The Hood River glacier. (Hood River, Or.) 1889-1933, 1914-09-17

10 Ue put out IN an unlimited amount.
Such currency associations have been
formed in New York and Chicago, and,
| believe, in other large centers. Al
ready the strain upon the financial in
stitutions of those centers has been so
materially lessened that our recent tel
eglams from those points state that
business again is proceeding normally.
1t is not believed by the bankers of
Portland that it will be necessary 10
issue any VTeeland currency in the
Northwest since our correspondents in
the East assure US they can forward US
an ample supply Of currency from their
associations without difficulty. Never
theless, the Portland Clearing House
believes it TO be the better part of wis
dom to perfect such an organization in
Oregon. To that end the national
banks of Portland. associating with
themselves a few of the banks of the
neighbOring cities, have taken the nee
essary steps for such an organization
by passing, in their different boards of
directors. the proper resolutions. The
preliminary steps have all been taken
and we now but await receipt from the
Comptroller of the Currency, of the
necessary forms to be filled out before
finally completing the organization and
making available an amply adequate
allotment of what, perhaps, | may call
Vreeland currency.
Incidentally, it may be of interest to
you to know that such currency associ-
alton must have in it at least ten ma
tional banks, with combined capital
and surplus of at least five million dol.
lars. The proposed Portland AssOcia-
tion as combined capital and surplus
of eight million, eight hundred thou
sand dollars, by reason of which we are
permitted to receive over eleven mil
hon dollars of Vreeland currency for
which "Uncle Sam" becomes the re-
sponsible payer. This sounds like an
immense amount of easy money. but
nevertheless there are restrictions
placed about its issuance that prevent
an unhealthy initiation. The banks of
the association applying for any of this
curvrency must hypothecate bonds or
commercial paper maturing within
ninety days or four months, such Sc
curity to be approved by the executive
committee of the currency association
and finally by the Treasurer of the
United States. For the currency issued
to any bank in the association, each
and every bank in such association be-
comes responsible in proportion to its
capital and surplus. In addition, there
is placed upon the issuance of the cur
rency tax at the rate of three per
cent per annum if the currency is out
standing three months, four per cent
per annum for four months, and so on
up to six per cent per annum if the
remains unredeemed six
Necessarily this will limit
the unwise and reckless circulation of
such currency.
1t is needless to tell you that, should
the necessities of our commerce demand
it, the Portland banks and their associ-
ates will not hesitate to take out all
the currency needed for the purpose of
facilitating the commerce of this Sec
tion of the country. Nevertheless such
will not be taken out unless
the pressure for its use becomes in
very great measure more severe than it
is today. 1t places liability upon each
and every bank in the association that
bankers do not care to undertake un-
necesrily, and is issued at cost that
must eventually become a severe bur
len on the community.
One moving cause for the belief of
the Portland bankers that we should
go slow in issuing the Vreeland cur
&c kat kn n
serve Act will shortly be put in opera
ton. The Federal Reserve Board has
now been organized, and they are
pushing forward rapidly the organiza-
tion of the twelve District Reserve
Banks. 1t is stated that by October
these banks will be in operation. If so,
It will easily solve any existing tinan-
,ial troubles and be far less expensive
to the borrower. AS you know, the
Reserve Bank of this district will be
located in San Francisco, but we are
using every effort to have a branch
established in Portland at as early
moment as the parent institution in
San Francisco will permit. Should,
however, the establishment of the
branch kank be delayed more than is
expected, nevertheless we shall be able,
possibly at some inconvenience. to
transact our business directly with the
San Francisco bank.
Incidentally, | wish to call the atten-
lion of the business men of the COM
unity to one change that will ensue in
our methods of doing business after
this bank is established: Commercial
paper proper for discount at the Re-
serve Bank must have fixed date of
and interest must be taken
1ut in advance. 1t is within the possi-
oilities that when the Reserve Bank is
in operation a member bank will be
able to liquidate every dollar of its
paper, provided such paper
IS of the proper character. That means
that a properly conducted member
bank cannot suspend or fail.
Now, for the futurel A man is a
fool who attempts the role of a prophet
but we're to venture such foolhard-
mess, should say that the next year
Or two will see in Oregon and the
United States generally, due to the
of others, such prosperous
as never before prevailed.
In the end, however, we cannot have
such an enormous economic waste as
this great European war seems likely
to cause, without materially affecting
the ability of those nations TO purchase
our exports. 1t is as if you had
customer whose stock of goods
was destroyed by fire and who wired
you to replace the same at any price.
0u might make handsome profit on
the first shipment but thereafter the
country storekeeper would be so Grip
pied that his purchases for some time
TO come would be materially lessened.
So it seems to me will be the case with
the nations of the world. The great
nations of Europe, by the destruction
IF life and property, will be reduced
to such poverty that they will not be
able to buy the goods we have to sell.
The result necessarily will be stagna-
lion and depression in business.
On the other hand, as an Offset to
this forecast of the distant future. IS
The fact that by the war loss that
comes to European nations there will
be open TO our enterprise the vast
commerce of South America that now
s trihufarv IN Enrone This ehould