The Birmingham age-herald., 1907-12-02
TIVE. ..|AL MEN 's.<-AR |NFLAT|ON This Dreaded Effect Is Being
 Fully Discussed BANKING RESERVES ARE HEAVY Heavy Influx of Gold and Bank De. posits Open the Way To Early
 Resumption of Cash Pay
 ments.
BANKING RESERVES ARE HEAVY

NeW oihI Oecempef lit IS sig nificant of the change in financial opinion that most of the discussion amongst financial men last week dealt with the dreaded effect of state of imitation of the currency into which it was feared the country might emerge with the passage of the effects of ira tional distrust
 The bringing forward of this sub ject into debate while the premium on the currency was being paid yet and other active measures for relief of the currency famine being pursued, was due to the plain lesson of experience in past crisises of a similar kind. In all of these the first return of confi- dence and the re-establishment of cred it have brought a condition of actual redundancy of the money market a heavy accumulation of banking re- serves and free export movement of gold.
 While the enormous mass of gold that has flowed to the United States in response to the urgent requirements developed by the crisis is admittedly in excess of the normal requirement. of the coming period, the return flow of gold is bound to have an unfavorable effect on financial 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 a check being added to the recovery in commercial activity is taken anxious account of
 Treasury Decision.
 The decision of the United States treasury department to limit the allot- ment of per cent .treasusy notes ahds to accept no more bids for them was the outcome of this new phase of the situation which the turn towards nor nal conditions has developed. The opinion of the treasury department that the secretary may call in these cer- tificates before their one year period has expired and so provide for the im- mediate requirements of all bank notes issued against them offers another resource for contraction in the event of any symptom of imitation.
 In another direction is the hope to
  large amount of the gold that has been rushed to the United States as a re- lief measure. The commission ap- pointed by Governor Hughes to consid- CT changes in the New York state banking laws Is enjoined to report con clusions by December 15.
 While the exact terms to be expected of the recommendations of this com mission cannot be forced, it is taken for granted that they will include drastic reform in the requirement upon trust companies for holding cash re- serves. The 3 per cent crisis has demonstrated the inadequency of pres ent reserve requirment for trust com panies doing an active business which most of them do.
 l. is pointed out also that a more favorable moment for effecting this re- form could hardly be chosen than the period now believed to be approaching when the heavy inflow of foreign gold will be found superfuous for the dimin- ished needs of the circulation and will tend to flow out again.
 Cash Payments.
 The engagement of nearly $100, ,000,- 900 of gold for import, of which ap- proximately $60,000,000 has been re- ceived, the deposit with the national banks Of about s67,000,n00 of govern ment funds and the issue of new bank notes to the amount of about 40,000,- 900 have met the present requirements and opened the way to the resumption of cash payments by the banks now clearly at hand.
 The disappearance of the premium on currency which by alternative state ment of terms is a discount on bank checks will herald the restoration ,o use of many instruments of credit which share in some of the functions was snoney and by which the driving out of the use of the extraordinary de- mand for actual cash.
 The re-establishment of credit is ex- pected to lead to prompt resumption of exchange operations between the different money centers in this coun- try, the dislocation in which has formed the most serious embarrass- ment to the conduct of Commercial op- erations.