The Washington herald., 1917-06-06
HOLLAND LETTER
The Biggest Daily
Financial News Feature Of
the country's Best Newspapers.

vertently made by Frank A. Wander
lin lust after he spoke. as he said,
confdentially. of Q subscription OF
s75. .OO0, coo to the liberty loan by hank
which he did not name. was this:
'T hope my own bank will do even
better"
This remark has tended to confirm
the suspicion that the liberty loan -
practically underwritten- Not that
Secretary McAdoo has received for
NAL or authoritative assurances that
the amount needed to make good the
total subscription will be furnished
by banks or very wealthy men, but
that there Is. presumably, a sort OF
tacit understanding that, should II be
necessary, banks-national, State
chartered and individual-will be forth
coming with whatever amount will
be needed before the subscription time
ends to make good the loan.
1t Il, however, the belief that as
sistancs Of this kind viii not be need
ed. Secretary McAdoo. and all those
who have been cooperating with him
in a campaign which has for its pur-
are persuaded that what they hope
for viii prove to be the event and that
hundreds of millions Of subscriptions,
each one, perhaps, for q small amount
$50 or S10o-will be made In the next
few days.
Very likely Secretary McAdoo him
self does not know what the exact
amount of subscriptions already made
really Is. The common estimate in
the financial district Is that 1t is ap-
amount On Decoration Day Of last
wesk the estimate was that nearly
/ 81, 400, 900, 900 had been subscribed
InnatIOn or Expansion.
One comment that has occasionally
been made respecting this loan-and
by men Of high authority-is that there
may be danger possibly that after
the bonds are issued many thousands
who hold them will be tempted to
the Federal Reserve banks into notes
which will pass as currency. Should
that be done, there might follow a
great imitation OF currency. with its
attendant dangers.
Federal Reserve Board and banks, as
well as national bankers, win have
1t within their power to prevent in
flation Of this kind.
Mr.. Vanderllp and others have clear
ly defined the difference between the
kind of imitation which is dangerous
and business expansion That busi-
ness expansion upon an enormous
scale will take place when the funds
received for this loan and for taxes
become available cannot be ques-
toned. For the money is to be used
exclusively for the purchase in the
United States OF supplies of all kinds.
That does not involve dangerous ex-
pansion of credit, for the business thus
law Of demand. In some respects bust
ness Will move in different channels
from those which have 1oated II TO
great prosperity during the past two
years. But the ultimate result will
be the same, for there will be speedy
readiustment of production and dis
tribution to the new demands.
For the Country's Sake.
No incident of compa ratively minor
importance SO clearly suggests the |
prevailing spirit Of helpfulness TO the |
government at this time as the an
nouncement made by the Chemical
National Bank of New York City that |
1t will expuEge rule that is always |
followed. OF not allowing interest on |
deposits and will hereafter adopt that |
policy Were there no war, certainly |
IL the United States had not entered |
into the war. this very successful in
stitutiOn would have always remained |
true to the rule IT has always here
tofore followed. The new policy is
adopted TO aid governmental financing. !
1t has been the general opinion that |
the adherence of this bank to the |
policy OF paying no interest upon de-
pOsits explains in great measure why |
its deposit line. which at one time led !
all the New York banks, remained al
most stationary while other banks \
were amassing deposits so that they |
were able to report that their deposit
or two Of them much in excess Of that
amount.
The Chemical Bank for many years
paid no dividends to its stockholders.
All of its earnings. which were heavy.
were turned over to surplus. Its |
stockholders were men of great wealth.
They did not need the dividends, and
were satisfied to see the surplus stead
lily growing. until at last the bank
amassed a surplus much greater than
the market value of its stock was at
one time higher by many points than
that Of any other bank.
The granting of interest on deposits
and the growth of many banks for
that reason well illustrates the dis
tinction between competition and CO.
operation. There came some twenty
years ago a time when banks began
vigorously to seek deposits, going so |
far as TO solicit them and to OFFER in
terest upon them In that way they |
were and are now competing con-
stantly with one another. But the
moment the banks enter within the /
influence of the Clearinghouse asso- /
ClaIlOn COT1peI1llOn ceases ana CO. |
operation in the best sense of the |
term is the policy.
Copper and More Copper.
The brief announcement that the |
Guggenheims have increased the al |
ready large plant esta blished in Chile |
some time ago so that a production |
now of ten thousands Of ore a day !
will amount to a little under thirty |
thousand tons a day serves two pur- |
poses-one the justification Of the Ven- |
ture the Guggenheims made in Chile |
when by the investment OF many mil !
lions they began to operate Chile cop |
per property, and the other the fact |
that copper producers are searching |
the world over for new sources of :,
supply. Alaska made a jump in cop |
per production in two years which, |
relatively at least, il without paral- |
lei in the annals OF the industry. And |
Alaska has only begun to produce |
copper. Then, too. American capital |
Is now seriously considering the. feas-
ibility of constructing a railroad from
one of the harbors Of San Domingo
to the interior, about a hundred and
sixty miles. TRANSPORTATION of that
kind is all that Is needed for the de-
velopment OF a very rich copper prop
erty. 1t is not unlikely that some of
the capital which our recent finan-
cial expansion has created will be
utilized within the next two years
in the construction Of this San Do
mingo railroad.