New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1916-12-02
]. p. MORGAN & co.
GIVE UP NOTE SALE
Continued from page I

of the Federal Reserve Board against
too free investment in unsecured"
obligations of belligerent nations
would, for time, at least, initiate
against their, sale here. There is
therefore no immediate prospect of
financing of an unsecured character.
The Reserve Board banker Of in
ternstional standing pointed out,
raised no objection to secured loans.
but was specific on loans of UNLIMITED
amounts with unlimited maturities."
"While these appear to be short
term notes. he said, Everybody
knows they we're meant TO be for the
length OF the war. or until such time
after the war as they could be fund
ed"
Advantage in Holding Notes
The National City Bank, in its De-
cember circular, issued before the Nor
CANS had cancelled the offering Of Brit
ish and French Treasury bills, discusses
the matter at some length. The opinion
of the Federal Reserve Board express
ing the view that Treasury bills issued
by countries engaged in the war are
likely to prove, when collectively con-
sidered, an unliquid asset in the hands
of American banks, and that such hold
ings, il large, may eventually interfere
with the accommodations which the
banks are under obligations TO give to
the home public, has the approval of
the bank.
at is not a question Of whether our
new supplies Of money and credit shall
be invested in liquid domestic loans or
unliquid foreign loans; the choice IS
rather between unliquid domestic loans
and liquid foreign ones" it adds.
Foreign Demand for Gold
at is always good for bank TO keep
liquid. Why? In order that it may have
available resources to meet any de-
mands that may come upon il in the
future. From what quarter are the most
serious demands likely TO come upon
the country in the near future? We do
not question the ability of the Federal
reserve system TO take care of any
home demands. It's note issuing powers
give ample protection against these
/ But even the Reserve Board is not san
gune that the gold resources Of the
Reserve banks are equal to the possible
demands for gold for expectation. These
Treasury bills, however, falling due al
consecutive dates, will serve as offsets
for equal amounts of gold. So long as
any are held in this country they will
J give control over the gold situation.
with the abstract opinion that the
banks of this country ought not to tle
up an undue share Of their resources in
foreign Treasury bills, or any one elias:
/ Of paper, no issue, OF course, can DC
| taken. A national bank is prohibited b.
law from lending more than 10 per cent
of it's capital and surplus to any one
! borrower. and although the Controlle,
, has ruled that this does not apply Il
/ the obligations Of governments, we re-
gard the rule as good one TO follow
upon general principles. Even that i:
! probably more than a bank is likely Il
/ lend to a borrower who has no claim:
upon il for accommodations. The pur
/ pose Of our comments is simply TO pre-
sent the views Of those who hold that
/ there is danger in continued accumula
tons of gold, and that short time obi
cations which will serve as .fsets e
foreign demands for gold may be in thu
not distant future an extremely de-
sirable class Of assets"