The sun., 1916-12-04
FINANCIAL NEWS
AND COMMENT
Holders Of War Bonds Scared
by Blunt Statement Of
Reserve Board.
DEPLORED BY K
Spectators. Looking on Sur
face, Sec Bull Argument in
loan Withdrawal.
DEPLORED BY K

settlement OF tho Wh0l0 question by
Great Britain and France deferring to
the wishes OF the Federal Reserve
Board removes the possibility Of fric-
ton which otherwise might have de-
veloped. and 10 therefore q buiiish argu-
ment upon stock market values.
Spectators go IN heavier gold I'm.
porte for the payment Of foreign pur-
chasss IN our markets . sufficient or
see 70 the extension Of credit facilities
70 the ALLIES without giving any
thought to tho fact that the extension
OF credit to sui best customers. a.
argued by the bankers. would provide
an after the war safeguard against
heavy Withdrawals Of the precious metal
from this country. And they DO not for
the minute concsde that any obstruction
to international credit at this time may
reduoe the volume Of European pur-
chases OF merchandise here.
me speculative element II not going
deeply Into the matter. It sees goid
coming to our shores and II notes the
ourrent abnormal strength In our indus
tries. Those factors provide an all suf-
hcient argument for the buying Of
stocks. II asserts. but to the interna-
uonal banker the position Of the Federal
reserve Board suggests q much poorer
market here for all foreign offerings,
the possibility Of a substantial decrease
In the volume Of foreign orders for mer-
chandise In the American markets and
an Increase In our gold holdings TO an
extent mat might become a real danger.
a statement was recently made ~ q
British Treasury OFFICER that Great Brit
AIN . arranged for the expenditure Of
1000 600 a day In the United States.
and now that our bankers. because Of the
AtttudA NJ fha EaAaro D-.- -.
are not to extend accommodation 70 for
eign countries on their treasury notes a
simple means Of enabling Great Britain
10 eettle its obligations here therefore Is
made impossible.
Danksps Are Conservative.
Our bankers are conservative rh.v
have been exceedingly conservative in
the matter Of foreign financing in the pc-
Rod OF the war. and to assume that they
would not apply the principle Of lending
Judictously TO Great Britain and France
on unsecured treasury bills is to place
them In the infant class Of hnanciers. II
10 no wonder that some Of them feel
Grisved and insulted and that they are
somewhat ap~prehensive of future devel-
opments with . bearing upon intsrna-
tional finance.
Perhaps the Judgment Of the Federal
Reserve Board was Justified in extending
a warning against the wholesale invest
ment OF American funds In foreim un-
secured loans, but II has had the effect
or weakening the position Of the foreign
bonds, In which there are dealings In our
market. while its ultimate effect, accord
ing to many bankers. will be 10 discourage
further offerings even of high Grade for
sign securities 10 American investors.
The bankers Of the United States are
not overextending their loans In any d.
rection. They may be counted upon "a
pursue the same wise policy. and from
their point OF view the amount OF banl,
money that would have zone into the re-.
Gently proposed offering here OF British
and French treasury notes not only
would have served the useful purpose oi
facilitating the payment OF foreign obi.
cations IN the United States but would
have strengthened the prospects OF
further heavy purchases in the American
export market and lessened the chances
OF an oversuppiy OF gold In this country
Furthermore. loans Of this characte,
would come in handy at the end OF the
war as a protection against actual dis,
turbancs Of credit under the changed
economic conditions hat must develop
at that time.
Assuming, however, that II was mee'
and right for the Federal Reserve Board
10 call a halt upon further lending abroad
would 1t not nave been better for the
hoard 20 have settled the matter private.
~ with The banks and bankers rather
than to make a raw announcement tha'
tended to upset the investors who nj
ready were holders OF Europe's wal
bonds? AZ one banker put It, ~ IN.
Anglo-French IS and the United King
dom IS are not good. then there Is ne
bond that II good. 30 why discourage tn,
purchase Of them by throwing a frigh'
into the investment community
How Payments VIII he Made.
Europe's obligations here are heavy
and although the action OF the Fedora
Reserve Board doubtless will tend TO re
strict where possible foreign purchases II
our markets, II Is not conceivable that ~
long as the war continues there will no
be q great excess OF exports over imports
from the United States. Europe mus
continue to buy In this country, and II 1
cannot find a good market here for Its Sc
curities II will Increase its shipments o.
gold, while II may liquidate furthe,
amounts OF It's holdings OF American sc
curities.
The latter prospect. however. does no
loom large at the present time. w
could absorb additional amounts OF for
eign held American securities. but |
would be far better for both this coun
try and for Great Britain II no such op
Grafton develops,
Reg rding gold payments the United
States ran receive much moro Of tn,
metal without adverse effect upon tn,
general situation that II. more eoi,
may be brought In without causing dan
gerous imitation In our markets. 1t 1
not desirable. however, that the STREAM
OF the precious metal be made continu
o,N.
Including the gold received from Rus
sia, which will he deposited In New Yorl
in the current week, the new inwar'
movement totals $50. 900. 900. maxim
since January upward OF $40. 0OO, 900
while the indications favor n total 70
the year of upward Of $500. Ooo, 0OO
Great Britain Is supposed TO hold II
Canada $500. 900. 900 gold available 70
shipment to the United States. Will
Russia has an cnormou store that haI
hardly been touched. II is estimate,
that Russia has s 1900. 900 900 IN gol
that could he used for war purposes, ant
the opinion Ia given in local bankinl
Oarlors that as much AZ $500. 900. 900 o
this amoun may no sent to the Unite,
States In the course OF the next twelv,
months.
Stock market operators will welcom
the gold. for they believe the greater tn
supply Of the yellow metal In the coun
try the greater will be the expansion 4
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