The daily morning journal and courier., 1907-12-02
SIGNIFICANT CHANCE
 IN FINANCIAL OPINION Dreaded Effect of Possible State of Imitation of the
 Currency. FORMER CRISES QUOTED Limitation of Allotments o1 Treasury Notes Was to
 Meet New Phase.
FORMER CRISES QUOTED

hCCb INV W A-
 New York. Dec. It Is significant or Inc change in financial opinion that most of the discussion amongst finan- cial men last week dealt with the dreaded effect of state of imitation ot tbe currency. into which it was feared the country might emerge Wlph the passing of irrational dlstrust' 4le nronninence of this subject in depate while the premium on the currency was vet being paid and other active meas !! ,,ras for relief of the currency famine were being pursued, was due to the r1ain lesson of experience in past crises of A similar kind In all of these the first return of confidence and the re- establishment of credit have brought a condition of actual redundancy or the money market, heavy acculnu- 1ation of banking reserves and freel exnort movement of gold. While theI enormous mass of gold that has flowed to the United States in response to the 13rgent requirements developed by the crisis is admittedly in excess of the normal TeQuHEul6llI Ol NllO SOAiiAAAe5 " iod. the return flow of gold is bound to have an unfavorable effect on fi- rancial sentiment and, in the event of its undue stimulation by any imitation of paper note issues, which would tend to force out gold, the danger of check being given the recovery In commer- cial activity is taken anxious account T Of fhn ITnif16 States treasury department to limit the allot- ments of three per cent treasury notes and to accept no more bids for them was the outcome of this new phase of the situation which the turn toward normal conditions has developed. The opinion of the treasury department that the secretary may call in these certificates before their one-year per- iod has expired and so provide for the immediate requirement. of all bank notes issued against them offers an other resource for contraction in the event of any symptom of imitation.
 In another direction it is. hoped to find permanent and substantial em- ployment for a large amount of the gold that has been rushed to the Unit ed States. The commission appointed by Governor Hughes to consider changes in the New York state bank ing laws is enjoined to report conclu- sions by the 18th of December. While the exact recommendations to be eX- pected of this commission can not be foreseen, it is taken for granted that they wiIl'include drastic reform in the requirements upon trust companies fol holding cash reserves. The recent crisis has demonstrated the made ol1acv of present reserve requirements for trust companies doing an active banking business, which most of them do. The 5 per cent. cash to be held in their own vaults under the present law, is therefore likely to be changed to a substantially higher figure, some advocates favoring the full 25 per cent. now exacted of members of the clearing house. It is also pointed out that a more favorable moment for effecting this reform could hardly be chosen than the period, now believed to be approaching, when the heavy inflow of foreign gold will be found superhuous for the diminished needs of the circulation and will tend to flow out again.
 The engagement of nearly $100,OOO,O0I ! of gold for import, of which approXl E mately $60,O00,OOO has been received the deposit with the national banks O about $670O0,OOO of government funds # and the issue of new bank notes to tn amount of about $4O0OO,OOO have me the present requirements and openet < the way to the resumption of casl B navments by the banks, now clearl at hand. The disappearance of the pre- q millm on currency, which by alterna Ii ye statement of terms, is a discoun on bank checks, will herald the restor alton to use of many instruments o credit which share in some of tn functions as money, the lack of use c Y which forced the extraordinary deman for actual cash. The re-estabnshmen of credit is expected to lead to a nronpt resumption of exchange opera
 lions between the different money cen
 CTS in this country, the dislocatlo If which has formed the most seriou
 
 Anharrassment to the conduct of com
 nercial operations. The check whic
 he endorsements have caused
 business. so far as they are themselve
 .oncerned, will be removed at an earl
 av and, to that extent, this will leav
 he way open for prompt recover'
 Fhsre remains the question of the rt I! umption of various forms of activit
 Fbich were absorbing large amount
 f capital before the crisis developet
 he distrust of which was the impel
 cause of the crisis. Many sue
 snterprises take on an appearanc
 lom the present point of view (
 ktravagance and i'll adjustment
 Dssible expectations, The course
 rents must be awaited to define ho
 r capital unprof1tably sunk in sue lterprises before the march of pr,
 less is taken up again where it W;
 alted