The sun. [volume] (New York [N.Y.]) 1916-1920, 1918-08-12

! exercise a surveillance over bank
loans in general. This would be out
| side the scope Of the committees
activity, except in cases where the
loan applied for was used for capital
purposes and not in the ordinary
course of business. It Is becoming
each day more apparent, however,
that credits must be restricted II the
banks are to make an enormous fort
nightly investment in the Govern
ment's short term notes. which the
Treasury programme calls for.
Touching this point, the Federal
Reserve Bank Of New York In an i'm
portant announcement made last week
asked the member banks to conserve
credits, so as not to finance non-pro-
ductive or essential industries.
Supporting the position taken by the
Federal Reserve Board in its letter Of
July 8 in calling on the banks to ex-
ercise "a reasonable discretion to re-
strict credits which are clearly not
needed for the prosecution Of the war.
nor for the health or necessary COM
fort Of the people," the directors Of
the Federal Reserve Bank Of this dis
trict plead for "a spirit Of economy
in credit transactions" as we'll as the
actual saving Of credit comparable to
the saving effected in food and other
commodities with the intent Of en-
abling the Government to utilize for
the benefit Of the war the credits
thus saved.
Saving for War Purposes.
These efforts in the direction Of
credit conservation supplied the most
important developments in last weeks
| extraordinary investment situation.
They brought home to investors in
n new way the need Of curtailing &C.
commodation for purposes which were
| not essential to war making. The
public Jumped hastily to the conclu-
sion that the control Of credits was
to be broadened and that 1t might be
necessary for every lending institu-
, ton in this and other cities to obtain
| the approval OF tho committee for
| every loan Of 100000 or more. There
was never warrant for such a conten-
| ton, however, since the law makes
sharp distinction between loans for
, capital purposes and loans made In
the ordinary course Of business. But
the incident only goes to show how
sensitive at time OF world chaos
the public is about any attempts to
restrict credits and how often the peo-
pie take fright at proposals made
with the sole idea Of conserving the
interests OF all borrowers by the prep
aration OF the banks to assist the
Government in financing its share in
the most destructive Of all wars.
The Next Loan.
1t is fortunate that this discussion
| came at the moment when the Gov
eminent was arranging the details Of
It's greatest loan. which is expected to
attract the largest number OF indi-
vidual subscribers ever enrolled for
a war issue. II the people are to pur-
chase $4,000. 100000 or $1,000, 5000
Of United States Government bonds
| within the next two months-and this
is what they are preparing for-the
| banks will have all they car do to
! finance this record breaking trans
action in war bonds without supply
ing the capital with which to conduct
enterprises that are essentially non
productive. This 10 the Sist Of the
extraordinary plans under way by the
| Federal Reserve Bank of New York,
the Capital Issues Committee, the Fed
eral Reserve Board and other high
banking authorities, touching the
! present needs of a nation that Is al
ready spending $4,000, 900 day foE
war and providing in addition to put
an army OF 100000 men in the field
during the next few months. 1t Is a
sufficient task even for the richest ma
! ton on earth and means that the
Government must continue to be the
| preferred borrower until the war has
been won for civilization and peace
full pursuits have been reestablished.
Extending Government Control.
The suggestion made by the Fed
eral Trade Commission that the
United States Government assume
control Of the packing industry by
taking over tho equipment, stock
yards. warehouses. storage plants
and facilities OF the great packers,
shows how easy 1t Is for commissions
and public bodies to pass over to tho
Government the responsibility of con-
trolling various forms of industrial
activity in war time. The fact that
the President had the report for a
month without authorizing its publica-
ton may show that he Is not inclined
to add to the Governments burdens
at time when it is running the rail-
roads and attempting to control for
the period OF the war a variety of
private enterprises. The packing in
dustry already Is largely under Gov
eminent supervision and the President
|
ton In changing the status OF the