the regulations in force in certain European cities, and makes suggestions for combating the smoke nuisance in England.] LAWSON (W. P.). Oxford Finance: A Rejoinder. Contemp. Rev., Jan. [Further discussion of the finances of Oxford University.] LOUIS-JARAY (G.). Les dispositions économiques du nou veau compromis austro-hongrois. Rev. Econ. Intern., March. [Describes the stipulations with regard to treaties, tariffs, railways, revenues, and the Austro-Hungarian Bank.] MONTGOMERY (H. J. B.). Criminals and Crime. Ninteenth Century, Jan. [Professional criminals are not to be got rid of by the simple expedient of locking them up. We must stop the process of manufacture.] PRINZING (F.). Der Prozentsatz der Militärtauglichen als Massstab der körperlichen Entwicklung einer Bevölkerungsgruppe. Zeitschr. f. Socialw., Jan. THE QUARTERLY JOURNAL OF ECONOMICS AUGUST, 1908 SUBSTITUTES FOR CASH IN THE PANIC OF 1907. THE autumn of 1907 witnessed what was probably the most extensive and prolonged breakdown of the country's credit mechanism which has occurred since the establishment of the national banking system. Upon no previous occasion have the banks of so many cities resorted to clearing house loan certificates for the settlement of their mutual obligations; never before have they issued them in such large amounts, nor for such long periods of time; and never have these certificates been so extensively issued in small denominations to meet ordinary bank obligations in lieu of cash. Even during the critical periods of 1873 and 1893 it is unlikely that as many banks limited the payment of their obligations in cash, altho the proportion of existing banks which so restricted payments may have been as large. In the pages that follow will be found some record of these phenomena, of the several ways in which banks and other firms limited their cash payments, of the issue of loan certificates in the clearinghouses of the country, and of the ingenious invention of multifarious other substitutes for legal currency during the weeks of hoarding and suspension. Of official encouragement to suspension, singular and striking examples occurred in several states. The most extreme instances were the legal holidays declared by some of the Western governors, which were intended to authorize banks, as well as other firms and individuals, to decline payment when unduly pressed or wherever they saw fit. The governor of Nevada was the first to resort to this measure. Beginning on October 24, he declared legal holidays continuously up to and including November 4. On October 28 the governor of Oregon also began declaring such holidays, and he continued to declare them by subsequent proclamations until December 14. In California such holidays were proclaimed without interruption for a still longer period, from October 31 to December 21, thus suspending all debts for more than seven weeks. This method of relieving business involved great inconvenience in unexpected ways. The whole judicial system was thereby brought to a standstill, the courts being even restrained from trying criminal cases. The governor of California very soon felt obliged to call a special session of the state legislature, and so secured authority to declare "special holidays" during which only civil actions based upon expressed or implied contracts for the payment of money would be precluded. Scarcely less radical was the action of the officials who supervise banking in several middle western states. In Indiana the Attorney-general, who had been invited to the meeting of the State Bankers' Association at which it was decided to suspend payments, advanced the opinion that no state law was violated in limiting payments on deposits, when demanded, if it was proposed to make a small payment in each case. At the same time the Auditor of the state addressed the following hastily com posed letter to all banks and trust companies within his jurisdiction, virtually advising them to suspend and giving assurance that the question of their solvency would not be officially raised: INDIANAPOLIS, October 28, 1907. TO THE INDIANA BANKS AND TRUST COMPANIES: Gentlemen,-Your bank being solvent, should it adopt the same rule that has been adopted by the banks of Indianapolis and refuse to pay to any depositor or holder of a check only a limited amount of money in cash and settle the balance due by issuing certified checks, or drafts on correspondents, such act, in this emergency, will not be considered an act of insolvency by this department. The same rule will apply to trust companies. JOHN C. BILLHEIMER, P.S.-The question of your solvency is to be determined by yourselves upon an examination of your present condition. Similarly, in South Dakota, the Public Examiner and Superintendent of Banks wrote to the state banks throughout that state, calling their attention to the action of the banks of Sioux Falls and Madison in limiting the size of cash withdrawals to $10, and in issuing cashier's checks to take the place of currency. He recommended that they do likewise, as indicated in the following excerpt: I would suggest and recommend that where there is more than one bank in a town, they get together and agree along similar lines, for the protection of themselves as well as the public, and where there is only one bank, that such bank take the matter up single-handed or confer with banks in the towns nearby. I would also suggest that you get the business men of your town together and explain to them the situation and the proposed plan, and in this way secure their approval and support. This method will of course be trying and unpleasant as well as inconvenient not only to the banks but to their depositors, but when the people understand they will gladly co-operate for the |