The Washington herald., 1914-08-02
CRISIS MAY PASS
WITH REOPENING
Closing of Exchanges Gives
the Financial World Much
Needed Breathing Spell.
GOLD AND THE TREASURY
Enormous Shipments Made Little I'm
preston on Country's Supply-Gov-
eminent Cannot Check Movement.
By w. sTEALEY.

By w. STEALEY.
With the exception of the Chicago
Grain and Produce Markets. where wheat
showed a slight loss over the opening
price. the worlds markets continued
closed. and, according to reports from
New. York to local brokerage establish
ments the exchange there will not open
before Tuesday, if then.
The argument is advanced that actual
fighting as a relief from uncertainty
would be Of advantage in Strengthening
stock prices.
The wisdom Of closing all the ex-
changes is becoming more apparent
With the prospects of a general Euro
pesn confederation. this action on the
part Of American exchanges is q proper
one, not because our exchanges are not
strong enough to stand on their own feet
but because those exchanges, so long as
they remained open. invited a food Of
thoughtless liquidation from the eptire
world. It was inviting a wholesale and
needless slaughter of quoted values
which might have worked an inconceiv-
able hardship upon the business and
finances OF this country. which has no
right to suffer needlessly through the
plight Of Europe. To have remained
open would have meant the wholeSale
destruction of credits, and might indeed
have paralyzed business absolutely.
After the first severe shock Of this
week it appeared for a moment as though
New York would be able to absorb Eu-
ropean offerings without difficulty. At
the bottom Of the first slump there was
a buying power broader than anything
that has been seen in this country for
years. American capital appeared al
most as by magic to snatch up the un-
doubted bargains which were cast upon
the counters by the stern necessities Of
Europe. However, the rally thus caused
was quickly smothered under an ava
lanche of offerings which could not bel
withstood. So long as there was pros
pect that the war could be localized be-
tween Austria and Servia, the governing
boards Of the various exchanges veryl
properly determined to maintain in New
York a market for stocks and bonds. |
When, however. il became apparent that
such localization was impossible, il was
the part Of wisdom to remove for Pc
riod the possibility of a financial COL
lapse.
This market vacation will be a benefit
to the American people and to the world
at large. because it will give holders of
shares time in which TO consider the sit
uation carefully. 1t will prevent hasty
action and the unloading Of sound Sc
curities on the spur Of the moment. II
will conserve values and will serve to
hold our financial structure together.
Sentiment generally is 10 the effect
that the closure will be brief and that
it will extend merely over the initial
period of uncertainty. Once il is def
nitely known just what countries are in
volved in the conflict, and the true, pro-
portions Of the confagration can be as
certained, the exchanges will presumably
reopen on a sounder basis. Before they
do reopen, however, there can hardly be
a question in the minds of thoughtful
men that the banks, the trust companies
the directing heads Of the big insurance.
and Of every other reservoir
Of capital will be found standing firmly
ready to put a support behind
the markets which will prevent any de-
in spite Of the severest
Liquidation which may have TO be faced.
Ia other words the financial interests of
this country will be ready TO back up
securities and American indus
tries with every dollar of the accumu-
lated wealth at their command.
The action of Secretary of the Treas
ury McAdeo in calling for a conference
Of New York, Chicago and St Louis
dnanciers Monday was distinctly encour-
aging to financiers, who believe that the
situation has cleared considerably with
from the Treasury Depart
ment
The outflow of gold will be relatively
small from now on. Insurance rates are
prohibitive, which is the main
factor.
The huge shipment Of $4,000. 900, made
since December 81, scarcely has made
any impression on the vast stores of the
precious metal in the Treasury vaults of
The United States The daily statement
Of the Treasury shows that the govern
nent has at the present time a total gen.
sral gold fund of s1,O4O,Ol5.s69. not count
ng a gold reserve fund of s150,oe0 900. The
general fund consists of $50, ,064.s24 gold
,oin and S23s. .s5l. .035 gold bars The reserve
fund consists Of s1oo.0oOooO gold coin and {
80, 100000 gold bullion. The latter fund is
reserved against s54s,1140l6 United States
notes and Treasury notes of 1890 while
The general fund is against gold certif-
,ates issued by the government.
In addition to the vast hoard of gold in :
he United States Treasury, which is the
argest store of the precious metal held
anywhere in the world, the United States
las a steady increment of its gold supply
II approximately ssOoOo,Ooo a year pro-
iuced by gold mines within its territory
Bankers were asked yesterday whether !
I would be possible for the government
10 stop the export movement of gold If
iesired. They ridiculed the idea. In the
irst place, they did not consider It good
economy to stop a gold movement which
s in the natural readjustment of worlds
,redits. This would mean that Americans
10 not want to pay their debts. More
,ver. they pointed out that there was no
,hance Of the movement reaching proper
ions large enough to threaten the re-
'erves Of the government I
As TO the government itself. II could
rot stop the movement without aclCnowI-
.dging bankruptcy, inasmuch as gold GER