The Fairmont West Virginian. (Fairmont, W. Va.) 1904-1914, 1907-12-07


| Bank Paaise and Their Nature.
In ordinary times. linking things on.
I The average. q bank takes In as much
money from day 10 DAY III the window
fofsthe reee Irtag teller as II passes ont
HI the window Of sths ying teller. It
! IL merely necessary to keep ION: hand
d certain percentage OF Its resources
as reserve fund 10 \ meet possible
emergencies when demands for pay
ment arc much In excess OF current
deposits The great bulk OF the re-.
sources OF the bank. meanwhile, is!
supposed 10 be placed in the hands OF
business people in the form OF interest.
bearing loans. Nc. Legitimate condition
OF business is ever going to compel
Iull depositors to make Wild rush at
the same time to draw their money out
OF all the banks.
When such a rush occurs. the rea.
SONS are psychological. People have
become panlcstricken with the idea
that the banks are unsafe and that
the, must get their money out at the
Quickest possible moment. The mon.
ey once out is, Under such clrcum,
stances. boarded until the people are
in different state Of. mind. They
lloek 1t up in safc.deposit boxes or
hi1e It in various ways about their
homes. 1t Is thus taken out Of the
channels OF business circulation, and
there ensues-it such movement is
idearread-a condition that makes
what is called currency famine. a
srert part of the ordinary business of
.lie, country is carried on by means OF
What is known us credit. Thus, in the
autumn, all over the country there are
| iro,luccrs OF corn, wheat, cotton, and
other natural products who are In the
habit OF selling their crops at the near
est market town TO dealers who pay
them In cash. These dealers in turn
sell to the large market centers and
the crops are thus distributed for do.
nestle and foreign use. This series
OF transactions, known as the move.
ment of the crops" rests in large part
upon the banks. which are accustomed
to advance the money with which to
pay the farmers and the local dealers.
Srhe crops are so vast and so valuable
that the sums OF money engaged in
marketing them are also enormous.
But the banks In turn are depend.
ent Upon their regular depositoFs for
The greater part of the volume Of mon;
e! they are able 10 lend for the pur-
pose Of facilitating this vast crop
movement and other analogous trans
actions, such as the distribution Of the
winters supply Of coal, of dry.goods
land general merchandise. and SO on.
And If people who usually deposit mon.
ey In the banks are. not only afraid
to make fresh deposits, but are stimuli.
taneously scrambling to withdraw all
that they have already deposited, 1t
Is evident that the banks cannot, with
their usual confidence and freedom,
supply the means with which to lubri-
cate the marketing OF crops and the
distribution Of other commodities. II
the banks are suddenly put in condi-
ton where they cannot extend the GUS
tomary credit to the manufacturers.
the jobers. and the mercantile com.
munity at large 1t is easy on reflection
to see what frightfal check may be
placed upon the ordinary freedom Of
the so.called distrbutive process.
Now it is Just these phenomena that
We have been witnessing for some
weeks past in the United States. -
From THE Progress Of the World. in
the American Review of Reviews for
December.