New-York tribune., 1918-01-17
Legislation Sought
To Release Silver
Hoard i'm Treasury
Substitution of Federal Re-
serve Notes for u. S. Ger
tihcates Proposed

step Of far reaching Importance IN
the world Of international finance, IN
volvng the fixing Of the market price
Of silver and the elease Of millions OF
dol ars Of the metal held on deposit
bv the United States Treasury as Sc
curity against silver certificates now IN
circulation as part Of the national
currency system. will be proposed in
bill being prepared for introduction IN
Congress- According to information
obtained here in banking circles yes
terday, the proposed legislation has the
backing Of the Director of the United
States NJ int and other financial author
tiles at Washington.
The programme as tentatively ar
RANGED. it is understood, also provides
for the ISSUANCE of Federal Reserve
notes in denominations OF 81 and 81,
which will be used to take the places
of the silver certificates that are to be
retired flom circulation when the sll-
yer reserve is released. That such
plan had been discussed was admit
ted yesterday by Paul NJ. Warburg'
serve Board. The present law pro
hbit5 the issuance OF Federal Reserve
notes in denominations of less than 80.
Bankers Arc Interested
Bankers to whose attention the pro
posed change in the currency system
through the elimination OF large
part of the silver certificates and the
substitution Of Federal Reserve notes
was brought expressed much interest
in the plan. In some quarters the
feasibility of the programme outilneo
was doubted, and the question or "hat
security would be put behind the
Federal Reserve notes issued IN place
Of the certificates was raised Against
deposits of about 81 $50, 100000 and
note issues already outstanding
amounting to $1.244, ,o00 900, the Federal
Reserve system has total gold re
serve Of about Sl,7oo,0 900, 900. A re-
serve OF 40 per cent in gold is required
to be maintained against notes and
a cash reserve of 35 per cent against
deposits. Although there is enough
gold in the system to provide for the
required reserve Of 40 per cent.
against an additional $3.50, 900 .OCO, or
$500 100000 in notes. bankers con-
sdered it doubtful whether the banks
could secure on short notice the neces-
sary commercial paper to provide the
balance OF the security required to be
held as security against reserve notes.
Hitch in Purchase Plan
Reports of hitch in the negotia-
tlors which have been under way in
Washington for several weeks be-
kot. &l,
eminent and Of the silver producers
focused attention on the proposed
legislation Several weeks ago it was
announced from Washington that an
arrangement was being made for the
purchase by the government Of 1OO,-
000,0C0 ounces Of the 1918 output Of
silver. G0,000 900 ounces OF which
would be taken for the account OF
Great Britain and 40,0OO0OO ounces
for the United States. This, it was
said: would take care Of the coinage
needs Of the Allies. The plan involved
fixing the price of silver. and various
prices were mentioned ranging from
o. cents an ounce 30 ST. Western
silver mining interests are said to have
prevented the closing of the deal bv
tnelr objections to what the govern
renr considered d fair price For the
metal.
Legislation Would Fix Price
The legislation now proposed if t
IS enacted into a law, will, it is as
serted, not only fix the price Of silver
out at the same time release the vast
store OF silver purchased by the gov
erhmeht IN the early '90s. when the
SHERMAN silver purchasing act was in
forcc, and which has since been tied
up as 4 reserve against the S47O. 900.
'oV OF silver certificates in circulation.
1T Is understood that not all Of the
silver certificates will be retired at
once it the law is passed. but sufficient
SILVER will be released to take care os
the demands Of the United States and
Great Britain for subsidiary COINAGE
tor long time to come. Moreover.
the available supplies of silver will
be increased so that it will be possible
To settle the international trade bal
ance by shipments of the metal to the
ORIENT in lieu of gold, exports of which
are now under the ban. A portion OF
'he SILVER obtalEed by the government
WILL II IS SAID, be shipped to France
10 reimburse the French government
lor silver CONS paid to the American
troops there.
since the war began there has de-
'e'opcd an enormous demand for silver
by the bel}igerent nations for cojnaue
purposes; IN Europe. gold having been
practically withdrawn from circulation.
paper and silver have largely taken it's
place. The result of this demand has
been to cause great rise in the value
OF SILVER. which, from price Of IS
cents m 1914, sold up to S1.16 an ounce
in October.