The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-12-10
M'ADOO PRAISED IN
: M'ADOO'S REPORT
Department, Aided BY Bankers
and Business Men. IL Is Said.
Avcrtcd q Big Panic.
L. s. STOOD SHOCK OF WAR

\
wAsniNoroN, Dec. o--The rerort OF
the Secretary OF the Treasury on the
state OF Government finances in the fiscal
year ended June 30 last. issued .J-day, de-
votes much space to commentator and
unstinted praise OF Secretary McAdoo and
mis- associates for their labors in restoring
confidence IN financial affairs ana avert
ing panic Of cataclysmic proportions
IN the critical period after the outbreak
- the European war
More than one hundred prges ~ the
document are given over to an erhsus-
i've review Of the financial crisis and
the successive emergency measures taken
10 restore the credit machinery
Through the prompt and effective ac-
ton Of the Treasury Department" reads
the report and with the cordial and
intelligent cooperation Of the banking and
business interests OF the country the dan
ger has been ayerted" Continuing the
reports says:
"The outbreak OF the European war
prscipitated many grave problems. Inter
national credits and exchanges were
completely dsorganiIed, ocean transporta-
ton was for a time partially paralyged
the entire business and economic structure
in this country was shaken TO its founda-
tons and a catastrophe OF calamitous pro-
portions was narrowly avtrted
Country's Strength shown.
1T IL a tribute to the economic strength
and soundness of the country and 10 the
tri.. liam of IN "A
walk OF life that this shock has been 50
admirably withstood. A panic Of cata-
clysmic proportions might easily have re-
suited, and IL II had the injury 20 the
country would have been incaculable ana
many years would have been required TO
overcome its effects
Confidence has been restored and specie
payments have been maintained in the
face OF the world. Al no time since the
war broke out has there been. to the
knowledge of this Department, with the
exception of a few isolated cases. a failure
on the part of any solvent national bank
10 honor its checks In currency or MONEY
or to meet its obligations.
THE general revival OF business through
out the country is the best eyl-
dence that confidence has been re-
stored. Interest rates have come down
from the high level to which appre-
hension had lifted them. restriction OF
credits has disappeared. foreign exchange
has reached a normal basis and a feeling
Of optimism pervades the business world"
The $l35,OOo.OO0 cotton pool plan 10
finance the 1914 crop. a scheme which had
the backing OF Secretary McAdoo and was
put into operation despite objections of
leading banking interests which opposed IT
on the ground that II was unnecessary, as
well AS uneconomical, is discussed a;
much length
OF the gold fund the report says
t1,at
was involved in that OF foreign exchange.
1t had early become apparen, that unless
the price OF London exchange could be re-
duced from the high level then prevailing.
viz, above So pound sterling, to APP
proximattiy the normal rate of sts7 a
pound sterling the interests of our people
must suffer seriously.
THE war found our business men and
bankers indebted to London In the sum
of approximately $3.50, 100000 maturing
by January /. 1915. TIE city o4 New
York owed sso,oooOoo; in London AVID
narily this debit balanIe would be paid
of by our shipments cotton (princi-
pallD, grain. foodstuffs' Ard U,Aer cont
modities But the check upon aSi uncer-
talnty about normal expectations made IL
necessary TO devise some measure TO on
able our business men and bankers 10
meet their foreign obligations in gold
without suffering the great losses tina. the
high price OF exchange at that time would
have compelled.
1T was thought that a fund OF 500.
000.c In gold to he contributed BY the
national and state banks and trust COM
panes in the various states, to be admin
istered by committee OF bankers in New
York. would restore confidence and afford
relief A plan was therefore prepared
and on the twenty first day OF september
1914. received the approval Of the Score
q hD T.4I NJ Il h.. 4
serve Board
Exchange Price Reduced.
This together with tho increasing ex-
port trade OF the United States, has had n
salutary effect in reducing the price OF
exchange to normal basis. This In turn
has produced a favorable effect upon the
foreign demand for cotton"
Secretary McAdoo says OF the new
banking system:
Il am pleased TO say that notwith-
standing the short time allowed to perfect
the organization of the banks, their officers
and directors have responded with COM
mendable zeal and vigor. and as result,
the Federal reservs banks were opened
Tor business In each OF the Federal re-
serve cities on the 18th Of November,
lplA l believe that these banks are 20.
ing to exert far reaching influence for
good upon the banking system and busl-
ness OF the country
Mr.. McAdoo contends that to pre-
serve the sound condition OF the Treas.
Ury It would he well to extend the opera.
ton OF the war tax"
II venture to suggest that this iimita.
lion TO December 81. 1915, should De re,
moved and the act amended SO as to pro
vide that 1t shall remain in force unit
peace ~ restored in Europe. that fact tC
he determined by proclams ton OF tn,
President"
The Secretarys report left figures e
speak for themselves concerning the new
Democratic tariff. The report said:
when the tarIff law was written IL wa,
estimated TO produce from customs in rs
FIRST year 500 600 600 There was actu
ally produced IN the year from custom,
s2s2, 32o,0li 81, or $@2.32o,014.5l in exceS.
nf the estim teS. which took into aC
count the estimated revenues for tire,
months under the old law and min.
months unf"r IA" new law II was In
tended by tho tarn ACT OF October 2
1919, to remove the duties from certain
necessarics Of life ana lower the dutie
on others,
ITO make up the deficit caused by TN
loss In revenue from customs the in
come TAX prov sion was enacted as par
OF tho new aot and the provisions for
tax on corporations were amended