Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1914-02-20
new CURRENCY system
Why It Was Necessary and How It
Works.
EXPLANATION FOR ORDINARY READERS
Bank for Banks Makes Panics. In Time
of Peace Very Improbable if Not Inn
possibIe-Affeets Every Kind Of Bus
mess, Laborers, Professional Men
and Evervbodv.

possibIe-Affeets Every Kind OF Bus
iness, Lahorers, Professional Men
and Everybody.
/ IA. Piatt Andrew, Former Assistant
Secretary of the Treasury in the Bos-
ton Transcript.
Despite the vast amount Of discussion
devoted to "the currency" during recent
years, few people have more than re-
mote idea as to what it has all been
about, and except among bankers there
are apparently very few who have any
conception Of the meaning and impor-
tance Of the Federal Reserve Act. 1t is
common impression that the whole
subject is Of primary concern only to
bankers, and only comprehensive by
them. AS a matter of fact, there has
probably been no subject Of legislation
before the country since the Civil war
of more general consequence-to mer'
chants, manufacturers, business and
professional men, employees and labor
ers Of whatever sort; and 1t Is also a
fact that the general character Of the
problem and it's solution allows Of COM
paratively simple statement
The Truth in a Nutshell.
Banking legislation has been needed
for five principal objects, which may be
named as follows, inversely in the or
der Of their Importance: First, legisla-
ton has been needed in order to pro-
vide banking facilities for handling our
foreign trade with which we have been
utterly unprovided until now. Rank
ing profits accruing from such trade
hitherto have gone to European bank
ers and our exporters and importers
have been handicapped by the lack Of
familiar domestic facilities.
Second, legislation has been needed
to provide means for handling the gov
ernment funds so that when the rove
nues of the Federal treasury happen to
be redundant, money will be neither
withdrawn from the banks and the
general circulation nor deposited invi-
diously in selected institutions. Since
1916 we have followed the medieval
method Of boarding our surplus reve-
nues in treasury vaults or the objec-
tionable practice of depositing por-
ton of it in favored banks.
Third, legislation has been needed to
divert the banking reserves Of the
country from speculative usein the
stock market where they have tended
in slack intervals to accumulate and
from which their withdrawal has fire.
quently caused great tension. Our
banking laws have tended to concen-
trate too large a proportion Of our
banking reserves in New York city in
loans in the Stock Exchange with the
result that money rates and security
prices have fiuctuated more widely
here than in any other country.
Fourth, legislation has been needed
to mitigate the periodical stringencies
which have hampered the agricultural
cial centres in crop-moving seasons.
And fifth, and above all in impor-
tance, legislation has been needed to
prevent the recurrence Of general pam
les such as have left the industry, COM
merce and credit Of the country pros
trate at intermittent intervals in the
past. These are the five principal OBJ
jects which banking legislation was in
tended to meet, but Of them all the last
is by far the most important. Every
other object Of banking legislation is
| subordinate in significance to the great
crucial need Of extinguishing general
financial panics, and upon this we may
concentrate our attention.
A Typical Panic-1e07.
In order to understand why banking
legislation concerns every man, woman
and child in the country, we have only
to recall what happened in this country
six years ago last October. At that
time bountiful crops, vastly exceeding
those Of any other country in the
world, were being brought to market.
There had been no war or thought Of
war in which we were interested. There
was not the remotest hint Of any polit-
ical revolution and no apprehension
even Of a change Of the party in pow
er. There were no disruptive labor
| troubles. There was no conflagration,
| crop failure or natural catastrophe.
| There was nothing to cause apprehen-
sion in the industrial. political or ply
sical events Of the time Yet, suddenly,
and almost without warning, upon the
failure of large trust company in New
| York, two-thirds Of the twenty-five
thousand banks in the country ceased
to extend credit to their customers, re-
fused to pay their depositors in cash
and boarded such money as they had.
| What was the result? During a season
when nature was offering plentiful har-
vests, farmers and dealers in produce
| crops and farm products had to be sold
under pressure and frequently at a
great loss. Manufacturing plants which
had hitherto been working over time
were for similar reason obliged to
force collections, reduce their working
force and lessened their output Jobbers
everywhere demanded immediate pay
ments and retailers called for settle
ment from their customers. Merchan-
disc, machinery and raw materials had
to be sacrificed and all kinds Of prop
erty, even real estate, shrank to a frac-
ton of it's former value. Railroads,
which had been running to their ut
most capacity, suddenly found them
selves burdened with idle cars. Thous-
ands of firms went into bankruptcy,
hundreds Of thousands Of employees
| joined the ranks Of the unemployed
and the trade Of the country came to
a standstill. Business conditions be-
came so desperate in number Of wes-
ern states that the governors declared
succession Of legal holidays in order
to postpone the payment Of debts. The
governor of Nevada declared such hol-
idays for eleven successive days. The
governor of Oregon continued to de-
clare them for forty-eight days, and in
California they were declared without
| interruption for fifty-one days, thus