New-York tribune., 1919-01-22
w alth-M ark ets-Inves ST I'M ents

to accept of domestic transactions in
an amount greater than 80 per centum
of its capital and surplus for the rur-
pose of furnishing dollar exchange, but
that any part of the aggregate amount
which a bank may be authorized to ac-
cept growing out of transactions m
volvng the importation or expectation
of goods"
Mr.. Warburg Explains Position
For his part, Mr.. Warburg explained
that, although he agreed that the ac-
ceptance market must be broadencd
vastly, he disagreed with the method
proposed by the head of the Federal
Reserve Board Instead, Mr.. Warburg
believes, that the formation of ac
ceptancc corporations, which specialize
in that side of the banking business
should be encouraged, as they are per-
mitted to lend on acceptances, he
pointed out, up to six times their CAPT
tai and surplus. 1t would be a danger
Gus banking practice, the former vice
governor of the board indicated, TO
permit deposit banks, which already
have large liabilities in other direc
tions, to lend up to 200 per cent on
their capital and surplus. In cases
where deposit banks seek to expand
mends All increase in the amount of
their capital and surplus through ma
Cural growth. Mr.. Warburg reminded
his auditors that several acceptance
corporations had recently been launch
ed In the East, and prophcsied that
many others would spring up soon in
all parts of the country. He saw
splendid opportunity for the establish
ment OF local acceptance corporations.
Warburg Counsels Caution
Mr.. Warburg, though protesting q
hatred for legal restrictions on bank
ing. urged caution in the development
of the acceptance market, saying: at
is important that we should avoid as
much as possible any untoward event
which would undermine the absolute
confidence in our bankers acceptances
as an investment both here and abroad
We must do everything to avoid fail
ures which might result from over
expansion, vcraggressiveness and
recklessness in granting credits. ] do
not believe that it is advisable to 20
too fast in increasing the legal limits
up to which member banks or accept
ance corporations may accept
Touching on the relation of the end
OF war financing to acceptance growth,
Mr.. Narburg continued: "Withln a
year the amount Of the United States
Treasury bills held by all the banks
of the country will become very sub
that after a reasonable time the United
States as borrower on short term
paper will practically disappear from
the market. The banks of the cOun-
try have now been trained to keep a
large part of their liquid assets in
vested IN Treasury certificates and to
use them and the war paper of their
customers when borrowing from the
Federal Reserve banks at preferential
rates. The preferential rate for the
future will be that for bankers ac-
ceptances, and the vast place now oc-
cupied by Treasury certificates and war
paper is likely to be taken up to a
large extent by bankers acceptances."
Organization to Be National
In the promotion of the use OF the
acceptance, which Mr.. Harding simply
defined as a draft made by the seAer
Of goods on the purchaser and an ac-
acknowledgement by the purchaser of
his Obligation, both speakers urged
that the new organization be thorough
~ national, instead of provincial, in
scope. In electing sixteen members to
the new executive committee, the men
who formed the council followed the
proffercd advice in choosing the follow
ing: Mr. Picrson. Mr.. Warburg, jerome
Thralls, secretary and treasurer of the
Discount Corporation OF New York;
Daniel G. Wing, president of the First
National Bank of Boston; William A.
Law, president of the First National
Bank Of Philadel lphia; Oliver i. Sands,
of the American National Bank of
Riclmond; DR.. J. T. Holdsworthy
vice president of the Bank Of Pitts
purgh of Pittsburgh; Charles w. Du-
puis, vice president of the Citizens
National Bank of Cincinnati; Forrest
Ferguson. of the Ferguson G. Nc
Kinney Drygoods Company, of St
Louis; Randall N. Durfcc, Weep presi-
dent of the American Association Of
Cotton Manufacturers, OF Fall River;
Henry Burden, president of the Ma
tional Gamers Association, Of Gaze
ovia, N. Y; M. A. Taylor, Of the First
Trust and Savings Bank of Chicago;
j. T. Mccarthy, treasurer Of the Kirby
Bonner Lumber Company Of Houston,
Texas; Morton II. Fry, of Bernard,
Scholc Co., Of New York, and J. H..
Tregoe, treasurer of the National As
sociaton Of Credit Men.
The annual report of the Controller
of the Currency gives a scrse of the
growth of the use of the acceptance
in this country, showing that the
amount of drafts and bills Of exchange
accepted by the national banks on No
vember 20, 1917, was $153.654 600 and
on November /, 1918, $332,719, 900. an
increase Of 116 per cent.