The Washington times., 1914-09-13
THE BANKERS GOLD
FUND.

bc taken to provide stock Of gold
at Ottawa, against which drafts
shall be promptly drawn to dis
charge our foreign obligations as
they fall due, and that the bankers
q the entire country be invited to
contribute gold 20 such fund, will
have the approval of everybody who
wants TO see this country keep its
financial record unsullied. that this
recommendation comes from Com
mittee of bankers, and a committee
dominated by bankers of the West
and South, will give it great weight,
and do much to allay fears as to
The international situation.
l. is a familiar fact that during
the last week the New York Stock
Exchange was open the sales of
American securities by European
holders were very heavy, and they
had been large in previous weeks.
Moreover, in recent months the bal
ance of trade OF merchandise &C
count had been unfey1rable. Arerl-
can bankers had been borrowing in
London as a means Of temporarily
tiding over the adverse situation in
The exchanges, expecting that the
exports of wheat and cotton would
,oon reverse. .aa situation and wipe
out all of these debts. The outbreak
nt war and the consequent suspen-
ion of exports upset all these calcu-
lations. In addition to the indebted
Less already named, there are heavy
interest payments accruing end
hort time notes issued by American
corporations running into many mil
lions coming iue. The usual fall
movement of cotton would have
aiken care of these debts, but with
practically no movement of cotton
N sight, it has looked as though
he balance would have to be paid
in gold, if paid at all,
AS usual at such 4 time there
have been plenty of people ready
with devices and excuses for not
raying gold, the most common eX-
case being that If later on the bal
ance turned our way we would
rrot ably be unable 70 collect gold
from the same people who are now
"ur creditors. This plea suggests
he German excuse for violating the
neutrality of Belgium. The COM
nittee of bankers has declined to
stand sponsor for such fiimsy pre-
text. 1t is of the opinion that the
people of the United States are
.mply able to meet their outstand-
irg obligations in the terms Of the
contracts, and that they should do
o.
They agree, however, that it is.
lot fair to expect the banks OF New
ork city, 5hrouGh which practically
Il of our foreign payments are
aade, to stand the entire burden Of
IMPLYING gold fo- these payments,
md although there is no way of
compelling the interior banks to
bear their share, the committee
proposes that thev voluntarily do SC.
The reader not verscd III alhing
nay not readily comprehend the
florence between payments made
y tranyic.' of bank credits and
rayments that require gold but
here is IN imDortant difference
J here is also 4 great difference he
wecn the stock Of gold in the United
tates and the stock of gold and
old certificates in the New York
anks. The purchases and indebted
ness abroad which have Dcen max
rng trouble were created by the
vhole country, but the interior set
led for its share by drawing on
1ank balances in New Yorl-, and the
after was obliged to supply gold
or the whole amount. In June,
ruly, and the first week of August
he New York banks gave up from
heir reserves over S10O,O0O,0C0 nf
old certificates, by means ot which
IN equal anount of gold was drawn
rom the Treasury and exported.
kese shipments were of small con-
oquence so far as the Treasury vas
roncerned, but they forced the re-
-rrvcs of the New York banks
S7C,00o,000 below the legal require
.nents. and bu5 for the availability
# the Aldrich-Vreeiand ac: would
have precipitatel 4 panic ever lhe
Uritcd States.
The fact should be emphasized
hat it WIS not The fact that the
'ountry lost $lG),00O,0OO of gold
which made trouble, bat the fact
hst under our old and clumsy bank
ing system the entire loss came out
Of the reserves Of the New York
hanks
The bankers of the West and
South who serve! Upon the commit
H.