The Birmingham age-herald., 1914-08-20
CHAOS GIVES
 FEDERAL BOARD A CHANGE
New System Has Excellent Opportunity to Gain Ap- plause and Confidence of American People = Hol- lands Analysis.
Rx HOLLAND


 New York, August 19.-(Special) )-It is spoken of here as most extraordinary. as it is certainly unprecedented. that the es- tablishment of national banking system should be under way at the time of un- pected chaos in the international financial relations of the world Such a condition as the federal reserve board will imme- diately face was, of course, undreamed of when the new national banking law was drafted. One of the purposes of those who framed this law was the fa- cilitating of exchange movements and particularly western exchange.
 Our foreign exchange market, which has within the past 20 years assumed very great proportions, was almost entirely in the hands of private bankers and of state chartered institutions The great est of American trust institutions, as it is now one of the largest banks to be found anywhere in the world, has in re- cent years handled probably a majority of foreign exchange or bills drawn against American commodities shipped to foreign lands and the last year handled between 80 and 90 per cent of the bills drawn against cotton. The custom in this coun- try has been to assume all the risk that is to say, that those in England or upon the continent of Europe against whom bills of exchange were drawn be- hind which stood American commodities would have the money on hand to pay these bills when they were presented.
 Some 20 years ago the New York stock exchange found it expedient to organize a clearing house for the purpose of ia cilitating speedily transactions in the stock exchange. The plan which followed was as far as possible that adopted by the New York clearing house. although in some respects it was much more com piicated. It did serve it's purpose as soon as the organization was in good working order With the close of the stock ex- change there has been silence in the stock exchange clearing house and the accustomed bustling and activity will not be resumed until the stock exchange is opened
 There was no clearing house for inter- national foreign exchange. It was pre- stunned that the establishment of the new national banking system would in great measure serve the purposes of a clearing house of that kind.
 Now that some of the national banks are undertaking to establish a clearing house for the purpose of facilitating the
 
 America and elsewhere, 1t Is practicable, and, in fact, highly expedient, that the federal reserve board as soon as organ ized provide for cooperation in an un- dertaking of this kind It is the common opinion in this city that if the fedora! reserve board should cause thorough CO., operation to be established with the banks which are undertaking to provide a clear ing house for banking and cash credits i'm, Ca1tfh An,a nd of rte nf "a | world-as it probably willthe board will have an excellent opportunity for gain | ing both distinction and the profound gratitude of the American people.
 Better Here Than Elsewhere | Whatever defects there may have been 1 in the old national banking law they were not great enough to prevent concen- l traton of resources. financial and credit, l in a few hours time, which Nave enabled | the United States to withstand what was probably the most deadly attack ever | made upon our money market situation and our credit. This was made possible 1 partly by the amendment to the old na- tional banking law which was adopted on the recommendation of the national mon- etary commission of members of that commission That amendment, supple mented as it was by improvement author ized by Congress a few days ago. has made possible the mobilization of prob ably $1, 500. .000O00 of American securities assets and resources So that as mucf as s1 250, ,C00.00O of new currency can be provided The old law was also supple mented by the purely voluntary action oi 1 the clearing house associations in tho larger financial centers. They were abls by agreement among the members to an 1 nounce that they would issue or pay ou 1 what was the equivalent of money in th' clearing house association based, as Il
 the additional currency upon assets, com mercial paper and bank resources.
 l Automatically, therefore, in connection