New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-05-30
American Markets Will Be
Closed to Foreign
Bond Issues
Capitalization of
Finances Is Planned
Trust Companies and State
Banks to Cooperate with
Federal Reserve

"a !
Washington, May 29-To enable the
/ United States to retain its present
supremacy in international finance
throughout the war-an aim with
which the Entente powers are under
stood to be in full accord-and to
emerge in a strong financial condition
afterward. officials have in mind the
enforcement Of sweeping programme.
The salient features are:
The virtual closing of American
moLey markets to further foreign gov
ernment bond issues throughout the
war.
The stabiizing OF business condl-
tons, so far as possible. by the con-
templated international purchasing
board, and
Capitalization OF the country's fnan-
cial system by the addition to the Fed
elal Reserve system of thousands of
strong trust companies and state banks
at present non-members.
Virtually all financial plans of the
government, including the fotation of
the Liberty Loan and the programme
of financing the Entente governments,
as we'll as the efforts to continue the
country's present prosperity, are made
with those features in mind.
Ban Foreign Bonds
Closing of the money markets here
to further issues of foreign government
bonds is regarded as imperative II the
government is to remain master OF the
financial situation. To this end 1t is
understood that the government VIII
notify bankers contemplating the I'M
derwriting of foreign bonds of its dis
approval. The investment market, so
far as the government can control 1t,
is not to be disturbed by outside bond
issues. for the big proportion OF Amer,
ica's savings, it is felt, Will be needed
10 finance the part America viii play
in the war.
Cooperating with the United States
il this respect, Great Britain changed
its plans upon Americas entrance INTO
the war. to issue S200.000,000 in bonds
here. secured by Canadian Pacific Sc
curities. Arrangements for raising this
money had progressed to point where
virtually ali details had been decided,
when the United States entered the
war The plans were cancelled and Great
| britain borrowed what funds It needed
/ from the American Treasury instead.
In line with this policy the govern
ment may find it necessary to induce
the government Of Cuba TO accept q
| loan of s3O.00O,000, instead of raising
the amount, as contemplated, by hoat-
inc a bond issue here. The little re-
public estimates her needs at this
sum. but is prosperous and does not
wish to be put in the light of asking
the United States for financial AID
Ovetures toward making the loan
have been made formally by this gov
eminent, it is understood.
Should this government request Cupa
TO accent loan the transaction would
stand in a class by itself. as all loans
made up TO this time have been upon
application of the government needing
/ the money.
A definite programme of financing
! for the Entente governments is belng
! considered for June by Treasury oft
Gals. but so far has not taken con-
/ crete form. 1t is understood that a
| loan NAV be made to Serbia next
! month, in addition to other Allies.
To Stabilize Business
Sterilization of business conditions
is regarded as essential BY Treasury
officials in order to permit the country
/ TO remain in a strong financial posi-
| tor. This. it is thought, Will be
/ helped greatly by the Inauguration OF
/ the contemplated purchasing commits
/ sion for the Allies and this govern
/ .ent. so far as its military ana naval
I needs are concerned.
With commission spending as much
| as $4,000, 100000 year, the estimated
| extent of the proposed commission S
purchasing powers, it is felt that ylrtu-
ally all lines of industry whose efforts
contribute toward winning the war
would be assured of steady employ
ment at a fair profit. and that produc-
ers in all lines would not run the risk
| of huctuating markets. certain
/ amount of fuctuation is regarded as
| desirable. and this, it is believed
would result from the operation of the
/ law of supply and demand.
Must Estimate Requirements
At the same time. with the commits
! sion operating at full power, producers
would be enabled to estimate their re-
ouirements in raw material at fairly
/ stationary figure, it is thought. and
would not run the hazard of purchasing
at high prices to face falling market
a few weeks later.
! The clement of doubt as TO market
; values a month or several months
/ ahead, il is thought, would be largely
/ eliminated by the full operation Of the
plan.
Under the plan every industry con
tributing toward the ultimate victory
would be kept going at capacity on
secure basis, labor would be fully and
proftably employed and output would
| be fully sold.
/ Capitalization OF all the country
finances in the Federal Reserve system
b is hound 10 come within short time
officials believe. Each day brings new
assurances TO the Federal Reserve
: Board Of the desire of state banks and
/ trust companies 20 JOIN the system
upon the passage Of amendments TO the
reserve act, pending before Congress
With virtually all the country's banks
in the system. il Is thought that the
finances of the country will be mobil-
lied and made efficient for the working
Of the national purpose TO an extent
hardly attained in any Of the other
countries now at war.
The Reserve banks virtually will have
absolute control, under the Secretary
of the Treasury. OF the redeposlt among
the banks Of the country OF the pro.
ceeds of the Liberty Loan. The board
and Secretary McAdoo have not con.
fined redeposits to member banks OF
the Reserve system. but have placed all
hanks OF he country. member and non
member, upon virtually the same foot
ing.
Announcement Of the technical de-
tails of the basis for redistribution OF
the loans proceeds among the banks
was made tonight by the Treasury in
a circular addressed to all banks Of the
| .rt.