The Oskaloosa herald., 1916-11-30
BANKS ARE WARNED
AGAINST WAR LOAN
federal Reserve Board Sees
Peril to Industry.
OFFICIAL STATEMENT ISSUED
United States Body Notifies lnstitu'
tons of Danger in the Purchase
of Short-Term Notes From
Foreign Countries.

Washington, Nov, 2S.-The federal
reserve board issuedla statement warn
ing banks and the public against the
purchase of short-term foreign notes.
The statement will be a severe blow
to the financiers who were planning to
float these loans in the United States.
Formal Warning Given.
The statment says in part:
I'm view of contradictory notes
which have appeared in the press re-
garding its attitude toward the pur-
chasing by banks in this country Of
treasury bills of foreign governments,
the board deems it duty to define its
position clearly.
"In making this statement the board
desires to disclaim any intention of dis
cussing the finances or of rejecting
upon the financial stability of any ma
ton.
"The board does not share the view
that further importations of gold must
prove a source of danger or disturb
ance to this country. That danger, the
the infowing gold should be permitted
to become the basis of undesirable loan
expansions and imitation. There are
means, however, of controlling Access
sions of gold by proper and voluntary
cooperation of the banks, or if need
be by legislation.
Advises Much Caution.
"The board believes that at this
time banks should proceed with much
caution in locking up their funds in
long term obligations which are short
term in form or name, but which,
either by contract or through force of
: circumstances, may have to be re-
newed until normal conditions return.
The boards concern and responsibility
lies primarily with. the banking stu
alton.
IF, however, our banking institu-
tons have to intervene because for
eign securities are offered faster than
/ they can be absorbed by investors
that is, their depositors-an element
would be introduced which, If not kept
under control, would tend toward in
I stability and ultimate injury to the
economic development of this country.
Loans Are Identified.
"While the loans may be short in
form and SeveraIly may be collected at
maturity, the object of the borrower
must be to attcmtp TO renew them col
lectively, with the result that the ag-
grcgate amount placed here will re-
main until such time as it may be adj
vantageOuSly converted into long
term obligation. 1t would, therefore
seem that funds Of our banks, which
should be available for short credit
facilities to our merchants, manufac-
turerS and farmers, would be absorbed
for other purposes to II disprOportion,
| ate degree, especially in view of the
fact that many of our banks are al
| ready carrying foreign obligations
which they are under agreement to re-
new.
1.-THE board deems, therefore. its
duty to caution the member banks that
1t does not regard it in the interest of
the country at this time that they in.
| vest in foreign treasury bills of this
character.
"The United States has now attained
position of wealth and of interna.
tiOnal financial power, which in the
natural course of events it could not
have reached for generation. We
muSt h, careful mt IN i,nnoir tbis no
sitl0n of strength and Independence