New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-11-13
Sees Relief for
Corporations in
Trade Acceptance
Its Adoption Will Greatly
Facilitate Financing,
Says Banker

Efforts being made by banking insti-
tutions here to finance large industrial
corporations by an extensive use Oh
the rediscount facilities of the Fed
eral Reserve system started a lively
discussion yesterday as to what form OF
commercial paper is under the law TO
be regarded as desirable invest
ment" for the Federal Reserve banks.
The views of bankers, business men
and credit authorities will be heard on
the subject at a meeting of the Amerl-
can Trade Acceptance Council to be
held in this city November %. The
chairman of this organization is Lewis
f. Pierson, chairman Of the Irving
National Bank, and Robert II. fireman,
deputy governor Of the Federal Reserve
Bank of New York, is vice-chsirman.
Need of Emergency Financing
ave all appreciate" said Mr.. Pierson
yesterday, "the fact that the activities
Of the war naturally have seriously in
creased the financing problem with
which large corporations are confront
ed. We realize, too, that in an emer-
gency of this kind these corporations
naturally would look hopefully toward
possibilities of assistance from the
Federal Reserve system.
at would seem, however, that the
best possibilities of this system toward
extending financial assistance TO the
commerce of the country is to be found
in the general use of the trade accept
ance. II would seem, too, that this IS
an excellent time TO call the attention
Of these corporations TO the merit or
the acceptance method Of handling
credit obligations and the desirability
of getting their accounts receivable,
and accounts payable as well, upon an
acceptance basis as soon as possible.
Praises Acceptance Method.
at hardly would be expected that the
Federal Reserye Board would favor a
plan which in effect caused them TO ex-
crcise greater liberality toward redis-
count than is provided for in their
trade acceptance plan. Nor would u be
reasonable to suppose that the board
would favor d new plan which pro-
posed to cover a situation already so
satisfactorily covered by the trade
acceptance method, for which the board
itself is directly responsible and upon
which il has expended so much time
and effort, and which at present 1t IS
ondeavoring by every reasonable means
TO have introduced generally through
out the business of the country. II Is be-
lieved that the trade acceptance IS the
best existing or possible method for
the treatment of credit obligations
arising from the sale of merchandise.
"If these corporations desire TO Sc
cure the highest efficiency in financing
their requirements. and to secure the
greatest possible measure of coopera-
ton from the government, they Will
carry their receivables in trade ac-
ceptance form and give acceptance
freely to cover their own obligations.
In this way they will secure the finan-
cial advantage Of economy in opera
ton and OF the best preferential redis-
count rate in existence, and also will
secure the benefit of the maximum
of lberality toward private CONNER
cial necessities which the government
las contemplated in the creation of its
Federal Reserve system"
Arguments for Ninety-Day Notes
The statement given out by the Fed
eral Reserve Board at Washington last
week that ninety-day notes issued by
corporations under an agreement with
banks that they are to be renewed over
a period of two years were not TO be re-
gard as in the desirable" class, be-
cause the renewal agreement destroyed
their self-liquidating character, has not
been accepted by those interested in
proposed plans for such financing as a
final expression of the boards views on
the subject.
The S25,000.000 of ninety-day per
cent notes sold by the American To-
bacco Company last week to a banking
syndicate, it was contended yesterday,
have not lost their self-liquidating feat
ure, but will be redeemed by the COM
pany whenever they fall due, provided
they are presented for payment, as
would be the case if rediscounted at a
Federal Reserve bank.
The two-year agreement with the
syndicate, it was stated, does not give
any longer life to the note than the
maturity indicated on its face. The
proceeds from the sale of the notes. it
was further stated, will be used to buy
tobacco and other supplies, and the
money derived from the sale of tho
company's products will be applied
from time to time to the reduction of
the amount of the notes outstanding.
This, it was argued. gives them the self
liquidating feature that is required of
commercial Manor