New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1915-01-02

Financial affairs. even in neutral ma
lions, have been disordered, since IN
transitional relations had become inter
woven IS never before. Credit, founded
on monetary systems which IN their
turn were based on comparatively
slight foundation Of gold, was shaken
almost overnight Unusual remedies,
as unprecedented as the conditions
they were needed 20 aid, have 20 taken
I'D the Arst shock that in spite OF a
daily cost OF war pot at over $4,000
900 and immense borrowings by the
bslligsrents, al abnormal. II artificial
esss IN monetary condition marks the
end Of the year.
Though removed from direct effects
Of the European uphesvAl, we have
had our share Of the burden. No mora
Aorium was needed 70 postpone pay
Inent Of debts. We did, however, after
a day Of furnishing the only great
open market for securities Of the
world, find II necessary 20 close our
Stock Exchange and extend collateral
loans. For time il seemed that,
with Europe clsmorng FOR gold, our
stock OF the precious metal might be
unduly depleted. AS shipments first Of
grain and then Of war supplies and
finally o. cotton began 10 move out
more freely this fear WAS seen 10 be
unfounded. Now American exchange
is the highest IN the world. We fur
nish the market for goods 70 which all
must come. and e Is question Of our
reoeiving gold from abroad rather than
Of giving II up.
Gain from War Temporary.
The gain 70 Us as 3 rch neutral
power. actively producing what Is
needed By the world. is not 40 great as
II seemed IN the first weeks Of August
Much that ve need comes from abroad,
and for what we sell we prosper in the
long run Ike any merchant, With the
prosperity Of our customers. For a
cine IL Is probable that we shall en-
soy the benefits that have before fol-
lowed the imitation and speculation
caused by wsstefulness Of war. Later,
when the bills OF the stupendous eI-
penditures are met, we may find our
temporary advantage dearly obtained
unless we have moved with caution.
When the Stock Exchange WAS closed
surplus funds Of the country 20 far as
they we're invested in security loans
became unavailable FOR use. To ioSs
sElee % stocks and bonds would have
30 lowered the level Of prices that the
basis Of security loans outstanding
would hsve been shattered and invest
nent holdings terribly deprecated.
This had 20 be prevented, but locking
up so large q proportion Of the funds
Of financial institutions made Il diff
cult 20 provide commercial borrowers
with necessary accommodation. The
Aldrich-Vreelsnd emergency notes,
based on commercial paper or other ap-
proved securities, prevented any panic
demand for currency. Credit was not
30 easily obtained National banks
with consent Of Treasury officials, in
creased loans beyond legal limits and
cash reserves went far below require
ments OF the national banking act
Demands by interior cities on funos
here we're in the main not unrcsson-
able and emergency currency provided
FOR crop moving needs. Just as the
check 10 our grain export for a time
prevented creation Of credits in our
favor IN Europe, so slower movement OF
Acrops 20 the seHboard lessened the
blsual return flow Of funds westward
V1n payment. General trade, already
cautious, slsckened and currency flowed
20 this centre, al first almost wholly in
bank notes, not available as reserve;
New Banking Act a Help.
As the new Federal Reserve ac-
meant mobilization Of banking re.
sources, reserve requirements were "a
be lowered. Realization Of this helped
lessen boarding Of gold and refusal OF
credit such as followed the panic o.
1907. As II turned out, Clearing
House institutions here were able
after a deficit that reached nearly
S4s,000,00O IN the middle Of August, TO
report a surplus before the end Of DC.
IODtIs ANfhIAAb AAOuHH EfTNllItAktH
through which financial institutions
Joined so IS 20 furnish necessary fnsn-
cial credit 20 prevent trade stagnation
were all retired here IN November.
Our new banking act, designed 20
prevent commercial panic, was not in
effect when the European outbreak
brought about the worldwide uphesvsl
in business and finance. The Federal
Reserve Board, in advance Of its for
nal duties, provided central body "a
bring the banks Of the nation into line
FOR relief measures The start Of the
new system on November l6 strength
ened the return Of confidence already
stimulated by the reputation on Flee
tion Day OF the anti-corporation atti-
tude OF the administration.
The new banking system centralizes
control Of resources OF all member
banks in the Federal Reserve Board
though Regional Banks are placed in
twelve districts with separate Orgsni-
cations. Commercial loans are made
q LIQUID asset, now that they can be re-
discounted a. the regional instltu-
tons. To our iuelastic currency have
been added notes based on mercantile
paper. which will expand and contract
In volume with the needs o. trade. Al
present this last benefit is Of compare
lively slight importance, AS little pro
vision was made for lessenlng the
amount Of bank notes already out
standing. General business, stili de-
pressed, requires less instead OF more
currency. Emergency notes are, how
ever, being rapidly retired.
international Finance Near Chaos.
International finance, immensely eI-
handed with the great growth OF for
eign trade Of all nations and proper
tionately greater extension Of credit