New-York tribune., 1907-01-31
A CONN ERCIAL DANGER
Steps Which Nag AUert It-Taco
Measures of Ample Relief I'm Sight.
TO tho Editor Of The Tr,bune.

what happened in 1902 and what did not happen IN
1895.
At the height Of the business boom in 1902 money
was in strong demand for legitimate trade the
crops and railroads and for n bull movement IN
stocks. Front steps of banks were worn smooth OE
the feet Of merchants and cher practical business
men, all negotiating for loans. When cash Welt
out from New York in the fall FOR harvest pur-
poses lawful money at the banks fell To
low eb5, and it Is estimated that contraction OF
credit took place at those institutions amounting
in the whole country to several hundred million
dollars. In some cities loans called in man
which froze the blood This led to a deplor-
able reaction in trade. lasting until the fall OF 1895
cripping thousands of men of moderate means and
causing some inconvenience even 20 the rich
In 1906, on the other hand, when the country
was enjoying another business boom, when stocks
We're again at high level and when every dol'ar
OF loanable cash at the banks Eas working over
tme lawful money reserves ran along the wh"ie
year a singularly even keel owing to the I'M
portation from abroad OF more than $lOOOOOOOO OF
gold, largely through the patriotic and helpful ac-
ton of Secretary Shaw. The gold saved the Chlteu
States from trouble. No violent contraction OF
loans required at time Except possibly just
after the San Francisco eaTthquake) and while
reactions OF tho usual sort took place IN STOCKS
several times the sunny sky of business prosperity
was never dimmed with clouds. and even yet there
| is no abatement IN the good times.
There is abundant reason for believing that no
setback in business would menace now were II not
for the usual evil entalled by prosperity ITSELF
| which has been pointed out thousand times In
spite of larger resources the banks are again taNeo
/ 10 meet the requirements Of the business world
The contraction of credit in the fall owing 10
harvest necessities has sometimes been SO great as
/ 10 be called by Charles n. Fowler the foreihos'
advocate in Congress Of the Credit Currency bill,
"a commercial tragedy" Not less than %VO'VVVVOO
must be sent to the grain and cotton states from
New York and Chicago If ever s2OOOeOoOO Is re-
/ Quired the loaning power of the banks is reduced
over the world and Europe has been guaI31hs !ss
gold supply with high rs;ss OF nIeFes 70 o little
more than pay off debts abroad Were there no re-
cone.ivabe that tho outflow Of cash from New
9oE next fan might , on ws PGIife its usual
OF smGSh 5ea5 n the STOCK
that two measures OF relief are in sight quite
Somsthing over ;iotSoco5 q government bonds
Which u' the IS @ making io the belief IS
strongly entertained that the bonds will be paid on
qaaedy R6 Sns the Il
is action may depend on circumstance i B1t II Is
| alton. and the unlocking of so6oooNo or more OF
| the money market completely.
The other source Of possible relief lies IN the
passage the New York Chamber OF Commerce and
hands. These both conservative and patriotic
bodies. and when they unite in favor OF any par
| respect and careful consideration Given the fair
the Country viii weather the next few months well
enough while the law itself will DO the rest. even
ulspt bonds next July. -. a..
IS The Of bin rs OF OF es Egh onSeT Ra @ c
| silence should reign with regard to It in some
the fact that Congress cannot act on the subject
tive hnancers in doubt as TO the wisdom of the
law. IL is not necessary however. for any one
but campaign of discIssion, such was had over
dously Informing 10 the publiS mind and would
6naiy lead to safe and sound action by the law:
for with @ reference to t@TiT % %TsysiOn and and such
spggeston that credit currency law W., would ala save
year in interest fact IKE that might h , well be
discussion OF the proposition But there are other
| matters consider. Following the argument OF
HotR!ns = Of Patriotc impulse. might PTorery inspire
banks and public ALIKE TO examine the merits OF the
ity desirable from every point OF view, whereas
Industry and an enforced liql!datton would mean
s5 TbeTe was soT no long depsese1 Sfter 1902
but next time the conditions may not be so favor
calamity id cancel a large part. perhaps more
than all Of handsome gains of tho fat years of
What does the Fowler bin propose? Briefly. it
the national banks to the extent Of 20 per cent Of
tho present bond secured ereuiatip1: & taxable at
i2Is per cent Of the capital. taxable at per cent
be so clearly an emergency affair pure and simple
IL full advantage ever taken OF such n law
s390 600 OI0 of new national bank notes might be
added 20 the free resources of the country in six
months time. For several reasons. however, It is
doubtful ~ the government presses will ever be
called on to print anything Ike so vast an issue of
In the first place. the country banks have already
largely issued the full amount OF circulation to
abO cent. They would be compelled TO
tire some small part of their bond secured crcula
the extra expense OF Tag]d redemption, II Is esti-
mated that they would nave 70 loan az about 61s
rency. They do this in the West, perhaps but
in the East many Of them would not find this a
In The larger cities where redemption is likely to
be most rapid, the marrow, margin OF pront would
rency at all. Many OF them do not take out cir
cuaton now because they do not care to bother
Nevertheless, many bankers are OF the opinion
that 500 100000 more might be issued before fall
The value OF any such new currency as is now
practical system Of redemption The authors Of the
Fowler bill have seen ht to turn that whole matter
certain cities for daily redemption and 20 establish
de1tion eSS the asset Currency would lose its char
acter as emergency relief and serve as peTma-
nent imitation OF the m paper me money something 10
RidgeIy's Views ere unknown at present, further
than that he is in favor OF early passage OF the
Jacob H. schifg is earnestly advocating the idea
ferTed the whole labor OF issue and redemption Of
| tho new notes, as means Of making the new sys
in the West recently was devoted in part 20 this
subject Mr.. Schff has been successful in bringing
this idea forward for consideration. and II known
that ne has gained friend here and there bota In
and out of Congress. for the central reserve bank
idea. Yet there s strong opposition the PROPOSE
ton, and It must be said that while the trouble
and expense involved I'm redemption by about elk
thousand Independent banks win help Illustrate the
purposes OF the bill and while the honor OF being
chosen 10 represent their states the governing
board must appeal with great force 70 the minds Of
bankers everywhere, marked sentiment has vet