The Washington herald., 1907-12-16

Si5HlilCAnct. A SnaQOW was. however. un-
doubtediy cast upon the market by the
rise In daily call money rates from last
weeks low level TO figures varying be-
tween u and . per cent, and such an
advance after the steady lowering in the
price of financial accommodation that
had previously gone on made IL seem on
the face OF things as II these previous
low rates had been unnatural and arti-
hcial, and had been designed TO foster
an unsubstantial speculation for higher
values.
The Situation Explained.
This was not at all the case. While
the so-calied panic lasted lenders Of
money in this city. and particularly the
banking institutions hereabouts. were-to
their everlasting credit-dispOsed 10 put
out money as freely as they could when
ever propes security offered. and, when
the wave Of hysteria passed. went rather
10 an extreme length in Offering money
down through their delight over the
genuine improvement in financial condi-
tons that was visibly setting in.
II finally dawned on these people that
Or per cent call money rate in this
city was hardly cOnsonant with a $46.-
10000 deficit in the surplus reserve OF the
clearinghouse banks. and that a reason
ably high rate for money ought in JUS
tice 20 be maintained. What is needed
here now more thar anything else Is a
return OF money from the Western in
stitutions that have so greedily and need
lessly boarded IT, Such a price should be
bid for money here as will tempt a re-
turn Of these funds. and viii for the
time being keep down an undue expansion
Of the speculative loan account.
Even as il was. during the week
money kept on moving 70 the interior
Of the country and premium on cur
rency continued 20 be maintained in a
way that If IL did not exactly excite
pessimism was yet more or less dIscon-
cerfing. The indications are, It must be
admitted, that our financial recovery
from the acute stress or the last week
weeks is TO proceed with somewhat more
cautious steps than IL did. for instance.
in 1893. the year with which a parallel
with existing conditions is most fire.
Quently drawn Our Western friends
who have taken their money home with
them are keeping a closer grip on Il than
they have done on similar occasions in
the past; and II may be that it is be-
cause OF this fact, as has been pointed
out. we have not now TO gather as we did
IN 1888 a daily crop of Western bank
failures and mercantile suspensions.
Censure Western Banks.
Many overoptimistic spectators were
Of the opinion a few weeks ago that by
the present time there would be a re-
sumption all over the country Of the
normal cash payments, and It does seem
as II this process could be safely in
augurated now at all places in the coun-
try a reasonable distance from the At
lantic seaboard- But here in the coun-
try's greatest banking center supplies
OF cash are still as yet too small for
the operation. and all that can be done
IS 10 patiently await the time that will
in due course surely arrive when these
supplies VIII be replenlshed.
A contributing cause 10 the stiffness Of
money last week was also the gact. as
is believed. that the trust companies and
State banks retired from the money
market in greater or less degree owing
70 their expected notification soon from
the State banking department Of a call
for a statement OF their condition. In
deed. # is altogether probable that the
trust companies are beginning TO make
preparations for the prospective Increase
Of their cash reserves, likely TO be en-
forced as the result Of laws on the sub
ject passed at the next session of our
State legislature.
Affects Trust Companies.
While no official statement has been
made as 10 the conclusions of the COM
mission OF bankers appointed by Gov.
Hughes to make recommendation in this
regard, II is almost certain that these
bankers will recommend and that the leg
is-ature will require from trust companies
doing banking business or upon such
deposits OF trust companies as can be
classed as banking deposits as distin-
guished from trust funds the maintenance
OF a cash reserve as high as is demanded
in the case of State banking institutions
proper. Finally as the end OF the year
approaches there is a sort OF general
making ready for financial settlements
and balancing of books, and the impress
sion obtains that this may not illogically
be accompanied with a certain degree OF
financial stringency.
AS time loans are maturing, made not
only by Wall street commission houses,
but by merchants and all sorts OF bus
mess men, these are not being renewed
on the old basis, and in many instances
the desire expressed on the part Of lend
ers not TO renew them at all. 1t is need
less 10 point out that grounds for embar-
rassment may possibly be afforded here,
even If the unquestionable desire on the
part Of every person who is in a position
TO employ funds in the money market is
TO do so with every consideration for the
needs of the financial community.