The Oskaloosa herald. (Oskaloosa, Mahaska County, Iowa) 1885-1919, 1907-11-07
PAYING With CHECKS.

bills all you would need is check
book and a lead pencil. Go to your
grocer or your clothier, pick out what
YOU want, agree on the price, and
write ont check That is all there is
to 1t. Your wants have been satisfied,
your dealer is pleased and the mon
ey is in the bank awaiting your pleas
ure
But you say, writing checks would
be nuisance for shave or a cigar
or some trivial transaction. Sure
enough! But if your credit is good
your barber or your cigar dealer
would be glad to- carry you for q
month, when you could write check
and wash the slate" to the satisfac'
ton of all concerned.
This condition of affairs, of course
is only theoretical, but it is none the
less true, and in fact is the way nine
ty per cent of the business Of the coun'
try is conducted every day. This
too, is the condition that was recently
in a measure enforced upon the people
of New York and Chicago and other
large centers, including in a mild way
the city of Des Moines.
The move in these places was made
to keep the money in circulation and
prevent a few depositors from taking
out all their money and hiding IL In
bureau drawers, stockings and tin
cans. The strongest banks in the
country do not aim to keep more than
from Is to 25 per cent of their depos'
it's on hand. In fact they cannot al
ford to, or they would not have enough
money loaned out to pay expenses
and enable them to conduct theil
business. 1t is evident, therefore
that if one-fourtn of the depositors Of
a bank would demand all their depos
its in cash, the bank would have to
suspend payment until they would
have time to realize on their securities
This would be true of the stronges,
bank ever organized. Banks every
where do business on the law of av'
erages, knowing from experience tina,
only a certain portion of their deposi
tors will need their money on the
same day and that most of the money
drawn out in the morning by one sci
of depositors will be paid to other mer
and be brought back to the bank
again before night. So banks, the
soundest and most conservative, keeT
less than 25 per cent of their deposits
on hand, loaning the rest out at in
terest. The law based upon the bank
ing experience of hundred years con
siders a bank sound when fifteen pei
cent of its deposits is kept on hand IN
cash and for this reason places ffteef
per cent as the requirement.
When fear seized the people of New
York City it was not strange that tht
banks there, even the soundest o.
them, found themselves in distress fol-
cash. From the government and othel
sources they raised a hundred million.
but when paid out, almost seventy
millions disappeared from sight. Tina
much failed to come back to the banks
from other depositors, so 1t was ap
parent that a panicky people were
hording and secreting it. This com
PEELED the New York banks to tell Chi
cago and St. Louis, I'VE will not shiI
currency-we need it ourselves unit
the scare blows over" Chicago ant
St Louis figured that If they coult
not cali on New York for currenc,
they had better keep what they hat
and so notified Des Moines, lndianap
oils and the cities of the third financia
class. There is just as much cash "
the country as ever, but it does no
move back and forth from one city u
another. The result has been tina
the old settled. rich and conservative
communities like Iowa are getting
along nicely while the new communi
ties. such as Oklahoma and Oregon
which need cash from the outsid'
world, are feeling the action OF TIN
money centers and are doing business
on the checking basis.
And it will blow over, too. Like tn
congestion of freight cars in tn
yards, the difficulty will unwind itscl
much as IL began. Just as soon as tn
people in the vicinity of the New
York banks get over their scare the,
will bring their money back to tn
bank vaults and by that time shiI
loads of gold will have, arrived fror
abroad. When there Is no longer dan
ger of run on them at home, tn
New York banks viii say tp Chicago
Draw on US for currency IL you wan
to-" Chicago will signal the same =
Des Moines and indianapolis and tina
will end the stringency which neye
had any good reason for existing.