New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1914-08-31
REVIEW OF THE
WEEK IN FINANCE
Success of German Arms
and Longer War Cause
Change of Plans.
FINANCING COTTON
CAUSES ANXIETY
Foreign Exchange Still High
Currency Not in Demand
Bank Deficit Lower.

Successes by the German arms
against Great Britain and France
. caused those who had been hoping for
a speedy close TO the European up
heaval TO realize that plans must be
, made against the possibility of a long,
drawn-out conflict. In the absence or
Stock Exchange trading there was Int
tie 10 show definitely how greatly tinan-
ciers here had built upon hope Of quick
rcvcrses by the Germans, but wheat
rose abruptly on expectation of con-
finued war demand and foreign ex-
change rates were higher in spite OF
further exports of grain. At the worst,
however, the Atlantic seemed likely 70
remain in control of the allies for some
time, and carCoes may be expected 70
cross in increasing volume when ar
rangements are completed for England
and France TO finance the purchases OF
needed foodstuffS.
The conference in Washington TO de-
termne how best aid might be extend
ed TO meet the situation caused by Eu-
ropes smaller takings Of our cotton
settled on the issue of Aldrich-Nreeland
currency against notes based on ware
house certificates. Unfortunately II
seems pretty clear that there is already
outstanding a great sufiiciency of emer-
cency bills. There is no boarding 20
produce any such great currency de-
nsnd as we saw seven years ago, and
the injection Of millions more Of the
: new currency means imitation.
The South and the banks that finance
the cotton crop are, of course, IN DIM
Guilty through the unusual crisis that
confronts them, but if the cotton could
be sold, with the banks financing the
purchases. truer value would be ar
rived at and the dangerous precedent
Of the government protecting the price
. Of a staple crop would not be estao-
Nshcd. No matter how strenuously the
administration may disclaim intention
of valorizing cotton. that appears TO be
the practical result of the plan pro-
posed. with the surplus crop held over
in hope that reduced acreage Will mean
+ better market next season. Tobacco
and naval stores as well as cotton are
already included. and further sugges-
tions have been offered to base cur
rency on such staples as tiaNseed and
canned salmon. II would not be sur
prising if the dried fruits of California
. and the salt FISH of New England were
brought forward as proper subjects Tor
government valorization.
Cotton Currency Guarded.
In itself it may be that the currency
20 be issued will be reasonably safe
guarded by the actual cotton or tobacco
in warehouses, by the name OF the
maker of the note and by the mutual
responsibility Of the members of the
currency association through which the
notes are 10 be issued. The Secretary
Of the Treasury has announced that
such notes on warehouse receipts are
10 be classified as securities. not as com
Inercial paper. This will practically
make certain that when the new Fed
eral Reserve law is put into effect 1t
will not be easy 10 define rediscount
paper. the basis Of the new reserve
notes. so as TO include notes based on
commodities instead of commercial
transactions in commodities.
Recommendations were made by a
committee of foreign exchange men 10
assist in settling the tangled accounts
Of that market which, il followed out,
should afford some relief. IL was ad.
lsed that in settlement Of return OF
a draft bought and sold in the open
market by dealers the seller should
pay the original price plus interest at
& per cent. This would prevent unrea-
sonable demands against the man VINO
has sold exchange he cannot deliver IN
the present most unusual corner. Com
merclal D4llS % Sieuls' PuiN'o9'" "
considerable volume by importers so
they can pay in European money CEN
tres for their foreign purchases, are
ordinarily paid for long enough before
maturity TO allow payment TO be sent
abroad 10 meet the original bill. In
spite Of moratoriums in Europe, il is
recommended that no change is TO be
made in this method Of settlement.
Exchange Rates Still Higher.
During the week there was no sign
Of easier exchange rates. Grain bills
and sixty 70 ninety day cotton bills
appeared in some small volume, and
there was some drawing Of finance bills
against credits established in London
owing 20 the greater ease OF the Lon