The Birmingham age-herald., 1915-02-16

the machinery which it's employment en- I tailed was started, called into active work the national currency associations For m order to make the emergency currency l facilities available it was necessary to call into active life the national currency associations of the various districts into which the United States as a whole is suouiNlued. As the association of New York city met with the heaviest respon- slolllties, for 1t was in our own financial uistf1ct that most serious strain was felt Ill August, there may be good illustra- 1 uon of the beneficial influences of the emergency currency act by referring to what was done by the New York Curren- ey association, since what was undertaken hefe was also in progress in other sections of the United States.
 The National Currency association of New fork city became trustee for the federal government at Washington, or. more accurately, for the federal treasury. The association became responsible for wise Judgment respecting the values of the securities which were offered for the guarantee of emergency currency notes. The magnitude of this work is made clear when it was stated that at times this as- sociation was compelled to pass daily upon as much as $35. .0o0,000 of securities by banks which were anxious to obtain emergency currency notes. To do this en- tdlieu eNcellent knOWleuSe not so much of the market value of securities. since at that time there was no market for securities. but of the inherent value which lurked in them. Day after day the banks which had already secured at the clear ing house facilities for meeting their clear ing house obligations offered to the cur rency association other securities in the expectation that after proper valuation of them the association would as trus- tees Of the d rt,, ize issue of emergency currency notes.
 So day after day some part of the Wealth of the nation as represented by se- curities went into the possession of the association and day after day there came from the federal treasury at Washing ton emergency notes which were as good as gold-so far as the needs of business were concerned.
 As Soon as the War Began
 On the third day of August last the cur rency association, though it's executive first committee met. It was occupied with responsibilitis for almost exactly two months. In that short time the clearing house associations, the emergency pro- visions and the establishment of two gold pools, each of s10000O.0O0. were sufficient completely to bring order out of chaos. At one time some part of the wealth of the nation was represented by nearly
 
 For this vast sum the association held as trustee of the treasury resources that were negotiable, that were represented either by commercial paper or securities as collateral. aggregating sl90.000, 900.
 New York city banks could have applied for twice the amount of emergency cur rency notes they did make application for The amount of these notes issued by the treasury to New York banks was almost exactly one-half of the amount which these banks were, under the statute, en- titled to ask for.
 There is another feature of this report which from one point of view is perhaps the mast valuable. 1t shows how far the true spirit of patriotism animated the banks of the United States in the first eight weeks of the European war. From purely business point of view or. father, the narrow and technical view of the counting room of d bank, there was no profit to the bank in the utilization of emergency currency notes. Proba bly, if it were possible to get an accurate es- timate of the actual relation of the issu- ing of these notes to the banking busi- ness. it would be found that the banks of the United States, certainly those of the eastern part of the United States. lost money through the use of the emerg- ency currency. In order to prevent ex- pansior of the currency to undue limits the federal act requires that the banks pay at the rate of per cent or tax for the use of emergency notes. It is highly probable that such use cost the banks more than per cent. Certainly the executive officers of the New York asso- ciation are convinced that the use of the emergency currency by New York city banks entailed loss to the banks them selves, as accurate bookkeeping would show. But that occasioned no criticism or complaint. It was a time of great emergency, a season when patriotic CO., operation was essential and the banks of the United States responded to this si- lent but urgent appeal and in their re- sponse they received the cordial approval and cooperation of the treasury depart ment.