Albuquerque morning journal. [volume] (Albuquerque, N.M.) 1903-1926, 1907-11-04
MONEY CRISIS
POINTS NEED
OF REFORM
CONGRESS EXPECTED TO
COME TO AID OF COUNTRY
Urgency of Currency LegisIa-
ton Made Plain by Recent
EVENTS Trust Companies
Should Have Larger Reserves

10y morning journal epeciai LehseO Wife.l
New York, Nov. 3.-Last week was
given over to the work of rehabiita-
tion of financial conditions and much
progress was made. although there
remained many elements of disorder
in the situation, owing to The disloca-
tio1 of exchange Facilities in the
money and commercial markets This
was inevitable from the shock of the
preceding events i'm New York. But the
situation has been well in hand and
success was met IN limiting the range
of the disturbance and I'm the initia-
tions of measures to insure correction
and settlement.
Of these the most vital were the
large amount of gold secured from
'"gn countries for importation now
afioat towards New York. The gold
engagements have reached the neigh
borhood of s30.000,00O ana this week
this broad stream will flow into New
York banks. The feeling that this
supply was en- route has done much
to fortify confidence but the act Jal re-
Viving effect on banking and money
operations waits the arrival of the
gold. Meantime the example set by
New York in the adoption of clearing
house certificates for the payment Of
balances between the banks has been
followed by the great money centers
and hes safeguardcd the banks.
Further important relief is looked
for from the facilities extended by
the comptroller OF the currency fer
the increased bank note circulation.
The government bonds are made
available as security TO take out addi-
tional bank notes and this Will afford
largely increased resources for sup
plying the urgent requirements for
currency which forms one of the Sc
verest trials of the situation.
The conditions which have had to
be met in the recent crisis nave giyea
a strong impetus to the movement for
providing Increased currency and Is
expected TO induce early action by
congress TO authorize new forms OF
bank note issues. The experience OF
tho rDun.rS in Period Of high pfOA
perity and active business and indus
try and with the banking position
sound and solvent IN coming almost TO
deadlock for lack OF means to make
banking resources quickly available
for the needs of the circulation has
made a deep impression i'm calculating
the needs of an emergency circulation
which can expand quickly in time of
need. In another direction, il is prac-
tically certain that measures of cor
rection will be adopted for the trust
companies position in New York.
which is now seen to have proved the
weak link in the financial chain. Here
again the solvency Of institutions did
not avail TO meet sudden demands OF
depOsitors without recourse to the
banks for assistance. the. assistance
thus rendered proving the\ strain that
precipitated the crisis. The clearing
house banks for several years have
voiced their discomfort with the trust
corr panies' position, which was due
to the great growth of these institu-
.a. l.,.st LII a,t Iws
banking functions in the acceptance
of large deposits subject to check and
to payment on demand without obli- |
Cation to maintain cash reserves In
the proportion enforced on the bar =. /
Efforts of banks TO coerce the tldst
companies In this regard led to the |
Withdrawal several years ego, of 1et !
Of the trust companies from the ~ Vi /
lege of clearing, through the banks.
Under the operation of lar years NV
York state law the trust companies |
had b, en- obliged To accumulate a re- |
serve of 3 per cent Of their deposits |
hut OF this only 8 per cent was TO be |
held i'm cash IN their own vaults. 3 per
cent being allowed 20 remain on de |
po5its with banks where IL figured, I
OF course, IN the reserve Of those in |
stiiutions also. and 3 per cent was al. |
lowed to be invested In designated Sc
curties. With the dependence of the |
trust companies IN an emergency Vl /
the reserves of the banks demon |
strated as IL has been by recent events, !
the enforcement of additiopal reserve |
requirements upon the trust compan- |
les, either by central authority among !
themselves or in conjunction with the |
clearing house banks. or by legal en-
actment Is expected TO result as c3n- ]
sequence of present experience.
In the stock market, the disturbed I
financial conditions naturally found /
some reflection and there was some
clearing away of wreckage going on
there. such as g. Inevitable from
corvulsion like that which swept the
markets the week before. Operations
were hampered by the obstructions |
10 the working OF the machinery OF
the money and exchange markets. In |
spite Of these obstacles, however /
there was reported to be going on /
buying for cash and for investment /
on q scale such as is not recalled BY |
the oldest observers. This demand Is
for both home and foreign accounts. 7
Principal interest from the standpoint \
Of the stock market now turns 90 the 4
outcome OF events in the general SIT
nation.