The Washington herald., 1914-10-31
Tied Hand and Foot.

Although no official statement regarding the mat
ter has been made either here or in London, ther,
are many indications that bankers and other hnancia
authorities in Great Britain are making ready for tn,
reopening of the London Stock Exchange which, like
the stock exchanges of our own country has beer
closed since the outbreak of the European wa
From all we gather on the subject, there is ever
reason believe that so important for the busnes:
interests of the country do the British authorities con-
to be- that the Bank of England prepared with the
sanction of the government, to take over the vast
quantity of loans against stock exchange collateral
held by London banks and bankers This, in effect
means praiseworthy effort to entIanything
sembling wide open break in the English security
market by reason of mere groundless panic. This
may seem like large effort but it will really add no
more to the governments responsibilities than was
involved in the general guarantee of banking and
commercial transactions previously entered into in
good faith, that was promulgated by his majesty's
government early in August The courage, vigor,
breadth of view, anrd general power to grasp with
a situation in big way at the right time that has
generally been characteristic of England in emer-
gency, has never been more prominently displayed
than in the present crisis.
We are moved to this reflection by the notifying
knowledge that in all this great international financial
emergency Which has brought our own country into
peril less than England the British government is
free to take whatever steps are suggested by both
prudence and intrepdity, while our own government
stands at such time with both its hands and its
feet tied. We have just remodeled our financial
system by of the Federal reserve act and the
Federal act expressly makes it impossible that
the Federal reserve banks should do the one thing
that ought to be done in order to the trade
and commerce and finance of the country from such
unparalleled predicament the present This
great arm, in the law it stands, is substantially
broken reed For purposes. of general help in such
contingencies, the Federal Reserve Board can issue
circulating notes based upon the notes, drafts and
bills of exchange issued drawn by the member
Federal reserve banks for agricultural industrial
commercial purposes, even upon any goods, wares,
merchandise whatever for practically anything
except notes. drafts bills drawn for the purpose
of carrying trading in stocks bonds or other in
vestment securities. Here is the provision from
Section I3 of the Federal reserve act which denies
our national banking system the power to do that
which the national bank of Great Britain is so freely
doing
Nothing in this act contained shall be construed to
cured by stable agricultural products other goods
wares, merchandise from being eligible for such
discount but such definition shall not include notes.
drafts or bills covering merely investments, issued
OF drawn for the purpose of carrying trading in
Stocks bonds or other investment securities except
bonds and notes of the government of the United
States
That is to say the financial organization which
fullls the purpose in the United States the
Bank of England does in Great Britain is precluded
from extending help of this kind in hour of grave
and unexpected financial peril to the very objects
and concerns that in more peril than anything
else namely the securities representing the partici
patton by the people in the business and industry of
the land.
Congress will be in session again before our coun-
try shall have emerged from the stress of war; and it
Is to be hoped that shortly after it reassembes, it
will repeal this unnecessary prohibition whose danger
has been strikingly illustrated by the emergency
through which passing.