The Hood River glacier. (Hood River, Or.) 1889-1933, 1907-11-21

LESSONS OF THE PANIC ABROAD
AND At HOME.

form anu Iue Cb ibS VI Si"'SiS4 W
our present flHancial system one in
controyertible fact at least stands
forth boldly-that whether it Is faulty
or not it must receive the unqualified
confidence aud support of the great
mass of depositors until such time as
it can be gradually remedied. The
readjustment Of a nations finances is
not the work of a day. To evolve our
present monetary system has taken
more than q century, Changes in 1t
have been made at widely separated
periods brought about largely by vary
ing conditions. Apparently We are
again confronted with one OF these
conditions. But until this can be ful-
~ determined it is necessary that the
individual adjust himself to the pre-
vailing financial status in advance oil
legislation or other methods that may
be adopted to bridge the financial
CHAINS, and later provide currency
whose contracting power is more lin
tied.
La pauic times history is insistent
in repeating itself 1t Is not the heay!
and generally well informed depositor
who withdraws his account for idle
rumor, but the army of small invest
ors. Ignorant of even the most ele-
mental principles of banking and con-
se1uently wrought upon by feaI that
approaches Mysteries they clamor for
their money and are Largely RESPONSE
lie for most of the bank failures. The
enormous sum that the small deposit
or can withdraw from circulation 10
difficult of realization to the average
reader until he il confronted with the
following statement recently publish
cd by the New York Times:
at ia to be doubted that the ordn-
ary deposition is aware that II each
savings bank account were reduced by
IA single dollar the total would be be-
tween two and three times the total
amount of money in circulation, gold,
silver, green backs, bank. notes, and
the rest of our variegated curren
"There are altogether nearly thir-
teen billions of bank deposits in the
United States and total money cir
culation of less than three billions.
Yet the repayment Of all deposits in
solvent banKs is guaranteed by the to
tai volume of all commerce. People
think they exchange goods fol money.
They really exchange goods with mon
ey. The hoarder of money is not a
desirable citizen. "
When 1t is taken into consideration
that only the above comparatively
small amount, in proportion to the
total deposits, Is in circulation under
normal conditions it is easy to realize
the effect produced in time of money
stringency when almost everybody
who has any cash parts with it reject
antly, to say nothing of those who
withdraw and hoard 1t until the trou
ble blows over aad who then, 1t may
be added, are usually the most insist
ent in their demands for high rate
of interest. From the foregoing fig
ures it is also an easy matter to de.
duce how banking institution that
ia sound under ordinary conditions
can he forced to close its doors by the
i'll advisedsaction of it depositors, ow-
ing to baseless rumors or fears that in
many instances are groundless.
As a safeguard against panics many
papers point out That better knowl-
edge of banking would accomplish
much lin this respect. The New York
journal of Commerce, considered an
authority, says that such knowledge |
ought to be more widely diffuied In
the schools, and adds: -
at is extremely rare that the gen
eral deposits, even In an embarrassed |
bank, are not entirety safe IL time il
given for realizing upon resources
without sacrifice. Savings bank |
depositors are apt to be blind to the
fact that their money can not be kept |
on hand ready to be paid out ct any
moment, except enough of 1t to meet
current demands, which will ordinari
ly be provided for from current re-
ceipts. 1t must be invested In inter
est bearing securities or in real estate
loans so as to bring In the revenue
from which interest is paid 20 depos-
itors. ."
That wider knowledge Of banking
methods must ensue to the. public
from the recent financial trouble is
apparent as the press of the entire
n'ry il engaged in throwing light
into every phase of the question of
tinan,e. OF this information much
will be absorbed and result in bet
tor understanding between banker and
depositor.
1t is also certain that notwithstand-
Ing the resulting disaster in many
districts, once Ieadjusted, our tinan-
uial system will be placed on a 9rmer
basis. A plan outlined by VIM. A.
Nash, a;ting chairman of the New
York clearing house, il adopted and
put in use in other cities, should
prove a strong safeguard. Mr.. Nash
Gays:
ave are passing from an era of bad
banking to one of good banking, If
this new era will result in the atiila
tion OF trust companies with the
clearing house on a cash reserve of l5
per cent or more. and the clearing
mouse itself shall arrange for system
of investigation and examination OF
the methods and accounts of trust
companies, such surprises as we have
had shall be very largely guarded
against, thus making the banking cit
uation as strong as 1t is possible to
make it. ....
ave shall recover rapidly from the
present trouble, aud conditions in
banking matters will go forward on a
much stronger basis than ever be-