Evening star., 1903-07-04
UNLOADING SILVER BARS.

1t here? Why not issue certificates against
the silver as it lies in the mine?'
There certain plausibility about
that suggestion, but a moments thought
shows that 1t was without practical value
Gold and silver in the mines is of unknown
quantity and quality. 1t must be taken out
assayed and weighed in order to obtain
market value. Then there are times that
the actual money is required in great busi-
ness as in small retail transactions, the
transfer of credits not being sufficient to
settle balances. For instance, while the
vast volume of foreign commerce is
financed by bills of exchange, there comes
a time when a shipment Of gold is neces-
sary. The foreigner wants the actual gold,
either in coin or bars, not certificates rep
reSenting some unknown quantity lying in
the earth. So also in inland trade, the vast
volume is financed by an exchange OF
checks and drafts, but there comes time
when an actual shipment of money is nee
essary.
Little Money In Wall Street.
But except for such purposes very little
money Is seen in Wall street. Business Is
done by various representatives of credit,
the chief of which is the check. The great
est trust company in New York, with de-
posits of over $5O,OOO,OOO. never handles a
dollar of actual money from one years end
to the other. 1t does all it's business by
check.
Wall street is more familiar with bullion
than with money. For instance. it is no
unusual spectacle to see a truck in front OF
some banking house being loaded with bars
of silver, and when gold Is to be exported
bars Of the yellow metal are boxed with
sawdust in the rear of the assay Office and
carted through the streets to the steamship
wharf.
1t is not easy to explain to the uninitiated
the philosophy of credit and the great
function it performs in and for the world of
l,,x a. t. In xI,,A
all the business of the United States is con-
Quoted by credit. This. instead Of being
weakness. a defect in the mechanism of
business, or an injury to the country, is in
the highest degree benefcence. For credit
multiplies many fold the power of money.
The highest function of money is to serve
as a standard of value. and this 1t per-
forms as well. or better. when held in re-
with money in Wall street are not misery
boards. The money In them is performing
its highest service to the country, acting as
reserve against the output of credit. It
Is only when money is stored where 1t can
not or does not serve as such reserve that
it becomes hoard and thus an actual loss
to the country. This is one of the defects
or our treasury system which locks up in
treasury vaults where it is prevented from
being Of use to the country a large amount
OF the government receipts.
For every dollar OF actual money in the
vault Of q national bank there is q credit
pOSSlDluty OF Tour 0ouare. the national
banking act requiring the bank to keep a
reserve Of only 25 per cent against it's de-
posits. AS a general rule. taking banks and
trust companies together. for every fifteen
dollars of money in Wall street there Is out
standing one hundred dollars OF credit
A Credit Market.
The money market therefore, Is a credit
market. It Is place where credits are
bought and sold A bank practically buys
the little known credit of merchants and
other business men and then sells at a
higher rate-its well known credit to 9TH,
ers. It is impossible to put into few SEN
tences the subtleties Of this great subject
Of credit which has been the theme Of
many ponderous Volumes and yet a correct
understanding Of this vital matter Is nec-
essary to true comprehension of the Wall
street system. Perhaps I may be able
brteny to give some Idea of It. Business is
simply an exchange Of commodities. One
man has bread but wants a coat; another
wants bread but has coat: they exchange
the bread for the coat That fs what we
are all doing In the world all the time. We
are exchanging one thing Of value Tor an