The Washington herald., 1909-01-02

records were broken right and left IN the
statistics Of American finance and indus
try. The really typical Thigh records
Of 1907, however. were such as would
have been suggested by the peculiar
! character OF the year-the largest bank
I ing deficit ever heard Of, The largest
issue OF clearinghouse certificates and.
+ before the panic, the highest monthly to
tai ever known in iron production, i'm
I port Of MERCHANDISE. and the highest to-
tai Of liabilities ever reported by our
banks.
/ All this was TO be expected IN q year
when a prodigious overexpansion OF trade
and oyerstrain on credit resulted IN hnan-
/ ciaI collapse OF a violence never matched
in history On general principles, and
in the light Of previous experience IN
/ the aftermath Of panic. one would expect
TO ind IN the present year Of reaction
+ new high records IN export of merchan-
disc and in cash poured into bank re-
/ serves from the channels or idle trade
I The first has been nearly. but not quite.
/ achieved IN 1913; monthly merchandise
/ exports last January were never but once
/ exceeded. and that was IN the month
I Immediately preceding But cash hold
/ ings in the national banks as O. whole
and in the New York bank particularly
/ have mounted higher than ever before
/ tn our history. Not only so. but the
increase for the year has been far greater
I thar in any former twelvemonJh-
Causes of Increase.
The reason for this great Increase OF
/ cash IN hank reserves was not only the
return Of currency from trade uses; the
actual supply has increased amazingly
Z The couutry's actual money supply has
touched new heights; gold In circulation
has established new precedents. and SO
+ have the TreaSury's gold holdings. though
/ the gold actually owned by the govern I
ment, and not held against certificates.
I has not. National bank circulation has
broken the eec0rd-sOueth.ng not very
logical Ia a year or trade depression. but
which happened, owing O. our illogical
bank currency system. IN 1891 as well.
II is interesting, and perhaps significant. I
that while cash holdings of the banks
have surpassed all precedent. surplus over
the required = per cent against deposits I
.
the reason why. with tie much larger
gain Of cash reserves in 1875. the sur
plus did not approach the high figure OF 4
fourteen years ago is that loans and de- I
posit liabilities have also EXPANDED great I
ly-f0r which We have the stock exchange
TO thank
TWO interesting new high records OF the /
year were bond sales ou our stock ex-
change and the sold reserve Of the Bank 4
of France, each exemplifes important 4
tendencies OF the year That our gov +
erument's monthly expenditure should .
have reached in July. during the year Of
deficient revenue, q total exceeded only .
in the month Of 1s04 when We paid for F.
the Panama Canal is another siCeliEhI /
on The situation
The features Of the after-panic year are I
summed up as follows.
Recovery Was SpaSmodIc.
% Spasmodic and Irregular recovery in /
trade activity, starting from a very low
level. with merchants rushing in sud
denly with orders-In February. In July.
and In November-when their shelves
were almost depleted. these buying i'm
pulses ceasiRg as suddenly as they had
begun, leaving trade stagns;ed again.
(Z) SLOW increase in consumption Of uer-
chandise. here and abroad. the ratio be-
ing below 90 Per cent of normal az the
beginning of the year. and 81 TO - per
cent on the average az its close. 80 sud
den shTinkase of our international com
merce. merchandise trade in eleven
months falling $47S. ol8.o0 from 1877. q de-
cline of Is per cent, OF which SOS 011 Go /.
was imports and -52Gllgo] exports. ex-
..a- -
liar; tD Enormous increase in the unem-
ployed. leading. az the Atlantic ports. 10
an emigration 251s0 larger than immi- 4
grafton; 10 Severe contraction Of railway
earnings resulting IN twenty-four rail-
way insOlvencies. involving the largest
capital Of any reCeiverships since those
Of 1888. and causing many dividend re-
dUctons. but followed. after the middle Of
the year. by such enormous reduction iu
expenses that. in some cases. autumn net
earnings actually increased over 1907.
Sudden Rush OF Currency.
90 Sudden rush of currency into The
banks. as a result. first OF removal Of re-
strictons or depositors. and next OF f5Iei
trade. with resultant change from .ssl- I.
000.000 New York bank deficit al the end
OF 1877 70 a surplus of SA601.oo8 az ;he
end Of January, and Of S55ea0.0o5 ca June
2I-the latter being second only 70 the
S1l1. .o09.o5o maximum Of ISs4: 90 As 4
consequence. abnormally low rates for
money, call loans going at > per. cent be
fore the end OF January. a. I per cent n II
eighteen weeks OF the present year and
at less than L per cent In three weeks:
(9 Export Of s7So00oo0 gold. the larses.
except for 1899 since 1856. and net ak
port Of S45.000Oo0, the largest in thirteen
years
- IN spite Of the above recited facts.
q constant spirit Of optimism throughout
the year. expressing itself. first in the
organization Of Prosperity Leagues "
which held conventions and proclaimed
tFat II people would only decide 20 20
they would be prosperous
and. second by q series Of extravagant (
speculative movements on the stock Ex-i
change, in the course OF which IL was :
declared in February, in July. and in No :
vember. that we were not only destined
to get back into the boom Of 1876. but
that We were there already; CO A wheat
harvest which n midsummer promised tot
be the second largest on record. but
which turned out only Of average vol
Aiil. Nie NHotttS dl+u Price I0I tDlS ana
other cereals. however. being so good
rs to enhance very greatly the wealth Of
he agricultural West; CD A Presidential
election. the result OF which the markets
and ell experienced people foresaw. from
the beginning. but OF which. It was
alleged, Tor two weeks IN November. that
Is outcome had totally changed for tFai
better the entire aspect OF American busi-i
Iess affairs
1--WE ST0cK MkpYCT