Richmond times-dispatch. [volume] (Richmond, Va.) 1914-current, 1917-02-04
FEDERAL RESERVE BOARD
ADVISES NATIONAL BANKS
Reviews Recent Admonitions against
Heavy Investments in For
cign Bonds.
MAKES IT'S ANNUAL REPORT
During Year 1916 Total OF $50 In
stitutions Entered the system.
Zig Increases in Deposits. Loans
and Discounts Are Noted.

recent sdln"iit IONS 10 national banks
against investing 700 heavily m
!"r"iEn bonds. expressed III" ,opiuion
TO-DAY, In its Iuun:N report to Con-
-r"Ss that Il reduction OF American cN-
port" or sr'tl"mrut therefor in gold
would he rr"friahl" whenever tho ab-
SorbirE cow"r "f ia" investment mar.
kct shows signs Of exhaustion. 10 hav-
in: banks "unduly extend their inYest-
m"nts ia foreign securities at - time
when business prudence and conserva-
tisIn suggr3t tho necessity o; th"!:
maintaining ,n"mS"lv"s in pariicu-
larly strong position
The purchase by American investors
o. desirable foreign loan" in large
amounts" reads III" report and tho
absorption by them Of a vas, volume
~ American securities previously hold
abroad may u. rcgard"i as 81 healthy.
and normal "p"ratior IN view Of the
circumstances which have existed aimee
tho war h"gal. but tho board hr-
deemed l., necessary. nevertheless. :"
emphasize Tho Importance ~ having
the banks oc III" country keep them
ScivcS In LIQUID condition
''Ea oks may. "f course. pcrf"rm IN
nup"rtaut function 20 ;cmpOral- mold
e~s Of securities during the process OF
their distributinr To ultimate Investors.
but in times when there arc enormous
International tranSactio-S such wr
have witnessed during the past two
years. tho velocity and volume of our
long ;imc credit. mu.t bc regulated hy
the power OF absorption Of the .\mcr:
investor
Whenever Tho absorbing power Of
the investment maThet shows signs Of
exhaustion. IL would. w the opinion Of
tho board hc better that the volume
~ our exports be reduced, thar
trad" balances in our favor he settled
b. import Of gold than thn, our
banks. especially those Of moderate
size should uuduiy extend their in
Ncstn"nts in foreign SECURITIES at
'lu1o when business prudcnc" aud con
serNa,i%m suErest inc necessity Of
mo intainiuc themselves III "a partic-
ulari. strong position.
NAY INDUCE DANGEROUS
Expansion ot CREDIT STRUCTURE
Tho hoard So not. however, urmind-
fpI that large Hccrrticns ~ gold may
undue" rapid and dangerous cNpan-
sion Of our credit structure. and III out
lining tho policy % The Federal reserve
banks aud III considering amendments
that in its opinion should be made 70
tho Federal reserve act. the board has
h"rn impress with iis 1uty 20 ,icep
ia clos. touch with she situation and
TO coutrol. a. far as possible. condi-
ti"u> resulting from either an excess
.ivc ,ufoW or outg" of gold
Tn" net movement Of gold ,n,o the
United states since Che beginning o.
To" war 10 the end az December, 1915.
No board estimates at $4,000, ohc.
parine this period the transfer Of Sc
"uritic. from foreign 10 American
"Wu'r-hip reached the huge estimated
total ~ - IS" boc 900. Of which ahoI:,
r... i rr,ien crw.rn,,,c,,ts nd ,n,.
nnrs,,n,,. ,n,I ,bs r,n,.;na.~ ..,.,,ri.jE
81 American origin held abroad a. the
"rthrc.k OF the war.
Ttcr> ndou. advances IN deposits
Ioru- and discounts have kep, pace
With tn" absorption "f securities. the
lcp"r' save, having reached the high
est levels ever recorded. rho aHErc-
gate ""hE account "i 'hc American
reop! --r"prHssnicd by tn" amount on
"'P"9''" ~ al Inc hahh. ia the couu-
~ PFC" ~ '.''"''.'ooo"" rhc
t.,. 80. ~
,e.'. ~" N"''"''""''""''
pc! ,tht' ia IVY"
ican hank" ar" .s,ir,,.,"d .>t' mo-
nna ono 49, ,,..
sa.oonco 600 or .,;.,,, -, 49,
during tho ,vo.year rcrioG Cas,, On
hand in American banks is e.,ir1a,nI
=; Slt66. 600 coo. or al,,,ro%.,tu,.ly
fl3oo"o 90" less than in June. isit
WIN " Genital and surplus " 81
"fi,oop.n"". the report continues
american banks held. Oh June 80 last,
5000 100000 Of long-tln" securities
prInciphilH ""ndS, IN addition :" about
f''"'""p'""" III tnit7u states govern
mont bonds. most OF which wcr. used
10 secure circulation. During two
years. ~ Is stated, total capital and
surplr OF all American banks in
croa ~ per cent while investment
in .C-term Notwithstanding
Unit, states bonds domcs,i, securi
tics aud obligations OF noutra, ,rd
hcllicercnt na,ionsrosa IN IN 49,,
cent or c,ni,,i md surnIr. 49, -
rrcpso Of - nor .or,
,rhc how're ,,,i,;.i ,,,
,o.r .-s ra.ia,,.aa '"e
,;r 49,, '' " Ho"
"' ="
volunc NJ o,,,s,,r5in, nntcs 49,, ~
.o,nhcr 20 i,v, u.,. so0n ~ M,
this tota, uulv sl7.:SS 900 ,yas secured
by cIicibl, paucr pledged with tb.
agents IN. r.r,aindcr helms. s.,ura,j
nv -o,d ,oli., for dollar E,,;on,l
ham, circ,Ia,iun sbov,1 :, rnIuc,:on
d,,rir- H. ,.o,r a: S,,5,, as
49, ,;n ono ,I. H., ,,
,, 49,. III, ,,,,,,,,,,. H.,
.;,.;i ~ -, ,..t,l ~