Evening star., 1907-10-27
Banking Committee.

Banking Committee.
While the action taken today is not i'm
nedlately efectlve-so far as it relates TO
trust cornpanies-it shows a willingness
Of the clearing house banks to cooperate
with trust companies. which greatly re-
lieves the situation and removes the dan
ger which some have feared that each
individual trust company would be left 10
shift for itself while the associated banks
in the clearing house stood firmly to-
gether. 1t is felt by conservative bank
ers that under present conditions It will
not be prudent to pursue such a narrow
policy. and If 1t Is necessary to bring
the important trust companies into full
fellowship with the clearing house it Will
b. GJua.
The clearing house certificates author
!zed today Will he issued IN substantially
the same form as those authorized from
1850 down to 1873. Banks desiring to
obtain the certificates will be- required
to present th-ir applications TO a loan
committee, which will consist of the reg
uiar clearing house committee. with the
addition of five other bank officers who
are experts in the judgment of credits
and in dealing with banking matters
Thesa additional members are James G.
Cannon, vic presid mt OF the Fourth 1
National Bank: Henry P Dawson. vice
president Of the First National Bank;
Walter E. Frew. vice president of the
Corn Exchange Bank: Gates w. MCGar
rah president OF tn Mechanics National
Bank. and A. II. Wigg.n. vice president
Of the Chase National Bank.
Former Issues.
When a bank satisfies this committee
that clearing house certificates are need
ed, and the request is granted the bank
Will IL Tequ ed to deposit tirst-Class bills
receivable or other good collateral, and
will receive - per cent of the ascertained
y,r lot in ole
ing house cert ficates. These certificates
Will ha accept d in al settlements of debit
balances against the hank at the clearing
hOus.. The effect OF the issue of the
certificates viii be to leave the cash re-
serves of the banks uninlpaired, so far
as the demands through the clearing
house are concerned, and will thus offset
the heavy drain which might be imposed
upon soma of them if large checks with
drawing d"Tosits turned up against them
in the clearing house settlements.
The effect of the decision to issue clear
ing house certificates has usually been
to restore confidence to a large degree.
and thereby to diminish the pressure
which might logically be anticipated, in
view of the previous demand for currency.
The cash left from the banks will then
be available to a larger extent to meet
the ordinary demands for currency from
depositors. The largest issue of certii- |
Gates up to the present time was in 1898,
when the total output was SAL 10000, and
the maxim mum outstanding at any one |
time was S}S. $50 600. The first issue was
made in that year June 81 Just before |
the announcement that the government |
of British India had suspended the free |
coinage of silver. and fear spread that it
would be impossible to maintain the value |
of the silver dollar.
Bank Statement.
No such menace faces the money mar |
ket at the present time, and under the |
operations of the gold standard law the |
accumulation of gold in the Treasury. in |
Guiding that held against gold certificates |
now stands at S9ZS 600. coo, which is the |
largest gold stock in the world 1t is not |
believed that the demands of the present |
occasion for certificates will be large. The |
clearing house banks of New York city |
showed today specie holdings of $780,,
426 Ot0 of which nearly all was in gold, |
and legal tender holdings of sos, ,2S3. 700 |
These items showed q decrease Of S12W0.- |
coo in the bank statement of today as |
compared to that of a week ago. but the |
total reserve on hand stood at S25i, I09,- |
100, which was only 81 ,233, 800 below the |
legal requirement of % per cent. While a |
decline Of the reserve below the legal |
limit is always subject of remark, 1t is
not infrequent during the crop-moVtng |
season, and still leaves SO large a fund of |
cash at the command of the banks that |
under ordinary conditions so trifiing a de- |
felt as that of today would not excite any |
uneasiness. The indications are that the |
cash reserves of the associated banks Will |
be kept substantially intact herea ter by |
the importation of gold. The sharp. fall |
in exchange yesterday, which made i'm |
pOrtations of gold possible a a profit, was |
not modified today 1t resulted in the an |
nouncement by the National City Bank |
of an engagement of $5.NO,tNO on the Eu- |
rop an continent and in South America, |
and runOrs of other engagements of the |
yellow metal. |