The Birmingham age-herald., 1914-09-07
ACTION OF GOVERNMENT
 MADE PANIC IMPOSSIBLE
Treasury Made. Its Funds Easily Accessible and Thus Prevented Bankers Panic. The Vanderlip Letter.
By HOLLAND

By HOLLAND
 New York, September 6-tSpecial) )-The pamphlet issued by the, National City bank on September 1. presumably pre- pared under the supervision of Presi- dent Frank A. vanderlip with consid' erable portions of it dictated or written by him. has already been widely read not only by bankers. but by others who have sent requests for copies; Some bank CTS say that they have read it two or three times, feeling tht it was wise to do that in order to get at it's full mean ing It has been necessary to Tread be- tween the lines to discover what Mir Van derlip and his associates had in mind when writing scme of the paragraphs, for these have been cleverly written, generalizing a good deal, but clearly conveying to. the reader the idea that much was left un- said which may be extracted from the par agraphs only after slow reading.
 A careful reading has left a general opinion that Mir yanderlip desired to call attention tc the extraordinary fact that at the moment when the national reserve banking system was about to go into oper- alton there me of a sudden unprecedent- ed and bewildering conditions, some of which for a time threatened to impair the American money situation and greatly to affect our gold reserve.
 That the new national banking law is to be in many respects great Improvement on the old law is clearly intimated in every line of the City banks pamphlet. And yet 1t was really under the old bank ing law, since the new system is not yet in full operation. and in cooperation with the administration at Washington that the United states was able to throw up hasty entrenchments which were sufficient for time to protect her own markets. But it was a highly artificial method that was thus adopted and compelled the vol untary cooperation of those who control the clearing house associations, the stock exchange organizations, banks and the administration at Washington. The best that could be done. Mir. vanderip inti- mates, was to establish conditions that may hest be described as marking time.'
 A Central Bank
 The experience of the past month seems to have demonstrated that .soonor or later the United States banking system is like ly to be based upon central bank MT. Vanderlip is careful not to speak of this as "a central bank, but he says that if the entire supply of gold in the country were massed and under the control of unified banking organization the exporta- ton of large amounts of gold at this time would not be serious matter to the United States. In other words the ex- perience alnce August has been suin- cient, MT. Vanderlip very delicately and carefully intimates. to show that the fed- nor can it be made perfect until it is rep resented by what he so carefully calls a unified banking organization.
 That is nothing more or less than a C ntral bank, and if there had been al this time a bank of that Kind In exis- tence under the control of the federal reserve board the situation would have teen much more easily mastered. The Bank of England. with the cooperation of the English government, was able instant y to protect her gold reserve.
 F The comment has frequently been made since the emergency arose that the United States treasury is in possession of consid- erably over s1,0O0, 00o,0O0 in gold, repre- sented by gold certificates. and for that reason the gold that we did export in the spring and early summer to meet the demands of Great Britain and of France was no more than a small portion of the total amount held by the United States. So it has been thought that there is un- necessary alarm lest the demands of Eu- rope would. if met, greatly deplete our gold supply since we have an enormous stock of gold on hand. Were there a unified bank the situation would have been kept we'll in control exactly as the great central banks of England and the continent of Europe are able to master their sudden emergencies.
 Gotham Banks Burdened
 But at this time it so happens that in New York city there were held little over Sl75, GOO, GOO of gold certificates. II was upon the New York banks that the entire burden of meeting the sudden emer- gency was placed, and it rested upon the supply of gold certificates which the banks of New York city possessed, about $175, ,000, GOO. These banks were thereupon compelled to resort to various devices. such as clear ing house certificates and other expedients too technical to be described to the un- derstanding of aymen This critical situ- alton demonstrated that New York is national, not local, from the financial point of view, for the endorsements through which the New York banks are passing of course were influential through out the country, compelling banks almost everywhere immediately to act in self protection.
 While the New York banks were paying out large amounts of money there was for q day or two some danger>that situ- alton similar to that of 1907 would be de- veloped. In fact, it might have been de- veloped had 1t not been for the co-opera- tion of the government at Washington and Congress. which made it possible in- stantly to secure all of the additional cur ron a ho 1lxulp a6 ba