The sun., 1918-08-19
MODELLING THE COUNTRY'S CREDIT RE.
SOURCES TO WIN THE WAR.
the
History Finance-Fn ancing the Government,
Activities of Prosperous Nation
BY WILLIAM JUsTUs BoIEs.

promptness. Inasmuch as the Gov
eminent has been successful In iti
effort to take money out Of the mar
ket through the sale OF bonds and
certificates OF Indebtedness, as well as
increased taxation, the quick liQuida-
ton OF contractors claims Is no more
than Just under the circumstances. In
some instances these bills are audited
more promptly than would be the case
for work done for private customers.
In others settlements have been de-
layed and the banks have had to
finance the contractors for consider
able periods
Cash Settlements.
Some Of these delays have been In
evitable, while others have resulted
from the rush of work upon overbur-
dened subordinates who have pigeon
holed the necessary vouchers In the
expectation of passing them at a con-
venient time. In a strained money
market, however, such delays compli-
cate a difficult situation and add to
the problems of lending institutions
everywhere. The country Is fast
adopting the acceptance system, which
Is making available an immense vol
ume Of capital that was formerly tied
up in open accounts. It has been es-
timated that within a year bankers
acceptances outstanding in the United
States have increased to 100000, 900.
This Is a remarkable showing, since
four years ago bankers acceptances
were virtually unknown in the United
States. Trade aoceptances are also
becoming more popular. and various
business organizations are adopting
resolutions asking for the abandon
ment of single name paper, together
with the old method of open accounts.
in favor Of the acceptance system,
which the Federal reserve act has
made genuinely popular.
Preparing for the Great Loan.
Tho banks are preparing to finance
the Fourth Liberty Loan operation
and to offer every facility to intending
subscribers. The large response from
small investors on the occasion OF the
last loan offering has made 1t possible
for the banks to strengthen this ap-
peal in the effort to bring in a larger
number Of small subscribers. The
coupon system of handling small sub
scriptions has been successful and
efforts will be made to place at least
s75,000.00O Of the bonds with small
investors upon the weekly or monthly
payment plan. There is a prodigious
amount of work in such offerings, how
ever, but the undertaking is justified
by the necessity Of placing these bonds
with actual investors, instead OF con-
interests.
Appeals to Patriotism.
The Fourth Liberty Loan operation
will be highly successful and there is
no doubt that the American people
will oversubscribe the issue. This Is
because every one realizes that by
purchasing a Liberty bond a man
UNDERWRITERS his own future and bust
ness success. There would not be
anything worth while left in this
country IL the Germans should gain
the upper hand or force an inconclu-
sive peace. The American people are
fully alive. therefore. to the necessity
OF Strengthening their military ma
chine so as to make our participation
more definitely effective in the fight
against Germany. There is no doubt
that the forthcoming loan will be
in broad demand everywhere. whether
the amount is S.. 900. 100000 or SO, O00,-
100000 The banks were successful or
the occasion OF the third offering in
placing the bonds with genuine in
vestors. This is the only absorption
which insures satisfactory results,
since il is necessary TO place the bonds
as far as possible with that class OF
investors who will, retain their hold
ings for income producing purposes.
In the four weeks between April 10
and May II last, during which the
last loan was distributed, member
banks in a hundred leading cities in
creased their holdings Of United States
bonds in the sum OF $294,00O, 900 In
this same period the banks reduced
their holdings Of Treasury certificates
Of Indebtedness by 1884. 100000, at the
same time increasing their loans upon
war bonds and Government certificates
from $500, 900, 900 to $5O1 100000.
Reaching Actual Investors.
The banks were successful in plac-
ing the Third Liberty Loan bonds with
actual investors, so that they did not
overburden themselves with Govern
ment securities. The Fourth Liberty
Loan will be much larger and the
difficulty OF lodging the bonds with
permanent investors Wilt be in
creased in proportion as the public