New-York tribune., 1918-03-04


Gust 8. The disastrous battle of Bull
Run had occurred on July 81, and the
secretary came to New York by way
OF Annapolis because the city OF Balti-
more was practically in the hands OF
the Confederates. Evidently those
we're trying days.
The Secretary wished to raise $780,
100000 tor immediate use and to ar
range for the distribution of bonSs to
the public. The bankers responded pa
triotlcally and courageousy. Moses
l3ylor,, president of the City Bank,
which later became the National Citv
bank, was chairman of the loan com
mlttee of the New York Clearing
House, and after conference in the
comraIttee and with the representatives
or or the Boston and Philadelphia clear
has become historic:
,I;I MR.. Secretary, VIC have decided 70 sub
scribe scribe for the $50,000.0o0 OF United States
securities you have offered. and to place
the amount at your disposal SO that Won
morning. ~ '0-'''o' ~"
This s5O,0oo,O00 was taken in tho
tEFee-year 7.3o notes, and the banks
also entered into tentative agreement
10 take $5O,O00,000 more on October
~ and third $50,000,OO0 on December
10. These We're very large sums for
that time. as the total coin reserves
o. an the banks of the three cities wero
only $63,00o,00o. Those Of the New
,nt York banks were about s49. 900 900
Inc understanding as to the second
ana third lots of notes was put in the
loHm of an option to the banks and
thcy were TO offer the notes or bonds
tc the public.
-, Inc Inc sales throughout the country
through the Secretary's agencies v,ero
so small that after couple Of month =
INC agencies were discontinued. The
general public was not vet worked IN
20 'he point or accustomed to the idea
ol o. subscribing to government securities
Inc banks OF the three cities, however
Pushed sales with sufficient success to
DC ahIf to take the second $4,000, 900
Ir october 10. and to take the third
Der 16, instead Of on December IL ns
ORIGINALITY planned They elected to
take the third $4,000, 900 in nor cort
twenty-year bonds, instead of throo-
year notes.
Disagrecments
By this time diSagreements had
arlsen between Secretary Chase ann
me associated bankers over Questions
OF policy which in the opinion of the
oahNers seriously affected their ability
lH 20 on financing the Treasury by the
i' eHNJ were pursuing.
George 5. Coe, of the American Ex-
ucipant in these events, afterward
wrote an account of them which ap-
peared in "The Bankers Maca2jncr Of
January, 1876 in which upon this ac-
ton he says:
lerge sums involved in these loans ar, ' ~
transfer them to the Treasury, thence to
n,a nu wnlefy scattered over the country ut n
nie. moment when war had excited fear and
aistrust' was to be pulling out continually
the foundations upon which the whole
structure rested. And inasmuch as this
money was loaned TO the government. and
was in no sense a trust reposed in tha
banks. there appeared to them no reasnn
Mhy 1t should not be drawn by checks in
iavoF OF government contractors and cred
rlorS, rS, VINO would require to exchange Their,
ior other values in commerce and trade
through the process of the clearing house
Ahd TINS consideration was greatly
s.fenHthened BY the fact. that these I'D.
SdnIes iiai',s. were made. and the money publicly
uiShrraed. = long time before the Treas
"Iy notes were ready for delivery to the
banks which had paid for them
~ sooi became manifest that. in consent
iiH 70 nave then hands tied and their most
c'tlcient powers restricted and in allowing
thclr com reserves to be wasted by pour
ing then out upon the community in n
manner so unnecessary and exceptonal
the banks deprived themselves and The gov
crninent of the ability of long continuing
rs they otherwise could have done to ne
Eotlate the national loans upon a specie
standard.
Ih's Grst great error, il II did not cre-
Gte ncccsaltV for Tie iegal-lcndcr ,otcs.
~ ~ certa'n''y prscipitoted the adoption Of
nlaC a ntost n.nhdppy c@pcdient. al thereof
c9N"'tted the "atio" Gt eorlie, dan to
the most cTpensice Of all methods OF
ttn0ncinD.
Demand Notes
Another important question related
to the socalled demand notes, of which
SoO,000O00 had been authorized. The
bankers urged that these notes if
placed in circulation would inevitably
take the place of coin or bank notes
ana have an unfavorable effect upon
thelr reserves in coin. Following is d
brle1 quotation from Mr.. Goes state
ment upon this phase of the situation
~, very small amount has been emitted.
The Treasury was empty of coin 70 re-
deem them, and could only be replenishetl
by the proceeds of the bank loans 1t was
evident to the bank officers that they
could could not sustain coin payments. if the
transfers from their vaults to that of the
fcasury We're subject to be snterceptcd
and absorbed by these notes Of govern
ment. Nor could the banks receive them
upon deposit from the public as money.
whic they were responding to the govern
ment and 70 their own dealers in coin. 1t
was an lnflaton of the currency in the
1orm most embarrassing to the enterprise
they mad commenced. Accordingly the
Secretary was urgently solicited to re-
1raln from exercising the discretionary
, powers given him of creating the Treasury
currency, until all other means were ex-
hauSted.
1t will be seen that Mr. Coe. an ex
cellent authority, was of the opinion
that if the Secretary had followed the
advice given by the bankers who were
j. handling the loans the suspension OF
specie payments and subsequent issues
OF government paper money might have
been avoided. It is not possible to
say positively that such would have
. been the case, but it is certain tina,
the Secretary made serious mistake
in each instance. Unqucstionablv the
effect of his actions was just what the
bankers predicted it would be.
There would have been some loss OF
reserves under any circumstances, ant
it is probable that the exciting politi
cal events had something to do with
I the losses which the bank suffered. Or
, November Commodore Wilkes, O,
the United States frigate San Jacinto
took Messrs. Mason and Slidell Con.
, federatc commissioners to the Britt sh
: government, from the British mai
| steamer Trent. The British Cabne,
, demanded the surrender of the com.
: missioners, with an apology, and there