New Britain herald., 1918-07-06

CT operating costs. The banks and trust compan1es of the country whose sOlvency is so necessary to war finan- cing and the countryp financial sta biIity, cannot be asked or permitted to lock up their funds in securities at least temporarily unmarketable."
 That it Is understood, is precisely the point that will be made by bank CTS in todays discussion. As long as municipalities refuse to grant the higher rates for services made neces- sary by inflated costs, it is doubtful if the banks will be willing to take the risk that would be involved in invest ment in securities of this character. Certainly it is unreasonable to ask them to do so.
 (The Letter:)
 Financial Editor. The Tribune,
 Sir; In last Fridays Tribune you discuss part of Paul M. Warburgs address before the National Confer enCe on War Economy concerning the public utility situation. and quote MT Warburg as saying that the War Fiji nance Corporation "eXpects to deal only with concerns that are solvent and able to provide a bankers guar antee." And further, that except where the public interest absolutely requires the corporation will not con- sider itself warranted in making ad- Vances to companies on the brink of insolvency without such guarantee" You say that would seem to be the proper position for the War Finance Board to take. There is no good req son why the corporation should un- dertake to provide funds for bank I'upt or near bankrupt properties"
 
 companies that have been placed in of their own? It would clear ly be against the public interest to permit bankruptcy on a wholesale scale among our public service cor porations. .. It would not be sur prising if the Finance Corporation should discover many cases in which public interest would require direct loans, without the guarantee of bank CTS"
 In his annual report the Hon. John Skelton Williams, controller of the currency, said the continued and in creasing efficiency of these corpora tions is important for the successful conduct of the war;
 In a letter to the president secre- tary of the treasury the Hon. Will liam G. McAdoo said our public service utilities are closely connected and are an essential part of our prep arations for and successful prosecu- ton of the war;
 The president, in his reply to the secretary of the treasury, said: q fully share the views you express re- garding the importance of public utilities as part of our national equip mt nj.111 in essential that these utilities should be ciency and that everything reasonably possible should be done with that end in view"
 Subsequently the War Finance Corporation was created and organ ized, and you have quoted Mir. War burg as saying that the corporation now "expects to deal only with con cerns that are solvent and able to provide bankers guarantee"
 It is apparent that the continued and increasing efficiency, and, con- sequently, the solvency of the public utilities of the country, are essential to the prosecution of the war. The inability of the utilities to meet their maturities and to respond by expan- sion to the unusual industrial de- mands for motive power and trans portation is not due to anything in herent in that industry but is due to two conditions altogether resulting from the war namely:
 (a) Increases In all the ele-
 r1ents entering into the costs of
 operation including materials.
 labor and capital, with the possi-
 bility of further increases which
 oi
 creases in rates.
 (b) The governm ont financial
 operations monopolizing to
 large extent the activities and re-
 sources of bankers and making
 large demands upon the invest
 ment funds of the country.
 These two conditions are war con- ditions brought about entirely by the war and must be considered and treated in relation to the war.
 Utility companies, which would have been bankrupt had there been no war, are not entitled to considera- ton because war conditions exist; but public utilities, which, because of the war, are unable to maintain their eff ficiency and their solvency, must be protected as a war measure. Neither the bankers nor the investors of the country can assume that costs of operation will not be higher. or that rates will be increased to offset high CT. operating costs. The banks and trust companies of the country, whose solvency is so necessary to war financing and the country's financial stability, cannot be asked or permit ted to lock up their funds in securi- ties at least temporarily unmarket- able.
 The continued operation and solv- ency of the utilities of the country are essential to the prosecution of Al, inn i,.r,,l Iln