Evening times-Republican. [volume] (Marshalltown, Iowa) 1890-1923, 1910-09-02
MACVEAGH Ar
RANGES FOR EMERGENCY CUR
RENcY ISSUE.
MAKES RULING PERMITTING
ISSUANCE OF $500, ooo, 900
Secretary Settles Long Disputed Point
Secs Aid to Both Large and Small
Banks Under New Pan-Notes En-
dorsed BY Banks Held as Good Cir
culaton Basis.

Washington, Sept. 2.-Nat1onai ana
state banks of the United States are
now in a position to put into clrcula-
ton $500,0OO.O00 in emergency money
at the first sign of financial string
ency. which the bankers of the coun-
try say, is not likely to appear.
The weapon to fight a possible string
ency was furnished by Secretary OF
the Treasury MacVeagh, who, IN an
swer to a letter from the o1lclals VI 'ie
Chicago clearinghouse committee ASK
ing for an Interpretation OF the eiiiei-
gency currency law, made ruling thae
became public last night, ana WhlSn
will. in case of need, enable the pank-
ers to form effective currency assocla-
lions, by means of which possible pan
les can be checked even before 'heS
gain headway This ruling was EN-
braced in a letter to James b. forsah'
president of the Chicago Clearinghouse
comm ittee.
The law provides that commerciar
paper upon which emergency currency
may be issued shall include ohly ~,
representing actual commercial iran.
least two responsible persons ana nave
not more than four months to run.
Question at Issue.
Nearly all Of the banks hold inc
notes of reputable individuals ana cor
norations which have been purchaseu
from note brokers. These notes oeai
the name of the maker. The question
IN the mind of the members of the en-
caeo clearinghouse committee was
would the Endorsement of the NOUNS
hank upon such notes constitute .he
second Endorsement called for by the
currency law?
Secretary Macveagh holds that the
endorsement of the holding bank does
not constitute the second lnoorseiiieh.,
In other words, the notes OF BUSINESS
men who sell their notes to brokers anu
take advantage of cash discounts nS
having cash in their TRANSACTIONS are
GOOD as the basis of emergency eui
rency. +1a
This decision Of the secretary or the
treasury removes the bar Which i':' ~
hold tho banks Of the entire west III
check, and now IT IS likely liza l,..a
hanks of all the large western cities
asnaciallv those of Chicago, will at once
begin the work of organizing eiilei-
geucy currency associations.
Position of Secretary.
In his reply to the letter of the chi
.capo clearing house committee, Secre-
tary MacVeagh says in part:
IT can not but feel very strongly tilae
i, Is wise for us all-for the banks, 1or
the business communities and the gov
ernment-to put ourselves, thru these
national currency associations III o,ie
position where we can secure 10 ,he
public that in no case Will the currency
be short. This would inevitably take
away the motive for grasping and mold
ing on to the existing currency 1t is
only fear of scarcity that produces the
currency contraction that so greatly
accelerateS a panic.
Il am interested in the keen analy-
sis your letter makes of the way in
which the state banks Of your clearing
house association might in an actual
panic set themselves to drain the ma
tional banks by demanding redemption.
they continued to be
creditor banks-they could do that. But
would they do it? And, practically,
could they do it?
State Banks Obligations.
state banks are not exempt from
the conditions of panic merely because
they do not issue currency. They, too.
have their obligations to the business
community and to their customers.
They have every motive national banks
have for fulfilling their obligations to
the people at large as members of the
clearing house and of the banking fra
ternity.
while. therefore. I conceive it as
possible that the state banks would
array themselves and their interests
against the national banks and their
interests and against the public inter-
est, it does not seem to me probable
that they would classify themselves in
to a hostile camp.
Il can not conceive Of the banks and
bankers Of Chicago, as I know them,
forgetting their community of interest.
1 can not see them divided into two
camps at a time when all interests re-
quire their united action. And I fully
believe that the national banks of Chi
cago could entirely trust the state
banks in panic or semi-panic or in
the period in which panic could be
averted, even If it can be shown to be
true that the situation of the state
banks would necessarily be better than
that of the national banks, because
of the fact that the one can not issue
the currency that the people need, while
the other can issue that currency and
furnish it to the public.
Sees All Banks Aid.
"Personally / do not see that it is a
to the national banks to
be charged with this function vi fur11-
ishing this emergency currency But
if we should have to admit that it does
involve a weakness on the part of the
issuing banks, it is fair to assume that
the other banks which benefit, and
whose customers benefit, from this
function would feel themselves obliged
by the mere consideration of public
duty to help rather than to hinder the
national banks in the performance of
this critically important function.
Woman Sues For SANDER.