The sun., 1916-11-28
BOARD IN
WARNING ON LOANS
Continued from First Page.

forecast probabilities or to specify cir
cumstances which may become impor-
tant factors in determining future con-
ditions. Its concern and responsibility
lie primarily with the banking situation.
II, however, our banking institutions
have to intervene because foreign Sc
curitles are offered faster thar they can
he absorbed by investors-that Is. their
depositors-an element would be intro
duced into the situation which, IL not
kept under control. would tend toward
instability, and ultimate injury TO the
economic development OF this country.
'The natural absorbing power OF the
investment market supplies an important
regulator of the volume OF our sales 10
! foreign countries In excess Of the goods
that they send us. The form which the
most recent borrowing Is taking. apart
/ from reference to It's intrinsic merits.
makes 1t appear particularly attractive
as a banking investment.
1.-THE board, as a matter OF fact. UNI
derstands that II Is expected to place IL
, primarily with banks. In fact, It would
appear 80 attractive that unless a
| broader and national point OF view be
adopted Individual banks might easily
be tempted to invest in It to such an ex-
tent that the banking resources OF this
country employed In this might
run into many hundreds of millions OF
dollars.
while the loans may he short In
, form and. severally. may he collected at
maturity. the object OF the borrower
must be to attempt TO renew them col
lectively, with the result that the aggre-
gate amount placed here will remain
! until such time as II 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 mer-
chants, manufacturers n farmers.
| would be exposed to the danger Of being
absorbed for other purposes to a dispro-
~portionate degree. especially In view OF
the fact that many of our banks and
trust companies are already carrying
substantial amount of foreign obliga-
tons, and OF acceptances which they are
under agreement to renew.
"Not In Intercst Of the Country"
1.-THE board deems It. therefore. It's
duty to caution the member banks that
II does not regard II In the interest OF
the country at this time that they in
vest in foreign treasury bills OF this
character.
1.-The board does not consider that II
il called upon TO advise private invest
ors. but as the United States IL fast
becoming the banker OF foreign countries
in all parts Of the world, 1t takes oc-
%casion to suggest that the investor should
receive full and authoritative data
particularly In the case OF unsecured
loans-in order that he may Judge the
future in~telligently in the light of pres
ent conditions and in conjunction with
the economic developments OF the past.
I'm the opinion o. the board II ls the
duty OF our banks to remain liquid II
order hat they may be able to continue
to respond to our home requirements
the nature and scope OF which none car
foresee. and in order that our present
economic and financial strength may b'
maintained when. at the end OF the war
We shall wish to do our full share II
the work OF intei national econstruct!o
and development which will then III
ahead OF us, and when "A clearer un'
Outstanding OF economic conditions, a:
th,y will then exist. will enable thi:
country more safely and intellgent'y Il
do It's proper part IN the ilnanv!a! re
Mobilization OF the world"