Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1916-11-28

Jury to the economic DEVELOPMENT Of
this country.
1.-The natural absorbing power of the
investment market supplies an impor-
tant regulator Of the volume of our
sales to foreign countries in excess Of
the goods that they send US. The form
which the most recent borrowing is
taking, apart from reference to its in
trinsic merits. makes it appear par
tiouarly attractive as banking invest
ment The board as a matter Of fact,
understands that 1t is expected to place
it primarily with bankers. In fact. it
would appear so attractive that unless
a broader and national point of view
be adopted. individual banks might
easily be tempted to invest in 1t to
such an extent that the banking re-
sources Of this country employed in
this manner might run into many hum
dreds of millions of dollars.
While the loans may be short in
form and severally may be collected at
maturity. the object Of the borrower
must be to attempt to renew them col
lectively. with the result that sthe ag-
gregate amount placed here will remain
until such time as it may be advan-
tageously converted into a long term
obligation. 1t would. therefore, seem as
a consequence that liquid funds of our
banks. which should be available for
short credit facilities TO our merchants.
manufacturers and farmers would be
exposed to the danger Of being absorbed
for other purposes 20 a disproportion-
ate degree, especially in view of the
fact that many of our banks and trust
companies are already carrying substan-
tial amounts of foreign obligations and
of acceptances which they are under
agreement to renew.
THE board deems it, therefore, it's
duty to caution the member banks
that it does not regard it in the inter-
est CT the country at this time that
they invest In foreign treasury bills
of this character.
The board does not consider that
it Is called upon to advise private in
vestors. but as the United States is
fast becoming the banker of foreign
countries in all parts Of the world, it
takes occasion to suggest that the in
weston should receive full and authori-
tative data-particularly in the case
Of unsecured loans-in order that he
may judge the future intelligently in
the light of present conditions and in
conjunction with the economic condi-
tons Of the past.
We must be careful not to impair
this position Of strength and independ-
ence. While 1t is true that slowing
down in the process Of credit extern
sion may mean some curtailment of
our abnormally stimulated export
trade to certain countries we need not
rear that our business will fall off pre-
clpltately should we become more con-
servative in the matter of investing in
loans. because there are still hundreds
OF millions Of our own and foreign
securities held abroad which our in
Vestors would be glad to take over.
and. moreover. trade can be stimulat-
ed in other directions.
I'm the opinion Of the board. it is the
duty OF our banks to remain LIQUID in
ORDER that they may be able to con-
unue to respond to our home REQUIRE
ments. the nature and scope of which
none can foresee and in order that our
present economic and financia,
strength may be maintained when at
the end Of the war we shall wish to
do our full share in the work Of inter-
national reconstruction and develop
ment which will then lie ahead of us
and when a clearer understanding OF
economic conditions as they will Their
exist will enable this country more
safely and intelligently to do its prop.
err part in the financial reha bilita tioy
of the world"