The Birmingham age-herald., 1914-09-19
STUPENDOUS ENGINE ! OF FINANCIAL WORLD IS SET IN MOTION New YOrk's Action Has Caused Great Renewal of
 Confidence In England HAVE NEW THEORY
 FOR BANK RESERVES Bankers Now Think Instead of Being Hoarded They Should Be
 Used In Time of
By HOLLAND

New York. September 1S.-fSpeoiai) The stupendous engine or machinery of international financing began to move on Monday of this week. This machinery has been likened to a triple expansion en- zine which is operated or is made tc start by a small engine upon, which the chief engineer of steamer places his hand when he receives the signal he initial energy passes from this little en- zine to the greater one until by series of expansions of energy the great ma chine is in full operation.
 Those who were fortunate enough to be in the vicinity of any of the banks in the financial district on Monday had OF portunity to see this first movement of the great international financial machine Had the transactions been carried on ex- clusively by means of foreign exchange then there would have been no visible demonstration to the public of the first operatio needed to perfect by and by our international money relations. The banks which had made their proportional sub- scriptions to the 00,0o0000 fund raised by New York city banks for the purpose of taking care of the existing obligations of the city and those which speedily to mature in the aggregate ssooO0,0o0 found it expedient-because it was cheaper-to pay the first installment of their sub. scriptions in gold rather than by accum- llated foreign exchange.
 Nearly all the banks utilized gold which was in their vaults. But when later installments are paid probably gold certificates will be employed for the pur- pose of the redemption of them by the treasury in gold, unless the quotations for foreign exchange become approxi- mately normal.
 This gold, in the aggregate B. 5.ad0. .0a0, which represented the leadership of J. r. Morgan and his associates as managers of the banking syndicate, was withdrawn from the bank vaults and placed in charge of an express company. It has been stored in vaults, in the conventional kegs used for storing gold in such manner as to prevent abrasion. Each keg contained $50 900 in gold. The responsibility fcr this gold was with the express company aftet the gold had been delivered into it's hands.
 The transfer of this gold from the banks to the railway trains for shipment to the representative of the Bank of Eng land at Ottawa, Canada. was the frst visible demonstration that the stupeil- dous national banking machine had peen partially at least repaired and had begun to operate
 Reaching Into Reserves
 Fifteen or twenty years ago those in charge of banks in the financial district, with two or three exceptions, ere per suaded that of all times the days If panic were the times when reserves should be kept intact That was not the view however, of two or three of those whose vision was broader than that of the aver age banker. It was not the view of some of the leading economists of Great Britain, notably the late Walter Bage- hot. He, and in New York the late Frederick D. Happen, president of the bank in New York city, which was or ganized by John Jacob Astor to give occupation to his friend Albert Gallatin, once Secretary of the Treasury, were con Ninced that reserves were especially val uable in times of panic and depression for the relief which they could furnish Therefore, they should not be kept in- tact, but should be freely utilized.
 The experience of the panic of 1907 and the great service in terminating that panic which was given by the banks of New York through voluntary. although really enforced encroachment upon their re- serve aggregatng many millions of dol Jars taught the lesson of the service which