New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-06-02
TARIFF AND FINANCE
A Reader Sees Gold Exports and a
Panic Following Reduction in Rates

To the Editor of The Tribune
Sir. During the last two weeks 100000
in gold has been shipped to Paris. This
makes a total Of 100000 that has been
sent abroad since the first OF the year.
I'm view Of the effect OF this movement
on existing monetary and business condi-
lions. IS IL not about time for our people
10 open their eyes TO tho possible conse-
quence or pending tariff legislation?
II is estimated that the Underwood bill
will increase merchandise imports 10y
from $50 nDoO co TO S2o00oocoo These i'm
ports must be paid for In gold. This gold
forms the reserves of our banks, and 81
OO0.con Of the metal serves as a basis for
four times that amount I'm credits. Hence
n this bin Increases imports by only
500 coo 600 it means that much Of drain
on bank reserves and contraction Of
credit facilities of AOo, 100000.
Query-Arc the banks in n position TO
stand this train on their reserves
study Of existing conditions shows that
even AS il is these institutions can hardly
keep their heads above water and hence
this added strain is almost certain 10 en-
gulf them completely For months past
there has been worldwide scarcity 81
money But nowhere has the scarcity
been more severe than In this country. In
January last j. r. Forgsn. president Of
the National city Bank OF Chicago. stated
that in the last sixty days the banks OF
the country have passed through period
Of the tIghtcst money since 1907. and If
anything had happened 10 cause things
10 blow up the country would have had
another panic like that Of 1901 In those
sixty days there was not national bank
In the country that kept up its full legal
reserve
During the last three months condi-
tons have grown steadily worse. The
lately compiled figures of the national
bank returns showed cash holdings SIS
10000 below year ago and loans 500
10000 larger. As to the cause Of this
situation. the financial columns OF The
Tribune furnish abundant proof that II is
due to the outflow OF gold Thus its flnan-
cIal report Of March IS says: Since the
first Of the year 100000 gold has gone
abroad II is very evident that the United
States can i'll afford TO spare SO much
gold, and unless the movement IS checked
the effect will he felt more severely than
has been evidenced thus far" Matters
have not mended since March IS They
have grown worse, 100000 more has
gone out. loans keep on expanding and
the condition OF the banks is In some re-
spects the worst N their history.
And now on top vi this precarious situa-
ton we are to have tariff law that Will
100000 more and contract credits by $780,
100000 The worst of II Is that this drain
will he heaviest i'm the first few months
and will come at the most inconvenicnt
time Anticipating a change. importers
have been holding off to get the benefit Of
lower duties. hence we may expect rush
of imports at the start. and II. as is now
expected. the law is in operation by Au-
gust / then the foreign demand for gold
TO pay for the imports will be heaviest
right I'm the crop season. when banks are
already being subjected to the severest
strain OF the year.
Under these circumstances the new tar
III law Is almost certain to cause serious
financial and commercial disaster Every
great panic In our history was preclpi-
tated by gold exports. and in 1881. 1851,
1873 and 1898 the outflow was due TO in
creased imports Of foreign goods Are the
banks any better prepared to stand the
extra strain this year?
The Senate Finance Committee has sent