The sun., 1893-06-19
RESTORING CoAE1DEN or

,r.cn thems selves. Clearing House certificates
,,.sd upon good collateral security as the
.,riv,lent OF money would be alarming II II
IA NOT also carry with 1t an assurance calcu-
or,,tel TO dspel alarm 1t is public declara-
dion that the onfldenco OF business m en- In ono
.rother throughout the country having be-
come so impaired that they are giving less
credit and demanding moro cash in their
,-opsact!cns than thcy formerly did. and that
TIER, IL. consequently. call for moro
currency than tho banks are able to
tnrr,sh. tho banks propose to nll tho
rop with thoir own united credit. and
thus to prevent the universal liquidation
which would result II the process OF substi-
tntinc cash for credit were carried to an cx-
trsme Tho device has proved successful on
moro than one former occasion, the latest be-
inc that of tho Barring collapse in 1890. and
tbors is no reason why 1t should not succeed
now 1t amounts indeed, 10 q suspension OF
rash paymonts as between tho banks, but It
insurrs TO their customers supply OF credits
which will serve their purposes equally as well
as cash The banks which hcncefOrth may be
debtors nt the Clearing House by reason OF
drafts made upon them by their depositors will
mo-, be Obliged to call in turn for payment from
their ,ohtuis. but they will be allowed. pract-
caly. TO transfer to their associate banks the
obligations Of those debtors. to no held and car
rjst' along until tho emergency has passed.
Tho same srasm OF stringency which has
led banks to take this course OF action has
also had the effect Of reducing the prices OF
Shoat and Of exchange on Europe. and thus
oistorring the cxport OF gold Indeed, II tho
rates OF foreign exchange should fall only a
tri.c lower than they are now. and should re-
main there for week or two, g Id might even
be shipped bnck to us. and as 1t is. tho stop
al he xrlo In
It's place and ny the scarcity OF money here.
with the resulting high rates Of interest. DEM
o, stra:a how in financial affairs. evils tend to
work their own cure. The paper currency
created Ivy the sherman law helped to keep
M the price Of wheat and to drive gold out Of
tho country. Now tho currency being con-
trac.el by the loss OF gold. and still moro by
the loss of public confidence. wheat has fallen,
geld has ceased to be shipped. and confidence
Is returning.
The rcassurinG effect produced not only on
tho Stock Exchange, but in commercial circles
generally. by the action OF the banks and by
the cessation of gold exports illustrates. too.
how much more useful to the business COM
munity is general confidence than that abun-
dance Of currency for which there is so much
clamor In fact. m inflated currency. by un-
duly stimulating speculation, is more detri-
mental to genuine prosperity than too scan
ty supply OF 1t. II, indeed. all transactions
could be made for cash only. and II sellers
never parted with their goods except upon
payment Of money down. a great volume Of
currency would not be harmful. But in this
country. at least. men cannot be kept within
strictly cash limit. No matter how much cur
rency We hnyo crodit will always be pressed
into service to increase the quantity OF
Transactions. and the more there Is Of
currency the greater will be the increase.
With less volume OF currency on the con-
trary. the possible limit OF imitation is sooner
reached. and the revulsion which inevitably
follows 1t Is less destructive and its conse-
Quences are more easily repaired. Obviously.
too since the giving Of credit cannot be avoid
ed. 1t is important that those only. as far as
possible. should receive 1t who deserve It. and
q moro careful scrutiny into the character and
qualifications OF men asking for credit is likely
to be made when an abuse OF itleacs to speedy
embarrassment than when the day Of reckon
ing is indefinitely distant.
1t is also to he remarked that on the present
OCCASION as on those OF a like character which
have preceded 1t. the change Of public feeling
from general confidence to general distrust
was started by few conspicuous revelations
Of unsoundness in places where 1t had not been
suspected. 1t is true that Secretary Fosters
groundless alarm four months ago at the con-
diton Of the Treasury gold reserve. and the
extraordinary measures he proposed for re-
plenishng it, created uneasincss among bank
officers everywhere, and led them to contract
their loans. but this feeling would have soon
worn of had not events like tho bankruptcy
OF tho loading Railroad Company. tho collapse
Of tho National COrdaRe Company. the en-
barrassment OF the Whiskey Trust, and
number Of little bank failures at the
West. proved that there were more seri-
Gus grounds for it than. tho mere dwin-
ding Of the Treasury gold reserve. People
naturally began to fear that weak mess else
whore was likely soon to be uncovered:
and they took their precautions accordingly.
Not knowing whom they might safely trust.
they distrusted everybody and thus the vast
mass Of credit transactions Of which the bust
ness Of the country mainly consists has gone
on shrinking by tho throwing out OF one dis
credited debtor after another. until it has como
down to point whore II the process went fur
ther. nobody who had not enough cash. or at
least enough securities and commod odites
promptly convertible into cash. to pay on de-
nand all that he owed. would be safe. 1t is a
case where the innocent have had to suffer
along with the guilty. and ell the consolation
they can get Is that In time their Innocence
will lie proved and their pres ent losses made
up TO them.
great ana widespread loss OF it from which
the business community Is suffering, will nee
essary be slow Great things are expected
from tho repeal OF the Sherman act. which is
predicted to take place as soon as Congress
meets, which will be in September. or earlier
II the wishes OF Eastern citizens prevail, but
the repeal is by no means certain to be en-
acted and even II it IL enacted Its direct re-
SUITS are not likely to he those which are
counted upon. Still, since fear and discour-
ag"ment are mental emotions. they can be as
ehlcac!ously countoracted by imaginary as by
real agencies. The belief that tho Sher-
man act is the direct cause OF the
present financial troubles is so general that
Its expected repeal works by anticipation and |
Is doing now all the good it possibly can do |
when 1t comes More thoroughly and per- |
HAnerty "ilcnc!ous vii! he the result OF tho |
sitting process now going on and the estab- |
hthinent OF credit upon u better knowlsdre Of |
Iarls. when the