The sun., 1918-08-19

finds II necessary to reserve its sur
plus funds for tax paying purposes
A strong appeal will be made to tho
farming communities OF the Yves,
which made such generous suhscr,n.
tons to the last loan and which ara
much better Off than they were then
in consequence OF the immense
amount Of new wealth which will coma
from the soil this year. The 100 lead.
ing banks in the three central reseryo
cities, which figured 30 largely in tho
financing Of the last loan, may he dc.
pended upon to work UP a record vol.
ume Of subscriptions for the forthcom.
ing issue. The outlook Is highly rea,.
suring. however, as wage earners ara
better fitted than ever before to make
large aggregate investments in bonds
since wages everywhere have been in.
creased and the whole country has a
largo reserve fund, Notwithstanding
high living expenses and the steady
rise in commodity prices.
Curtailins Credit Accommodation.
Fresh rumors that the Capital Ia.
sues Committee would seek to super.
wise bank loans of 100000 or mora
caused some uneasiness in investment
quarters last week. 1t was urged that
such an extension of the committees
activities might bring disturbance.
since 1t would be impracticable for
bond houses and many other borrow
rers upon collateral securities to OBJ
tain the committees assent TO a loan
after It had been approved by the
officers Of the lending bank. Actual
announcement was not made, however,
that sun a privilege would be In
sisted upon in the effort to restrict
loans for capital purposes. The COM
mittee's authority for such possible
supervision Of bank loans would de.
pend upon the Interpretation of this
provision in the War Finance Cor.
poration act of April 6. 1915, pro.
vided that "the committee may, under
rules and regulations to be prescribed
by 1t from time to time. investigate.
pass upon and determine whether 4,
Is compatible with the national interest
that there should be sold or offered
for sale or for subscription any issue
or any part Of any issue OF securities
hereafter issued by any person. firm.
corporation or association the total or
aggregate par or face value OF which
issue and any other securities Issued
by the same person, firm, corporation
or association since the passage Of
this act is in excess Of 500. 900"
Fresh Borrowings.
The law goes on to say, however.
that the committee shall not pass upon
any borrowing by any person firm.
corporation or association In the or
binary course Of business as dls-in-
guished from borrowing for capital
purposes" II is evident, Therefore,
first, that the committee may, IL It sees
Mt, extend its supervision over loans
made by banks for capital purposes
and second. that the committee is pro
hibited from supervising mercantile
loans made by bank in the ordinary
course OF business. There is nothing
In the situation. therefore, to occasion
unrest among the rank and file OF Dor
rowers who often have to seek large
loans from their banks. Although the
law does not give the committee the
''S''S ~ A'''o bp Il stNulllN lSSu' 'H
which IL disapproves, there has been
scarcely an instance where prom.-
nent borrower has insisted upon mar.
keting securities which the Capital
tissues Committee has disapproved.
one case has been reported where
the officials of one county who had in
hand funds for the erection of Il new
court house declined to postpone the
Improvement until after the war was
ever. The school officials Of san Fran
cisco in difference to the wishes Of thu
committee abandoned their project Of
spending $3.500,000 for lsw sghoo'
buildings and instead made an oI'la'
OF $435,000 for temporary structures e
serve until after the war was over The
Capital Issues Committee has become
controlling factor in corporate
finance, fully $1,000, 900 900 of long tern
and short term securities having been
passed upon by this committee and
Its predecessor since February last.
The committee has handled a difficult
task admirably and 1t is evident tha'
there Is no occasion for the uneasines'
felt by various borrowers concerninE
tho possibly disturbing effects from al
extension of the committees activity
The committee was organized 10 doa
effectively with a situation that was
without precedent in American finance
and like the London committee formed
for similar purpose it has been ~
great service to the American peoTl'
at time when 1t was OF vital impor,
lance TO give the Federal Government
first call upon the investment mark"'