People's Pilot, Volume 2, Number 51, Rensselaer, Jasper County, 9 June 1893 — THE CLIMAX OF ABSURDITY. [ARTICLE]

THE CLIMAX OF ABSURDITY.

An Attempt to Make the Sherman Stiver Act Responsible for the Present Strln(encj. The first act in the grand drama placed upon the boards by the money power is now being played. It will be remembered that the threat has been freely made that the western and southern banks would refuse banking accommodations to the people in order to manufacture sentiment against silver. It is also charged, and admitted by the American Hanker, that a panic was to be brought about with the same end in view. Well, the panic seems to be with us, at least in its incipient stages, and, with rare poetic justice, one of the first to be caught in the crash proves to be one of the principal instigators of the plot, and one, who more than any other one man, is responsible for present monetary conditions. The ex-secretary of the United States treasury, Hon. Charles Foster, has failed and has made an assignment for the benefit of his creditors.

As a basis for a few very brief remarks we submit to our readers the following clippings, printed in parallel columns, in order that they may see that the failure of some fifty or sixty banking institutions in the United States since May 18, and an alarming increase in mercantile failures, has its counterpart in a country widely separated from this, where there is no silver produced and where is no such thing as a Sherman silver act, and where, moreover, they have always enjoyed the blessings (?) of a single gold standard. THE FOSTER FAILURE AUSTRALIAN FIGURES. Cleveland, 0., May The real proportions £7.—A soecial from Fos- of the linanctal disastorla, 0.. says: "The ters in Australia, due situation here to-day to tbo failure' of large so far as the Poster banking Institutions, failure is concerned may be gathered from presonts but little ihe sworn returns change from last even- made recently to the ing. There is a general British government by feeling of uneosiness tho Australian banks, in all branches of trade, According to these rebut very little excite- turns Australia had at meat noticeable In the the close of 1892 twenty streets this morning "colonial" and six J. B Gormley, the as- ‘"Anglo-ootoniar banks, signee of Mr. Poster, with ueposlts uggregatstates that further In- Ing #774,000,u0i). Of this yestlgatlon shows as- amount *213,020,uu0, or fairs to be In even •29 49 per oent., was Enworso shape than had gllshoupltal. The Ausbeen at first thought, trallnn bunks paid and the liabilities large Interest to dowould reach 48 U,i<H poxltors. and that acand possibly 51.00.i.U00, counts In part for un with the assets muob Increase between IBso less.” and 1>92 of nearly *VJ,ln response to n tele- uoo.uoo in the amount of gram sent to him by an English money on deufternoon paper of this posit. In somo of the city Gov. Postor an- Australian banks tho swered: percentage of English "Thanks for your of-deposits was very large, ferof space. My pres- In eleven Hoxceeded 23 ont mental distress per cent of lho total precludes acceptance of deposits and In live It your kind offer to any exceeded fti per cent extent During the boom period “My failure simply of 1888 and for a couple Illustrates the great of years after It was folly of permitting ono’s possible to earn interself to be in debt be- eston the large deposits yond tho reach of rea-and dividends on sonably quick assets shares, but since the for relief when the recent depression the hour of difficult bor- banks have found it lmrowing comes. When possible to do business people ore in such con- enough tokeepupearndltlon, and tho stabll- ings. The immediate lty of existing financial cause of iheir iroubles, conditions is shaken, however. Is tho panic tho result is inability among depositors at a to borrow, suspension iliuo when it is linpracand failure. iluuble to realize on &)• "Business Is largely sets. Depositors are done with borrowed calling for their cash at money. Confidence in a moment when it is the maintenance of impossible to obtain it sound financial condl- for tho securities in tlons is essential to le- hand without Incurrlug gitlmate lending. That groat loss. Fourteen public confidence has of tho banks referred for somo time been to have failed in ihe shaken in the ability or last few weeks. These capacity of tho govern- had ti2i,72tt,zus of dement to maintain gold posits, of which slßl.payments is evident. (40,855, or over 81 per The natural impulse of cent., were British. If banks in such times is to tho Mercantile bank of strengthen themselves Australia, which susagainst some possible ponded in March, 18J3, and unusual draft be added to the list, Then comes Inability there have been fifteen to borrow. Decllno in failures of Institutions, price, suspension and aggregating ovor *482,• bankrupts follow. O.st.uO i of deposits, some "The country Is pos-*i8?,000.0i)u of which scssed of enormous re- were from Great Britsnurces which are at ala The locking up of the command of tbe nearly half a billion of government, and it money—pending the reshould say and act in baMlltatlon of the terms that will always banks, IP that can be satisfy tho country effected—is a very serlwithout ambiguity or ous matter. But some uncertain words that of iho collapsed congold payments will be cerns havo comparamaintained. lively worthless assets ••CHARLES Poster." and will not bo rehabillThe announcement is tated. In other words, made this morning that depositors will lose a the North Baltimore lurge proportion of Banking Co at that their *421, OiM.OjO of deplace, of which Gov. posiis, to say nothing Poster Is a director, of the losses of stockhad closed its doors holders over and beAssociated Press yond this enormous figure. The consequences of tbl4 great loss are bound to be very considerable, not only In Australia and England, but on the continent of Europe and in the United Slates—Kansas City 'limes.

Both of the above clippings are from the Kansas City Times, the item relating to the Foster failure appearing under the following scare head: “Confidence is Shaken—Ex-Secretary Foster Tells Why He Could not Borrow —What Ills Failure Teaches —The Great Folly of Being Too Far Away From Quick Assets—Lack of Confidence is Bad—lt Causes Banks to Hold Back Against an Unexpected Draft—A Most I’ractical Statement.” Like the Dutchman’s flea, the “gold basis,” when you think you have your thumb upon it, always proves an alibi when you raise your thumb. In the absence of a panic, it is called a “gold basis” and is dilated upon as being the immovable rock upon which is built all sound monetary systems; but the moment there is a run upon a bank, or banks, and a panic ensues, it changes its name from “gold basis” to “confidence” and is found to have folded its tents and 6tolen away. He who ever had any confidence in the “ability of the government to maintain gold payments,” is a blooming idiot. With only one hundred millions of gold and unlimited liabilities, the prospect for any such a consummation is indeed poor. The term “unlimited liabilities” is used advisedly and is none too strong. So long as a volume of paper currency amounting to somewhere about five hundred millions can be presented over and over, again and payment demanded in gold, and interest and dividend paying American investments and securities are held by foreign nations amounting toav.ywbero from six to ten billions, we are powerloss to prevent the constant, steady outflow of gold until the entire stock of the metal in the United States is exhausted. And with the banking institutions the situation is but very little, If any, better. The case stands about thus;

ASSETS Gold and gold certifies t**.. f 300,001009 Paper and silver 530,0u0,000 Debts due from individuals 4,500,000,000 ToUL LIABILITIES Due depositors'. *4,700,000,0<» Comment would be superfluous. The Australian banks were probably in just about the same condition, each dollar in money outside of bank reserves beingloaned out about eight times. Now suppose, what is not at all likely, that the banks could secure possession of all but *50,000,000 of the entire amount of money in circulation. They would then have about *1,180,000.000 with which to pay depositors the sum of *4,700,000,000. The system is all right so long as tha depositors do not ask for their money. Hut if they do ask for it, the first man out of every six or eight gets his money, about one-third in gold, and unless he is willing to buy the property of some one who owes the banks, the banks can collect no money to give the other five or seven. In the meanwhile there is no money in business channels and failures multiply. Gkoroe C. Ward.