Movement of the Crops. New York is our great money centre, and where country banks may keep one-half their lawful reserves. In addition, when money cannot be profitably employed elsewhere, it still further accumulates there as interior banks are allowed interest upon their New York deposits.
When the South prepares to harvest its cotton crop and the West its grains, a feeling of anxiety pervades the money market, for then the country banks will need to recall their New York balances to afford the planter and farmer the necessary accommodation to carry him through the harvesting and crop moving period, or to furnish the middleman the means to purchase the produce. During these periods the available supply of money for Wall Street affairs is sometimes so severely curtailed that interest rates advance sharply and possibly the stock market is affected. There is a gradual return flow of money during the winter and spring.
The call of the harvest for currency begins to make itself first felt in July in the southwestern reserve cities, for then the winter wheat begins to ripen. The country banks in Oklahoma and adjacent territory, as well as the Kansas City and St. Louis banks, experience the demand, not only for small money with which to pay the harvesters, but for loans from the middleman. As the stock of money in that section is depleted Chicago, New York, and the Eastern money centres are then, in turn, called upon. " Then, as the season progresses, and crops in various sections of the country are harvested, a flow of currency from the East to the South, to the West and to the Northwest sets in and does not cease until the cotton, corn, and wheat of the country are all marketed and the farmers' work for the season is over." ¹
Foreign countries, of course, experience this same harvest demand for money. In Austria, the Austro-hungarian Bank is called upon to largely increase its note issues during the month of October, which in that country is the harvest month. Germany likewise feels the call during September.
The size of the harvest and the prices obtainable are very important factors. Their influences are felt throughout the land and abroad. The available supply of grains and cotton for foreign shipment may be of great importance to Europe and Asia. Good crops and good prices, so that the surplus may be shipped, mean large earnings to many railroads.
1 Report of the Special Currency Committee of the Chamber of Commerce of the State of New York.
Crop statistics are studied with great interest by all speculators in "granger" road securities. Business throughout the land is to a great extent influenced by the yearly product of the agricultural sections. Do not forget that the United States is still, to a large extent, a farming country - nearly fifty per cent, of the people being engaged in agricultural pursuits - and that what affects the farmer affects us all.
The crops are one of the most important of all the business barometers, as by them future conditions may be to quite an extent predicted.