Camas Prairie chronicle. [volume] (Cottonwood, Idaho) 1901-1917, 1907-11-08
new LESSON IN
HIGH FINANCE
Lewiston Tribune Gives Some
Sound Reasons for the Cause
of the Present Money Panic
in this Country.

The following editorial from a
recent issue of the Lewiston
Tribune sums up the cause of the
money panic in the east so nicely
that we reproduce it for our
readers:
While New York City announ-
ces that it is industriously engag-
ed in cleaning house and in re-
forming its financial practices
and conditions that have brought
it we'll nigh to the brink of ruin,
there is also a lesson that the rest
Of the country may well heed if
it expects to retain its own sol
vency and trustworthiness.
That is, that New York City
should not ever again become
the reserve city of this country
to any such extent that it is at
the present moment. The
country at large through it's bank
ing institutions has heretofore
carried it's surplus balances in
New York, considering the de-
posits the same as cash, and
having annum interest on the
average balances, This practice
has been safe and approved in
the past, because the deposit
was always available, even during
the Cleveland panicky days, but
in modern finance it is no longer
so. New York now holds the
money of the country by forcible
process, by highwayman's pro-
ceedings, while at the same time
keeping open doors, inviting
other deposits, procuring other
deposits through the necessities
Of daily business exchanges, and
refusing utterly to pay back the
money of other banks it is hold
ing, even when other banks must
go into insolvency from sheer
powerlessness to reclaim their
own funds, as in the case Of the
great San Francisco bank. New
York's necessities are extraordi-
nary, to be sure, but instead of
facing it's own difficulties and
making its sacrifices upon it's own
resources, it has required inno-
cent parties to shoulder it's diff
fculties and make the sacrifices.
If the country does not duly
profit by the lesson it is now re-
ceiving it will be it's own fault,
it will knowingly become an ac-
cessor so its own undoings in case
of recurring disorders. The
banks at large will properly and
necessarily have to continue to
carry checking accounts in New
York and in other cities with
which the respective localities
have commercial relations. But
the practice of keeping reserves
IN other cities, such outside
reserves frequently constituting
the bulk of the cash resources of
local banks, carries with it it's
own dangers and penalties, as is
now being demonstrated. Such
outside reserves are only needed
by solvent banks in cases of
strlngency or panic, but since
such reserves can now, under
nigh finance, not be made avail
able in periods of stress, the
suicidal folly of continuing the
policy becomes apparent. More
than that, by the system of
redeposits carried on through
successive stages of superior
cities, a fictitious financial struc-
ture is built up, with an eventual
deposit total much like that of
an inverted pyramid. The farm
er's S100 placed in his home bank,
IS redeposited in the county seat
oank, then carried in the Port
land bank, then in San Fran
CISCO, next Chicago and ultim-
ately New York, making a show
Ing of five or six times more than
the actual sum available for leg