New-York tribune., 1918-08-06
Reserve Bank Urges
Loan Curtail1nents
ToConserve Credits
Bankers Must Restrict Non
Essentials to Help Gov
ernment Finance War

Greater restriction in the extension
enterprises is expected to follow action
taken by the directors Of the Federal
Reserve Bank of New York Announce
ment was made yesterday that the
board of the local institution has sent
out letters to all the banks in this dis
trict urging upon them the need of con-
serving credits in order to meet the
daily increasing requirements Of the
United States government for war pur-
poses.
Resolutions adopted by the directors
Of the Reserve Bank and made public
for the first time yesterday follow:
Reserve Bank Resolutions
ut is clear that the increasing vol
ume Of government financing makes
necessary far more united and con-
sistent effort on the part of the bank
ers of the country to conserve and save
credit than has heretofore been under
taken. The Federal Reserve Board ac-
wi oliiSiy, Ol uly U, duuIeSScU d lcCCcl
to all banks and trust companies, re-
questing them to exercise a reasonable
discretion to restrict credits which are
clearly not needed for the prosecution
sary comfort of the people and at the
same time asked the Federal Reserve
banks in every practicable way to bring
about a better understanding of the
Therefore, be i,
"Resolved, That the directors of the
Federal Reserve Bank of New York, in
full sympathy with the views of the
board, hereby direct the officers of the
bank, in such ways as may be appro-
pirate, to express to the banking insti-
tutions of this district the Importance
and necessity of conserving credit;
"By endeavorng to secure such
gradual reduction as may be prac-
ticablc of loans now carried for non
productive or non distributive pur-
poses;
"By gradually reducing the amount
of credit granted for purposes not
clearly necessary for the prosecution
of the war or the health and neces-
sary comfort of the people, and
"By educating borrowers Of all
classes to keep their demands for
credit down to the very minimum.
"Such a concerted campaign Of action
and education by the banking institu-
tions Of this district will surely lead to
spirit of economy in credit transac-
tions, as we'll as to an actual saving Of
credit comparable to the saving already
effected in food and other commodities,
and will enable the government to COM
mand the credit thus saved and use it
directly and with full force for the win
ming of the war.
ever, that nothing should be done to
cause undue embarrassment to borrow
ers or affect necessary credits"
Stringency in Money Rates
Concerted action on the part Of the
financial community for several months
in curtailing credit extension to nom
essential lines of business has been re-
f'ected III steadily increasing stringency
in money rates. Offerings of call
money and time money in the Wall
Street market have greatly contracted,
while interest rates have been firmly
III III ICdlHcu az y " III per cent.
The extent of the control being exer-
cised over the local money market was
indicated a fortnight ago when it be-
! came known that the bankers commit
tee, in whose hands rests the task of
stabillzing money rates, had begun to
require from the banks daily reports
of their outstanding loans and discount
operations
The necessity of curtailing private
loans arises out Of the enormous de-
mands of the government. At the pres
cnt time the treasury is borrowing fort
nightly on Az per cent certificates of
Indebtedness, of which $4,000, 900, 900
have been taken by the banks since
early in July. Banks in the New York
Federal Reserve district alone have
purchased approximately $500, 900, 900 of
the total certificates Of the new series
sold to-day. This has placed a heavy
strain on the banks resources and
made it imperative that loans in other
directions be limited.