The Goldfield news and weekly tribune. [volume] (Goldfield, Nev.) 1911-1947, 1915-08-28
Idle Money In United States

Oakland Tribune: The following dispatch was sent
out from Washington, ID. c., under yesterdays date:
Comptroller of the Currency Williams announc-
ed that the present unemployed loaning capacity OF
national banks and reserve banks was sufficient to
finance at market value the entire cotton crop and halt,
il not all, of the tobacco and wheat crops, and to con-
servatively justify an expansion OF credit OF two or
three billion dollars.
This report discloses an accumulation of idle capital
unprecedented in the history of the country. A few days
ago we recorded the fact that the gold reserve OF the
&C untry had reached the two-billion mark, a new record.
Despite the great surplus of money there is, with the ex-
ccption of a few favored lines, dizziness and notable in
activity in the business and industrial life of the country
We must get rid of all notions that it is a psychologist con-
Iition. The bankers associations, the national chamber
of commerce, the federal reserve board organizations
that do business upon facts and realities report subnor-
nal conditions. The big business men and the little bust
ness men everywhere feel the effect.
What are the causes of this unbalanced situation?
The banks are full of money and yet no new manutactur-
ing, building, agricultural or commercial undertakings are
being launched. No money is being loaned for longer
terms than four to six months = preferably for shorter
terms except at %exorbitant rates. The European war
accounts for much of the caution and prolonged waiting
of the banking and financial interests, but it by no means
is the sole cause. War credits afford a profitable, and,
under present conditions a comparatively safe field, for in
vestments, but up to the present they have absorbed but a
small amount of Americas surplus capital.
The loans so far made to some of the beligerents,
England, France, Italy, Germany and Canada, have not
exceeded the ability of the syndicate in New York repre-
senting most of the entente allies to take them up within
their own circle. The profits On these loans are big. They
have been issued at or less than par, bearing five and five
and One-halt per cent interest. Assuming that q normal
rate of exchange in Europe ultimately will be restored,
profits have been made on exchange. The English pound
Sc rling is now worth fifteen cents less than it was when
war was declared. Further, the loaning syndicate is also
spending the money loaned for supplies for the European
powers, for which it receives a commission. The sum of
all the profits on money loaned to warning nations, deriv-
ed through these several processes, probably amounts to
from ten to fifteen per cent.
However, the real test of the financial credit of Europe
in the United States is yet to come. Final deliveries on the
large orders of munitions and wal supplies other than food
will beO1n within the next few weeks and steadily GROW IN
til all the orders have been filled. The extent of the war
trade will show sharply in these final payments. New York
financiers are urging that Great Britain and her allies
place in this country credits aggregating $5oO,Ooo,Ooo to
meet their coming obligations. Europe will have to Dor
row and the chances are she will borrow in America,
either offering as security new government issues or
Some of the American securities still held abroad. Then
will the American bankers begin to take profits and make
l,ng-term investments bearing high interest rates. 1t is
the time against which many of them have been holding
.teir surplus money, refusing to invest in domestic COM
mercial and business enterprises.
The second powerful influence upon the bankers to
hold on to surplus is the unfavorable political situation in
this country. The policies to which the Wilson admin
istration is pledged are in the main unacceptable to bust
ness, and business does not believe it can survive them I'm
der normal peace conditions, when the European nations
are again in the export business. Knowing the hazards
which confront business, the bankers naturally prefer to
invest in safer foreign securities.
-O-
ON Drcen1her J6 the Ninino and Meta111roica1 So