The Birmingham age-herald., 1908-01-13
Revivinq Confidence.


 Henry Clews, in his Wall street letter Of Saturdays date, says
 "The tendency of affairs in Wall street IS distinctly towards improvement Con- ndence is reviving and a much greater degree of recovery has already been es- abolished than could possibly have been foretold month or six weeks ago. This improvement Is almost entirely due to favorable developments in the monetary situation The premium on currency has hnally disappeared and rates for time money are steadily declining Along with thls movement there has been a corre- spending drop in rates for commercial paper, the demand for which has much Improved. The Arrangement of credit is gradually passing away; liquidation has been severe and has had the effect of releasing large sums previously locked up in hlgh-priced securities. The return movement of funds from the interior has fairly begun and will now continue for some time to come. There is an abund- ance of currency in the interior and a relative scarcity in New York This is demonstrated by the last national bank statement, which showed that the banks In the central reserve cities in order to help during the crisis allowed their re- serves to decline to $32, 900 900 below legal requirements, while the country banks carried surplus reserves of over $1O3,0O0.- GOO. With the return of confidence and the resumption of specie payments, there should be very large influx of these funds back to New York and other re- serve cities.
 When it is recalled that the increase in circulation during the last F months has been 95,000,OOO, of which nearly s7O,- 100000 was added in December, 1t will be apparent that very material n- crease in the supply of loanable funds is imminent at this center. It is also to be considered that hoardings in all parts of the country, estimated at over $270- o0OO00, are being released and will soon be restored into circulation. In short, we are rapidly running into a period when the supply of funds will be more nearly sufficient for requirements, in view of lower prices and smaller demands than a year ago. Ordinarily, a redundant cur rency acts as great stimulus to stock market values, and no doubt this has been an important element in hastening reeov- cry. It Is well, however, to consider some of the offsets which are likely to coun- teract any tendency toward excessive monetary ease. In the first place, there are many millions of clearing house cer- tifcates to be retired; next, the govern ment must be expected to reduce it's enormous deposits with the banks at the first favorable opportunity; then the trust companies, which must now submit to similar regulations as the banks when doing a banking business, will be com pelled to increase their reserves and carry them in cash Again, many demands for new capital which were postponed in the last half of 1907, will certainly be forthcoming at the first opportunity. Some of the railroads are in serious need of funds for the completion of improve ments which cannot be delayed; and con- siderable maturities and installments on subscriptions will have to be provided for. Finally any undue ease in money rates ] would be sure to start an outward move ment of gold and thus automatically check exceptional weakness in the money mar ket. The monetary outlook, therefore, is decidedly complex