The Montgomery advertiser., 1907-12-02
DISTRUST PASSING
FINANCIERs FEAR AN INITIATION
 OF CURRENCY.
Return Flow of Gold to Europe fs Now the Thing to Be Dreaded by
 Rusincss Men.

New York, Dec. lit is significant Of the change in financial opinion that most of the discussion among financial men last week dealt with the dreaded effect of a state of imitation of the currency, into which it was feared the country might emerge with the passing of the effects of irrational distrust. The bringing forward of this subject the currency was being paid yet and other active measures for relief Of the currency famine being pursued, was due to the plain lesson of experience in past crises of similar kind. In all of these the first return of confidence and the re-establishment of credit have brought a condition of actual re- dundancy of the money market, heavy accumulation of banking reserves and a free export movement of gold.
 While the enormous mass of gold that has flowed to the United States in response to the urgent require ments developed by the crisis is ad' mittedly In excess of the normal re- quirements of the coming period, the re- turn flow of gold Is bound to have an unfavorable effect on financial sem timent and in the event of its undue stimulation of paper not issues which
 would tend to force out gold. the dan ger of a check being added to the re covery in commercial activity Is takeh anxious account of.
 The decision of the United States treasury department to limit the allot- ments of three per cent treasury notes and to accept no more bids for them was the outcome of this new phase or the situation which the turn toward
 normal conditions has developed The opinion of the treasury department that the secretary may call In these cer- tificates before their one year period has expired and so provide for the i'm mediate requirement of all bank notes issued against them offers another re- source for contraction in the event Of any symptom of imitation.
 In another direction 1t Is hoped to find permanent and substantial emp)H y ment fot a large amount of the gold that has been rushed to the United States as relief measure
 The commission appointed by Govern ar Hughes to consider changes In the New York state banking laws Is en1oin- ed to report its conclusions by Dec 16. While the exact terms to be ex- nected from the recommendations of this commission cannot be foreseen, it is taken for granted that they will include drastic reform in the require- ments upon trust companies for hold ing cash reserves.
 The recent crisis has demonstrated the inadequacy of present reserve require mentS for trust companies uolnB dH aC- five business which most of them do. If is pointed out also that a more Ia- vorabie moment for effecting this re form could hardly be chosen than the neriod now believed to be approaching, when the heavy inflow of foreign gold will be found superfiuous for the dimin- tshed needs of the circulation and will tend to flow out again.
 The engagement of nearly $l0OOOO'- OoO of gold for import, of which Ap- nroximateIy $6O,000,000 has been reSetV- ad the deposit with the national btnks of about $67,000,000 of Government fnrds and the issue of new bank notes to inc amount of about $40,000.000 have met Inc present requirements and open ed inc way to the resumption Of cash novn,ents by the banks now clearly at hand. -,... on currency. which by alternative statement of terms Is uIscount on hank checks, will herald the restoration to use of many instruments of credit
 vh hicb share in some of the functions os oonev and of which the driving out ~ tha use forced the extraordinary de- U'a,1d for actual cash. The re- establish ,.,art of credit is expected to lead to a aronnt resumption of exchange opera t.tons between the different money cen tars in this country the dislocatiop Of which has formed the most serious em- harras ssmcnt to the conduct of com mercial conditions