The Montgomery advertiser., 1907-10-27
SITUATION
 BRIGHTENS :; .- No Bank Failures Re ported Yesterday MR MORGAN GIVES ADVICE Says Thoughtless Withdrawal of Deposits Should Cease. National City Bank AnAounces Heavy Imports of Geia Frsm Europe.
 calmne.s Prevail. In the
 Metrosolis.
R. MORGAN GIVES ADVICE

a request of the Associated Press as to his view of the present situation, J. Pierpont Morgan said today: 'As I have already said. cannot too strongly emphasize the importance of the people realizing that the great est injury that can be done to the pres- ent situation is the thoughtiess with drawal of funds from banks and trust companies and to hcarding the cash in safe deposit vaults or elsewhere. thus withdrawing the supply of capital ai- ways needed In such emergencies as that which we have been confronted during the past week"
 James Stillman. president of the Na- tionai City Bank. who next to MT. Nor gan. has done more to bring out . so- luton of the financial difficulties in New York than any other man. said: "The wise and heroic action of the Secretary of the Treasury and the splendid efforts of Mir. Morgan, with the assistance of the Clearing House. have demonstrated the sound financial conditions of the Clearing House banks of this city. Now, however, in order to facilitate the shipments of cotton. grain, tobacco, and other produce, and to facilitate the imports of gold. the associated banks have wisely decided to combine their credit by the issu- ance of a Clearing House certificate and | prevent large part of the business Of the coun- try"
 CaImnesn Prevails.
 Calmness and growing encourage ment were the dominant features of the financial situation when the great banking institutions closed their week today. with all the great financial in- stitutions of the city Intact. after nav ing met the unprecedented demands of the past week. With this signal dem onstration of the resisting powers of the banks, came the adoption Of new and prudent measures to prevent X recurrence of acute strain Although the stock exchange and other sensitive points were Free from extreme agfta- tfon yesterday, there were heavy with drawa1s of casii from several banks and trust companies. These withdrawals Tor the most part were by the smaller danositors. All the institutions af- fected continued to pay out on demand up to the usual hour of closing on Saturday.
 First of importance in the remedial measures was that of the clearing house association in voting to issue clearing house loan certificates for the usa of the banks themselves In set- ting .their daily balances at the clear ing house. These certificates VIII not go into general circulation but tneir use will enable the banks to keep n circulation for the needs of general husiness large amounts of currency which otherwise would be required of inc settlement of the daily clearing house balances. Plans were formula ted to extend the benefits of the clear ing house certificates to the trust conn panies as well as to the banks which are at present members of the clear ing house association.
 Gold Is Engaged.
 Another extremely important fea- ture of today's news was the an- nouncennent by the National City Bank that 1t had engaged $5,0oO,0oO in gold for import It is believed by bank ara and exchange brokers that this an1arement fs the beginning of what will probably be a continuous move nnent of gold to New York from abroad The exchange market is very favor able for the Importation of gold and if is believed that no difficulty will be met within securing the metal from Europe so far as may be needed
 The clearing house certificates will he issued to those banks making ap- plication and proving to the satlstac- tion of the committee appointed for the purpose the need for the certift- cates and their ability to deposit the proper collateral. No limit was fixed to the amount to be issued but 1t is
  he small. Another step was taken also of frst importance designed to offset tha unfavorable effect which might De nFoduced by the fact that the clear ing house banks were in position to obtain certificates, while the trust companies were left out Of the ar engagement.
 Tbe fear that the trust companies would be unfavorably affected by such n decision was one of the influences which led several members of the clearing house committee to the meet ing of the association to the etfect that trust companies should be admit ted to the clearing house. It was pro- vtded that this resolution might be considered at a meeting of the asso- citation to be held hereafter. Thus far there have been no applications by the trust companies for admission to the clearing house and the exact conditions not been fixed.
 To Keep n Reserve.
 The requirement. made from banks aamitted to the clearing house is that they shall keep in their own vault reserve of 25 per cent of their depos- its. This Is a larger reserve than rnost of the trust companies have car rtod since the requirements of the law oF eO6 did not go beyond 10 per cent in cash on hand or on deposit in other 
 banks.
 while the action taken today is not Immediately effective so far as 1t re- Iates to trust companies it shows a vvillingness of the clearing house banks to cooperate with the trust compa- nies which greatly relieves the situa- tion and removes the danger which some have feared that each individual trust company would be left to shift for itself. while the associated banks in fr- gether. It is felt by conservative bankers that under present conditions, | it will not be prudent to pursue mar row policy and if it Is necessary to bring the important trust companies l into full fellowship with the clearing | house it will be done.
 Effect of Certificates.
 The effect of the decision to issue | clearing house certificates has usually | been to restore confidence to a large l