The Wheeling intelligencer. [volume] (Wheeling, W. Va.) 1903-1961, 1916-11-28
FFDERM RESERVE BOARD SOUNDS
WARNING To BANKING INTERESTS
TO AVOID TIEING UP
THEIR LIQUID FUNDS
In Long Term Obligations
With hForeign Governments
The Statement.

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 financial stabll-
ity 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 American mer-
chants, manufacturers and farmers
in danger of being absorbed for other
purposes, it docs not regard 1t in lie
interest of the country at this time
that they invest in foreign treasury
bills of this character"
The statement is regarded in Off.
cial circles as one Of the most i'm.
portant declarations by the board
since it's creation Officials would
not discuss the question for publlca-
rion, but some of them informally in
terpreted the warning as the. reserve
boards answer to the recent proposal
of J. P. Morgan & company, British
fiscal agents. in this country, to have
American bankers accept British
treasury bills of an indefinite total
issue, secured by gold reserves held
in Ottawa. Such loans would be for
ninety days, with the privilege OF
renewal for FIVE other ninety day
periods.
H. P. Dawson, Of the Morgan firm,
was in Washington recently and con-
ferred with President Wilson and
some of the members Of the reserve
board. 1t was said later that he
sought to have banks of the reserve
system authorized to buy British
treasury bills as If they were bills Of
exchange to cover commercial trans
actions.
Danger from further importation Of
large amounts Of gold, the board says
in its statement, will arise only in
case the gold is permitted to become
the basis of undesirable loan eXpan-
sions and Of initiation. Emphasis is
Laid upon the necessity for caution in
putting money into investments which
are short term in name but which
"either by contract or through force
Of circumstances may in the ag%re-
gate have TO be renewed until normal
conditions return.
The Warning
The boards warning. in line f0:'! Of
statement TO be published later III
! the federal reserve bulletin. f0iiow$-..
! "ln view OF contradictory reports
which have appeared III tie press ie.
garding its attitude toward the pur.
chasing by banks in this country Of
treasury bills of foreign governments,
the board deems ii duty 10 dcti2c
its position clearly. in making this
statement the board desires TO
disclaim any intention of discussing
the finances Or of reflecting upon the
financial 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 fur
Their inportations of large amounts OF
gold must of necessity prove source
of danger or disturbance to this coun-
try. That danger the board believes.
will arise only in case the inflow
ing gold should remain uncontrolled
and be permitted TO become the Jasis
of undesirable gan expansions and OF
initiation. There are means or con-
trolling accessions of gold by proper
and voluntary cooperation OF the
banks or if need be by legislative en-
actment An important step in this
direction would be the anticipation OF
the final transfer of reserves conte1n-
plated by the federal reserve act 70
become effective on November 16.
1917. This date could be advanced to
February or March, 1917.
Be On Permanent Basee
Member banks would then ba
placed on the permanent basis Of their
reserve requirements and fictitious re-
serves would then disappear and Sle
banks have clearer conception OF ac-
tual reserve and financial conditions.
II will then appear that while large
increase in the country's gold holdings
has taken place, the expansion OF loans
and deposits has been such that there
will not remain any excess Of reserves
tContinued on Page Ten.)
pRnRE RRINGo 0lLT