The sun. [volume] (New York [N.Y.]) 1833-1916, 1906-12-24

lative sentiment In Wall Street should have
veerod TO the conclusion that ono Of three
things must happen In the future either
some fresh addition to the circulating
medium in the country or other similar
development that would serve 70 increase
the lending power Of financial institutions;
some let up in the present tremendous
business activity, or a period of liquidation
in the security market. Now. 80 far as the
events of the last week went. there were
no signs Of either one Of these contingencies
happening. The liquidation in the stock
market that occurred, though severe in
certain cases. was not general, or such as
TO testify TO serious trouble In any direc-
ton. The currency bill proposed by the
committee Of the American Bankers Asso-
citation was index reported favorably to
the House of Representatives at Washing
ton by the House Committee on Banking
and Currency. amended In only one or two
particulars, the most important OF these
being the imposition Of a tax Of 3 per cent,
instead OF ~ per cent, upon the new bank
note currency proposed to be issued. Al
though this was 4 welcome step prospects
still do not seem to be very bright that the
measure, or one similar TO il, will become
a law at the present session Of Congress;
but hopes Of advocates OF currency reform
are undoubtedly at the moment addressed
more to the chance that a bill may pass
allowing all the Government revenues. a.
they accumulate, to be deposited in the
national banks. Whether, however. there
will be popular approval Of the bills al
ready introduced to this purpose by Sena-
tors Depew and Elkins. which allow all
national banks, however small their CAPT.
tai or surplusee, to serve a. Government
repositories, is questionable. The provi-
sions of the present law, that require any
bank acting as q Government depository
to have a surplus OF at least $50, 900, do not
seem to err on the side Of conservatism.
The fundamental reason for whstever
monetary stringency exists in the coun-
try at present, OF is likely to exist in the
future, Is not at all obscure. II lies in tho
high prices now prevailing for all sorts OF
articles and commodities, including, it may
he said, the high wages paid for labor and
the rushing pace at which business is being
done. These prices have. according to
the data furnished by the commercial sgen-
cies, risen between 60 and 60 ger cent in the
last ten years, and they low stand at by
far the highest level ever recorded in the
1AN NtOiO III hhOAo ihOtiCy liihb OCtu
required TO carry on business operations,
and more end more money tends at such
times to be kept in pockctbooks end TO
pass from hand TO hand among the people
rather than to accumulate in bank vaults,
where It might serve as a basis for credit.
The scarcity of money thus e~ngendered 10
not scarcity in the absolute sense, since, asis
well known. the quantity Of MONEY in the
- =
edent in the last decade. Il is scarcity
only in the sense that the high level of values
at which all business is now being conducted
requires relatively n greater amount OF
money 10 carry II on than wss asked for in
previous years. The tendencies herein
noted are not confined 20 our own country,
but are strongly In evidence in England, In
Germany and everywhere in the civilized
world. In England the deposits in the
country's banking institutions. that lie TO
say, the bank extension OF credit there.
are now put at $4,000. coo, 900, against which
the total stock OF gold and bullion in the
Bank Of England, which holds the bank re-
serve practically for the entire country,
is only sizes 900. 900; and in England plans
are being discussed for an emergency our
renoy and for the building up in the country
OF a special reserve fund Of money not 10 be
used except at a high rate OF interest and
upon the authorization Of a committee Of
who should AVE the fund in charge.
These plans, IL will be observed, bear a gen
eral resem bllnce to those already discussed
for use with rs. Manufa curing industries
around tho globe are at a height never
before W Witnessed; consumption is in excess
of production everywhere; and in our own
land. at leIst, it lie plain that tho population
is increasing more rapidly than are the
facilities for supplying the demands Of this
population for necessities and luxuries.
The general superintendent Of the Penn
s~ylvania Company estimates, for instance,
that the current necessities of the country
dema ndanannual production OF at least no.
600 freight cars, while the total possible out
put OF cars at present is only $50 900. The
huge volume Of products bf our farms is
sold each year ct a price highly remunera-
tive 70 the producers, leaving little if any
remaining; and by means Of this
wealth the western part Of the country
has developed in so safe and sound a way
thet it may be sincerely questioned II the
basis Of its prosperity Is not now actually
more sound than that of the eastern half.
Ii Is impossible under such circumstances |
for any observer of the financial and business
TO be governed by a spirit Of pessi-
mism; and yet il is equally impossible TO
out the fear that such high rates for
the use Of money az nov prevail, If they are
to continue and are perhaps to increase
under n still further development Of bust !
ness and industry, must In time operate 10 !
this business and industry itRelr.
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