Bisbee daily review. [volume] (Bisbee, Ariz.) 1901-1971, 1913-01-26
PAN|CS HIT THE
WAGE FARMERS
They And Their Families Are
the First 70 Feel Pinch of
Want WheI Money
Crisis Comes
AN OBJECT LESSON

To say that the man who viii bene-
fit most from a wise reform OF our
-anking system is the man without a
bank account sounds paradoxical, but
believe il is unquestionahly true. The
man without savings or other accumu-
lated resources has nothing 10 depend
on but his employment 81 he is dis
employed, then his family is certain
20 feel the pinch OF want.
Ours Is the only civilized country
which suffers from money panics. oar
banking sys sem is a panic-breeder.
And the brunt of the vast misery and
hardship which panics bring fall upon
the wage Garner. II was so in 1907.
II has been so in every panic We have
known
When such crisis sweeps over the
land. tie banker receives early warn
ing Under our unscienufic scattered
1 reserve system, il is imperative that
he protect his reserves. He knows
that the time is coming when deposi-
tors will be clamoring for ehsh. So he
calls in all outstanding loans he can,
and selfishly grasps Tor gold. Il is
not his fault that he must do this
il is the fault OF the system under
which he conducts his operations.
Praise should be accorded 10 our Ma
ton bankers for the fact THAI the
notes they issue have always been re-
/ deemabie at their face value, and that
they have suffered but few disastrous
failures. But owing to the defective
system under which they carry on
their work. they have been derelict
/ tiIia and again 10 their larger duty
which lies in their obligation TO main
! tain such conditions that wages will
be promptly paid and opportunities for
employment generally steady AS the
servant Of the ublic, they should
maintain such conditions; and. since
We have excellent bankers. they would
undoubtedly maintain them were il
! possible.
Effect of a Panic
Our National bank act requires thIt
the banks operating under it maintain
a certain proportion OF cash reserves
to their Liabilities. When the resery aS
fan to a certain point, they must stop
loaning That is what happens when
a crisis comes. The consequence is
that the employer manufacturer
let US say-finds that he cannot OBJ
tain accommodation 10 carry on his
business. He may have prime securi-
! ty TO Ger Tor loan. His business
may be furnishing, and he may be
eager 10 continue it, But II he cannot
obtain capital, he must cuTtail il or
shut down his plant altogether. His
largest cash outlay is pretty certain
TO he his payroll. SO he sets about 10
! reduce that He may do Il By laying
off part OF his force, and he may fur
I Their retrench by cutting wages. He
may, as so many manufacturers did
in 1901, close his plant.
Now this occasions the manufacturer
certain temporary inconvenience
nothing more He is losing interest
on the money invested in his plant
and the profits from his business. But
he has an extended credit with sradet-
men and life goes on with him pretty
much as it did before the crisis came
How different is the situation Tor
his employees Even If they have sn
/ account at a savings bank. they are as
likely as not TO be told they can
not get the cash. The banks may be
forced 70 suspend specie payments.
And. granting that the cash is obtain
able, the wage earner's slender sa =
ings are soon dissipated when there Is
no weekly pay check 10 supplement
them. So finding himself with ais
earning capacity annihilated, through
no fault OF his own, the workman
faces priyation, perhaps actual hun
ger.