Evening star., 1918-02-06
OBJECTIONS ARISE
TOF|NANCE BILL
Principal Opposition to Giving
u. S. Control of Private
Securities Issues.
SCRUTINY SURE IN SENATE

When the administration bill to ere
comes up in the Senate it is destined to
receive very critical scrutiny, and one
provision of it to meet with opposition,
, according to present indication. The bill
is strictly war measure proposed by
the administration and as such will be
pressed for carly consideration.
The principal object of the bill is set
forth to be to extend financial assist
ance to persons or firms whose opera
tions are necessary or contributory to
the prosecution of the war. The sum
of $500. .O0O. 900 is appropriated from the
Treasury as the basis of fund to be
loaned to such borrowers. 1t is thought
that no serious objection will be urged
to this proposition.
Control of Securities Issues.
But the bill goes further and pro-
poses to give the Secretary of the
Treasury. through the finance corpora
ton. control over all private issues of
securities. The object Of this drastic
provision is set forth to be ''the re-
striction of unnecessary capital ex-
penditures" Section provides, in
part, as follows:
NO person, firm, corporation or asso
citation shall sell or offer for sale or for
subscription any issue. or any part of any
issue. of securities hereafter issued. the
par or face value of which issue shall be
in excess of 100000, except in accord
ance with such rules and regulations as
the corporation with the approval OF the
Secretary of the Treasury, shall prescribe,
nor when required by such rules and regu-
lations. except as permitted by licenses
granted by the corporation The corpora
ton shall, however, grant licenses for any
such sale, or any such offer for sale, or
for subscription. which it shall determine
to be consistent with the foregoing pur-
poses
This section will be resisted by some
senator's. who contend that it proposes
too extensive control of private enterprise
by the board 1t will be insisted upon,
however. by the administration, it is said.
and Secretary McAdoo is reported to be
confident that the Administrations con-
tention will be sustained and that the
restriction will be granted.
Board to Issue Notes.
Another section which is to come in for
careful analysis by the financial and eco
nomic experts in the Senate is the one
which authorizes the board to issue notes
aggregating eight times its paid-in capi-
tai. having standing with the federal re-
serve banks the same as United States
bonds and notes not bearing the circu-
lating privilege.
One school of financial thought in the
country is expected to oppose this pro-
vision vigorously, but it, too, will be
demanded byS the administration as
Forecast of the nature of some of the
resistance to this provision is given in
the monthly financial review issued by
the National City Bank of New York,
which is accented as rejecting the
views of an influential section of the
banking interests of the country. Upon
this section the review comments as
follows:
Views of National City Bank.
$50 much Of the measure will be gen.
orally accepted as creating powers
which it is desirable to have lodged in
a government board in view of the
present extraordinary financial condi-
tions. but the bill goes on to empower
this corporation to issue it's interest
bearing notes in the exercise Of its
any one time of eight times it's capital,
and to authorize the federal reserve
banks to deal in such notes in the same
manner and to the same extent as
states
bearing. the circulation privilege and
to rediscount or purchase paper secured
by such notes in the same manner and
to the same extent as paper secured by
obligations of the United States and
with the approval of the Federal Re
serve Board, use these notes as the ba sis
Of currency issues
1T is further provided in this con-
nection that when federal reserve notes
are issued in this connection, a speciaI
interest charge may be made on them.
In the discretion of the federal reserve
board. This is evidently for the pur-
pose OF exercising some degree of re-
straint over the volume of such issues
but 1T would be a very slight brake Tor
a very heavy load on a very dangerous
down-hill road.
Bad Use of Credit.
These are extraordinary times. and
nobody wishes to withhold from the ad
mlniStration at Washington any de-
gree of authority which may be neces
sary to secure the most effective mob-
iliZation and use of our resources dur
ing the war but this measure clearly
contemplates the use of credit in
manner and to n degree which, in our
opinion. cannot be advantageous TO tbe
country under any conceivable circum-
stances.
1T is unnecessary for us to go further
here than to say that we do not be-
lieve there will be any occasion to in
Hate the credits of the reserve hanks
or the currency of the country to the
extent indicated. or that it can he
done without disastrous results.
1T is undoubtedly important to sun
port the essential industries of rho
country and bring them to the highest
possible efficiency. but the printing
press Is not an effectual agency for
accomplishing that purpose That end
must be accomplished by organizing
co-ordinatine and directing the indus
/ tries and concentrating them upon war
work.
Moreover. as this is the view which
the Federal Reserve Board and the Sec
retary of the Treasury have tenaciousIv
held and ably advocated in the past we
feel bound to assume that they are NOT
really intending to depart from il 90
F, far as the text of this measure would
! indicate. We think it mistake 70
even countenance such a policy by
providing for its possible adoption"