The sun., 1917-05-30
MAY CLOSE MONEY
MARKETS TO WORLD
Washington Considers Pro-
pOsal as Necessary to Re-
tain Leadership.

wAsHINGToN. May 2s.-To enable the
United States to retain its present su-
premacy in international finance through
out the war--an aim with which the En-
tente Powers are understood to be in full
accord-and to emerge in a strong finan-
cial condition afterward. officials have in
mind the enforcement OF a programme
the salient features of which are:
The virtual closing Of American money
markets to further foreign government
bond issues throughout the war:
The stabilizing OF business conditions
20 far az possible. by the contemplated
international purchasing board;
Capitalization Of the countrys finan-
cial system by the addition to the
Federal reserve system of thousands Of
strong trust companies and State banks
Mt present non-members.
Virtually all financial plans of the
Government including the fiotation Of
the Liberty Loan and the programme Of
financing the Entente Governments as
well as the efforts to continue the coun-
try's present prosperity, are made with
those features In mind.
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
derstood that the Government will no.
/ tify bankers contemplating the under
writing of foreign bonds OF It's disap-
proval. The investment market, SO far
as the Government can control II. Is not
TO be disturbed by outside bond issues.
for the big proportion of Americas saw
ings, 1t Is felt, will be needed to finance
the part America will play in the war.
Cooperating with the United States in
this respect Great Britain changed Its
plans. upon Americas entrance into the
war, to issue 5000. .00o. 900 In bonds here
secured by Canadian Pacific securities.
! Arrangements for raising this money
/ had progressed 20 a point where virtually
( aK details had been decided when the
United States entered the war. The
plans were cancelled and Great Britain
borrowed what funds II needed from the
American Treasury instead.
| In line with this policy the Govern
ment may find II necessary TO induce q !
. Government Of Cuba to accept loan
of S30.000.000 instead of raising this
bond issue here.
| Sterilization OF business conditions Is
regarded as essential by Treasury Off
cials to permit the country to remain in
a strong financial position. This, it IL
thought, will be helped greatly by thC
inauguration OF the contemplated pur'
chasing commission for the Allies and
this Government. so far as Its militar,
and naval needs are concerned.
With a commission spending as much
as SIC, 900. O00. 900 a year-the estimated
extent of the proposed commissions pur.
chasing powers--it Is felt that virtually
all lines Of industry whose efforts con.
tribute toward winning the war would
be assured OF steady employment at q
fair profit. and that producers In al
lines would not run the risk OF fiuctuat
ing markets. A certain amount Of fiuc'
tuation IL regarded as desirable. ant
this, It 10 believed. would result from thu
operation Of the law Of supply and de
mand.
Al the same time. with the commits
sion operating at full power. producer.
would be enabled to estimate their re
auirements In raw material at fairly
stationary figure. II is thought. and woult
not run the hazard OF purchasing a
hlsh prices to face a falling market ;
foW weeks later. Under the plan every
industry contributing toward the ulti
mate victory would be kept going a
capacity on a secure basis. labor woul,
be fully and profitably employed ant
output would be fully sold.
Capitalization of all the country,
finances In the Federal reserve system Il
bound to come within short time. OF
flcials believe. With virtually all tn,
country's banks and trust companies Il
the system It Is thought that the finance
Of the country will be mobilized an,
made efficient for the working OF tn
national purpose to an extent hardly at
tained in any Of the other countries nov
at war.
Announcement, Of the technical de
tails OF the basis for redistribution o
the Liberty Loans proceeds among tn
banks was made tonight by tn
! Treasury In q circular addressed TO al
banks Of the country.