The sun. [volume] (New York [N.Y.]) 1833-1916, 1906-12-23
THE FINANCIAL SITUATION.
A Trust Company President Thinks II May
He We'll TO 60 SLOW.

To THE EDITOR OF THE SUN-Sir: Al
president of a new York trust company and
a director OF a national bank | am naturally
called upon to consider banking questions OF
an essentially different nature. The cur
rency. problem therefore presents itself to
me from the point of view Of the trust COM
pany on the one hand an Of the national
bank on the other.
The trust company is the modern ex-
tension OF the saviAgs bank and of the bank
Of deposit. Its depositors are of "A class
which neither OF the older institutions ef-
f~ectively reach. II handles estates and trust
funds. 1t affords a place for the safe deposit
at a fair rate of interest OF unemployed in
vestme moneys to any amount. The
payment OF interest has brought out vast
sums OF boarded money: so that in trust
companies and the savings banks. trustees.
investors, wage earners and the savings OF
labor are by State laws amply accommo-
dated and fully protected.
Aside from the annual output Of the gold
and silver mines. the national banks and the
Federal Government are the only lawful
producers OF money. This money gold
silver and paper-is now exchan geable
dollar for dollar in the money marts OF the
world.
The question Ia. is our stock of money on
hand and in circulation sufficient to supply
the legitimate demands of the country's in
CTeHblDR lTHuc anu COHlIlPTCeF
The amendment Of March "a, 1900. to the
national bank act was intended to accom-
plish this object. and under normal condl-
lions and the Economical use Of credits the
gradual increase in circulation thereby pro-
vided ought TO be amply SUFFICIENT. This
act permitted all national banks to issue
circulation M to the par value OF their de-
posted Government bonds, and. in order to
furnish the country districts with banking
FAC ihties and the necessary currency upon q
safe basis, authorized the establishment Of
small national banks with q minimum capital
OF s25. 900, The results OF that act, passed
only six years ago are not always appreI
banks has increased 1000. The percentage
of outstanding circulation to paid up capital
isso. to y per cent. n December. 1900. and to
az per cent. in September, 1909; and four banks
only have no. circulation. The total number OF
national banks is now 6.l37, an. increase for
the year Of $50. Our stock Of money per
capita Is S3i Al: as against si7.5s in England.
total stock OF money is now 5.OsSY OoO. 900. as
against s2.ss3 100000 in 1905. or an increase
TLhln we've months Oh sISo'9oV.Voc; surely
average. circulation per capita was s3ios,
now it Is 1872 AZ: ten years ago It was only
was. 81. 100. 100. OOO-of which 81 900. 600. eco was
lawful money and disable as a reserve an
Of sl3s, OoO, 900. On the other hand the esti-
mated population has increased from about
$1,000 900 last year 70 but 81 1000 this year,
III ObhCL NOihF1 Ihlt NuF.Nthl y INV
IN population has been a little more than
per cent. yet the increase in circulation
we add the proposed $4,000 900 Of uncovered
credit currency for crop moving purposes TO
last years proportionate increase in the
would bring next years circulation up TO the
gigantic total Of nearly 81. oOo, OOO. 600 which
would soon be used in speculation. Who can
~foresee what would happen?
The trouble lies not in our lack OF money
But our wsstefII use OF ~ In Us snnHsi
duties. the Government necessarily becomes
an important factor in the country's business.
There In no more excuse for the Government
locking up this vast sum, than there won II
be for any business man to do so. ThesN col
l%ections shou Id be promptly deposited in the
which should be kent in n separate fund as an
insura nee against loss.
The people have forgotten the value Of
money, Let us remember that the past few
years have been years Of uneQualled COM
mercial. industrial and agricultural activity
abnormal. A widespread speculation in
stocks and real estate, anticipating in value
the country's growth for several years. ana
stocks has withdrawn a vast sum from the
banks: The enormous destruction of values
caused by the San Francisco disaster has had
to be made good In cash. Railroads and in
d~ustrials have no. only hugely increased their
capitalization for costly improvements. but
have also largely increased their dividends.
The prices Of food. clothing and lodging have
been marked up. and SO have wages; Hish
rates for money are world wide. Our borrow
inE abroad and persistent impOrtatiOns OF
gold have caused the Bank of England TO raise
its discount rate to o per cent. the hi hest
point for many years. The Imperial Ra nix of
Germany has recently increased its dlscoTnt
rste to 7 per cent. Russia e debt to France
Is still unpaid. The first principle Of COM
mcrce is con ndence. Is not that confidence
beginning to be shaken? IT any rate II
would seem az IL the commercial machine is
being driven under pretty hiTh pressure. II
then the business Of the country has become
expanded beyond what has been heretofore
regarded as the safety point. IL IL net bitter
20 blow on steam rather than TO force the