New Britain Herald Newspaper, November 28, 1916, Page 13

ONE DAY BRITAIN DAILY HERALD, TUESDAY, NOVEMBER 28, 1910, LONGER TO JOIN CHRISTMAS GRAFONOLA CLUB Open Wednesday The Columbia Graf- onola is the one gift that will give the entire ily more pleasure fam- than anything you could pos- sibly buy. There is a tremendous short- age of the popular Grafonola mod- els every Christmas season, so it will be wise to place your mas order at once. Christ- The “Leader” is the most popu- lar Grafonola. Hundr people were disappointed eds of last Christmas because we could not get enough. Don’t Be Disappointed Order at Once! ! SPECIAL TERMS WEDNESDAY ONLY $1.50 Down s 7 The Columbia “Leadr" $75 Fully guaranteed. Your choice of finish. You will receive the instrument December 23, or immediately if you wish, subject to slightly different terms. COLUMBIA Records and the Columbia RAFONOLA Open Wednesday Evening Until 10 o’Clock BRODRIB f 138 Main Street (’Phone 974-4) \ \ WHEELER Hallinan Bldg. RESERVE - BOARD ISSUES WARNING Believes Banks Are Taking Risk in Investing in Foreign Notes ‘Washington, Nov. 28.—The Federal Reserve Board yester took action banks treasury on the acceptance by of Wnited States of belligerent countries. notes In the board warns the banks not to be ; deceived by investment which at the outset appears to be a short-term an transaction, when from the very force ! of circumstances it cannot be Pventually, the board holds. it is sure to become a long-term investment, to the defeat of the principle and spirit underlging the banking stem of this country, which is designed to make our curreacy always liquid and available for tae promotion of our own commercial necessities and tivities. The reserve board, it was explained hes been impelied to the action taken by the experience of two New “York banks, which accepted treasury nbtes of the Republic of France and are now living up tolan asreement to allow five renewals of those notes. s ac- the | of | a statement | now | more than ordinarily profitable to the banks, dbut it is virtually a loan for eighteen months, as the five-renewal agreement came at the end of the first ninefy-day discount. The board believes that such a transaction, mul- { tiplied throughout the months to ! ~ome and involving a large number of banks, would lead to the eventual ! building up of a foreign loan of very Jarge proportions. Made under the auise of ninety-day discounts which would not be met and would be con- | stantly renewed, the transaction | would become permanent loans taken | from the liquid currency of the coun- {try instead of the legitimate invest- | reent market, where they properly be- long. No Fear of Gold. The reserve board, at the outset of statement to the member banks the country, says that it has no whatever on the score of gold | coming to the United States. The soard is willing to let it come and | does not believe that it is to be put in banks and made the basis of specu- and inflation. It says that if ger it could be voluntary co-operation of the banks or by legislation, The prac- ce urged on American bankers now ; a chance to make profits and hy agents of belligerent government, the ! hoard intimates, will bring a real dan- 1 which is the reduction of excess | “urrency and a resulting situation where if there js not control, u formidable eclements instability will be introduced The reserve board, after cautioning the banks not to take f goes a step f i private inv - and fear | lation se wise of n treasury and tells the should get notes, he JTth transaction is supposed to be) full and authoritative data, especially in tfie case of unsecured loans in or- der to judge whether future develop- ments will justify his investment. H. P. Davison of J. P. Morgan & Co. was In Washington recently and conferred with Presldent Wilson and some of the members of the reserve board. It was sald later that he sought to have banks of the reserve eyvstem authorized to buy British treasury bills as if they were bills of exchange to cover commercial trans- actions. The statement of the board reads: “In view of contradictory reports which have appeared in the press re- garding its attitude toward the pur- chasing by banks in this country of treasury bills of foreign governments, ihe board deems it a duty to define its position clearly. In making this state- ment the board desires to disclaim any intention of discussing the fi- rances or of reflecting upon the finan- °ial stability of any nation, but wishes it understood that it seeks to deal only with general principles which af- fect all alike, “The board does not share the view frequently expressed of late that further importations of large amonnts of gold must of necessity prove a source of danger or disturbance to this country. That danger, the board believes, will arise only in case the in- flowing gold should remain uncon- trolled and be permitted to become the basis of undesirable loan expan- sions and of infiation There e means, hawever, of controlling acce: sions of gold by proper and voluntary co-operation of the banks, or, if need be, by legislative enactment. An im- portant step in this direction would be the anticipation of the final fransfer of reserves contemplated Dby the iFederaI Reserve act to become effec- | | vestment market supplies an impor- | the goods that they send us. | ence to its intrin=ic merits, makes it | appear particulariy | expected to place it | banks tive on November 16, 1918, could be advanced to March, 1917. This date February or Member bapks would | reserve requirements and | fictitious reserves would then dis- | appear and the banks have a clearer | conception of actual reserve and finan- cial conditions. It will then appear that while a large increase in 3 country’s gold holdings has place the expansion of loans and de- posits has been such that there will not remain any excess of reserves apart ‘rom the important reserve loaning power of the Federal Reserve | banks. More Caution Needed. “In these circumstances the board feels that member banks should pur- sue a policy of keeping themselves liquid; of not loaning down to the legal limit, but of maintaining an excess of Teserves—not with reserve agents, where their balances are leaned out and constitute mno actual: reserve, but in their own vaults or preferably with their Fedetral Reserve banks. caution in locking up their funds in long term cbligations or in invest- ments, which are short term in form | or name, but which, either by contract or through force of circumstances may in the aggregate have to be re newed until normal conditions return. “The board does not undertake to forecast probabilities or to specify oir- cumstances which may become impor: tant factors in determining future conditions. Its concern and responsi- bility e primarily with the banking situation. _If, however, our banking { institutions have to intervene because foreign securities are offered faster than they can be absorbed by inves- tors—that is their depositors—an ele- ment would be introduced into the | situation, which if nat kept undeg con- trol, would tend toward instability, ultimate injury to the economic de- velopment of this * country. Thn‘ natural absorbing power of the in- tant regulator of the valume of our sales to forelgn countries in excess of “The form which the most recent bhorrowing is taking, apart from refer- attractive as " a banking investment. The board, as a matter of fact, understands that it is primarily with In fact it would appear so at- tractive that unless a broader and na- tional point of view be adopted, in- dividual banks might easily be tempted to invest in it to such an ex- tent that the banking resources of this country employed in this manner might run into many hundreds of mil- lions of dollars. “While the loans may be short in form and severally, may be collected at maturity, the object of the bor- rower must be to attempt to renew them collectively, with the result that | the aggregate amount placed here will remain until such time as it may ad- vantageously be converted into a long- term obligation. It would, therefore, | seem as a consequence that liquid funds of our banks, which should be | available for short credit facilities to our merchants, manufacturers and farmers, would he exposed to the danger of being absorbed for other purposes to a disproportianate degree, especfally in view of the fact that many of our banks and trust com- panies are already carrying substan- tial amounts of foreign obligations and of acceptances which they are under agreement to renew. The board deems it, therefore, its duty to caution the member banks that it does not re- gard 1t In the integest of the country at this time that they invest in foreign treasury bills of this character. Sugestions for Investors, “The board does nat consider that The board belleves that at this | time banks should proceed with much | § | then be placed on the permanent basis | § of their LAST CALL! Our housewiring campaign will be closed, and our present offer withdrawn, after November 30th, 1916. Until that date you can obtain: Special prices on wiring, 12 months to pay, Free Mazda Lamps, Equivalent of Six Month’s Free Lighting. Remember that November 30th is Thanks- giving, and a Holiday. So there is very little time left, and if you expect to take advantage of this offer you should act at once. 'Phone us for details. THE URITED ELECTRIC LIGHT & WATER CO0. 92 West Main St., it vestors, but as the United States is fast becoming the banker of foreign countries in all parts of the world, it takes occasion to sugest that the in- vestor should receive full and authori- tative data—particularly in the cae of unsecured loans—in order that he may judge the future intelligently in the light of present conditions and in conjunction with the ecanomic de- velopments of the past. “The United States has now at- tained a position of wealth and of in- ternational financial power, which, in the natural course of events, it could not have reached for a generation. We [must be position carcful not to impair th of strength and indepen- dence. While it is true that slowing down in the process of credit exten- slon may me#n some curtailment of our abnormally stimulated export trade to certain countries we need not fear that our business will fall off precipitately should we become more conservative in the matter of in- vesting in loans, because there are still hundreds of millions of our own and foreign securities held abroad which our investors would be glad to take over, and moreover, trade can: be stimulated in other directions. “In the opinion of the board, it is New Britain, Ct. | the duty of our banks to remain liquid In order that they may be able to continue ito respond to our home re- quirements, the nature and scope of which none can foresee, and in order that our present economic and finan- cial strength may be maintained when, at the end of the war we shall wish to do our full share in the work of lnternaflon%‘l’ reconstruction and development Which will then le ahead of us, and when a clearer un- derstanding of economic conditions as they will then ‘exist will enable this country more safely and intelligently to do its proper part in the financlal rehabilitation of the world. Amn’t It a THE\ BANG oF BLOW OUT AND You SyPPOSE (T AND YoU FIND oUT 1T WASN'T YOUR TIRE AT | AL To BE YourR TiRE Grand and Glorious Feelin’? WHEN YOU HEAR a THERE GOES MY REBAR SHoe 111} -AN‘D You S§ToP You® CAR To cCLIMB ouT AND Do Tue DIRTY DISAGREEABLE WORK oOF CHANGING SHOES By BRIGGS WOULDN'T THAT MAKE Yoo TIRED. AND | HAVEN'T H&D OVER, SIX THOUSA D MILES O'\{Al'r— % QH-u AINT 1T A GR- Axp GLORI-YUS Fesmin' €~ TA~TATA TYA Tva