AMERICA'S DAY OF RECKONING.

Otago Witness, Issue 2812, 5 February 1908, Page 15

AMERICA'S DAY OF RECKONING.

It is a question whether the great financial upheaval in the United States is being faced as it ought to be. Under the stimulus of an almost criminal optimism, loans and speculations aro being- continued. The Financial News remarks : " The one unquestionable fact in the American situation is that the crisis is the fruit of over-trad-ing and ovei-banking. Individual traders have, carried their operations far beyond the limits of their resources, among which v.-o class the degree of banking or other lean accommodation which they might legitimately depend on retaining in time of pressure. Speculation of all sorts— in land as well as in produce and securities — has been carried on at a high pitch, and the banks have been the too willing ministers to this universal over-trading. The cure for this is to face the day of reckoning — to contract excessive credit, and curtail grandiose commercial ambitions. "What we fail to find in American advices is any general disposition to face this disagreeable and inevitable process, though here and there loans on stocks have been called in. The entire community seems still possessed by the spirit of the gambler, who cheere himself with the fiction that if he gains a little more time and has another throw all will como right. . "Sooner or later the true meaning of the situation will have to be faced, and there will be a general liquidation and contraction of credit. Tho brinks cannot tro on flnancn? large blocks -of etcclt^ and shares, and bolster up an inflated industrialism merely becau=e the conceit of the American people will not allow them to acknowledge that they have overdone everything, •and must pay the reckoning. Adding to the currency at the expense of a needless increase of the national debt will not restore healthy conditions, but will rather retard their restoration. There need be no famine of currency were there not a plethora of credit, which there is a tacit coJisph-acy to maintain. The inevitable effect of an increase of currency is to proide an apparent iustification for the topLeavv edifice cf credit. When the upper storeys of the edifice should be taken down, tho American financial experts proceed to underpin it. A temporary shoring-up will not prevent it toppling over in due course. The American* may postpone, but they cannot abolish, the day of reckoning."