Evening star., 1916-07-13
RESERVE BOARD RULES
ON IMPORTANT MATTER
Decides When Banks Are in Compe-
tition-Status of 8 Per Cent
Bends Exchanged for Is.
Small Investment BUSINESS Prac-
tically No Changes in Values
Feature Day in Local Securities.
BY I. A. FLEMING.

An important ruling has been maze
by the federal reserve board. covering
the INTERPRETATION of the Kern amend
ment to the Clayton law. relating TO
interlocking directories, permitting
dual Office holding in banks that are
not competitors.
The federal reserve board CONSIDERS
two banks in substantial competition
within the meaning of the language
used in the amendment, if the business
engaged in by such banks. under nor
NAL and natural conditions. connicts
or interferes. or if the cessation OF
competition between the two would De
Injurious to customers, or would-oe
customers, or would probably result IN
appreciably lessening the volume OF
business or kinds of business of either
institution"
1t would seem as if an individual de-
cision would be necessary in nearly
every case, although in the matter OF
the Anacostia Bank, practically con-
trolled through large stock ownership
by the Continental Trust Company, and
in the matter of the Citizens Saving
Bank, controlled in like manner or en-
tirely by the District National Bank. 1t
would seem that the ruling would have
no effect on this dual relationship.
The New Government Per Cents.
In regard to the new government 3
per cent bonds which are being issued
in exchange for equivalent amounts OF
government IS rendered by the federal
banks to the federal reserve board. C..
F. Childs & Co. of Chicago say:
The conversion 3s merit considera-
ton strictly as a non-taxable United
States government obligation, bearing
a definite maturity date thirty years
hence. or later, according to the GATE
of issuance The bonds do not bear the
special qualification which is attached
to the Is, was 3s or As, with respect
to securing circulation.
The market for any bond. such as
conversion 3s which are threatened
with a recurrent supply. cannot rea-
sonably maintain as steady a price
equilibrium as some other bond such as
Panama 3s, of which new supply Is
not likely to be created under normal
conditions except at remote intervals.
The supply of these conversion IS ap-
pears to be interminable, and SO long
as the state institutions and individual
investors absorb them. just SO long will
the federal banks be justified in apply
demand. The extent of their issuance
will likely be governed by the publics
desire for per cent investment.
coupled with the amount of IS which
: the federal banks may elect to utilize
for this purpose. The public's lack of
interest in conversion IS to date is
chiefly owing to the fact that no ade-
quate steps have been taken to famil-
iarize the public with the merits of the
issue or popularize 1t by sustaining the
market during it's Introduction.
I'm the event that Panama 3s are
offered by the Treasury Department for
public subscription, the market for con-
version 3s would probably be depressed
to a comparative price level near par.
The market for Panama So should prop
erly be quoted about u per cent above
the price OF conversion 3s until such
time as these two bonds can be COM
pared from the standpoint of an equal
length of life to maturity. At the pres
ent time, If Panama IS with As years
to run are quoted at 103 to yield
2.s1 per cent, it is apparent that the
conversion 3s with only thirty years to
run should by comparison be quoted
at only 1929. in order to yield the