Norwich bulletin. [volume] (Norwich, Conn.) 1895-2011, 1916-12-15
EXPLANATORY STATEMENT BY
FEDERAL RESERVE BOARD
OF Warning to Bankers Against Lock-
ing of Money in Foreign Treasury
Bills,


Boston, Dec. 14.-An explanation of
the Federal Reserve oBard's recent
warning to American bankers against
| locking up their money in foreign
treasury bills was made in a speech
here tonight by w p G. Harding the
the declaration that there was no in :
tention to reflect upo nthe credit of
! any nation. Soon after the boards
statement appeared, short term Brit
| ish treasury bills whfc hhad been Of
| fered for sale in this country were
withdrawn.
Mr.. Harding spoke tonight before
| the Boston City club.
| 4 know" he said, that there has
been criticism of the boards action in
making this statement. which has
been given a significance neither ms
tined nor intended in its reference to
| investors. 1t was not the purpose of
the board to make a nattack, either
ope. nor covert upon the credit of any
government, nor did it seek in it's
statement to reflect upon any particu-
lar obligations.
In my opinion, what the board had
IN nina when 1t made it's brief refer
ence to investors, was simply this:
American investors have for MANY
Years been accustomed to buying in
dustria1 securities-railroad obliga-
tons to a great extent In dealing
l
tablished rules have been developed
me investor has acquired the habit
Of requiring specific information re-
gardlng gross earnings, fixed charges.
net earnings, sinking funds etc. and
he insists upon knowing definitely
whether he is offered a first mortgage
BOND, income bond preferred. stock
or common stock.
Tt is the practice of every issuing
house when offering securities to state
n no <a4- ~.
own signature or that of the head of
the borrowing corporation Nowhere
Is the Importance of authentic and
complete Information more fully I'M
derstood and appreciated than in Eu-
rope, both In England and on the con-
tinent and prospectuses for foreign
loans contain all the important facts
relating thereto. in a statement sign
ed by an authorized representative of
the foreign government or by the is
sung mousse. or In some cases by both.
Ihe board sought merely to call at
tention to the fact that as this coun-
try has become an important market
for foreign securities, the same busi
ness-like habits which are we'll estab
nshed regarding domestic loans. should
be developed in marketing foreign flo
tations.
Mr.. Harding denied that stfffenine
or call money rates In New York aft
er the statement was issued was due
to the boards action and said that anv
furry at that time was confined en-
t1rely to loans secured by stock ex-
change collateral.
Discussing the inflow of gold into the
United States. he said the board did
not regard it as danger except tthe
inhowing gold should remain uncon-
trolled and be permitted to become thu,
basis Of undesirable loan Expansions
and imitation"
He pointed out the board had sug-
gested that step toward control of
this gold by cooperation by the banks
would be an act of congress authoriz-
ing the final immediate transfer Of
lawful reserves Of banks members of
the system to the proper federal re-
serve bank.
There are now" he added, "approxi-
matelY $600.00O,000 Of so-called re-
served held by national bank reserve
agents which If the amendment be-
comes a law and in any event in No
vember, 1877, will no longer be count
ed as such and will have the status
simply of balance in bank. The act
ual gold requirements will be increased
by about $20o, 100000 and IL we do not
regard profit as a first consideration
there are other means by which the
continued inflow of gold into this co1,n.
try can be used to its lasting bene-
fits" -.
Mr.. Harding said this country has
been handicapped for many years by
an tnelastic currency, "particulariy le-.
gal tender notes. or greenbacks and
national bank notes." He said the sug-
gestion has been made that 1t might
be well TO REQUIRE retirement of $780,.