Evening star. [volume] (Washington, D.C.) 1854-1972, 1914-09-06
FEARS INITIATION
Of j. S. CURRENCY
Cousins Sounds Warning
Against the 0verissuing OF
Emergency Notes.
FOREIGN OBLIGATIONS
CAUSE OF SOME WORRY
Bankers Trying to Devise Plan of
Payment Without Too Heavy
Drain Of Gold.
BY w. S. COUSINS.

NEW YORK, September "a careful
survey of the money situation at the
present time leads to the conviction that
there is a large and unnecessary amount
of money being boarded in every part Of
the country. The old stocking and the
chimney corner have been called into
play on very large scale; and while
bankers and government officials are ex-
erting their every influence, and employ
Ing all their facilities for the strengthen
ing of our financial position, they would
find their task less difficult were not large
sums Of gold and currency lost to gen.
eral circulation for the time being. This
boarding movement has extended to Can
ada, where American gold and currency
are being accumulated and held tightly,
due to the peculiarly restricted money
supply in the Dominion at the present
time.
Even superficial study of the financial
markets shows the following conditions
to prevail. Due to the closing of the
stock exchanges not only in New York,
but in many other large centers, there is
absolutely no demand for funds for spec
ulative purposes; the foreign exchange
situation is such that practically no
movements Of currency abroad can be
attempted at this, time; the Treasury De-
partment stands ready to deposit" any
desired quantity of its gold reserve for
crop-moving purposes; bank balances
have been settled through the medium Of
clearing house certificates, while emer-
gency currency notes to the extent OF
nearly $500. 100000 have been issued for
general circulation. The question natur-
ally arises, why the necessity of all these
extraordinary measures2-and are We not
in serious danger of d currency imitation
that will later work havoc in our COM
mercial markets?
Sees Grave Danger.
Secretary McAdoo announced last week
that he would accept cotton warehouse
receipts as approved security for the is
suance of national currency under the
provisions of the Aldrich-V reeland law
While such step will naturally be TAX
en- with caution and prudence, there is
grave danger lest the emergency process
be overdone, with a currency imitation as
the outcome. 1t is, of course right and
proper that the cotton growers-and in
fact every one similarly situated-should
be afforded every possible protection, in
stead Of compelling them to sacrifice
their commodities at ruinous prices.
Looming money on cotton warehouse re-
ceipts is not a novel process, and the
banks have always been in position to
afford ample accommodations, consistent,
of course, with conservative banking
methods. 1t is, however, an unnecessary
and unwise process to pass along these
receipts from the member banks to the
Secretary of the Treasury in order that
more currency may be issued on them.
If currency on cotton, then why not on
any other commodity that can be pre-
served in a warehouse. 1t is not a
question of principle, for this is a time
when spirit of loyal corporation should
be in evidence from the Atlantic to the
Pacific; but of method.
The ruling of Secretary McAdoo that
cotton warehouse receipts are to be list
ed at 70 per cent of their value. which Is
the rating for bonds, instead Of at 30
per cent Of their value, that of CONNER
cial paper, Is certainly open to criticism.
While condemning directly the PROPOSE
ton of cotton valorization. he is indirect
" giving his sanction to such scheme
by his ruling on the subject.