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

Washington, Sept 2.-National and
state banks of the United States are
now in a position to put into circula-
ton 100000, 900 in emergency money
at the first sign Of financial string
ency, which the bankers OF the couh-
try say, is not likely to appear.
The weapon to fight possible string
ency was furnished by Secretary Oh
the Treasury MacNeagh, VINO, III an
swer to a letter from the onlclals u 'ne
Chicago clearing house committee asn
ing for an Interpretation or the ehiei
gency currency law, made ruNls Ia
became public last night, ana whiSn
will, in case of need, enaple the va
ers to form effective currency assocla-
tions, by means of which possioie %
les can be checked even before 'heS
gain headway. This ruling was en-
braced in letter to James B. forsan
president of the Chicago clearinghouse
committee.
The law provides that commercial
naner upon which emergency currency
NAV he issued shall include only NOES
representing actual commercial traii.
sactions which bear the names oi a.
least two responsible persons ana nav
NOT more than four months TO run
Question at Issue.
Nearly all of the banks hold the
notes of reputable individuals ana COZ
porations which have been purchaseu
from note brokers. These notes peai
the name of the maker. The ques tioh
In the mind of the members of the Chl-
caeo clearinghouse committee was
would the Endorsement of the holo!ns
hank upon such notes constitute .iie
second Endorsement called for by 'iie
currency law? .,a
Secretary Macveagh holds that the
;r,5orsernent of the holding bank does
NOT constitute the second lndorseiiiesi.
In other words, the notes OF BUSINESS
men who sell their notes to brokers anu
take advantage of cash discounts ~
having cash in their transactions a.e
GOOD as the basis of emergency Sui
rency. ~ the
This decision of the secretary OF lhe
treasury removes the bar "flcn has
held the banks Of the entire "es' ~
check, and now it is likely that .ne
hanks of all the large western cities
especially those of Chicago VIII d. oi.se
begin the work of organizing elhei
gpncN currency dSSOSAeAN
Position Of Secretary.
In his reply to the letter of the Chi
cago clearing house committee oecie
tary Macveagh says in part:
IT can not but feel very strongly that
!. &c wise for us all--for the banks, TOT
tho business communities and the gov
errment-to put ourselves. thru THESE
national currency associations, IN the
nosition where we can secure TO lhe
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 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
Theoretically-if they continued to be
creditor banks-they could do that But
would they do it? And, practically,
could they do it?
State Banks Obligations.
estate 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
he, a,
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 1 know them,
forgetting their community of interest
1 can not see them divided into two
camps at time when all interests re-
quire their united action. And 1 fully
believe that the national banks of Chi
cago could entirely trust the state
banks in a panic or semi-panic or in
the period in which a 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
the currency that the people need, while
the other can issue that currency and
furnish it to the public.
Sees All Banks Aid.
PERSONALLY l do not see that it is a
disadvantage to the national banks to
be charged with this function of furn-
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.