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largely in the West and Southeast, were the only currency that was available for weekly payrolls and cash purchases by wage earners. (See pp. 352 and 353.)

Miscellaneous Expedients.

In addition to these well defined classes, there were others so varied that but a suggestion of them can be made here-negotiable certificates of deposit; ninetyday and other short time paper in currency denominations, with and without interest; bond certificates; grain purchase notes; credit and corporation store orders; improvement fund orders; teachers' warrants; shingle scrip; specimens of each of which are given below, and which are noteworthy here as the adaptation to use for general circulation, by issue in small currency denominations, of paper devised for other and widely differing purposes. (See pp. 354, 355 and 356.)

The foregoing will, I trust, have indicated somewhat of the resourceful vigor with which we met a sudden demand. And the result was as creditable as was the promptness with which our people arose to the occasion.

THE COURSE OF NATIONAL BANK CURRENCY.

But the performances of the National banking system turned tragedy into farce. The table which I now quote is itself a conclusive exposure:

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* Including those temporarily in the United States Treasury and subtreasuries.

** After $50,000,000 loan.

*** After second $50,000,000 loan.

+ Deficit.

June 1, 1893, there was a surplus of about $21,000,000 in excess of legal reserve lying in New York banks awaiting investment, and the amount of National bank currency then outstanding was about $177,000,000. During that month the surplus reserve in the New York banks decreased to $1,250,000, while the National bank notes outstanding increased to $178,700,000. August 1, the bank funds were drained $14,000,000 below their legal reserve; the demand for money to move the crops was increasing, the stress was almost a panic; yet the National bank currency had increased but $5,000,000. September 1, the situation was improving, and the deficit had fallen to $1,500,000; and, now that it was less needed, the National bank note circulation began to expand rapidly and stood at $199,000,000.

October 1, the deficit had turned to an embarrassing surplus of $28,000,000; but the National bank currency expansion was as hard to stop as it had been to start, and aggravated the plethora by an increase of $10,000,000 during September-on October 1 standing at $208,700,000. November 1, the idle funds had increased to over $50,000,000, but the National bank issues were still expanding, standing on that date at $209,300,000. December 1, the unused surplus had risen to $76,000,000, but the National bank circulation had contracted less than $500,000. January 1, 1894, the banks had $80,000,000 more than anybody wanted, but the National bank issues had remained stationary for three months at above $208,000,000. By February 1, the surplus seeking employment had risen to $110,000,000, while the National bank note circulation was still about $208,000,000; during February the $50,000,000 loan to the Treasury was floated, the most of which was taken from this surplus; yet it stood on March 1 at $76,000,000; on April 1, at $81,000,000; on May 1, at $83,000,000, and meanwhile the National bank currency had remained stationary at about $208,000,000.

In June, 1893, therefore, when there was the greatest demand that this country had ever seen for currency, the National bank issues constituted a smaller percentage of our total circulation than at any other time except during the preceding

year; the almost frenzied efforts of the National banks were utterly futile in bringing material assistance until after the crisis had passed; and the result of their attempt to aid us has been to keep an increased volume of National bank currency outstanding, while the amount of unemployed currency was greater than it had ever been before, at the highest point it has reached for five years. And this is not

all. The law permits but $3,000,000 contraction monthly in any event. It will not be possible, therefore, to get back to a normal basis before the annual stringency due next September.

RESULTS.

Throughout New England, so generally that it may be deemed to have characterized its manufacturing centers; in so many portions of the South that it might be considered general there; in the West and in the Northwest; sporadically in the Middle States, the necessity for local currency developed at once a supply of it; and, where this was not the case, from city after city comes the word of how unfortunate were those who, not assisted by the enterprise of others, had none of their own to fall back upon. There is one general exception to be made-an exception which, however, proves the rule. It is this:

To the precise extent that-either by the use of clearing house certificates within the law, or by the violation of law in continuing discounts when their reserves were depleted-the banks of any section thus met the emergency, their customers and the community dependent upon them were relieved from the necessity which so generally came upon others of providing a special local currency. It was the New York banks that issued the greatest amount of clearing house certificates, and at the same time continued to assist their customers, even while their reserves were depleted; and, therefore, it was in the neighborhood of New York and her own great manufacturing establishments, in those of Newark, of Brooklyn, and of Long Island City, that it was unnecessary to look further for a supply of the currency they needed. The same was the case in Philadelphia, Chicago, Boston and their neighborhoods, in each of which cases either clearing house certificates, or loans of clearing house credits, enabled strong banks to aid weak ones. But in every case where the associated banks of a section were not in a position to supply the lack of currency or obviate the necessity of its use, individuals and corporations were compelled to do this.

In this, way after the machinery so carefully adjusted by Government had utterly failed to work, the business common sense of our people readjusted its finances; and in every part of the land business started up again, manufacture continued, the laborer received his hire, and the merchant disposed of his goods. In not an instance, so far as I have been able to learn, did any community find any trouble in the use of what, in the absence of all restrictive laws, would have beenand what in defiance of them actually was-a perfectly natural bank-note currency. The whole American people promptly accepted-each locality upon its knowledge of the conditions there-the paper of individuals and institutions. And as a result of this experience-most widespread, and had under conditions least favorable to security other than the integrity of those who issued the notes, and the intelligence of those who were asked to accept them-there was not a single dollar lost. Such was the honorable record of the emergency currency of 1893.

HOW RELIEF CAME.

By September 1st, 1893, the passage by the House of the repeal of the purchasing clause of the Sherman Act had both stopped inflation and quieted the worst apprehensions; and to $30,000,000 additional national bank currency and the volume of the emergency currency noted, which can be but vaguely estimated at $80,000,000, was already being added the $40,000,000 of gold which had been purchased in Europe for import hither. The panic collapsed as suddenly as it had been blown up; and, with dull business conditions for a year to come, the currency proved excessive.

With accession of confidence among the masses the petty hoards were returned to the savings banks or paid out to merchants, and by them used to swell their bank credits; so that from $1,450,000,000 in October 1, 1893, the aggregate deposits in National banks alone rose to $1,529,000,000, December 19, 1894; $1,586,000,000, February 2, 1894; $1,671,000,000, May 4, 1894; $1,678,000,000, July 18, 1894, and $1,728,000,000, October 2, 1894. The emergency currency gave no trouble. By the process of natural redemption it disappeared so promptly that before the end of the year specimens became curiosities.

Such was the crisis of 1893, a situation brought about by the wanton interference of Goverment with business not its own; aggravated by legislation which had to be broken before the people could help themselves; relieved by enterprise overriding and evading restrictive law; and turned into a theme for the gayety of nations by the grotesque exhibition thus afforded of how depraved was the elaborate bank note currency system, upon which had been lavished so much of thankless labor.

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sited with this Committee securities in accordance with the proceedings of a Meeting Association, held August 7th, 1893, upon which this Certificate is issued. This Certificats will be received in payment of balances at the Clearing House for the sum of Ten Thousand Dollars, from any Member of the Clearing House Association.

Ten Thousand boilers.

On the render of this Cero&cate by the depositing Bank above named, the Committee will endorse the amount as a pag ment on the obligation of said Bank, beld by them, and surrender

• proportionate share of the collateral securities beld therefor

$10,000.

TEN THOUSAND DOLLARS.)

Committee.

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This Certifies, That the

has deposited with this Committee securities in accordance with the proceedings of a meeting of the Association, held June 26, 1893, upon which this Certificat is issued. This Certificate will be received in payment of balances at the Clearing House, for the sum of Ten Thousand Dollars, from any member of the Clearing House Asso

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LOAN CERTIFICATE.

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HIS CERTIFIES, that the

Philadelphia,

has deposited with this Committee, securities in accordance with the agreement of a Meeting of Bank Officers, held September 24, 1873. This Certificate will be received during the continuance of said agreement and of any renewals of the same, in payment of balances at the Clearing House, for the sum of FIVE THOUSAND DOLLARS, only from a Member of the Clearing House Association, to whom the same may have been issued, or to whom it may be endorsed by the Manager of the Clearing House.

On the surrender of this Certificate by the Depositing Book above med,

the Committee will endorse the amount as a payment on the obligation of sald Bank held by them, and surrender a proportionate amount of the collateral scorkies, carept in case of defauh on the part of aid Bank in to transactions through the "Charing Home Asociation of Philadelphia."

COMMITTE

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No. 498

Five Thousand Dollars.

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Bankers Association of Buffalo.

This Certifies that the

Buffalo, NY

has deposited with this Committee securities in accordance with the proceedings of a Meeting of the Association held January 22nd, 1890, upon which this Certificate is issued. This Certificate will be received in payment of balances at the Clearing House for the sum of Five Thousand Dollars from any Member of the Clearing House Association.

On the surrender of this Certificate by the Depositing Bank above named the Committee will endorse the amount as a payment on the obligation of said Bank held by them, and surrender a proportionate share of the collateral securi ties held therefor.

BALTIMORE CLEARING HOUER.

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has deposited

with the Bommelles appointed by the Aunciated Banks on.
Approved Secuistics, which are held as a Special Deposit to uscare the redemption of this
Certificate in compliance with resolations adopted by said Banks on the day abous named.
This Certificate will be recarved for the sum of SIX THOUSAND DOLLARS, wither!
andorsement, in colllement of balances resulting from the rechanges between the Banks,
will hear interest at the rate of six per cent. per annum until redeemed, and wild bo
negotiable only between the Aneriated Banks.

COMMITTEE

$6000.

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New Orleans Clearing House Association.

This Certifies, That the

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has deposited with the Committee, Securities in accordance with the proceedings of a meeting of the Association, held

upon which THIS CERTIFICATE

is issued. This Certificate will be received in payment of balances resulting from the exchanges at the Clearing House, for the sum of...

from any member of the CLEARING HOUSE ASSOCIATION.

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$10.00.

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Of the Associated Banks, of Danville, Da.

Danville, Virginia, August 14th, 1893.

Any of the Banks, whose names are printed below, will pay to bearer, on demand, TEN DOLLARS, ninety days after the above date, with interest at the rate of 6 per cent. per annum.

THIS CERTIFICATE is negotiable and payable at any of these Banks.

Interest will cease 90 days from the above named date. The payment of this certificate is secured by the combined capital of these Banks; also by collateral worth one third more than all the certificates issued.

The following 6 Banks are formally bound for the payment of this paper: Planters National Bank; Commercial Bank; Merchants Bank; Danville Savings Bank Lean and Improvement Co.; Border Grange Bank; Ciltsens Savings Bank.

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