U niversity of O regon M onthly
9
any other time of the year. But perhaps the largest factor in the
excessive absorption of money is the seasonal outgo~6f wages pay
ments. Disbursements are commonly made in cash and the laborer
makes little use of deposit banks. Any surplus'-is held in temporary
hoard and paid ont to meet current living expenses; The amount
disbursed to a single laborer is, of coufse, inconsiderable, but the
payment of a whole army of harvest hands; compels bankers in the
South and West to reckon seriously with thpir cash reserve's.
The total extra demands for currency in harvest time has been
variously estimated at from $150,000,000 to $200,000,000 and an ex
amination of bank statements reveals the fact that there is a pro
nounced movement of currency outward from New York city and
other financial centers „ which begins early in July and continues
into October or November. During January and February.-the tide
turns. and the idle money is emptied into the financial centers of
the iSast. . Although the annual outgo of currency begins in mid
summer, t h é 'stringency is not seriously felt till the autumn re
vival of/trade and industry. Country banks at the close Of the
harvest season are anxious to take advantage of the movement of
specie to r eplenish their shrunken cash reserves and the money
drawn away from the Commercial centers seems less responsive to
centripetal than to centrifugal forces.. This recurring stringency
in the money market .may at times be fraught with very serious
consequences. When conditions have for some time been hovering
on thé verge of. a crisis, affairs usually culminate in a collapse of
credit during the period of autumnal -strain. Suchfor example was
the situation in 1873, 1884 and again in 1893. More recently still
in the panic- of 1907, the disturbance of credit was wholly dispro-
porfionate to'the immediate causes, partly on account of some un
easiness in the business world, but more because the currency of
the country1 was already taxed to its utmost by the regularly ¿re
curring demand for harvest *money.
The currency of the-United States is almost completely lacking
in the element of elasticity, Or that capacity of, expanding and con
tracting with temporary variations in the demand for its use. The
cpin element possesses the property of mobility in the sense that it
easily gravitates tp the place where is the greatest need for its
employment, but is not responsive to a séasonal or temporary de
mand for more./or less money..., The, quantity of legal-tender notes
is rigidly fixed by federal enactment at some $346,000,000. The
national bank circulation on'/which we depend for elasticity is based