Every evening, Wilmington daily commercial., 1920-04-26
DEMAND FOR MONEY
MORE THAN SUPPLY
ere People Are Wanting to Bor-
row Than Have it to Lend;
Hence Rising Interest.
BY Frederic ]. Haskin. :

i1lfifu tfi3ifN IiHN Dli iliT fttbN'i
or on his farm that amounts TO about half
and sometimes twosthirds of its value.
| The mortgage has been riding along easily
| for FIVE years or 20 years, with no other
| inconvenience than the intermittent neces-
sity for paying the interest, The budget
has been adjusted to taking care OF The
added expense.
| But 20 the multitlides who have aceus-
toned themselves to carrying this load OF
debt there is likely soon to- come an unex-
pected shock. Their mortgages will be
coming due from time TO time. Most of
| these mortgages were made for terms OF
three or five years. In the days before
| the war they were renewed almost auto
| rnatically when their time had run. There
was little To do other than take mother
around 20 the notary to sign the papers.
| The mortgage, like the brook, ran on for
ever
But when the mortgage fails due next
| time. new situation will be presented.
The holder of il may merely say that the
| interest rate must be increased from SIX to
| eight per cent. Where the mortgage was
| formerly assigned $500 IN the family
| budget, it must be assigned Si00. The
home owner, when thus informed, will
probablv run around excitcdly for few
y
| There are thousands Of them in the
| United States registering excitement from
this cause today. Some OF them may lind
money at the old rate, but not many.
Most OF them will absorb bit OF iinancial
atmosphere in their quest and return
hastily to sign up at the advanced rate
Or perhaps the man IN business has a
loan az his bank, secured by his note.
H. NAV be for thousand dollars or Tor
ten thousand lie is using this money ~
his business, or is speculating with It, or
has borrowed il TO waste in extravagances.
HARD TO RENEW.
He is very much surprised, one morn
ing. wnen he gets a notice from the bank
asking him to come IN and iq,Iidate this
loan. He wonders what has happened
that his credit is no longer good at the
bank. He frantically and introspectively
looks himself over for sins Of omission or
commission. lie tifnidly goes down to the
bank and asks why he has to pay up. The
bank. tix months ago, solicited his blsi-
ness Why the change Of 'front.'
He is told that the money market -
tight. Call money has been up to fifteen.
Foilr-and-a-pIarters are below ninety.
The country il suffering from imitation
He does not know what all this talk
means. but IL humiliated by his very ~
norance. goes out and digs up the money,
If he can, and pays the note.
But the fact u that the owners Of this
money have found that they can make It
earn more than il has been earning. They
can put il out Mt higher rate Of interest
than money has been drawing during the
past few decades They have been hiring
out this chattel which they possess for SIX
dollars, where they might be getting
eight.
DEMAND FoR MONEY GROWS.
Their climbing interest rates are due TO
the fact that the demand for money y
greater than the supply. More people are
wanting TO borrow money than have
money to loan. The borrowers are bidding
against each other and running the price
The Treasury Department is much
agitated over this situation. II explains
Il hv saving that the world formed the
habit. during the war Of living beyond It's
income. The gospel of pouring out with
out stint. DESTROYING, lending, spending,
was preached increasingly Tor years.
Lavish borrowing became a national
necessity. national virtue. The whole
world came TO spend much faster than It
produced.
In the lives OF families there are some
times crises. Typhoid fever may run
through a poor family and REQUIRE tIn-
usual expenditures for doctor bills, medi-
cines. nurses. The family viii spend at a
rate that is entirely beyond It's income:
One often wonders that the finances Of
such family may 90 so Tar
But the crisis is usually brief and when It
Il haat~ "a modest
basis of living It may even deny itself to
retrieve its losses.
The countries of Europe that were in
the war. financed themselves beyond the
noint where it would have seemed pos
sible. They borrowed from their citizens,
from America, from all the world. The
United States spent prodigious sums, bor-
rowed from its people preached the gospel
OF pouring out its wealth.
Thus it performed the financial miracle,
but il created a madness for spending, tor
borrowing. The nations did not retrench
when the orgy was over as did the family
with the typhoid They had grown accus-
toned to waste, to pouring out, 70 borrow
ing. The people of the nations, and ar
ticularly OF the United States, are still
indulging in a profligacy never before
known.
LOANS BASED on WEALTH.
The Treasury points out the basic fact
that loans must be made on existing
wealth. So long as the wealth is greater
than the loans. the security is adequate, is
made on a sound basis. When there is not
wealth beyond the value of the loans issu-
ed against it, those loans depreciate
II man has a coal mine worth a mil
lion dollars, he may borrow amounts less
than million at the current rate of inter-
est and the paper he issues will remain at
par II he issues two million dollars worth
of stock against his mine, his stock viii go
down to fifty No matter how much stock
he issues, he cannot make IT worth more
than-the wealth back of It.
So. when the borrowings of q country
are greater than its wealth available TO
pay them, its currency depreciates.
France, Germany, and Italy have bor-
rowed beyond the amount warranted BY
their production If they issued twice as
much paper it would so depreciate as to
have the same value as the present
an,r,,n4 Tho rarpdnefi0 0f wealth IS the