New-York tribune., 1918-01-28
Three Bankers Appointed
to Regulate Issue of
Private Securities
Federal Reserve
Plan Under Wav
Allen B. Forbes, of New
York, Heads New Ad-
visory Committee

WASHINGTON, Jan. 26.-Thc first
definite step toward limitation of nom
essential enterprises requiring capital
expenditures was taken to-day by the
Federal Reserve Board, which an
nounced the appointment of commit
tee of three bankers or fnancicrs to
act in an advis.~y capacity to the
capital issues committee of the board
in passing on applications for approval
Of issues OF private securities.
The advisory committee, together
With committees organized by each Of
the twelve Federal Reserve banks,
practically will administer the new
system, which is based entirely on the
theory Of voluntary cooperation on the
part Of capitalists. Through the Fed
eral Reserve Bank committee and the
advisory committee tho Federal Re-
serve Boards capital issues committee
will give or withhold its sanction to
proposed issues of large amounts.
Railroad financing will be left en-
t:reiy to the government railroad ad-
ministration, and the Federal Reserve
Board system will apply only to securi-
ties involving municipal, public utility
and industrial financing. Later the
board hopes to devise nationwide
method Of dealing with transactions Of
smaller scope.
Members Of the Committee
The advisory committee consists OF
Allen B. Forbes. member OF the firm Of
Harris, Forbes & Co, New York, bond
dealers; T. II. GoH, president of the
Cleveland Trust Company, and Henry
c. Flower, president OF the Fidelity
Trust Company, of Kansas City. The
committees counsel Will be Bradley ".
Palmer, Boston lawyer, and the execu-
tive secretary Will be Stephen L. Sell
den, an engineer, formerly of Denver,
now associated with the Aircraft Board.
James Hugh Newton, OF Denver, is to
be assistant executive secretary.
All will serve without compensation.
The committee will have a staff of ex-
perts located in Washington.
Temporarily. the Federal Reserve
Boards capital issues committee will
not pass on individual securities issues
aggregating less than S500,0O0 in the
case os industrial and public utility
corporations, and S250000 in the case
OF municipalities, nor upon securities
having maturity of less than one
year
Legislation is now being framed pro-
vldlng some measure Of compulsion in
the government regulation of securl-
ties issues. The board counts strong
ly, however, on voluntary co0pe ration.
and cites that already many applica-
tions have been received from pros
speetive issuers Of securities.
Local Committees
At each Of the twelve Federal Re
serve banks local committees will be
organized to assist the central commit
tee, consisting of the chairman of the
board and the governor of the Reserve
bank and three other bankers or bust
ness men.
1t is distinctly understood. says the
Federal Reserve Boards announcement,
that the capital issues committee will
not pass upon the intrinsic merits of
individual cases, but only upon the
question of whether or not the objects
for which money is to be raised and
spent are essential to and compatible
with the national welfare at this time"
Applications for approval of security
issues are to be sent to Washington,
and the committee here, if necessary.
will forward them to the district Fed :
eral Reserve banks for investigation.
The system is somewhat similar to that
Of Great Britain.