The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-02-28
CLEARING HOUSE FOR
ENGLISH CREDIT PLAN
Dissgrees With FOrgan and
Chicago Bankers on Com
mercial Paper.
SUPPORTS NEW MONEY LAW
First Expression Of Approval
Contained in Report to
Federal Committee.

A highly important Recommendation re-
garlng the character and basis Of ac-
ceptance of commercial paper under the
currency law was sent yesterday by tho
Clearing House committee Of tho New
York Clearing House to the organization
committee of the Federal reserve system
a, Washington in response to a request.
Incidentally the Clearing House put It.
self on record as backing the new system
In the following statement, the first 1t has
made:
THE attitude of tho New York Clearing
House Association IL to assist In every
way In making the new currency law a
success and to define commercial paper,
that the intent of the bill to make the new
circulation both safe and elastic may be
carried out. and at the same time that
present customs and use OF notes in com
mercial business will be recognized and
the upsettlns OF present business methods
avoided"
The question OF commercial paper Is re-
garded by bankers as the most important
single Issue In the application Of the new
law.
The Clearing House committee. whose
chairman is Albert ii. Wiggin, president
Of the Chase National Bank. took issue
WIN JdUeS d. FoTkdu Vi 1ulCdkO anu tHo
Chicago Clearing House committee. Tho
Chicago bankers recommended the reten-
ton as far as possible OF the present sys-
TEN OF commercial credit. in which the
purchaser Of commodities pays cash. which
he obtains from his bank on his own
single name note The old system. which
is still the universal practice In England
and on the Continent, was that the pur-
chaser gave HIS note TO the seller for
ha aaIIar ipdorsing the nd
discounting II at his bank.
Although the present practice could
not we'll be discontinued abruptly" says
the New York Clearing House committee
in It's letter. nevertheless we deem II
matter of the utmost Importance that
there should be Il general restoration OF
the former conditions in this respect"
The committee urges that the full al
vantages OF the new law cannot be appre-
ciated unless the European system Is
brought into operation here.
THE use OF acceptances abroad Is a
prime factor in the open discount market
and a similar system should prevail In
this country. The purpose OF issue OF
that class OF paper Is apparent on its
face. and as IL retr-s itself automatically.
II is an efficient aid In making an elastic
circulation. 1t Is evident from the
language OF the Federal reserve act that
the advantages OF this system were APP
preciated. and We urge that every legiti-
mate effort be made 10 encourage its
general adoption"
The committee put itself on record
against the exercise by the Federal Re
serve Board and the Federal Reserve
banks of the functions OF n clearing house.
II declared the tremendous amount OF
business done by present clearing houses.
and the fact that many state banks may
not Join the system make the retention Of
the present system necessary.
Forms OF commercial paper were sub
mitted In which the maker Is compelled to
declare. In uninistakable terms. his intent
to use the credit derived therefrom only
for the commercial purposes mentioned