Arizona republican., 1912-12-02

empty the banks of money within few months. If the farmers sold thei' crops for CaSn and L. arded the money as fast as it came in, they would have every cent of money in the country long before they had marketed the products of a single season.
 The barbarians of old had some the precious metals, but civilized peoples do not secrete idle hoards of the worlds money. It is a humil- ating fact that in recent years Amer jeans are the only people who have engaged in barbaric struggles to con- vert property into hard cash" The 1907 banking collapse was the result of a barbaric, panic stricken attempt of bank depositOrs to conevrt their credits at the banks into cash. The banks could no more perform this miracle than they could convert base metal into fine gold. They had to stop paying cash.
 Strength of Single Reserve System
 England. France and Germany no longer have money panics, because bank depositors abroad, even in times of financial stress, do not attempt the impOssibliity of converting their wealth into gold. The Bank of Eng land and the whole English bank ] ing system would collapse if de- positors suddenly demanded gold. A sngle-reserve system commands public confidence and prevents the collapse of credit. A many reserve I system to scatter reserves that they are unavailable and insufficient in 1 time of need.
 | While we have a many-reserve sys- l tenn in which every bank holds it's own cash reserves, we have as a result of redopositing, such a con- centration of banking reserves in | New York as to give us the semb- l lance of a single reserve system. ! Banking reserves are kept for emerg- encies. We have in this country an | approach to the single reserve sys- 1 tenn during periods of financial quiet ! But when the emergency arises and 1 reserves are needed to keep the credit machinry going, then our reserve system suddenly disintegrates into a many reserve system. with result ing financial collapse
 The 25.O00 banks of the country make the New York banks the keep CTS of the ultimate banking reserves in fair weather, but when a storm l comes, and these accumulated re- | serves in New York are needed fol the general defence then the 25, ,00( banks tear down the central reserves 1 md each one tries to weather the storm with what little it has snatcheC from the emergency fund The sys- tenn is a panic breeder
 The national banking law. by it. provisions for the redepositing of re serves, maKes New York the holde, | of the ultimate reserves COuntry banks can keep three fifths of thei
 reserves in the form of credits a central reserve city banks. Reserv
 ity banks can keep half their re
 -rVes in the same form. In othe
 words, country bank, with $50, 900 idle reserves. can put s18,000 O
 these reserves at work by depOsitin
 them with reserve bank. Natural
 the country banks and reserve cit
 banks keep no more idle money i
 their vaults than is absolutely re
 quired. The idle money drifts to tn
 central reserve banks
 Our Reserve System ColIapses | As a result of this system of re 2 depositing reserves. the national ban
 statements show reserves greatly i
 excess of actual cash holdings. Re
 serves of $500. 100000 are now show |
 The country banks report reserve om more than $5O0,0O0,O ,OO0 but mol
 than half of these reserves are
 the form of credits at reserve bank
 In the same way the reserve cit
 banks show reserves of nearly $500
 000,OOO, but only about half of thes , are cash in hand. The rest are creC
 its at central reserve banks.
 : While the official returns of the ns z tional banks show reserves of 21 D, cent against deposit liabilities. tf actual cash reserves are less than
 per cent.
 This system of redepositing r,
 serves, without any foundation of G great public singlereserve uphodir :. the whole structure of credit. co o | lapSeS whenever the county banl
 and reserve banks, in time of pan f attempt to convert their credits n the central reserve banks (New Tor c Chicago, and St. Louis-but in u s end, New York;, our system fail ', The New York national banks. u
 holders of the ultimate reserve Q l carry net deposits for other banl
 of $5O0,000,000, and any general a
 tempt on the part of interior bank c in a money panic, to draw cas n against these deposits, must inevi f ably result in disaster.
 No Reserve Laws in Other Countri a We have stringent cash reser' | laws, not only for all national bank IF but for many state banks. No oth s banking country requires it's banl
 to keep cash reserves. But we ha'
 money panics and they do not q times of stress, our banks stop pa a ing cash and stop loaning, intensif
 ing distress. In other countries t n banks meet financial storms by pa n. ing cash freely and loaning freely. rtl In other banking countries, with t It single-reserve system, where mon it panics are unknown, and where the