The citizen-Republican. (Scotland, Bon Homme County, S.D.) 1???-19??, 1914-09-10
BANKING LAW is
HELD UP BY WAR

Chicago. ILL.,, Sept. S.-The launching
OF the new American banking and fl
nancial system has been greatly de-
layed by the European war. At a con-
terence in Washington between Secre-
tary McAdo and ~financierS of note the
general situation was discussed and
means sought to release American fl
nances from their present letters. 1t
appears to be the consensus Of opinion
among national banks that it would be
hazardous to transfer the American ma
ton bank system from the old to the
new under existing conditions.
one or the first steps to carry
out this plan Of the government is to
call upon the banks in the reserve cit
les Tor a statement of their condition.
The local clearing house has done this
IN Chicago. One of the main objects
is to get a measure on the supply of
gold.
This country has q considerable in
debtedness in Europe on current &C
count, and it is ardently desired by our
best ~financiers that that Indebtedness
snail be paid as speedily as possible.
1t is a matter both Of the relief OF fl
nancial affairs from present obstacles
and or the good name Of this country
among European peoples. The throes of
the bankers thus far lave had little
visible result, and they are still strug-
CLING to devise some effective plan. AL
most are we in as bad condition as two
or three weeks ago.
1t would seem also that the bankers
are at a loss to determine the amount
due. A short time ago it was estimated
at $4,000, 900. Later on a guess was
made that it was only $50, 000, 900 or
$4,000 900. But what we owed at a
given is one thing and what
we shall owe from time to time in the
near future is another.
The city of New York, for example,
1,D ~
month, not to mention railroad and
other corporations. Our interest ac-
count abroad is a very big thing. If
1t were merely $50, 600, 600, the amount
of wheat that went Onward in August
Is sufficient to balance that, the total
being in round numbers 100000
bushels. Cotton is doing little for us
becaus the European mills do not
want much Of it and the means of get
ting 1t across are insufficient.
Several conferences in Washington
and New York LAY tried to crack his
obdurate nut, but it would not crack.
If the experts chosen this week can
break the shell they will deserve well
of their country.
The other subject with which they
have to deal is quite as difficult, but
perhaps not so pressing. The cham
pions of the federal reserve law are
anxious to get it into operation as
speedily as possible, and some Of them
really believe tha it will cure or pal
late present troubles. To the bankers
the question takes an extremely prac-
teal form.
The first important act in starting a
federal reserve n is the payment Of
the subscriptions by the local banks
to the capital stock Of that institution.
hat involves a transfer Of gold to the
vaults of the new institution. Such
transfer would work a reduction in
A.. -o-~-yrn r,ra ir,rf. fh~- - H.
bank called for by the present law.
Such a reduction is, however, offset by
a corresponding reduction in the re-
serve requirements under the new law.
That is not the chief difficulty. The
banks in the reserve cities have thou
sands of correspondent banks in other
cities and small towns. These banks
are required to subscribe pro rata to
the capital stock of the federal reserve
system. They have comparatively little
gold. Accordingly, they will request or
order their correspondent banks in the
federal reserve cities to deposit such
gold as they are required to turn in
and charge it to their account.
The city bank would not be obliged
by law to perform this act, for it
could pay it's Indebtedness to the coun-
try banks on deposit account by legal
tenders n tell that correspondent to
go elsewhere for any gold that it might
need. But the city banks would not
like to stand inflexibly for two reasons
one that they would not care to in
cur the i'll will of the country banks,
the other that they would be afraid Of
causing financial disturbance.
Yet the banks at central points are
fearful of the strain that will be placed
upon them. One does not AVE to be a
''timid banker" or a profound f1nancier
to see that a good deal of confusion
might result. Prudence, therefore, calls
e. - IT, -r- -, -.--
TEN.
1t all raises the question of the
makeup of the cash reserve of several
thousand national banks. 1t was
charged some months ago rather
pointedly that many of these banks
were using national banknotes in
their reserve funds instead of the law