Evening star., 1915-09-19
BY I, A. FLEMING.

During the past year the United
States has learned the meaning of the
financial term "acceptances": moreover.
the lesson has been prolific in prohts
and offers opportunities for large en-
ployment of funds, and may. after the
war, enable this country to hold
large part of it's new trade with the
Latin republics.
London, Paris, Berlin, Amsterdam and
other centers have profited for years
through acceptanceS. They have ena-
bled the nations of the old world to
control very large part of the trade
of the world, now partially headed to-
ward New York, as the leading finan-
cial center of the world of today, with
ample banking capital and more and
more funds available for discount of
acceptances. drafts drawn on an Amer
lean bank or banking house for goods
imported to or exported from the
United States. and which have been
vized by the bank upon which 1t was
drawn and accepted for payment on
maturity.
The federal reserve board has placed
in the same class with acceptanceS, or
in close relation, commodity paper, Sc
cured by warehouse receipts. or paper
of certain maturity, given for the pur-
chase of merchandise. products, etc.
The National City Bank of New York
was the first to issue acceptances
against coffee imports, and these bills
found favor among bankers and others
seeking employment of capital for a
limited term, and at the rates offered,
which were better than the going rates
for money in the open market-with
absolute security back of the accept
ances-the credit of the National City
Bank and SO many hundred or thou
sand bags of coffee or cocoa.
Some other national ard state banks
engaged in the business of acceptances,
in less pronounced degree, and the fed
eral reserve board, seeking to find en-
ployment for the surplus funds of it's
member banks. adopted acceptances
soon after the operation of the system
was put into effect. But a national
bank pointed the way.
1t is not within the probabili that
any large acceptance business will be
established based on exports of Amer
lean products. This particular kind of
a transaction is usually up to the buy
er on the transaction with his home
banks. 1t is within the possibility that
2cceptances may be used more freely
on expectations in time to come
through credits established here by for
eign bankers. that may be drawn on
in favor of exporters.
Acceptances, commodity and CONNER
cial paper are readily discountable, and
any member bank of the federal reserve
system may rediscount such assets
with great freedom with its regional
bank of the reserve system. under rules
and regulations of the board.
Time limits on paper for .rediscount
can be arranged for by the shifting of
paper with regional banks. Member
banks can carry six months paper for
half the period and then have it redis-
counted for the other half.
While there are limits to the redis-
counting of this class of security, the
amount or rediscounting that can be
carried on allows for the enormous use
of funds under the new elastic system.
Warnings have been issued against
paper and commercial paper,
where the issue may have been made
with a desire to influence market
values. as dangerous. also acceptances
or paper on more or less permanent in
vestments which is against the spirit
of the rulings of the federal reserve
board.
The United States will continue to
handle the very valuable coffee trade,
sugar and other products, through ac-
ceptances. and the high standing ac-
corded to this class of paper should be
carefully maintained. in order that the
business may continue to grow, for
the further commercial credit of the
United States.
After the War Whate
When the war started the United
States was panic stricken. No one
knew what general European war
would mean to the United States; it
meant that several of the nations that
are our best cusomers and from whom
we purchase large quantities OF goods
were to devote their energies to the
cause of destruction. 1t looked as if
this nation had reached the time when
she had to depend very largely on the
great home market on which Ameri-
can economic independence of the rest
of the world had so often been pro-
claimed theoretically.
Seeing clearer, with the light of ex-
perience, the admission has been
made that the war saved American IN
dustries" The home demand restrict
ed even below normal. the consuming
power of the great market" at neces-
sity only.
Then the needs of the allies. in control
of the sea, developed. and factories
start. up full force; millions were seHt
over in gold and securities, credits were
established and exhausted to the pront
of Americans. Money has been more
plentiful and easier during all TINS
neriod OF gigantic struggle abroad
than ever before in the history OF the
But, will it continue?
Mr.. Vanderlip's Views.
In a recent address Frank A. Wander
lin, president of the National City Bank
Of New York, a banker whose words
carry weight. warned his hearers that
conditions would change, that destruc-
ton on the awful scale now going on
abroad could not fail to have its direct
effect.
Herewith are given some excerpts
from Mr. Vanderlips address:
you are facing a period when the