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

Bank paales and Their Nature.
In Ordinary lines. taking things on
the average. d bank lakes in as much
money from day 10 day At the sindos
Of the receiving teller as 1t Iissses ont
atttae window Of the paying teller u
IS merely necessary to keep on hand
a certain percentage Of It's resources
as a reserve fund 10 meet possible.
emergencies when demands for pay
nient are much in excess Of current
deposits. The great bulk Of the re
sources Of the bank. meanwhile. Is
supposed to be placed in the hands Of
business people in the form Of interest
bearing loans. No. legitimate condition
of business is ever going to compel
all depositors TO make q Wild rush at
the same time TO draw their money out
OF all the banks.
When such rush occurs the rea.
sons are psychological. People have
become paniestrIekea 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 circum-
stances, boarded until the people are
In different state of mind. They
lick 1t up in safe-leposit boxes. or
hide It in various ways about their
homes. 1t is thus taken out of the
channels OF business circulation, and
there ensues-if such n movement is
5 itleapread-a condition that makes
what is called currency famine. A
great part of the ordinary business Of
lie country is carried on by means Of
What is known as credit. Thus, in the
aptgnp, all over the country there are
PRODUCERS 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 rs the "move-
ment of the crops" rests in large part
upon the banks, which IRE accustomed
to advance the money with which to
pay the farmers and the local dealers.
The crops are so vast and SO valuable
that the sums of money engaged in
marketing them are also enormous.
Eut The banks in turn are depend
ent upon their regular depositors for
;he greater part OF the volume of mon.
e. they are able to 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
and general merchandise, and so on.
And # 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 a condl.
tIoR 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 a frightful check may be
placed upon the ordinary freedom Of
the so.called distributive 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.