The Richmond Virginian. (Richmond, Va.) 1910-1920, 1918-01-21

with this situation apparent, even Il
IL were otherwise advisable to do 50
from the standpoint of the govern.
ment.
BY Trade Acceptances.
A method was recently employed
by one company in raising SIS, 900.
900 for one year through acceptanccs
The agreement under which tns
loan was placed provides that each
bank shall accept the same amount ir
ninety day drafts as 1t subscribed for
in the underwriting OF the loan, and
that each bank shall buy for it's owl,
account an equal amount of drafts
similarly accepted by other members
of the syndicate.
The company makes arrangements
to pay each series of drafts as the,
come due. thus making the accept
ances eligible for rediscount by mem.
Der banks In the federal reserve re.
gional banks. New ninety-day accep.
tances are then issued. This Is done
every ninety days until three RENE w.
ais have been made. ~
The Many Advantages.
One advantage of such a credit op-
Grafton is that the borrowing corpo-
ration does not come into competi-
ton with the government for public
funds and so have tendency to raise
money rates, which tSndency would
surely arise If the former methods
of raising corporate working capital
were followed.
Besides helping 10 stabilize money
rates, which Is a distinct ADVANTAGE
to the government, as IL. too. is great
" interested In keeping qutations in
the money market down, this method
E1.fa t-AI
tracts placed by itself. the payment
for the goods so ordered. The gov
eminent can. therefore. not only await
more favorable conditions and raise
its funds periodically rather than in
bulk, but also save itself the interest
which il would be necessary other
wise to pay on the funds borrowed
to provide the working capital for the
corporations having It's contracts,
had such corporations not financed
their own needs through some such
credit operation an the one devised
for the company in question.
Although the matter OF government
contract does not enter into the situa-
tion to any great extent, so far as that
company is concerned. there will un-
doubtedly be q need for similar op-
erations on the part of corporations
having contracts with the govern
ment. Such contracts can surely be
considered an excellent reason for
agreeing to a series of renewals OF
ninety-day paper; for government
contract places such renewed notes
in the position of self-liquidating OBJ
legations II the maturity of the Las,
series is timed to occur with the com.
pletion of products contracted for by
the government.
What England Is Doing.
Almost At the beginning II the great
conflict the British government de.
cided that, in order 10 meet it's para
mount needs for waging war. 1t would
be necessary to concentrate and direct
the financial resources OF England
through channels which would bs
most efficacious toward obtaining a.
ultimate victory.
With the reopening of the London
stock exchange, 1t was decided tn Il
, for the issuance OF all new capital
application should be made first tc
the treasury for approval. the ap.
prevail OF the treasury to be governed
by the following questions:
VIII the undertaking, whether II
is to be carried on In the United King.
dom. or in the British empire ovsr-
seas, be advisable In the national in.
terest. and is it OF urgent necessit v
or do special circumstances warrant
1t?
1t should be recognized. however
that the British treasury had no le.
gal authority to make disapproval oi
fresh issues OF capital effective. Il
was rather the moral guasion exsr.