The Manitowoc pilot. [volume] (Manitowoc, Wis.) 1859-1932, 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 issued statement warn
ing banks and the public against the
purchase of short-term foreign notes.
The statement will be Il severe blow
to the iinanciers who were planning to
float these loans in the United States.
Formal Warning Given.
The statment says in part:
in view of contradictory notes
which have appeared in the press re-
Garding its attitude toward the pul'-
chasing by banks in this country Of
treasury bills of foreign governments,
the board deems il duty to define its
position clearly.
'In making this statement the board
desires to diSclaim any intention of dis
cussng the finances or of rejecting
upon the financial stability of any ma
tion.
THE board does not share the view
that further inportatiOns of gold must
prove Il source of danger or disturb
ance to this country. That danger, the
the inhowing gold should be permitted
to become the basis of undesirable loan
expansions and imitation. There are
means, however, of controlling acces-
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 10 be re-
ncwed until normal conditions return.
The boards concern and responsibility
lies primarily with the banking situ-
alton.
"If, however, our banking institu-
tionS have to intervene because for
eign securities are offered faster than
they can be absorbed by investors
that is, their dcpOsitors-an element
would be introduced which. If not kept
under control. would tend toward in
stability and ultimate injury to the
economic development of this country.
Loans Are identified.
while the loans may he short in
form and Seyerally may be collected at
maturity. the object of the borrower
must be to attemtp TO renew them coll
lectiVely, with the result that the ag-
gregate amount placed here will re-
main until such time rs il may be adj
vantageouSly converted into n long
term obligation. 1t would, therefore,
seem that funds of our banks. which
should be available for short credit
facilities to our merchants, manufac-
turcrS and farmers, would be absorbed
for other purposes to n 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.
The board deems, therefore, its
duty to caution the member banks that
it does not regard it in the interest of
the country mt this time that they in
vest in foreign treasury bills of this
character.
THE United States has now attained
Il position of wealth and of interna-
tiOnal financial power, which in the
natural course of events it could not
have I lched for generation. We
must be careful not TO impair this po-
sition of strength and independence.