The Washington herald., 1914-08-23
FINANCIAL HUB
needs DEPOSITS
Foreign Exchange Market
Could Be Relieved by Ac-
ton 81 Treasury.
WEAK STOCK ACCOUNTS
Cotton Selling Low on Lack of For
eign Demand-lncrease in
Cost of Drugs.

In financial circles, there is expressed
a good zeal of curiosity regarding Sec
rotary McAdoo's reported plans TO relieve
the foreign exchange market by de-
posting money in the New York City
banks. So far as the effect OF such de-
posits upon the New York money mar
ket the action would, OF course, be fav'
orabIe, and would mean a return by the
Secretary of the Treasury to the former
usage of depositing government money in
the banks at the financial metropolis OF
the country, instead OF, as one banker
put it, placing the funds at crossroad
centers."
While the operation Of the customs
laws compel the government to draw
actual money from the New York banks
TO be locked up from the regular chan
nels. nothing could be more reasonable
or logical than that the government
should redeposit the money in the banks
from which it had been taken.
The foreign exchange market although
nominal as TO rates, shows the increas-
ing effect Of scarcity of exchange. Moth
ing is quoted in sterling cables below
sos. with sos for demand. The best
authorities continued to lay stress on the
fact that there can be no appreciable
betterment in the international situation,
until the foreign exchange market has
been opened up. and resumes compare
tivly normal conditions.
The three months moratorium declared
in Germany, although specifically de-
clared against foreign obligations. was
expected to affect unfavorably German
inland trade indirectly. There was some
difference OF opinion among bankers as to
whether the moratorium would not tenn
porarily relieve our merchants from pay
ing their bills to Germany.
1t is understood that the increased OPP
erations of the Bank Of France in COM
merciaI paper TO which inference has
been made in the last two days, are con-
fined strictly to French paper drawn
against specific commercial transactions.
In normal years French bankers are
among the heaviest investors in British
commercial paper.
Satisfaction was expressed over Secre-
tary Of the Treasury McAdoo's state
ment that at various financial centers
clearing house certificates. which had
been taken out earlier in the war excite
ment, are being retired. New York
bankers at the moment are not buying
paper. leaving that market chiefly to the
bankers. Discount operations
at below per cent are the exception.
In the local money market there has
been no change so far as standing call
loans are concerned. Some banks are
charging per cent, and others, the ma
jority. are charging per cent.
Weak stock Accounts.
A member of one Of the stock exchange
houses believes that brokers are not.
as a rule. putting forth the efforts they
should in demanding that the weak ac-
counts on their books be strengthened.
The attitude of many customers" he
says. whose margines have been
brought down to slim proportions by the
slump in prices in that they should
worry now that the exchange is closed.
Thus if when the exchange opens there
Is any temporary further recessions in
prices, many accounts will have to be
Iiqudated. / believe it Is entirely pos
sible to eliminate these weak spots to a
large extent while the exchange is
closed. In a great many cases custO-
neTs who have not taken the trouble to
raise money to further margin their &C
counts would do so il their brokers took
a firm stand on the matter. II no more
margin is forthcoming. liquidation Of part
Of the account under the arrangements
provided by the New York Stock Ex-
change should be insisted upon.
AS regards pening the exchange any
talk of doing so under present cOndi-
tons without restrictions is idle. be-
ieve the best course to be pursued when
things have cleared up just a bit more
Is to try to arrange to open our ex-
change and the London Exchange sImuI-
.aneOusly for a trial day, transactions
10 be for cash only, then we should be
able TO form some opinion of just how
much liquidation is hanging over us, and
be able to decide what course to pursue
Stnnd of Georgia Bank.
Banks in various parts Of the cotton
States are following the advice of w.
P. C. Harding, Of the Federal Reserve
Board. in extending credits to those who
have borrowed from banks for the grow
ng crops Mr.. Harding. in a recent in
.erview, suggested this renewal Of obi
cations as the best means of dealing
With the complicated cotton situation.
Below is a circular letter signed by r.
D. Waters, cashier of the First Ma
ional Bank of Biakely, Ga, advising its |
customers as follows:
Owing TO the fact that the price of |
cotton is depressed, and there is really 4
10 market for same, and realizing that |
he world must be clothed sooner or |
alter. We take pleasure in stating to |
hose who are indebted to US that cot
on receipts stored in the farmers |
warehouse and insured against fire will |
,e accepted by this bank for the purpose |
II extending any indebtedness due US.
n order that we may finance our own |
business, and realizing that the cotton |
,ecelpts will necessarily be a basis of |
,redit, We will ask our customers who |
iesire 10 take advantage Of this not to |
Wait until the maturity of their papers" |
COtton's Poor Position.
The Southern organizers arc mention |
nE u cents and L 1-2 cents a pound as
he minimum for which they should hold /
he cotton crop. This will depend very |
much on their capacity to hold cotton
BY the aid of liberal governmental pro- |
plsions for lending money. The mills are |
Jingularly silent as TO what they may |
10 in the premises.
The cotton manufacturers are not like
Y to be enthusiastic in promoting any
plan which would help to given an ar
ticial value to the raw material. Prob |
IDLY there would not be much complaint
II l2-cent cotton on the part Of the
Mills. But growers may be fortunate II
hey get something less. An average Of