The Norfolk weekly news-journal. (Norfolk, Neb.) 1900-19??, 1908-04-24

system, and is It possible to avert OF
at least control them?
There are people who say that our
currency system had nothing to do
with IT, That panic was due and
bound TO occur at about the time II
came, because we had been prosperous
as long as any people can stand pros.
perity.
On the other hand, what happened
last fall was precisely what students
and critics of our monetary system
have always predicted. They have al.
ways insisted that we needed an ele.
ment of elasticity in our monetary sys-
TEN, and that without 1t we would be
absolutely helpless in an emergency.
Credit in Times Of Crises.
That seems to me the vital point in
the question and one completely illus
trated by our experience last fall One
lesson seems to stand out distinctly
from that experience; that there ought
to be some means by which the abun-
dant resources of this country may be
brought to the relief Of such a situa-
ton as we had last fall. At some price
firms of unquestioned credit should be
able to command money. That Is the
test of the efficiency of a currency
system abroad. system which does
not meet this test Is wanting and con-
demned
We all understand that there is
natural recurrence of periods Of pros
perity and depression.
Granting that these fluctuations In
trade are inevitable, 1t remains clear
that they put an additional strain on
our monetary system, which ought to
be reckoned with and provided for IL
possible. II makes ii all the more I'm
portant that there shall be reserve
power somewhere to handle any sit
uation that may possibly arise, and
that our banking system itself should
not break down at such time and add
to the general confusion and wreck.
Now there is no better security for
loans than bills of lading for insured
cargoes Of wheat on their way to the
worlds markets, and | tell you their
is something wrong with your currency
system when money cannot be had to
finance a transaction like that. No
matter what the conditions in Wall
street may be, no matter what the sins
of Wall street spectators may be,
there ought to be way to move that
wheat Independent of Wall street. The
wheat itself can be made to provide
a currency.
Rightly Defect of Our system.
The fundamental defect in our cur
rency system is its rigidity. The vol
ume of currency instead of being re-
sponsive to such demands as these, is
practically fixed in amount; it is not
responsive to business. We have prac-
tically the same amount all the year
round, although there is great varia-
ton in the amount of business to be
handled in the different seasons Of the
year. In the early months of each
year, and in the summer when trade is
quiet, money accumulates in the banks
and drifts to the cities to earn some
thing. Money is capital, and its own
ers never like to have it idle. If it
cannot find employment here, 1t is
likely to go abroad in the form of gold
exports. One way and another it be-
comes engaged and tied up, and then
when the busy fall season comes, the
crops are to be handled and trade all
over the country revives, this money
must be recalled, disengaged from its
temporary employment, taken away
from the people who may be using it
and re-distributed over the country.
This redistribution always creates
more or less disturbance.
A parallel may also be drawn be-
tween the supply of money and the
supply of railroad cars. Both are an
essential factor in the exchanges. For
several years there has been a chronic
shortage of freight cars: now it is said
there are hundreds of thousands Of
them idle on the side-tracks, represent
ing an investment of three hundred or
four hundred millions of dollars.
In order to have cars enough in
the busy seasons the roads must
have great many idle cars in other
seasons, and of course the interest
on the idle investment must be taxed
up to the traffic. Our currency in this
country all represents capital and with
our system of fixed supply, in order
to have an abundance in the fall, there
must be idle money through the rest
Of the year, and nobody will carry
money idle for eight months in the
year in order to use it in the other
four.
The Stock Exchange Question.
1t is common to criticise bankers in
New York and elsewhere for loaning
money on stock exchange collateral,
or as the offense is commonly stated,
for loaning money to stock gamblers.
Unquestionably it is unfortunate that
so much of the banking reserves of
the country are employed in this class
Of loans. But banking practices are
to great extent fixed by competition
in the business. There is strife every
where for deposits. with the result
that bankers pay too much interest
on them to allow them to lie idle. The
New York Stock Exchange affords a
very broad market both for the sale
of securities and the lending of money.
All the world buys and sells and lends
there, and it is practically the only
call money market in this country.
Il