New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1916-11-30
Feels Morally Obliged
TO Define the Situa-
ton Clearly
NO BIAS IN IT'S
PUBLIC WARNING
Danger Lies in Mistaking
Emotional Finance for
Sound Banking
By GARET GARRETT.

Washington, Nov. 2s,-rhs Federal
p.se-va Board has assumed moral
stewardIhip Of g certain commodity
rh;ch Ia called credit, and proposes
"a treat Il a. a social product with
which people may do as they like, pro-
,ided they know what they are doing
Nth Il and what consequences may
;. .rpected TO follow. They may LEND
y, Give il TO whom they will. in unlim-
ted amount, or they may dispose Of 1t
~, its economic value strictly, as they
,i.sse. but II shall be the business OF
,bs Federal Reserve Board TO call their
attention to the point at which emo
,opal finance begins TO part company
with sound banking. After that they
may choose. .
This is the fundamental meaning OF
the Boards action in defining its atti-
tude toward the employment Of COM
nercisl bank resources IN foreign
loans which begin as short term paper
and must eventually assume the form
Of fixed capital, like railroad or gov
ernment or New York City bonds.
Acted Without Bias.
II = an interesting and important
precedent, easily misconstrued. since
issuing its statement the Board has
been receiving letters from all sorts OF
people who lecture, upbraid or ap-
plsud it, as their emotional bias IS
All are equally distasteful, for they
imply that the Board has been inhu-
cnced by its sympathies or political
leanings, whereas it has acted IN
a spirit Of disinterested responsibility
The mere statement that this is true
may not suffice. Let il be illustrated
Among the members of the Federal
Reserve Board the whole conflict OF
American emotion toward the war is
fairly represented. They make no pre-
tenee Of concealing their feelings from
each other. One says openly:
q am pro-Ally IN my sentiments. I
might. as an individual, or as po-
Htical person, advocate placing bill
lion or two Of credit at the disposal
Of the Allies, without security, with
out even the promise Of repayment.
"Tn that case we should know what
We we're doing. II ought not TO be con-
fused with banking OF finance. We
should be openly backing the cause and
taking the risk. AS a member Of the
Federal Reserve Board | am not a po-
litical person, and | agree with my col
leagues that it is dangerous TO invest
the liquid resources of our commercial!
banking system in Pyramiding war
leans"
Feel Differently, but Agree
Another member Of the board 's
known 20 be pro-Germsn in feelinf
Every other sentiment is represented,
including even that OF neutrality
any such thing is. But in spite of
these diverse feelings the board is
united on the proposition that the
country must choose between, on the
one hand, confning its participation in
war trade to sound financial lines; or,
on the other hand, committing itself
20 the economic condition of a country
At war.
The board does not believe with one
Of the visiting Wall Street bankers, that
II Great Britain goes bankrupt so shall
we, wherefore we may as well 20 on
with il on these lines to the end. And
II this we're so the board would hold
that the public should be notified to
that effect.
Cooperation Impossible
To the criticism that the board sought
70 accomplish by a public statement
whs, might more properly have been
gained by cooperation with the bankers
the reply is that such cooperation was
impossible for reasons which were be
yond the boards control. After having
discussed with the Federal Reserve
Board the proposal 70 print and sell al
unlimited" amount OF British and
French treasury bills, the Wall Stree
bankers did not wait for final expires
sion Of opinion. but went home and an
nouneed what they were going 20 do
The fact that they had discussed It witt
the board was widely known.
The inference was. therefore, that the
board had approved. On the contrary
II had expressed its disapprovsl. II had
said that il might be proper enough tc
sell British and French treasury bills
rp 20, say, one or two hundred millions.
but the idea Of the bankels was that II
should be unlimited bills should
be sold as the market would take them
20 any amount, and as much as a bill
ion dollars worth was mentioned.
Feared ? misunderstanding
When the bankers had formally an
nounced in New York that they we're
authorized by the British and French
governments 70 issue and sell their
bile. and would begin 10 do so on De-
,rnber /. the bOaro feared that before
~ attitude could become known TO the
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