Willmar tribune., 1907-11-06
WEDNESDAY, NOVEMBER 6. 1907.
THE FINANCIAL. SITUATION.

The present business condition
in the United States is certainly
anomalous. In the midst of pros
perity, with good crops bringing un-
usually good prices, with the fact
cries running at full speed and
with orders ahead for months or
years, with Europe anxious to get
every bushel Of our grain surplus,
with money volume larger than
we have ever had since the period
Of contraction of currency COM
menced in 1868, and all "sound
money, all of sudden we find
ourselves in the midst Of a NEAR
panic'' that might have developed
into a genuine one if the banks had
not stopped the runs by refusing to
pay out money on cheeks and de-
manding sixty days notice for the
withdrawal Of money on certifi-
Gates. While this will cause some
Inconvenience and to some extent
check business for while, it is
as nothing compared with the ter
rible consequences that would have
followed a general run on the banks
with the consequent bank failures
and general suspension of business
that it would have taken years to
recover from.
1t must be understood that there
is not bank in the country that
can stand run of depositors. The
bank takes in deposits and pays in
terest thereon. To'be able to do
this, the bank must turn around
and loan out that money on a high
er rate Of interest. If the bank
management is conservative in it's
loan business the money is as abso-
lutely safe as if it remained in the
vaults; but it is not ready for in
stant production if all depositors
demand it at once. Thus a bank
may be as solid as the rock of Gi-
braltar and yet have to go under
for run. That is what has hap
pened in previous panics; that is
what would have happened had the
runs been permitted to become
general thruout the country. A
sporadic run on safe bank is gen.
orally met with help from other
banks who exchange their money
for the good collateral securities
held by the attacked bank; but this
cannot be resorted to in a general
run. Hence we may say that the
peope may be glad that the banks
stopped the current that threatened
to engulf the country.
If the people keep their heads
level and submit to a little incon-
venience there is no doubt but that
normal conditions will return in 9
short while. The exporting of ou,
agricultural products will bring
money from Europ,. Confidence
among the people will let loose the
immense volumes of money in this
country that are now hiding. The
condition is entirely different nov
from what it was in 1893, when Eu.
rope, South America and Australia
were bankrupt, when the factories
we're overstocked and had been sell
ling on falling market for some
time, and when the fnanciers hac
been preaching about the danger:
of the silver purchase law anc
threatening a financial cataclysn
until the moneyed people were
ready to see spooks at midday
Add to this the fact that the none,
volume at that time was the small
est it had been for over thirt,
years, and we cannot wonder thai
the panic was so severe and the re-
covery so slow. Now all these fac
tors are reversed, and nothing bu
what Hill calls "finncial hysteria'
can cause much of check in bust
ness.
The cause of the trouble? Tht
same old pest hole that has causet
all financial fevers in the country
for the past forty years-Wal
Street. Over-speculation with bor
rowed capital, the abnormal fore
ing up Of stock values by the ''Sys
tenn" when it wants to unload anG
the forcing down Of values when il
wants to get the stocks back these
are the causes, and we shall have