Los Angeles herald., 1907-11-11
FINANCIAL
CLOUDS ARE
DLSPELLED
SKY MUCH CLEARER THAN ON
LAST MONDAY
BANK STATEMENT CONSIDERED
ENCOURAGING
Money Is Being Sent to the West and
South In Such Quantities as
Can Be Spared from
New York


NEW YORK, Nov. 10.-The most event
full week in the financial history of tue
present generation came to close on
Saturday with conditions much clearer
than a week before, but with some clouds
stili hanging over the financial horizon.
The previous week had closed with the
flisouieting announcement that the New
York bank reserves had lost $20,00OOOO in
cash in spite of deposits by the govern
,nent during the week of nearly an equal
sum, representing net cash loss OF $780,
C0O,0O0 The bank statement of yesterday
changes this situation While 1T shows a
nominal decrease in required reserves OF
s13. .Os5 800, more than two-thirds of this
decrease is due to the reserve require
ments caused by increase in deposits be-
cause of the taking over of loans from
the trust companies by the banks.
Moreover, the actual cash loss OF S43l3, :
f,oo is due to the system of averaging ac-
counts for the entire week. including sew
eral DAYS before the arrival OF the new
gold Unless demands from the country
are very heavy next week the arrival 9.
additional gold will more than offset the
loss of cash last week, and make a credit
able showing for reserve Saturday next.
Week Opens obviously
The week begun on Monday with feel
ing of grave doubt as to the future OF the
two trust companies which had been SUB
jected to severe runs. The possibility tnat
thew might go down and drag with them
such financial structures which still stood
erect, kept Mr.. Morgan. the trust com
pany's presidents and other financial
leaders in almost continuous suspense
until Sunday morning.
when it was finally announced early
on Wednesday forenoon by President
King of the Lincoln Trust company that
the MANAGEMENT Of the Trust Company oil
America and the Lincoln Trust company
were to receive all the assistance they
required in return for depositing the ma
1ority of their stock in the banks of the
clearing house committee the situation
cleared Confidence returned and the
stock market advanced generally from
to points.
IT was felt that the danger of general
crash in New York was over and that the
waves of the storm would gradually sub
side.
The restoration of comparative security
in New York was obtained only by de-
mands on the markets of Europe which
created a tension not before experienced
since the Boer war. Indeed, the Bank
of England, in order to protect its gold
reserve raised its discounts on THURSDAY
to Z per cent, a rate which had not been
before fixed since 1878. The Bank OF
France raised its rate for discounts to
per cent. the Bank of Belgium to per
cent, and the Bank of Germany, at spe-
cial meeting called on Friday, adopted the
unusual rate of ~ per cent.
Europe Protects Herself
1t is not surprising that these precau-
tions were taken to protect European
bank reserves in view of the fact that
nearly s5O,OOOOOO in gold was engaged D"
American banking institutions within less
than two weeks.
The first arrival of the yellow metal
came at the critical moment when the
trust company situation was uncertain on
rruesday Then came smaller consign-
ments on Wednesday, and on Friday the
delivery of $12,3 900 by the Lusitanla
The demand for gold from Europe came
at a favorable time in some respects for
the outward movement of American pro-
ducts, of which the Leading ones are cot
ton and wheat
The cotton movement has been great
deal congested by the absence of small
bills In the southern banks, but every
thing possible is being done by Secretary
of the Treasury Cortelyou and New York
bankers to aid the southern banks m
meeting the situation.
The same is true in regard to the move
ment of grain, which has thus far been
easily handled at Duluth and other north
western points with the aid of western
banks than has the cotton movement.
Sending Money to West
New York bankers are sending forward
N the west and south all the currency
they can spare, especially to those points
wherein the money is most needed. The
premium on currency, which rose as high
as 8 per cent during the week, though It
closed somewhat lower, has had curious
effect upon exchange and the price or
United States bonds. 1t has disturbed the
calculations based upon gold PARTIES OF
exchange and has.made it possible to pay
a higher price to get gold and to acquire
bonds as basis of circulation than If no
such premiums prevailed.
One of the features of the situation thus
tar is the small number of failures of
national banks as compared with the
record of 1898. At that time seventy
eight national banks suspended In the
single month of July, and sixty-three ad-
ditional in June and August, while during
the first eight months of 1893 the number
of suspensions of state and private banks
was Ais, In the present crisis the number
of national bank suspensions reported
does not exceed a dozen, and some of
these will reopen.
The week closed with favorable situa-
ton as indicated by the reports to r. g.
Dun e. Co The new week opens with
the banking situation in New York cleared
up, SO far as any danger of further fall
ures or suspensions is concerned, with
the banking reserves comparatively in
tact and with more than 100000 on the
ocean to strengthen them during the com
ing week.