The Saint Paul globe. (St. Paul, Minn.) 1896-1905, 1903-10-29
CRIMINAL GOSSIP.

one nardly KNOWS whether to GEN.
sure more severely the gossips who
started the story that some of the
to the wall or the feather-h headed peo-
pie who listened to and acted upon it.
There was great danger for a short
time Of a general panic and financial
crash that would have ruined scores
of industries and thousands of people
without any occasion whatever. And
this is what may happen in any city
in the country if the tongue of rumor
is sufficiently reckless and if the cree
dulity of the public overcomes its COM
mon sense and its seIf-interest.
1t ought to be an old story by this
time to say that the public can break
any bank in the country if it sets out
to do so. Banks can exist only when
they make a reasonable profit for their
officers and stockholders, and they can
get this from no other source than IN
terest on their loans. They buy and
sell credits; and, with the interest re-
ceived from such portion of the money
left with them by their depositors as
it is safe to lend and as can find
proper market they make their i'm
come. ;-.'7s-
The money of their depositorsniis
mostly left with them on call. The
people who borrow from them mostly
borrow on time. That is to say, the
bank can collect money from the man
who owes it, no matter how solvent he
may be, only at the expiration of thir-
ty, sixty or ninety days from the date
when DIS note was given. The depos-
itor, on the other hand, can collect from
the bank, as rule, in five minutes by
his money.
Now bank cannot keep In its vaults
money enough to pay the accounts of
all it's depositors in full on demand. If
it did it would be mere storage ware
house. 1t would have to charge every
depositor round sum for the safe
keeping and return of his money. It
would have no means of making money
itself.
OF course bank always keeps a
certain amount of cash on hand to
meet the average daily demand upon
it. This reserve fund varies from 10
to 40 per cent or more, according to
the conditions of the times and the
conservatism of the bank management
1t is simple arithmeticaI PROPOSE.
itors pull out their money to exhaust
this reserve, the bank can only answer
further demands upon it by sacrificing
any securities that it holds, discounting
the notes of its depositors and finally
going to the wall if the run on it be
sufficiently prolonged. 1t may not only
be able to pay dollar for dollar, but its
stock may be worth a hundred per
cent premium, and yet it can be ruined
and a considerable portion of the funds
of it's depositors sacrificed if they
choose to ask for all their money at
once.
This is one Of the great dangers of
every time of slackening business. The
banks may be and generally are Just
as sound as they were at the height of
prosperity. Indeed. bank officers
usually perceive before anyone else the
signs of coming depression and are the
first to get ready to meet it. A time of
lessened prosperity finds every bank
with fewer and safer loans and with
all sail shortened to meet any possible
storm. All now depends upon the in
telligence of the people. If they per
NIT themselves to become panic
stricken, if they give heed to the. ru-
mors which some timid or malicious
creature is always ready to sens
af1oat about this or that financial in
stitution, if they lose confidence in
their banks, they can involve the whole
community in crash. This is the les
son of what so nearly happened at st.
Louis. and it is one that every COM
mnnity in the country should take Sc
riously to heart.