Evening star., 1903-08-29

for the wages of their farm labor. If they
did keep bank accounts they could not pay
their help in checks. In he harvest season
the requirements for currency are greatly
increased by the additional labor the farm
ers are obliged to employ. Tens of thou
sands of extra men are hired in the harvest
season at from 81 to 81 per day.
Now it would seem, the surface, very
improbable that the operations of the Kan
sas or Dakota farmer would affect the
markets in Wall street But such is the
case and nothing illustrates more clearly
the intimate relationship existing between
the street and the country. The harvests
are so large that the requirements of the
farmers and planters, small individually,
in the aggregate make a sum which Is
heavy tax upon the money market. The
local bankers in the agricultural districts
carry a part of this burden, the banks in
Chicago, st. Louis, New Orleans and other
large cities in the grain and cotton sections
carry another part, while the rest of the
burden falls on New York.
West Financially Independent.
There was a time when much of the cur
rency needed to move the crops had to be
borrowed in the east, but the prosperity of
the past few years has practically freed
the west from it's state of Indebtedness to
the east and made it so rich that it can
now boast with some measure of justice
of it's ability to finance its own require
ments. But very considerable proportion
of the reserves OF tle western banks are
on deposit in New York, and when the crop
moving period begins, the western insti-
tutions are obliged to draw upon these re-
serves as well to call in their outstand-
ing direct loans IN Wall street. The effect
on the resources of the New York credit
market is almost the same as II the west
had to borrow in the east for all of it's
harvesting requirements. For the with
drawals of currency reduce the volume of
available credit, and the question whether
the currency belongs to the west, though
on deposit in New York, or, belonging to
New York was borrowed by the west,
makes comparatively little dlfference SO far
as results are concerned
Loss of 100000, 600 Credit.
The fact remains that the currency is
withdrawn from New York, and that it's
credit capacity is thereby reduced. 1t is
estimated that the average amount taken
from New York. by all sections in the crop
moving season is about $35,00o,0O0. In
seven weeks in the fall of 1902 the banks of
New York lost $35 coo net to the interior
institutions That meant a loss in credit
capacity of S1O0000,G50. For it should be
understood that for every dollar of actual
money in a national bank in New York
there is possibility of 81 credit, as the
tional bank act requires the banks to keep
cash reserves of one fourth of their net
deposits.
The money that is withdrawn to move the
| crops is actual currency, not one or the
! other forms of credit. Small bills are gen.
orally wanted and the banks ship these by
| express direct, or if the money is to go to a
| city where there is subtreas sury the bank
| er can obtain what is called "a telegraphic
| transfer through the New York sub
| treasury. The subtreasury on the receipt of
| a like sum from the banker will telegraph
| to the subtreasury In another city to pay
| the sum required to the correspondent of
| the banker and in this way the transfer Is
made Immediately, and the cash becomes
| available without delay. For this service
| the government makes a charge which is
| the same as the express rate between the
two cities. About ohe-half the amount
| shipped during the crop-moving period Is
| thus transferred through the subtreasury.
Bank Notes Problem.
Whenever possible the national bank will
ship its own circulating notes. AS these
| cannot be counted as part of it's reserve
| the bank of issue tries to send them as far