The sun., 1918-08-12
DEMANDS FOR MONEY
MAY CHANGE RATE
Bankers Face Problems in
Further Drain by Treasury
Certificates Sales.
CREDIT SYSTEM AT TEST
Mechanics and Metals Bank Is
sues Statement on Finan-
cial Situation.
CREDIT SYSTEM AT TEST


all bankers according to a statement to
be issued to-day by the Mechanics and
Metals National Bank Is whether In the
face Of the strain imposed by the further
sale Of Treasury certificates present
rates for money can be continued. Inc
bank admits that thus far the money
market has not been subject to any dis
| turbance through what has been going
on, but says that much will depend upon
tho freedom with which the Federal re-
serve banks make advances to member
banks at current quotations. The banks
| statement follows In part:
Member banks have turned moro freely
to the Federal reserve banks recently
than at any time before In their career.
They have borrowed directly against
Treasury certificates. against Liberty
bonds and against commercial paper,
and they have rediscounted their Gus
toners commercial paper and also their
customers notes, which were secured by
Government obligations. All that has
been done has thus far been well within
the margin of safety, and the Federal
Reserve Board has not sought to impose
check by any notable advance In Its
discount rates The immediate future
will contain interesting developments. for
financing of the next Liberty Loan will
come coincidently with the autumn crop
movement and the attendant demands
upon the money market. and problems
peculiar to the season will operate then.
Meeting War Costs.
Upon the United States Treasury and
| the Federal reserve system as well as
upon the commercial banks OF the couh-
| try there is devolving a steadily increas-
ing responsibility to the money market.
The direct cost of the war to the United
70 o,,r aIiiss 4. now wore than $3.50 DOR.
nm !. week md funds to meet that cost
| 70 hoino ohtained In antio,nat,on Of the
naxt Iiherty I.oan Nv means of regular
oeferinga from Washington to banks in
ever,, Quarter ~ the United States Of
| TreaS,rv certificates of indebtedness
| These certificates are being taken by the
| hanks in Axed proportion to their re-
source,
"1n a sense the banks are between two
powerful forces. The Treasury Is very
| nronerlv seeking thelr helm to meet its
war cost in full. Its need cannot be
denied The Federal reserve system is
| seeking. also very properlv. to place a
| check on eny undue recourse to its IA
| ,,Iities Its restraint should mt he re-
| moved Rut the banks. as thew are
called unon N DIRECT credit stream
/ n n hiMiOn dollars
| month into the Government Treasury
| must necessarily have the proper means
Thev ire not ah,e 10 nav for tho certif-
4 Gates offered on n huge scale at regular
| interyaIa entiralv ont of the,S ovaiI, hla
resources Nor are they IN n nosition
10 nav for them altogether nv drastically
curtaIl,nr their commercial credits and
thus relieving funds for the Government
|
Restricting Commercial Borro,x.r.
|
| Up 10 the present time' IL is true,
part OF tne needs OF 'he treasury Tor
war nhahcihe nave peen met out OF such
free creoit as the banks mad available,
ana announcer part mas oeen diverted from
| conf'erciai ooiIowers, VINO were maze
10 80 without the oank accommodations
they Formerly enjoyed But for the
paIance tne feoerai reserve system has
neen turned 70. ana within Few weeks
ene oemanos lot IT'S neip nave been sur.
ncieht'v large 10 nave resulted In rapid
| increase IN the DIS discounted Tor mem