Bismarck daily tribune. [volume] (Bismarck, Dakota [N.D.]) 1881-1916, 1908-07-03

We must answer no, and for this
reason: Our currency problem has
come to be an agricultural one, the
the cities being already supplied
with a currency of maximum elast-
lefty, viz: deposits. The need for
currency is urgent in the rural dis
tricts where capital is scarce, interest
high, and deposit currency not high
ily developed. Funds are needed to
pay for farm labor, especially at har-
vest and crop moving time. Gould
banks furnish notes instead of depos-
its at this time, "the necessity for
withdrawal currency from the east
would be avoided, as would also the
return movement which creates a ple-
thora Of loanable funds in New York,
unduly stimulating speculation and
giving a wrong impression as to the
pleantifulness Of capital and credit. /"
1t is very evident that in the light
of the experience of our neighbors
and in the light of our own exper-
fence, our present form of bank cur
rency contains some radical defects. 4
1T is inadquate in ordinary times. It
fails utterly in a panic.
The 1907 Panic.
We don't seem to know all about
panics yet, although experience has
been teaching us many sharp les
son. All our panics have been bank
panics, in the sense that they were
directly related to banks. Money has
been demanded Of the banks, which
they were able to supply only by
greatly contracting commercial cred
it.
We have just noted that foreign
countries use bank note credit in
stead Of bank book credit. How
does this work in time Of panic?
To borrow a figure of President Rob
erts Of Chicago, there are two ways
OF stopping runaway horse app
preaching a stone wall. We can
head him up the hill thus letting him
slow down, or we can run him into
the stone wall with smash-up. our
banks ban use the smash-up policy. They
loan on and on at the usual rates
TIL the crash comes! Not SO the for
eign banks. With gradually rising
rate the business man will hold in
check any inclination to enlarge
his liabilities. Make an effort to re.
duce them and he will have time to
do all this this. Thus foreign banks
control the situation. Thus the 1907
panic caused raising Of the dis
count rate abroad per cent In Eng
land, IL per cent In Germany, but
no bank failures I'd. speak Of. with
us seventy banks went down in three
months, and some Of our strongest
banks, too. Ours was truly the
snash-up, save-the-wreckage meth
90. The fact that SO MANY Of these
banks are already reopened and do
ing business Is proof that it was not
their fault that they failed, but the
fault OF the whole condemned bank
ing system. 81
The panic OF 1907 has some lessons
to teach. What were the causes of
this panic? without Affecting anv
originality, 1 may give the following
catalogue OF causes all bearing On
the panic:
]. Under world-causes. The Boer
war, the japanese war, the Spanish
American q war, and the san Fran
CISCO earthquake. This wiped out
So .oo0. 0oo. 900 Of capital.
2. General causes Depreciation
OF gold, due to increased production
and consequent rise Of prices, and en-
larged value Of credit. Gold produc-
ton now $4sO, oOO, 600 per year fav-
ing, quadrupled In the last few wears
Bad currency.
Credit transferred from 1iuuid can.
ital to fixed capital.
Too many "undigested securities,.
on the market.
Speculation and peculation. Great
corporation fines by courts.
oyerdeYelopment Of trust com
spanles, with high interest and lou
reserves. ="
Continued on page 8,