The Washington herald., 1914-08-16
H COMMERCE. AND FINANCE

in the vaults OF the trust companies.
the trust companies are not unmindful
of the opportunity to earn money, but
realize that the gold. once let out. can
be returned only with great difficulty.
The New York Clearinghouse, which
now requires a Is per cent reserve, will
with the organization of the Federal re-
serve system, permit a gradual reduction
in gold reserve, but any amendment per-
hitting an IS per cent required reserve
by law will have no effect. believe, on
their stand to require Is per cent reserve
until the Federal reserve system goes into
effect
/ The letting down Of the reserve bars
now seriously would embarrass this
country in these critical times. The sole
purpose Of a reserve, II must not be for
gotten, is to protect credit and financial
Institutions in times Of stress andNa re-
duction of reserve in the best Of times
is Of itself fraught with danger"
Help for Railroads.
]. S. Bache & Co., New York bankers.
have sent out letter to officers of banks
here and throughout the United States
urging that they appeal to Congressman
to pass legislation directing the Inter
state Commerce Commission to review
its decision and grant the railroads fur
Their increase. This step is necessary, the
letter states. under the financial stress
growing out Of the war abroad to renew
confidence in American securities, prevent
the wholesale marketing Of stocks and
stop the gold drain abroad.
The letter states:
T. Our securities are in disfavur because
advance will have no effect in restoring
and establishing the confidence Of the
large investors here and the holders o.
our securities abroad.
These securities will be sent over as
soon as possible to do so, to draw our
gold or its equivalent, and they will not
be taken freely by our own large in
vestors because they have not SUFFICIENT
confidence in the success of the railroads
under the present scale Of low freIghts.
I'VE, therefore, earnestly suggest that
You bring this matter at once to the at
tenti0n of your Representative in Con-
greSs, and IL you agree with US urge them
to favor the passing of a joint and con-
current resolution OF the House and Sen
ate directed to the Interstate Commerce
Commission, requesting it, because Of the
emergency situation with reference to
railroad securities, to review and revise
the decision in the recent application of
the Eastern railroads and in their discre-
ton. and in view of the great and ex-
traordInary necessity for this action,
promptly to grant further and adequate
advances to all the railroads"
Unfortunately such a worthy appeal will
not succeed.
The suggestion that bank notes be
counted as part of reserve at first was
considered an academic matter by
brokers They were inclined to look upon
It as a technically for the banks to
thresh out. A broker happened to dis
cuss the matter with his banker yesteT-
day and was amazed to learn that in the
opinion of the latter any plan designed
to release our gold for the use Of for
eigners might prolong indefinitely the
suspension OF business on the stock eX-
change.
IF England and the Continent knew
Americas supply of gold was open to
them" the banker said, they would fiOcd
the American markets with securities
The Liquidation which forced the ex-
change to close and the banks to resort
to clearing house certificates and emer-
kency currency would not be a drop in
the bucket in comparison with the wave
of selling from Europe in exchange for
our gold Hundreds of thousands 0t
shares would descend on the American
markets and II would be folly to attempt
business on the stock exchange"