Los Angeles herald., 1907-12-01
CLEARER SKY
is EXPECTED
THIS WEEK
CASH PAYMENTS BY BANKS
PR0PHESlED
History Of Past Financial Disturbances
Leads to the Conclusion That
Resumption VIII Occur
in a Few Days
ny G. II. DAVIS

real estate depends largely upon 'he
banking situation If the latter is healthy
and exhibits no restrictions the former
enjoys some freedom
But let the banks show uneasiness OF
attempt an unusual curtailment OF loans
operations in realty win very quickly re-
fleet the conditions of the money market
BUYERS become scared, retreat from an
infer of speculation and refuse to FISK
even an investment which seems to carry
on its face an appearance of safety
This is a trrism today. lodged in mems
minds after much hard thinking. SIX
weeks ago it would have been admitted,
hut would have engendered little con-
slderation. When thing is brought
home to rsen's business and bosoms'
when life or prosperity stands in Jeop-
ardv. then commonpaces assume mo-
mentous Importance and become the rul-
ing principles in the conduct of life
The lesson had been learned several
times in the ration's history. but 1T had
to he learned again. On the first day OF
possible for the country to learn the les
son at so little cost. If you had asked
'.What would be the result II banks
should suspend cas-. payment and the
general credit system be turned awry?'
YOU would Immediately have replied,
.Bankruptcy," and have followed it con-
fidently with the assertion that such
condition as contained in the question
would be impossible, so foreign did 1T
seem to the marvellous prosperity we
were epjoying. But it did happen, and
vet so far we have sailed the troubled
seas safely, though the waves are as yet
unsubsided and the sails are still furled
and every match is battened down. The
question of present interest, however, is,
How long will it be until the vessel can
resume it's voyage under normal con-
ditions?
To get an answer to the question L
rave been looking into financial history
a little 20 see what result precedent would
furnish l would not have anyone delude
himself into thinking the conclusions in
fallible Tne best thing for each and
every one to do is 10 hope that history
will repeat itself and to help it so to do
If you wi go back to the panic year
'57 you will find that currency payments
we're re-establshed after period of two
months. By>that time premium on cur
rency had disappeared and banks an
nounced themselves ready to supply their
customers with money of the United
States" Coming down to '7S, you will
find that the resumption came at the end
of about six weeks. Heavy imports of
gold in both cases relieved the situation.
In aS, the time limit was five weeks.
accepting this ratio, we shall then ex-
pect the banks to end the existing ar
rangement Turing the current week.
Observe nat I do not say that that
will be the case. Analogy would lead us
10 think it will be. Further, recent de-
velopments teno to substantiate it. Quiet
is gradually spreading and with it is
coming renewed confidence. The pre-
MUM on currency has almost disap-
peared in New York. Last Wednesday it
was down to one-half of one percent
Banks in Los Angeles are taking care Of
their customers in the way of loans under
proper conditions This is not enough
to bring greatly accelerated movement
TO business, but is sufficient to be thank
full for rrv.
After such a cataclysm in the world of
business a period of depression is, in the
nature of the case, bound to follow. bu:
that it will produce crisis q draw a
distinction between crisis and panic)
seems impossible under the highly de-
veloped commercial organization we have
at present.
Future Is Secure