The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1907-12-02
TOO MUCH MONEY
IS NOW FEARED
Period of Initiation Always Fol-
lows a Crisis and Bankers
AnxiouSIy Await Future.
CERTIFICATES A HINDRANCE
GOLD WILL BE DRIVEN BACK TO
EUROPE.

New York. Dec 1t 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 initiation of the currency. into
which 1t was feared the country might
emerge with the passing OF the effects OF
4 irrational dstrust. The bringing forward
Of this subject into debate while the pre-
/ MUM on currency was still being paid
and other active measures for relief of
/ the currency famine being pursued, was
| due to the plain lesson of experience in
/ past crises of a similar kind In all Of
/ these the first return of confidence and
the establishment of credit have
/ brought a condition of actual redundancy
1 of the money market, a heavy accumuia-
| ton of banking reserves and free eX-
port movement Of gold.
Return Flow OF Gold.
While the enormous mass of gold that
/ has flowed to the United EtateS in re-
| sponse to the urgent requirements de-
veloped by the crisis is admittedly in eX-
cess of the normal requirements of the
coming period, the return flow of gold
IL bound to have an unfaVOrabl bic effect on
financial sentiment, and in the event of
its undue stimulation by any initiation of
paper note issues, which would tend TO
force out gold. the danger of check be
ing administered to the recovery in COM
mercial activity is taken anxious account
Of The decision of the United States
treasury department to limit the allot-
ments of 8 per cent treasury notes and
to accept no more bids for them was the
outcome OF this new phase or the Sltud-
ton which the turn toward normal con-
ditions das developed The opinion of the
treasury department kat the secretary
may call in these certificates before their
one-year period has expired and so pro-
vide for the Immediate retirement of all
bank notes issued against them, offers
another resource for contraction in the
event of any symptom of initiation.
Trust Company Reserves.
In another direction it is hoped to find
permanent and substantial employment
for large amount of gold that has been
rushed TO the United States. The COM
mission appointed by Governor Hughes to
consider changes in the New York state
banking laws is enjoined to report con-
illusions by the 18th of December. While
the exact terms to be expected OF the
recommendations of this committee can
not be fOreseen, 1T is taken for granted
tina tthey will include drastic reform in
the requirements upon the trust cOmpa-
MES for holding cash reserves. The re-
cent crisis has demonstrated the made
quacy of present reserve requirements
for trust companies doing an active
banking business, which most of them
do The per cent of cash to be held in
their own vaults. under the present law.
therefore, IS likely TO be changed to a
substantially higher figure, some advo-
exacted of members of the clearing house.
1t is pointed out also that a more favor
able moment for effectinga this reform
could hardly be chosen than the period
now believed to be approaching, when
the heavy inflow of foreign gold will be
found superfluous for the diminished
needs OF the circulation and will tend to
flow out again.
Way Opened for Resumption.
The engagement of nearly s1OO,OOOOOO of
gold for import. Of which approximately
$50, 900 900 has been received, the deposit
with the national banks of about S67 Co.,.
900 of government funds and the issue of
new bank notes to the amount of about
$40 100000 have met the present require
ments and opened the way TO the resum2-
ton Of cash payments by the banks, now
clearly at hand. The disappearance Of
the premium on currency. which by al
tentative statement of terms is a discount
on bank checks. will herald the restOra-
ton to use Of many instruments of cred
1t which share in some of the functions
as money and Of which the driving out
Of use forced the extraordinary demand
for actual cash.
Time Will Tell the Tale.
The re-establishment Of credit is ex-
pected to lead to a prompt resumption of
exchange operations between the differ
ent money centers in this country. the
dislocation OF which has formed the most
serious embarrassment to the conduct of
commercial operations. The check which
the embarrassments have caused to bust
cerned, will be removed at an early day
and to that extent leave the way open
for prompt recovery. There remains the
question Of the resumption of various
forms Of activity which were absorbing
large amounts of capital before the crisis
developed and the distrust of which was
the vital impelling cause of the crisis.
Many such enterprises take on an ap-
pearance. from the present point of view,
of extravaganza and lack Of adjustment
to possible expectations. The course of
events must be awaited to define how
far capital was unprofitably sunk in such
enterprises, before the march of progress
is taken up again where Il was halted.
ness, so far as they are themselves con-