New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1916-11-28
Virtually Vetoes Nor
qan Plan for British
Short Loan
WANTS CAPITAL
KEPT LIQUID
Declares Danger from
Gold Imports Can Be
Met in Other Ways
fr,on u. Trsua. Burssul

Wellington. Nov. 27.-ln q statement
o,posing the purchase of any foreign
,.,ssurv notes by the banks Of this
,opntrv. the Federal Reserve Board to-
"a, virtually vetoed the plan OF Henry
p Dawson. Of J. P. Morgan & Co., for
81. sale OF British treasury brief ma
,,-i,v notes. In addition 70 warning
.te bankers that the board disapproyed
a. their investing in securities which
- fears may prove non-liquid, due 20
the desire of the country issuing them
a substitute long term obligations Al
n, close Of the war, the board warns
private investors.
TIE board takes occasion to suggest
,bat The investor should receive full
and authoritative ALPHABETICALLY IN
ne case Of unsecured loans-that he
nav Judge the future intelligently IN
lie light o. present conditions and in
conjunction with the economic devel-
oprents OF the past"
Displeased by Advertisements
Thi. warning was said here 10 result
from the displeasure Of the board at
The character Of certain advertisements
Of bonds which. after stating the con-
d'tions Of the. country making the loan,
stated in small type that this informa-
ton was furnished 70 the bankers max
ine The advertisement and was not OBJ
.ained originally by them.
'The board believes" says the state
rent. chat at this time banks should
proceed with much caution in locking
up their funds in long term obligations
o. investments which are short term
in form or name. but which, either by
contract or through force of circum-
stances, may in the aggregate have 10
be renewed until normal conditions re-
.lTn."
The ultimate economic development
this country, the board declares, may
be injured through this long term lock-
iar uD Of funds.
Other Aids for Trade
The board recognizes that failure 10
purchase such securities may result
ia diminishing the buying power in
this country Of foreign purchasers, but
asserts that the export trade will not
iall OF precipitstely should we become
more conservative in the matter of in
,esting our loans, because there are
stll hundreds OF millions of our own
and foreign securities held abroad
which our investors would be glad to
take over. and. moreover. trade can be
simulated in other directions"
Perhaps the most surprising asser-
ton in the statement, aside from the
disapproval OF treasury note purchases
itself. is that the board does not con-
slider that further large importations
o. gold would prove source OF danger
or disturbance in this country. The
statement points out that steps can be
taken for controlling this gold supply
70 prevent too much imitation.
One important step indicated would
be the anticipation Of the final trans
fer Of reserves contemplated by the
reserve act. The act provided for this
final transfer for November 16, 1911
This could be advanced, the board sug-
gests, TO February or March next.
Issues General Warning
Following is the statement:
In view Of contradictory reports
which have appeared in the press re-
sarding its attitude toward the pur-
chasing by banks in this country OF
tr,isury bills Of foreign governments,
TIC board deems it duty TO define its
position clearly. In making this state
zen. the board desires to disclaim
ac intention OF discussing the hnsn-
r.s 81 rsese:lnE upon the financial
% t,l.) - spv cation. but wishes il
sS.sst-es "a: e seeks &c deal Only
80 .-..rsl ?~.,s.pl.s which aaect all
.~ts
-sns.t, .Ipressa Of late. that fur
o." SEPARATIONS OF large amounts Of
vels @ss: 0: reeesSity prove a source
81 .4nr-. o: disturbance to this coun-
t~y Tsp- dSueef, the board believes,
E.ii s,s' eD.y IA case the intowing
-oid .fould remain uncontrolled Rnd
be permitted TO become the basis OF
undesirable loan expansions and OF
inRatioa. There are means, however,
o. controlling sccessions OF gold by
proper and voluntary cooperation OF
the bank or. II need be. by legislative
enactment. An important step in TINS
direction would be the anticipation OF
the final transfer OF reserves contem-
plated by the Federal Reserve act 20
become effective November 16, 1911.
This date could be advanced TO FEB
ruary or March, 1917.
Would End Fictitious Reserves
Member banks would then be placed
on the permanent basis Of their reserve
Seuirements and fictitious reserves
would then disappear and the banks
have clearer conception OF actual
reserve and financial conditions. II will
then appear that while q large increase
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