University of Oregon monthly., February 01, 1908, Image 5

8
U niversity of O regon M onthly
return to the normal conditions of trade. It is the function of this
secondary and auxiliary medium of exchange, not only, to economize
the use of money, but to give it a measure of flexibility.
Though the use, of checks, drafts and .other credit devices has
increased. enormously in recent :yearg they have (by no mean? dis­
placed money altogether. It is estimated that about $150,000,000,000
worth of checks and drafts annually pass into and through the
clearing houses and banks of the United States. À glance at these
figures might lead us to conclude that the extensive use of money
substitutes, leaves little room for the circulation of coin or bank
notes. We must not forget, however, that fully one billion dollars
in actual money circulate outside the banks. Nor i s . i t 'at all im­
probable that each piece of this outside circulation changes hands
on an average as many as three times a week; which would enable
it to perform a monetary service equal to that of checks, drafts and
other,¡credit devices combined.. So long, then, as half ' the .field re­
mains for the employment of money, the sphere of its. use is liable
to expansion and contraction. Any enlargement of -the yolume of
business . transactions somewhat foreign tQjthe use of deposit cur­
rency, checks, drafts, etc., calls for actual moneys and, under legisla­
tive requirements for the maintenance df minimum cash reserves,
compels a contraction in the amount of credit transactions that
can be based on the residue.
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4.
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It is a well known fact that there are “tides in the.demand for
tangible money for actual use” and the circumstance that .is most
largely responsible for this, recurring need for additional specie or
bank notçs is the necessity for .harvesting and marketing the crops
within such a. short space of time. This results not only in a con­
gestion and tem porary. multiplication of transactions, but also in
an increase in the kind of payments for which checks and drafts
are little used. The annual crop of 14,000,000 Kales of cottón,75Ó,-
000,000 bushels of wheat and 3,000,000,000 bushels of corn must be
marketed and paid for within two or three months after the harvest
season. Payments for agricultural produce are as a rule made by
means of check or draft on a cotton or grain-buying center, but
the majority of farmers and planters belong to the non-banking
classes. The draft is cashed at the -store dr bank, the season’s-bills
are settled, and the balance is taken in-..coin which is held in tem­
porary hoard and gradually paid out for help or for winter sup­
plies. Thus the farming class have làrger sums in-their possession
for. the three or four months succeeding the sale of crops than at