The independent. [volume] (Lincoln, Neb.) 1902-1907, 1904-11-10
Too Much Bank Credits

theory OF money has triumphed' On
the increase of money as reported by
the department, and set out above.
The basis is too narrow in the face
OF the increased demands for money
that has far outstripped the increased
volume as shown by these reports.
Every theory must be tested by the
facts-all the facts and not a part OF
them. When Mr.. Bryan and Mr.. Towne
admit that in part, at least, the Same
thing has occurred that would have oc-
Cured ii silver had BEEN restored to
the same position under the law that
1T occupied prior to the acts of 1873,
and attempt to explain the admitted
business activity and higher prices
during the last eight years by the
'quantltatlve theory based upon the
increase OF money volume as shown
by the treasury reports-and limited
to that-they subject themselves to
certain discontinue when they at
tempt to test their explanations and
arguments by facts as they now exist.
1t is not difficult to show an increase
OF certain specific demands for money
demands that take money practi-
cally out of circulation-almost if not
quite sufficient to absorb the increase
OF volume as shown By the department
reports, and that leaves but small
part of the S9S0,019,704 of the net in
crease available as a basis to explain,
upon the "quantitative theory" the adj
nitted business activity. If this can
be done. then Mr. Bryan and Mr.
Iowne must give up the contest, or
widen the basis upon which they rest
their claims for the triumph of the
quantitative theory
In December, 1886, the aggregate de-
posits in all national banAs were ST.
S87, 1913, 760 on which was calculated
Y and against which reserve was held
The last distract of the condition OF
these banks shows all assTesscta of de-
posits against which a reserve must Be
held of $4,000, 1886, 400, or an increase
of S2,513,621 ,649
The last estimate made by the comp
troller of the currency indicated very
|conclusiyely that the national banks
had about tWo-fifths of the banking
business done in this country. 1t is
conservative and entirely safe to say
that, at this time, they do not hold
over three-sevenths Of the bank de-
pOsits To be absolutely certain that
the estimate is not exaggerated. let
it. be conceded that the increase of
deposits in all other banking institu-
tions are only equal to the increase in
the national banks, and we must have
an increase of bank deposits of not
less than $5,027 ,243, 298. This makes
a specific demand upon the money vol
ume for an increase of the reserves re-
quired by law and safety to be held.
The average of the aggregate cash
reserves Of all national banks is about
IL per cent. More than this is claimed
exclusive of that part in the hands of
reserve agents. At this low and-ac-
cording to all AA>iag authority and
OBSERVATION-DISCLOSURES reserve the in
crease of deposits since December 1,
1896, will require an addition to the
cash reserves over the amount held at
ludI udIC VI POOf ,OOI,OUV Ills Is
treating all banks as if they had the
same privileges under the same protec-
:tion of Law that the national banks
have. ffa Fss.-z,1f- .eeurse. is not true AS
a rule, safety requires ipsssrx{f and
state banks to carry larger amount
of available cash reserves than ma
tional banks. This specific demand
for money can not be avoided. and
will take every dollar Of the whole
net increase reported by the depart
ment except S125,3SS.344, and of which
amount $64,314.961 is in the treasury
department and not in circulation ut
all.
The fact is-and there is no doubt
about it--that over $919,000,000 of the
net increase, for which Mr.. Bryan an \
Mr.. Towne claim so much, is tied up
in bank reserves and in the treasury
vaults, and that out of this net in
crease there can not be more in actual
circulation than SCI 073,3S3. This is
an amount too small to be considered.
1t is. however, all there is of the net
increase of the money volume upon
which the editor of the Commoner can
base the claim that the increase of
4 IL