Evening star., 1903-08-22

| more than was necessary There Is no
oouDt that the loan certificate was a kind
Oh NAT money, though circulated only be-
| tween banks. Moreover being based on
collateral that had already been pledged
| lor ioans they involved species of rehy-
Pothecatlon that was violation of law
But they were measure of dire necessity
| ana after performing the largest possible
service TO the country We're quickly re-.
| tired.
| No More Loan Certificates to Be Issued.
1t may be said however that In the nexf
panic-may 1t be long postponed-it is prob.
able that loan certificates will not be is-
sued. This is a fact of which little or no
pubic notice has been taken, but ii is well
Understood In banking circles Indeed at
recent meeting of the clearing house tho
passing OF a loan certificate as a means of
rellet IN time of panic was announc.sd by
l@ormer @ controller A p. Hepburn. 1t is
claimed that the loan certificates whiIe
oenehting the country at large in the last
panic. operated to the injury of New York
moreover. they have the distinct dIsadvan-
tage or being an advertisement of trouble
An issue of certificates Is public procIa-
nation of financial weakness and thus
they may do as much harm in arousing the
fears or the people as they do good in
strengthening the hands of the bankers
BesldeS there are other remedies which
can now be applied quickly and effectively
10 check the progress of panics and dimin-
lsh their disastrous effects For instance
year ago when the money market was so
strained that it seemed as IL a severe con-
Vulslon would be produced seven or eight
great banks in New York formed $50 O0O.-
ooo pool and offered to loan, up to that limit
all the money that was needed al the mar
ket rate The effect was magical AS soon
as business men were assured that relief
was at hand, half the pressure on the
money market was relaxed. and as a mat
ter or fact the pool never loaned a dollar
Old Wall Street Story.
find in book on Wall street, published as
long ago 1887: In the panic of 1897" II
says. "a merchant of high standing in
Broad street was indebted to a son OF
johnnie Cropeau in the sum of $1,000
money deposited with him on interest One
morning while the merchant was busily en-
gagged In his correspondence Johnnie came
in in great trepidation and announced the
object of his visit by saying:
monsieur. yer much want dat monies
quer vous devez.'
L thought it was to remain We have
paid you interest for it when 1t was of no
use to u.s.
''Eh mon Dieu. I shall lose"
IF you are alarmed for its safety we have
no objection to paying you"
"Sare. l must have"
drawn for the principal and interest. which
he handed the Frenchman.
What Is dis. monsieur
That check is for your money"
Den you pay?"
Yes: you demanded your money!
Eth. monsieur (handing back the checls)
| was alarmed. If you pay. den don't want
III you can't pay, den / must have"
1 have given this quotation from the old
book OF 1887, partly to show how ancient
Is the origin of a story which, in one form
or other. has been told a multitude of
times. and partly to illustrate a trait of
human character, which is as strong now
as 1t was sixty years ago, and which often
works disastrous Injury in the money mar
ket
II panics should so deplete the cash re-
serves of New York as to make disaster i'm
minent it would be easy to restore them by
Importing gold borrowed in Europe. The
credit or this country, since 1t has estab-
nshed itself firmly on gold standard and
has paid off SO large proportion of its
foreign indebtedness is so high that It is
always easy to borrow of Europe provided
the rate of interest is attractive The
movement of gold is largely controlled by
the rates of interest
What Bank Statement Shows.
The weekly bank statement issued by the
clearing house every Saturday morning,
after 11:30 divides with the statement Of
the Bank of England. issued every Thurs
day. the interest of the financial world
Iaken together they are guide to the con-
ditions existing In the two greatest money
markets. Yet the bank statement is neces-
sarily an exhibit OF the condition of only
the banks that are members of II. Outside
- - liz o,ioei Sup VI tns clearing Hohse
ale niy uust companies. banks private
ma DanheIs ana lhdlVfduai lenders Of credit
The statement. therefore, gives only a PAR
uai view OF the situation. Still, tho banks
IN tne clearing house are the largest of al
creolt institutions, and they are tho chief
reservoirs of cash reserves So that tho
bank statement, while 1t does not by any
means report all the deposits and loans IN
New York. at least represents so important
a part of the money market, ps to consti-
tute fair indication of prevailing condf-
tions. The statement presents the following
items: The capital. the surplus and un-
divided profits, the loans. the deposits. the
specie the legal tenders and the circulation