New-York tribune., 1917-12-20
Bankers Outline
Plan for New
Security Issues
Suggest Adoption of British
Methods of Restricting
Financing During War

Leading New York banser'. a. the
request of the United States Treasury
Department, recently drew up plan
providing for the formation OF COM
mittee 70 pass upon all new security
issues during the remainder of the
war. The plan. it was learned yestei-
dav. was forwarded to Washington
about month ago, with the urgent re-
ouest that the exigencics Of the invest
ment situation required quick action
but as yet 10 word has been received
AS to what steps the government VIII
take in this connection.
The bankers who had hand IN Tor
mulating the plan we're Thomas La
mont. of J. 2. Morgan & Co.; Charles
II. Sabin, president of the Guaranty
Trust Company; Albert II. Wigg'n'
president Of the Chase National BANK
and Allen b. Forbes, OF Harris, FORBES
e Co II was proposed by them that
the committee should be known as
financial priority committee and thst
h should work out plan similar IN
a general way 70 the British scheme
I
for restricting new financing By cor
porations, firms and other business IN
| terests during the war.
Working of British Plan
The British committee is called the
Capital Issues Committee, and IS head
ed by Lord St. Aldwyn, eX-Cnsnce1Ior
of the Excheouer. The other members
arc Sir Michael Hicks and Lord Cun-
life. governor of the Bank OF Engi
No new issue of securities has been
allowed without the sanction OF TINS
committee. Cp TO the end OF last June
about 10000 applications for perm!s-
sion To float securities were laid before
Il. bat only an insignificant percentage
were approved. The British committee
laid down an inviolsble rule that no
competition for capital would be per
mitted unless, first, the money vas alb
solutely necessary for the production
or Transportation Of war materials, or,
second, refusal TO sanction an issue
would entail serious loss of capital pre-
viously expended. Renewal Of matur-
ing obligations has also been supervised
bv this body, the test being how the
nrosecution Of the war would be a.
fectcd.
Mr.. Sabin's Views
In discussing the need OF a similar
organization in this country Mr. Sabin,
in the current issue Of FORBES Maga-
zine" says:
There Is nothing novel, nothing
autocratic. nothing revolutionary aoout
such a proposal. Have We not already
a priority board a Railroads War
BOARD and other bodies regulating ac-
,iyjtios of the railroads, steel plants.
coal transportation, ETC.? Inc conserV-
ing and outstanding and control OF our
financial resources are not less lmpot-
tant in their bearing upon the war tnsn
il the control of transportation and
production of war supplies. 81,
az nothing be done to regulate the
connection Of investment FUNDS tne
successful fotation Of future var BONDS
NAV be jeopardized. Certainly the
greater the absorption or Iunds tor
corporate purchases not conducive 10
the winning of the war the stronger
will be the tendency TO force up 'he
cost of capital and thus entail a heaV-
Ter interest burden upon the govern
ment and the people as a whole
Suggested Plan of Organization
The organization Of an American
financial priority committee, as sug-
cested b. Mr.. Sabin, would probably
be brought about in this manner:
THE lead would naturally come
from the Treasury Department. Inc
cooperation Of all Governors OF states
would doubtless be sought and en-
Enthusiastically given. Secretary BIC
Adoo could also count upon the as
sistance and support oil the governors
OF the New York Stock Exchange and
other exchanges, responsible bankers
I'll over the country, and the heads OF
the larger municipalities which have
the spending of vast sums OF money on
public works. ..
perhaps in working out the plan 1t
would be found most feasible 70 have
number of subcommittee, each
familiar with one particular field. For
example, Il would probably be found
advisable 10 have one subcommittee
consider all applications for railroad
financing. another for industrial issues,
another for public utilities and an
other for state and municipal offerings.
"The recommendations Of these sub
committees could be passed up 70 the
general committee for final action. In
England all securities must be ap-
proved by the treasury, but | under
stand that in no instance has the treas
ury overruled a decision OF the capital