West Virginia argus. [volume] (Kingwood, W. Va.) 1877-1946, 1906-10-04
MONEY TO MOVE CROPS
Pure Friction That the New York
Banks Furnish II.
WHERE THB WoNBY COMES FROM

The West Uses Its own RESERVES Go
Pay Fsr Farm Products-iIow the
Annual flight Money" In Wnu
street Comes About - LIght ON a
Popular Fauncy.
The old cry is proceeding from wall
street that tie New York banks are
obliged TO furnish 'the money 10 move
the crops Why, OF course they are 10
the amount Of the money of the west
ern banks they hold on deposit The
New York banks oould not refuse TO
honor the drafts OF their weatern Gus.
toners ms long as they had their mon
ey. But one would think 70 read what
the New York financial Journals say
That the New York banks were phllan.
thropists and kindly lending the money
TO move the crops until the crops could
hc sold and repay them. Tho fact Is
that nearly every country bank has an
account with some New York bank
principally FOR the purpose OF being
able TO draw against H. Business men
and commercial travellers are constant
ly buy Ing exchange on New York TO
remit FOR goods.
ON these deposits OF the country
banks Ia New York interest Is paid on
balances according TO the going rate
for call loans. and when tho country
banks have surplus funds Il pays bet
ter 90 deposit them I'm New York than
10 hold the money In their own vaults
or safes.
When harvest begins nnd the farm
ers check ON their deposits IN the coun.
try banks 20 pay their harvest help or
have TO borrow OF the country banker
for the same purpose then the surplus
In tho country banks begins TO run
down, and they In turn begin 20 draw
against their deposits I'm tho banks OF
New York, Chicago. St Louis or any
Of the bis money centers where they
have deposits
When the farmers begin 90 sell their
wheat and other products this money
movement from the money Centers TO
the country Is ncccntuoted IN q great
degree ana millions OF dollars are
Withdrawn from the money conters 10
be pnid out for farm products. AS this
IS through The merchants or by being
deposited In the country banks. the
prolonged drain on the money centers
Is often acute nnd leads TO tight mon
Cy" nnd high rates OF interest which In
some years has vCrged on financial
panic
Tho reason Of this tight money" IL
that the New York banks are compelled
90 call some OF their loans made TO
stockbrokgs and others, ana these In
turn ere Obliged ID lld higher rates for
loans on sell the securities 10 pay The
loan. II any considerable number are
compelled To soil t.nsc stocks ihcy
have borrowed oa. O, course the market
price Of the stocks sold IS liable 10 dc.
cline, according 10 the amount OF such
stock forced on the market. This I'm
simple terms Is the yearly history Of
money 10 move the crop" But eel
dom g. dollar Of Kew York money
used % move wheat, unlcsg New York
exporters borrow for that purpose.
There is, however. later IN The year or
la ho carly LiouMs OF thc ucw year
a'uc MoHcy l3'uoj TO southern banks
Il- cg' fIs..g use. bot you may be
5ra t..t tIH cotton warehouse receipts
%. ctlor g.5I tcIty i5 hyp0ulccatcd
rar G.y l)ua s5 made.
3D. ihe t9ia oi NCv FORK banks fur
De-! a.-g tae ic-vy - move the crops Is
Eciipa. 'ae 1rt Ictiy plyng ont the
rs-cy af cop tors tie same as all
hHuHs must go when called upon