The Sentinel=record., 1916-11-28
SETTLEMENT TOD FAR
 AWAY FUR STABILITY
Announcement Considered an Answer to Morean's Movement to Have British Treasury Bills Generally Distributed Through the Whole of United States.

Washington, Nov 27.-American bankers were warned by the federal reserve board today to avoid locking up their funds by purchasing treas ury bills of foreign governments in. volving long term obligations.
 While specifically disclaiming "any intention of reflecting upon the finan- cial stability of any nation" the board advises all investors to proceed with caution and formally announced to member banks of the federal reserve system that with the liquid funds which should be available to Ameri- can merchants, manufacturers and farmers in danger Of being absorbed for other purposes, it does not re- gard it in the interest of the country at this time that they invest in for eign treasury bills of this character" ." The statement is regarded in off cial circles as one of the most impOr- tant declarations by the board since its creation officials would not dis. cuss the question for publication but some of them informally inter reted the warning as the reserve board S answer to the recent proposal of J P Morgan X Company, British fiscal agents in this country, to have Amer jean bankers accept British treasury bills of an indefinite total issue, se- cured by gold reserves held in Otta- wa. Such bills would be for 9J days with the privilege of renewal for five other 90 day periods
 P. P. Dayison of the Morgan firm was in Washington recently and con ferred with President Wilson and some of the members of the reserve board. It was said later that he sought 10 have banks of the reserve system authorized to buy British treasury bills as if they were bills of exchange 10 cover commercial trans. actions
 Danger from further importation of large amounts of gold the board says in it's statement, will arise only in case the gold is permitted to become the basis of undesirable loan eXpan. sions and of imitation.
 Emphasis is laid upon the necessity for caution in putting money into in vestments which are short term in name but which either by contract or through force of circumstances may in the aggregate have to be re newed until normal conditions re- turn"
 The boards warning in the form of statement to be published in the federal reserve bulletins follows in part:
 In view of contradictory re- orts which have appeared in the press re- garding it's attitude toward the pur- chasing by banks in this country of treasury bills of foreign governments, the board deems it a duty to define it's position clearly. Tn making this statement the board desires to dis claim any intention of discussing the finance or of reflecting upon the fi- nancial stability of any nation but wishes it understood that it seeks to deal only with general principles which affect all alike.
 "The board does not share the view frequently expressed of late that further importations of large amounts | of gold must of necessity prove a source of danger or disturbance to this country That danger the board believes will arise only in case the in- flowing gold should remain uncontroll- ed and be permitted to become the basis of undesirable loan expansion and Of imitation. There are means, however of controlling accessions of gold by proper and voluntary cooper ation Of che banks or if need be by l legislative enactment. An important step in this direction would he the anticipation of the final transfer of reserves contemplated by the federal reserve act to become effective on Novmber 16, 1917. This date can be advanced to February or March | 1917.
 l Member banks would then be placed on the permanent basis oi their reserve requirements and fieu