South Bend news-times. (South Bend, Ind.) 1913-1938, 1916-09-19
Democrats Laid
Basis For Nations
Present Prosperity

ly upon financial laws which were
the creations of republican congress-
es Emphasis has been placed by
repu blican debaters mainly upon the
fact that in the "parlous' period aft
er the outbreak of the war most
effective preventive operations by
the treasury department were based
upon an utilization OF the Aldrich-
Vreeland. demergency currency act
IL is of the record that the fed
eral reserve act was not established
until months after the European war
crisis had been weathered, but con-
fidence had been inspired by public
knowledge Of the imminence Of the
new currency systems establishment
and by the foresight of the demo-
cratic congress in amending the Aid
rich-Vreeland act so as 10 make
il a workable instrumentality for
easing financial stringency. The bold
spirit in which Secy Of the Treas
urer McAdoo and Pres't Wilson es-
sayed certain unprecedented acts 10
supply the credit needs of the coun-
try also had its effect in maintain
ing financial equilibrium.
Reed Scrutinizes Bill.
An exposition of the question that
will bear the strictest non-partisan
scrutiny was made by Sen. Reed of
Missouri in a speech in the senate
Aug. 29. The senator gave a brief
history of each financial panic that
had occurred under the operations
of the national banking system
created by the republicans. showing
that these disturbances were all
thrust upon the country by causes
which compared with the vast
volume of the country's business,
were so small as to appear incon-
sequential."
With similar references to the
inefficient and dangerous system
which the republican party for so
years maintained and bequeathed to
the democratic party" Sen. Reed
went on to show how the democrats
sought. first, to recify the funda-
mental faults in the credit struc-
ture and, second, TO cope with such
immediate dangers as were created
by the European war. Here are ex-
cerpts from Sen. Reeds address. in
which democratic foresight is ex-
tolled with a very excellent show
Of logic:
I'm order TO provide for existing
emergencies and such contingencies
as might arise before the new bank
ing and currency system could be
inaugurated, the democrats revised
the Aldrich-Vreeland act.
That bill had been a dead let
ter upon the statute books for six
years. II was absolutely unavoidable.
because both interest charges and
the character of securities required
were prohibitive. In it's entire his
tory the Aldrich- Vreeland act had
never been utilized
Interest Charges Reduced.
We revised the Aldrich-Vree-
land law so that interest charges
were reduced TO three percent and
the character of securities broad
ened so that money could be OBJ
tanned upon those collaterals gen.
orally held by financial institutions.
These amendments TO the Aid
-Vreeland act were in force and
process of creation when the
European war suddenly broke upon
the world.
II have referred to the small caus-
es which produced panics for 40
years. l now challenge attention to
the conditions produced by the
European war which was declared
on Aug. ?. 1914.
The cotton crop of the south was
selling at IA cents a pound on
the morning of Aug. ?. 1914. il was
Of the aggregate value OF $3.50, OO0.-
600. On the evening OF that day
cotton had shrunk TO three cents a
pound-a loss of $4,000, 900. On
the value of this crop depended
substantially all of the business and
commercial prosperity of that great
domain lying south Of the Mason and
Dixon line.
Calamity did not fall on the
south alone For so days practically
all shipments OF every kind to
Europe were discontinued. Our coun-
try was under substantially the same
kind OF embargo as would have
been produced had our shores been
infested by the war fleets Of some
puissant enemy
international exchange was com
pletely disarranged.
".,u European banks restricted or
suspended payments.
The various war powers declar-
ed a moratorium upon all debts
public and private. for SO days, and
this period has since been indefinite
ly extended.
While refusing payment of Amer
lean demands. European financial
houses drew on us for their com
mercial obligations. and within 10
days time had taken from Us as
millions in gold.
The belligerent governments very
shortly began invading their metal
lie reserves and issuing enormous
quantities Of poorly secured fat
money.
Markets Cut on.
Our markets for many articles
were for months cut of and the
course Of trade interrupted This
condition exists 10 large extent
today. I instance the single fact that
our annual trade with Germany de-