
if any notes are issued above these figures
they must be secured by specie, treasury
notes notes of other banks, and, unless
thus secured, they are subject TO tax Of
5 per cent. Thus, whenever there comes
severe money stringency or a panic, the
currency is expanded, and when any is is
sued under the tax of per cent, it is
Withdrawn as soon as the money market
is restored to it's normal condition, as il
lation. Under the German system, under
a strong demand for money, the supply
is put in circulation in the natural ana
ordinary course Of business. There is ne
necessity to have a meeting of director:
or wait for the permission of the gov
eminent When the ordinary supply o
money is exhausted and demand raise:
discount rates the extra supply of none,
is Forthcoming.
1t is evident that this arrangement il
superior to our own devices for relieving
money stringency. With us the govern
ment may cheaper domestic exchange b.
transferring money at low rates FREE
Of charge. placing 1t from well-supplie,
points in localities where it is wanted. l
may anticipate the payment of interes
on the public debt and it can purchas
bonds or deposit the public money in ma
tional banks, which by giving security fo
1t, may loan it and relieve stringency
The government, however, has contine
itself generally to the anticipation o
interest payment and to the purchase O
bonds. This can only be done when tn
treasury holds a considerable surplus
The experience under the bond purchas
system has been that, when the govern
ment goes into the market as buyer, tn
prices are forced upward and the bank
are disposed to sell their bonds to secur
their circulation, and their absorptio
by the government means the with
drawal from circulation of the notes tn
relinquished bonds secured. Somethin
better would be accomplished if tn
government would deposit more widel
the surplus funds in the national banks
pro rata as to their capital and surplus
The German system Of currency eN
pansion is to be preferred to our preser
methods of meeting money stringency.
is practically automatic and has shown il
high value in the several business an
financial crisis through which the empi1
has been passing during the past yea
and a half We have only to recall tt
almost impotency of our government
relieve the money stringency Of 1873 an
1893
The Ieop1e of Oklahoma will be keen
disappointed when statehood is Genied
taem, as it probably will be. They al