The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1907-11-29
THE SALT LAKE HERALD: FRIDAY NOVEMBER % 1907

creased.
1t is not only considered highly de-
sirable TO reduce deposits in the banks
as soon as money market conditions
permit, but il is believed that there
viii be little difficulty in doing so II
the treasury can reduce these deposits
to the neighborhood of $500 OOO. 600 In
the course Of the spring, it will then
have at its command about 500. 600 600
as working balance, from which de-
posits could be made from time to
time to aid in the crop movement in
the autumn, If they were required.
The history of previous crises has
shown that money tends to accumulate
rapidly in the banks after the worst
OF crisis is over. In 1893 the specie
In national banks fell from $207. 222, 141
on May 4, to S6.761.173, on July II
The worst break in the stock exchange
occurred on July &c. when call money
went to IS per cent. Notwithstanding
business depression was still acute and
the contest over the Sherman act was
still raging in congress at the begin
ming of October, the relaxation of bus
mess activity led to the decline of
loans on October 3, by about $lT50 =
600, and this had its logical sequence in
the accumulation of specie in national
banks to the amount of 1924, 7OS, $50, or
an increase of about 5000, 900 from
the low point shown by the bank re-
ports. In six weeks more or by the
statements of December 10, 1893. specie
in national banks had increased to
$251 ,253 64S, or by nearly s65, 000, 900
over the low point.
The banking community deals now
with much larger aggregates. the spe-
Gle in national banks by the statement
107 $50. On Aug. %, 1907. the banks had
increased their specie holdings by S66-
500 600 since Nov. r. 1905, and had in
creased their. legal tender holdings
from S152, CT to $i70,515.7S2 They
had thus prepared for the storm to
the extent of about S75,000.0 900. Since
August government deposits have
risen by s6e 900, 600; gold had poured
into New York to the amount of about
SIS. 900, and banknote circulation
has been increased by approximately
$40 1000, 900. Thus from various sources
the banks have had at command. al
though not at any one time 1857 ,000, 600
above their capital reserves year
ago. This amount will be still further
increased by the deposit of 81 ZOO, 900
from the proceeds of the new loans.
From the standpoint of circulation
there will also be an increase whose
limit would be $4,000, 900 If all the new
securities were used to secure bank
note circulation. Various causes are
likely to reduce this maximum very
considerably, but il would not be sur
prising if $50, 600. 600 in new circulation
were taken out in the next two weeks.
after the allotment of the new securi-
ties.
Juggling With Figures.
a.
aggregating $500, O00 600, thus put at the
command of the banks within a year,
not all represents a positive addition
to the circulation since 1t has passed
through the hands of the banks at diff
ferent times, and much of it was al
ready in existence. The net increase
in circulation, however, Will not be
less than 5000, 600, 900, and this, it is be
lieved by bankers. will be redundant
and unnecessary by spring. The poll
cy IF the treasury, therefore, in pro-
viding for the redemption of the one
year certificates within a shorter term
than one year will involve the elimina-
tiOn of the banknote circulation based
upon these certificates, and a consid-
cradle withdrawal of cash from the
banks into the treasury. The fact
that the limit Of 5000, 600 per month
imposed upon the retirement Of bank
note circulation does not apply to
notes based upon securities which have
been called for redemption removes
any obstacle to the prompt retirement
of excessive banknote issues by the
payrSent of lawful money into the
treasury as soon as the securities are
called and paid.
The estimates made in regard to the
state OF the treasury cash Balance are
based upon the assumption that re-
ceipts during the remainder of the
fiscal year will equal expend-
itures. Last year the remain
ing parU of the year to July l showed
a surplus of about 1000, 900, but this
surplus promises TO be pretty nearly
wiped out by the increase of expend-
lures and by the falling off of re-
ceipts as the result of relaxation of re-
business activity. The payments for
Panama canal construction go into or
binary expenditures under the head of
puSac works, Notwithstanding the
fuRrfs for meeting them are obtained
by special bond issues. From present
indications. however, the treasury will
not only have. ample cash at command
during the spring, but il is believed by
bankers that the currency famine IF
the moment will be turned into a glut
which only foresight on the part of the
treasury will prevent from developing
into unnecessary imitation.