Albuquerque evening herald. [volume] (Albuquerque, New Mexico) 1911-1914, 1911-11-22

iohh't thuh touF mNnine 70 run lh'
plan INV provides that the paper
thus authorized shall have maxi
mum lifc of four months.
'~ro my mind" he SAID. "thc reser-
walton that the bin ~ exchange must
aflse out 81 commercial trnnsnt-
ton II sufficient without llmltinh the
bill ~ four months. sailing ships
siiii carry cargocs and many lcaiti-
mate transactions are presented
which cannot be contaminated With
IN four months For instance, when
this paper was being prepared tie
hank which I represent was called
uE0n % Hirc credit authorizing six
month"; drafts on ~ London CORE
apcndcnt covering coffee 20 Ne ship
ped IN a sailing vessel from Java To
New York The coffee benefits By
the Ions ocean trip and arrives AT ITS
destination materially enhanced ~.
value. ! cannot Imagine any more
legitimate transaction and cannot I'M
derstad why We should lcaislate
against business ~ this character,
1.-THE practice abroad u 10 grant
short credits Ia transactions within
their own borders. but 20 erant cred
its outside which win bridge over the
time necessary 10 make the transac-
lions possible IN granting foreign
credits under our present system we
now exercise great care and viii not
grant such credits as authorize four
months drafts on our foreign CORE
spondsnts n We know that the trans
action does not require more than
ninety days. nor viii We grant cred
~ allowing slxty-day drafts when We
know that thirty IL sufficient.
The clause ~ n now stands does
not prevent eur doing the business.
but u places US IN a position where
we viii only be able Co do part of u
with our own machinery. and will
have "a continue ~ borrow LondOn's
machinery to do the balance.
Tho provision that the accept
anccs 81 the national banks will have
To be properly secured viii need In
depreciation. Many OF banks trans
notions that have no specific deposit
of security back of them are more
secure than those with specific sccur-
ity.
"A clause IN the bill 60 the effect
that the banks could not make loans
except when properly secured would
IN my opinion be Just ~ sensible NJ
n clause that they cannot accept COM
mcfcial paper unless properly secur-
ed. the banks try not 90 make loans
OF any kind unless they feel confident
that the loan II good. and Ia lcndinH
their credit exercise greater care
than IN lending money: documents
attached b. time bills have TO be de-
iiyered against trust receipts and
many legitimate transactions are pre-
scented where there II no specific Sc
curity; for instance. We are often
asked for letters ri credit authorizing
drafts against the receipts OF the cap
tain and engineer Of a steamship for
bunker coal bought in foreign ports.
"The coal cannot be regarded as
security. as II " being consumed
daily. snd the bark has nothing bat
the guarantee Of the shipping firm
to protect lt. In other words. q Is
practically loan on the clean note
l9l thf shipping urm."
In order 90 take itr place IN ths
worlds trade. MIR. Anderson said. the
United states needs nm efficient
banking system, a merchant marine
and better knowledge of the re-
customs Of the countries where
American trade can be extended. The
National Reserve association, he
thought. provided for the first neees-
sity: " the government were 10 find
way Ia admit. through the Panama
canal free Of toll. ships flying the
American flag, hr thought the mer.
chant marine would be realized; and
for the third necessity II prescribed
In own manner of obtaining H.
Concerning banks which would not
be members OF the National Rcsery,
assoclatloh. SIR Anderson said
Provision II made for the banks
subscribing 10 the National Reserve
association's notes as part of theii
reserve. bat no such provision u
made for those banks which do no
subscribe, rnder the existing law
the -subscribing national bank
| and q great many OF tho state bank
| and trust companies would not bc al
lowed e. hold notes Of the association
az reserve money, and unless thu
notes OF the association are mad
lawful money the national bank ac
and the laws OF great number o.
the states will have 20 be changed o
the non-anbscriblng banks will drai
the association Of its lawful reserve
money as the national bank notes ar,
| presented for redemption.
"If the associations notes arr
made lawful money or the dlfferen
laws ara changed so that they can b
held a. reserve By al hanks. The aa
sociatlon must be placed In a posl
ton where Il can have a reasonable
hope Of controlling the volume o
credit through the country; In othe
words. II must be able u make IA
discount rate effective.
THE same hanks which now hul
national bank notes IN their reBeri'
win hold notes Of The association
The same affiliations which now *
lHi between the national banks AM
state banks and trust companies wIi
exist or hc Established between mem
beers 81 the association and non
members. and " there Is any ndvAht
uxe In Keeping the association
notes from Aeeklna fedomptiou, the
viii be Kept out Just as the nations
banks notes are now: ~ fact. the
win have 10 takt the place OF the ma
tlonnl hank notee which arc not
hcing held az reserve money ~ IN
state banks ana lruat companies whe