The Washington times., 1920-11-11

TO AID BANKS
Supreme Court Decision viii
Release $4,000,
Officials Say.
by w. II. ATKINS,
lateral tieaaI News Service.

InteraatiOaai news S~Ss~e'
Bankers are among heaviest hold
ers of whiskey warehouse certin-
Gates. and decision making with
drawals under them permissible
would release approximately $780,
0O0, 900 credit to productive uses.
LOANS TiED cr.
Loans approxImatIng that figure
are now tied up in fhe banks with
bonded warehouse Certificates as Sc
curlty, and this sum. Government Of
| hcials said. would be quickly liqui-
| dated under a favorable ruling OF the
Internal Revenue Bureau.
Hundreds OF small holders OF such
certificates already have paid of their
! loans. and Reserve bankers reported
today a steady liquidation on this
class OF loans outstanding on the
| strength OF the Supreme Courts de-
| cision UNFOLDING the right OF whiskey
owners to withdraw stocks from stor-
age and transport them to their
| homes
Many loans made TO holders OF
large blocks OF certificates have been
cancelled in various parts OF ths
country. owners anticipating no diff
| fculty in being able quickly TO con-
vert them into ''wet goods"
This recovery OF whiskey cersih-
| Gates upon such Il large scale WAS
considered by officials Of the Federal
| Reserve Board as an unexpected
though helpful credit stimulant In
| the localities affected, as money thus
involved will be diverted to more
| Essential channels.
Officials explained that the bunk OF
whiskey warehouse certificates now
I H.. L. .atA 40 I'D NJ
collateral at the banks. although the
loans made upon such security has
not been on the basis OF bootleg quo
! tations.
Bankers have been cautious. II was
said. to restrict their loaning on
whiskey to conservative limits. so
that the amount tied up by such Sc
curity probably would not exceed
one fourth OF it's actual valuation.
$5OO,OOO,OOO OUT.
In reckoning the amount OF money
that may be put into circulation
| through the cancellations of these
debts at the banks, officials dealt
only with the probable amount tina
might be affected under the persona
use" clause of the Supreme Court de-
cision. IT was not easy to compute
the whole amount of loans made on
that such loans might we'll exceed
$500 900. Their present interest
is the immediate effect upon the
rather strained credit situation by
the release OF enormous sums made
possible by Withdrawals Of certifi-
Gates.
The big proportion of remaining
bonded stocks of liquor in the pos
session of small individual owners,
! though il is stored in warehouses,
was emphasized today by reports from
leading prohibition centers. OF a
frantic rush among certificate holders
to withdraw liquor. Accompanying
these messages, were advices OF a
rush among bidders anxious to Sc
cure certificates on which they hope
! TO be able to obtain fresh whisky
supplies. Officials said this may ac-
count in part for the liquidation OF
borrowing at the banks. Present
holders of certificates, they were ad-
vised. are being offered fabulous
prices for the coveted documents.
Traffic in whiskey warehouse GER
tificates presented to prohibition en-
forcemcnt officers a problem which
defies solution. No existing statute
prohibits the purchase or sale Of such
certificates, and so far as officials
are concerned under the claw, such
sales are presumed to be made for
| legal purposes. The bulk Of the GER
tificates outstanding at the time OF
| the Supreme Courts decision had
been acquired a relatively low prices.
and have increased two or three
| times in value. 1t has been entirely
lawful to sell certificates to those
persons who are permitted by law
to buy liquor. withdraw II and sell
it under existing regulation.
DEALS ARE STIMULATED.
Dealings in certificates were slim
ulated somewhat. officials said. by
an opinion promulgated by Governor
Harding Of the Federal reserve
board. recently. He held that ware
house certificates on whiskey could
be used as collateral at banks for
loans within the DISCRETION Of bank.
ers themselves. The governor did
not attempt to say that that this
class of loans were "non-essentiaL"
as the board had cayefully avoided
such a definition. but bankers were
instructed that the board was not