The Birmingham age-herald., 1915-08-20

eoody. iHese figures snow that the nd- uonal banks of this country and the F federal reserve banks, exclusive of state banks and trust companies. have at this time an unemployed 1oaning ca- pactty sufficient to enable them, if heed be. to carry for our own people at market value the entire cotton crop and half if not the whole. of the wheat crop and tobacco crop. which it is not of course conceivable that they will be asked to do and also finance, until the purchasers can pay us in gold or it's equivalent, thousand million dollars or so of exports of foodstuffs or manu- factured products to be shipped to the rest of the world.
 Tt is far better for the banks to employ their surplus funds in making loans on staple commodities where they can relieve congestion or promote legitimate commercial transactions, rather than permit these funds to be used for the imitation of the stock mar kets, where speculation In securities mas already reached point which in- vites caution.
 Large Excess Reserve
 The abstract of condition of na- tlonal banks as of June 2s, 1915, just completed, shows that notwithstanding the great reduction in reserve require n1ents which went into effect with the inauguration of the federal reserve system In November last. the actual reserves of the national banks on June 2S, 1915 are far In excess of the larg- est reserves ever held at any one time in the past history of the country and amounted to 31.s40, ,000.0o or s77s,- 00o,oO0 more than the amount which the national banks are required to hold.
 This surplus reserve, it is estimated, Is sufficient to justify, on a conserva- tive basis, an expansion of credit or a further loaning power of say two or three billion dollars. The present total loans of all the national banks amount to about six and two-thirds billion dollars. year ago the sur Illus reserve of the national banks was only s41,0oO,o00; so that the increase oyer the surplus reserve shown year ago is $737.000.
 "The total reserve of the national greatest reserve ever held by national banks at any time prior to the passage Of the federal reserve act
 Specie held by the national banks and the federal reserve banks amounts to close to one thousand million dol lars. The specie In the national banks increased between May 1 and June 2s, 1915. s71o0o000
 Gold Supply Sufficient
 ''The reports of the federal reserve banks at this time show that the to- tai amount of bills discounted and ac- ceptances held by these banks amount to approximately s4o.O00.o0o. while the supply of gold which the federal re- serve banks have now on hand is sui ficient to give these banks a further leaning capacity, if the occasion called for it, of more than s630.000,0 900 addi- tional, provided they should utilize 1,ai, imum.
 Against their maximum direct bor- rowing in the past of $162,617, ,000, the reports of the national banks as of June B, 1915, show that they had on hand or had paper eligible for re- discount with the federal reserve banks amounting to $1,619, 000, 900, which Is more than 10 times the maximum amount which the national banks of the country, according to their sworn statements to the comptroller of the currency, have ever heretofore had oc- casion to borrow on their bills payable by rediscounts.
 "The soundness of our new banking and currency system and It's ability to meet successfully even the most trying emergencies have been demonstrated. We also have confidence that it will be equally able to cope with and con trol imitation growing out of prosper lty. It behooyes the national banks and the department of the government charged with their supervision to ex- ereise, under present circumstances, the utmost vigilance and wholesome restraint lest overconfidence and un- wise expansion or speculation may check the prosperity which now seems so likely to increase and endure" Short Sales Not Safe Washington, August 19.--(special.)-T cotton Is to be declared contraband by Great Britain and her allies is no longer doubted, either here or in New York. The announcement is expected within the next AS hours. It is expected that | at least two weeks notice will then be given by Great Britain in order that cotton in transit may reach its destna- tion, which will make cotton actually contraband about September 6. l It is also expected that Great Britain will make good the repeated assertions of her statement that no loss is to come to the planters through their action. The British government, 1t is said, will maintain the price of the staple. l Short sales on strength of the proposed declaration. therefore, will not be safe. The market will be closely observed and will be an interesting study for the next month.