The Indianapolis journal., 1903-06-15
FINANCIAL INDEPENDENCE OF THE
WEST.

The current issue OF the Wall-street Jour-
nal has an editorial on Independence of
the West" meaning financial independence
fact that the development of the financial
power of the West has not kept pace with
that of its political power. That is true.
The westward movement Of the center of
population by successive decades from
eighteen miles west of Baltimore In 1880 to
how the center of political power has
shifted from the seaboard to the interior
of the continent. In 1900, of 141 members Of
the House of Representatives there were
only nine from States west of the Allie
gheny mountains-and these were from the
Tennessee. In 1900, of SS6 members ZIG were
from States west of the Alleghenies. Only
twice in forty years has an Eastern man
been elected President. and during most Of
that time the West has had the speakership
of the House. Politically speaking. the
West controls the country and always will.
In monetary matters 1t is different. The
seat of financial power has remained in
the East during all of the time that the
center of population and political power has
been moving westward. The accumulation
of capital in the East began much earlier
and was much more rapid than in the West,
and until within few years the West con-
tinued to be subject in a financial way to
the East For long time the West might
have been compared to a debtor nation
and the East to a creditor. Eastern capi-
talists, banks and moneyed institutions
were lenders and the Western people were
borrowers. But the situation is changing.
The prosperity of the West has been so
great and the accumulation of wealth SO
rapid that ii has become almost independ-
5ebtedness to the East has been largely
iiquidated, and whereas formerly the West
was begging and borrowing money from
the East, Eastern capital now seeks in
vestment and hunts borrowers in the West.
Some of the largest enterprises in recent
years have been financed by Western cap
ital. New York is still the money center
of the country, but it is not the whole
thing" by a great DEAL The Wall-street
Journal recognizes the growing financial in
dependence Of the West, but it is not willing
to admit it can ever become entirely inde-
pendent of New York. 1t says:
There is no doubt whatever that the West
has made so much money that il has been
able to pay of its Indebtedness to the East,
and to acquire a large surplus. But IL is
noticeable that it has come to Wall street
to invest this surplus. Its banks and trust
companies still deposit a part Of their re-
serves with New York institutions in order
to earn the per cent. interest paid on
such deposits. Moreover, they have be-
come a factor in the New York money mar
ket, by making heavy direct loans, on call
and time, here and by purchases of mer-
camille paper. Western capitalists likewise
have employed the facilities of the Wall
street market in order TO make their in
vestments and to carry on their specula-
Every spring for several years we have
heard much talk, chiefly from Western
sources about the West being able to move
its crops without aid from Wall street.
Here again there has been a half truth
which has the effect of absolute fallacy.
The reserves of the Western banks, 1t may
be admitted, were sufficient to finance the
crops without the necessity Of much East
reserves were on deposit in Wall street,
and when the annual demand for currency
TO move the crops set in, there was the
usual heavy Withdrawals from New York.
The West called back the money it had on
deposit or In loans here. The effect of this
upon the money market was substantially
the same as If New York had been COM
PEELED to loan the money to move the crops.
AS a matter Of fact it was compelled, in
large measure, to take care of the Wall
street loans called by the Western lenders.
This is the New York view, and perhaps
1t is not far wrong. There may be several
local money centers, but there must be
one great, dominant one, and probably New
York will always retain its ascendency in
this regard. 1t is far better equipped to
be a continental clearing house than any
other American city, and will probably con.
tinue to be, for while other cities are grow
ing in wealth and banking facilities New
York is not standing still. But Eastern
financiers should recognize the fact tha,
the West. if not independent of the East
has become a factor in the financial situa-
ton that must be reckoned with. 1t is ac-
cumulating wealth very rapidly at present
1t is much more independent of the Eas,
financially now than 1t was twenty years
ago, and will be much more so twenty
years hence than it is now.