Albuquerque morning journal., 1913-12-27
BANKS Of COUNTRY.
MUST CONVERT
THEIR FUNDS
New Currency Law May Affect
Securities by Forcing Large.
Concerns Into Partial Lii.
Quidatio0,

issscisl eosars-crur''cr 70 soHsNo Journal.
Chicago. pcc. a6.--With the now
barsmg and currency law on IA
.,'nt or comng into actual operation
gpd with certain banks already givine
notice Of their in'cuiion 90 avail them
selves - its provisions, the effect ot
the great chang on securities has
hc,n too little discussed. though al
most cyciything else connected with g.
hts been threshod over tin It is dry
su1w.
An attempt has been made to rc
tho opinion cf experts. and the word
securities here does not mean ali
uncuNcN those which are thc uhic5
cf go much speculation ia Wall street,
particularly or mainly, hut securiti, g
et all elasses a. properly might Int
clude oven commercial paper, which
Is one form of security though not
clased with stocks and bonds.
A banker who has spent years a
the buying and selling OF stocks an
bonds aud who has been identifie
with many successful promotions, eX
pressed himself n such q way on thisl
1hieet that the interviewer felt oblig-
ed to interrupt him and remark. "Yott
are making ont very bad times"
- can't help that" was his reply.
81 have tu say what | believe To ha |
uu.. Take Tor Example. tho case oi |
the Continental d Commercial bank. |
OF Chicago as good illustration OF % |
concern that has 10 so into partial Il |
quidation in order TO meet with "a |
requirements of this law. That inst |
tuition has % capital and surplus oi |
moro than Ss0000,000, and Il mus. I
ON call Immediately after the new /
system Is organized. give up per cen. |
of that capital ana surplus to the fed /
cr0l reserve bank in It's district and .
carry IFS contribution up TO 6 per cent /
eventually in various instalments. ItI
then has TO give mp. we will say, $25.-
100000 Of country deposits, and the
only qualification of this drain on It's
funds is IN @ reduction Of $1,000 900
or $1,000, ,000 in the amount it is nee
essary 20 carry as q reserve
where is the bank to get the funds
70 make these payments? And these
payments must he made in gold Null
tnly the amount Of money go bce
moved hy This Institution by such %
figure ass will Indicate the ratio of the
whole mass Of bank funds in the eoun-
try 10 the amount represented hy the
Continental & Commercial and YOU
will see what huge proposition
this is. 0s
ITO meet these requirements it will
be necessary for the banks Of the
country to do two things in addition
to the mere matter OF moving gold
from their vaults to the vaults of the
regional banks--sell securities and
curtail loans With such "a tremen-
dous selling proposition hanging over
the market, II is difficult to see any
bright outlook for securities True
Il is that this process will 90 on grad
ually. the first requirement being
per cent Of capital and surplus on
call then I per cent more within
three months and I per cent more six
months thereafter. but there never
has been any demand on the banks
by the government or anybody else
that involved so much shifting about
of funds as this law requires. It is
clear to me, therefore that for the
next six months or year. nothing
good in the security market can be eX-
pected. It will be liquidation and
shifting about and readjustment,
which means disorder 1t does not in
my opinion, mean panic"
These statements are in line with
the experience of mankind in the mat
ter of disturbance in the money and
security markets. II is capital with-
held from action or capital in transit
that causes trouble. Substantially,
one may say that even in panic
time there is not more nor less capital
than there was before, OF will be after
the trouble is over. 1t is a question
where the capital is and what it is
doing, and when there is too much Of
it in transit there is likely to be a
strain somewhere, and a consequent
breakdown. If Sheridan had been at
the front when the battle Of Cedar
creek came on, the rout Of the north
ern forces would have been avoided,
but Sheridan i'm transit was q danger
GUS proposition.
Il is bad time for the banks Of
the United states TO have securities
for sale, or TO be in a position where
deserving borrowers cannot get all
the loans they need The rates for
money are already high, and there is
little motive on the part OF the in
dividual purchaser 60 buy securities
yielding an ordinary income. Wall
street it is true, has elected to put
up the prices of a number of issues
in the last few days, ana tho prospe
OF the enactment Of the new law was
one of the reasons for the advance,
for a definite law in place of an in
Iefnite possibility was regarded MS at
least relief But there are other
reasons for the advance IN prices, one
OF them being the hope Of an in
crease in rates on the eastern roads,
Then there is the bear, who must buy
stocks which he has already sold, and
which were not his own.
Naturally. one Of the objections Of
the bankers to the new banking and
currency system is its artificiaiity.
Business has found it's centers Of ac-
tion, its methods, its short cuts, by a
natural process by the experience OF
the men working IN the system The
steps in and says, this
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