New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1914-08-13
NOTES FOR PART
OF RESERVE FUND
Request of New York
Bankers Sent to the
Federal Board.
WOULD SUBSTITUTE
PAPER FOR GOLD
Plan TO Pay All of United States
Obligations to Europe
in Gold.

Bankers Of this city declaring that
Che financial honor Of the United States
was a. stake. took the unprecedented
step yesterday of sending 20 the Fed
crai Reserve Board at Washington
proposal that tho national banks Of the
city be permitted 10 substitute bank
notes for part OF the lawful money
now required as reserve against de-
posits. The radical nature OF the pro-
posal viii be understood when II IS
noted that bankn0tcs have never been
allowed 10 count as reserves and that
the only reason Cor asking chat they
shall be now is GO release gold. In
effect. the rlan would substitute paper
money for q part Of The metallic re-
serve. The gold would be used 70 pay
American debts 60 Europe, estimated
90 he about S250.000,o0Q.
Two proposals have been made. The
first is Go amend the national bank acl
SO as 20 permit this change IN the
character of The reserves. IL was a
draft Of this proposed amendment that
was sent Co Washington yesterday. The
other. which may obviate any leglsia-
ton. is that the Federal Reserve Board
use its power under Section il, Para
Creph c. viz; -,
4 % MNN .....M AWa n N'NA wv NV N~NN~Nr-
ing thirty DAYS. and from time 20 TIME
10 renew such suspension for periods
not exceeding fifteen days, any reserve
requirement specified in this act tine
Federal Reserve gct), provided, that IL
shall establish a graduated tax upon
the amounts by which the reserve re-
ouiremeuts of this act may be per
rittcG 90 fall below the level herein
after specified. etc
10 was doubt of the power Of the
Federal Reserve Board TO act until the
organization Of the new banking sys-
TEN IS fully completed that led to the
lronoyal of the amendment TO the ma
tonal bank act The latter plan orig
mated with Jacob II. Schif. It was
discussed at the meeting yesterday
morning of the international exchange
subcommittee Of the Chamber OF Com
ricrce special Committee on ship
ments During the European War" but
no formal action was taken by the sub
committee. which is made up OF Jacob
n. ScEif. Frank A. Nanderllp and j. Z.
Morgan.
planned yesterday. 20 make any very
considerable substitution Of national
hank notes for metallic reserves, but IL
was felt that something had TO be
done to preserve the promise Of Amer
iran ors-corp0ratiOns and midi
vidCals to pay their debts TO Europe
in gold. The moratorium, or suspen-
sion OF debt payments, that IS IN force
in London, and likewise IN Paris, COW
prs many kinds OF contracts, but not
those Of public corporations like Amer
lean railroads and municipalities. The
Lake Shore q Michigan southern, for
d. ID. Low n A. n
are the fiscal agents, has 100000 49,
400 O0Ol Of notes maturing in London
on September g. The City Of New
York has revenue warrants 10 the
amount Of about S12,150,GO0 coming
due ia the same month Ia London and
Paris. and q total Of about SoO,OOO,OOO
maturing i'm those cities before January
j, 1915. Numerous other debts OF Ike
importance make some plan for pay
ing gold TO Europe imperative.
Among bankers and business men IN
this country there is the greatest diff
ference Of opinion about the obligation
of Americans to pay their foreign
debts now that the ordinary inter
national banking machinery has broken
down Many took the stand yesterday
that as long as Europe was paying out
rqDer instead of gold there was no
moral connulsion on American debtors
TO do anything else but wait until grain
shi1mcnts from the United States had
created enough credits TO Offset this
couutry's debts. They argued further
that it was essential, with the country's
currencv expanded by the Aldrich-
Nreeland additions, that the banks keep
every dollar Of gold they could 20
strengthen the reserve behind the
paaer money. international bankers,
however. were almost "a unit IN de-
clgrine that now is the time when the
good faith and business morality. of
the United States are being weighed
in he .caIes Of FOREIGN Opinion.