Evening journal., 1913-10-22
NEW NEWS OF YESTERDAY
When a Bank President Re-
fused Government Bonds
as Security
By Holland.

l"In my long experience in the fnan
cial world l have known Just one in
stance when a bank refused TO accept
United States Government bonds as Sc
curity for a loan. | have known times
in panic days when man who possess
sed millions Of government bonds could
not borrow a dollar even though he Of
fered these bonds as security. But that
was not because the banks discredited
his bonds, but because money could not
be obtained upon any terms no matter
what the security was"
This was said 10 me by the late
Charles +. Cox, who for many years
was one Of the chief executive officers
in the financial department of the Van
derbilt railroad systems and earlier in
his life was associated with Daniel
Drew in the banking business.
"Curiously enough, the experience TO
which ] have just referred happened TO
William II. Vanderbilt. ] presume there
are very few bankers in New York who
would not, in ordinary times, have been
glad to discount Mr.. Nanderbilts note
for three or six months and for as much
as million or more, and with no other
Endorsement on the note than Mr.. Van
derbilt's name. But there was one
banking institution in New York which
refused to loan Mr.. Vanderbilt several
million dollars unless he gave it secur-
itv of a different form than the United
States bonds which he offered
1T was at a time when there was a
GOOD deal of disturbance in the specu-
lative market and when the Reading
Railroad Company was the object oil
special attack by spectators who
wanted to break the market. Mr.. Van
derbilt was at that time heavily inter
ested as a stockhoder in the Reading
Railroad Company and when he learned
that the spectators were trying to
break down Reading stock he decided to
protect the market.
"Mr. Vanderbilt called a confidential
representative into his Office and asked
him TO go TO the president of promi'
nent banking institution in New York
and arrange for a large loan. ! do not
remember the precise amount, but It
was several million dollars. The agent
was instructed to tell the president that
Mr. Vanderbilt would put up govern
ment bonds reasonably margined as col
lateral security for the loan.
after an hour or two the agent re-
turned and told Mr.. Vanderbilt that he
had arranged for a loan. Thereupon Mr..
Vanderbilt went to his safe-deposit
vault and took from it a large block of
government bonds. They We're a por-
tion OF the government bonds which Mr..
Vanderbilt had bought with the money
f..aa coll N al
twenty five millions par value OF New
York Central stock.
'In a little while the agent returned
and said that the bank president would
not accept the government bonds as col
lateral securities.
"Mr. Vanderbilt was dumfounded
! There was no better security than gov
ernment bonds for a bank loan. II
asked the agent what the reason wa
and was still astonished when he wa
told that the bank president said tha
Il the government bonds Nere Of too bi
denomination. Each of them was f'
ten thousand dollars He wouldn't tai
bonds of that denomination an
wouldn't make the loan unless he cou
get bonds OF the denomination of or
thousand dollars.
MI ' tNutlDlll hih N'A hh'
whether to be amused or TO be indil
nant. He was, ] think, little OF botl
He was capable of acting with great CO
leritv when the occasion demanded an
he did so in this instance. lie commun
Gated with another banker and aske
him if he would loan him the money o
the security of government bonds eac
of the denomination of ten thousan
dollars, and that banker replied that }
would gladly do so.
"The transaction was speedily col
summated and Mr. Vanderbilt WI
ready to protect the Reading stock +
was. in fact after the first irritatio
passed away, So greatly amused th'
government bonds of the denominatic
of ten thousand dollars would not be a
cepted as the security for loans that !
actually forgave the bank president f'
the momentary annoyance s.
Copyright, 1918, by A. }. Edwards
Tomorrow Mr. Edwards will te
SLOW Lyman Tumball Took Ment
Relaxation"