MARKET RATES ON PRINCIPAL TYPES OF PAPER AT NEW YORK. Prevailing selling rate each week of prime 4 to 6 months commercial paper, prime 60 to 90 day bankers' acceptances and United States certificates of indebtedness maturing in 6 to 9 months. Source of information: Reports of dealers to the Federal reserve bank of New York. CALL AND TIME LOAN RATES IN NEW YORK CITY. Prevailing call loan renewal rate and prevailing rate on time loans on industrial collateral. and in assigning the different quotas to the 12 reserve banks, each district is expected to take its full quota and likewise each bank within the district is expected to take its full share. We have no doubt of the ability and of the willingness of the banks in this district to cooperate fully. The reason for bringing you here is to perfect an organization so that in the succeeding issues which will be put out, every bank in the district in so far as possible will participate. It may be of interest to you to know what has been done in the past in regard to the previous issues of certificates and the number of banks subscribing, the records of which I give you herewith: Certificates issued in anticipation of the first Liberty loan: Total sale..... Total subscriptions, second district. Total allotment, second district.. Certificates issued in anticipation of the second Liberty loan: Total sale.... Total subscriptions, second district. Certificates issued in anticipation of the third Liberty loan: Total sale..... Total subscriptions, second district. $816, 000, 000 525, 393,000 459, 962,000 2, 235, 296,000 1, 539, 496,000 1,467, 543, 000 3,012, 085, 500 1, 300, 688, 500 1, 255, 308, 000 " In addition to the regular certificates of indebtedness, the Government put out certificates which were received in payment for taxes as follows: Certificates issued in anticipation of the fourth Liberty loan (June 25 issue): Total sale.... Total subscriptions, second district.. In the issue of July 9, closing to-day, there are, up to this moment, 789 subscribers, so that there has been a gradual increase in the participation. Out of all the 1,222 banks of the district, including savings banks, there are about 60 banks, if I remember correctly, which have not purchased any of the certificates of indebtedness of any issue. Now, if a bank under the present plan does not take these certificates, you can readily understand that it means that some other bank must take more than its quota. It is a big job that is before the banks. You whom we have asked to come down here, representing each of the counties in the State, have an individual responsibility so far as that county is concerned. It seems advisable to ask you to come here and sit around the table, and after whatever informal addresses there may be made, if there are any questions any of you would like to ask we hope you will feel perfectly free. to speak, because the problems are many and varied. Closely linked with this question, of course, is the saving of credit and it may seem rather inconsistent that banks are being asked to create credit by subscribing for certificates of indebtedness, and at the same time urged to withhold and save credit. But gentlemen, burn this into your minds, that the claims of the Government for credit must come first. Whatever claim any individual or corporation has for credit, no matter how urgent, the claims of the Government must be met first of all. Do you appreciate how greatly the demands for credit are growing? Not only the demands of our allies, but in our own country the billion dollar Congress of a few years ago has been succeeded by the $22,000,000,000 Congress of last year and it is estimated that $30,000,000,000 will be needed for the years 1918-19. The question of credit, it seems to me, is preeminently one that must be handled and solved by the bankers. The bankers manufacture credit, and they distribute credit, but credit is also a commodity which can be wasted or it can be saved-it can be employed usefully or it can be employed wastefully, so it is up to the bankers to see that credit is used usefully; in other words, saved and only used where it will purchase that which is to accomplish our one great purpose, the winning of this war. Every saving you make can and should be used for things essential, and buying these certificates tends to that end directly. Many people easily understand what is involved when you discuss the question of the conservation of coal, they know what you mean when you say that for the needs of the Government, such as shipping and many other needs arising every day, coal provision must be made, but the public has not even yet learned the extent to which they should economize coal. If the individual is called upon to conserve coal and freeze himself for the benefit of the Government there is no misunderstanding and it is now recognized that the thing must be done. But it is more difficult to make them understand when customers offer a perfectly good loan, with perfectly good security, why it is the banks are not in a position to give them or loan them the credit that they want. To meet this situation is you job and it is not an easy job, as every banker understands. No one appreciates this more than those of us who are connected with the reserve bank. We have every day numerous letters coming in from banks all over the district stating that "we are called upon to take so many certificates of indebtedness. We are loyal, we are patriotic; we want to do this thing, but how can we do it when all of our resources are invested?" This is especially the case in many of the agricultural districts. They say, "all the loans are tied up with farmers who can only pay in the fall. How are we to find at present the necessary credit to supply the Government?" This again is the question for the banker, and it is his job to find out the ways and means by which that credit can be transferred from individuals and corporations or in some way can be developed, so as to furnish the Government, without too much restricting the business of the country, what they need. We come now to specific ways in which this credit can be developed and secured. Do you want to manufacture credit in excess of needs and cause undue inflation? Do you want to "go the limit" as some bankers have advocated? I heard one of the most prominent bankers of this city say awhile ago: "Business must go on as usual." But, gentlemen, business can't go on as usual any more in the matter of credit than it can in the matter of coal. If we are going to give an additional amount to our friends on the other side of the water, and we can only produce so much, somebody has got to give way and how to do this is being worked out by the Government. But when it comes to the question of credit, that is preeminently for the bankers to work out and along similar basic lines. The machinery is all ready to manufacture the credit but it is not advisable to go beyond the extent that it is absolutely necessary, and it seems to me, over and against the manufacture of an undue amount of credit, leading no doubt, to overexpansion and possibly inflation, we should recognize that it is in the power of the individual bank to help in saving credit by a proper withdrawing or withholding of credit for the things which are not essential and checking any expansion of credit along nonessential lines. This really becomes in the last analysis a matter for each individual bank, and in each bank it then becomes a matter for each individual banker to do his full part. In many of the communities the banks of which are represented here, it is a question of loans to farmers. Now it seems to me there is a perfectly clear line that can be drawn in regard to those loans. If a loan of money is asked by a farmer for seed or for necessary tools or for labor, it would seem to me personally-and I am only speaking as an individual-that in those cases every proper and reasonable extension of credit should be made. But the farmer is inclined to be a speculator, and when he comes to you in a month or two and wants loans because he says he is not ready to sell his hay or his oats or his cattle or other products-wants to hold for possibly higher prices, and you encourage him because the loan is a good one as to its credit, it seems to me that your bank is helping to that extent in interfering with the Government's need for credit and its supply. I think that the farmer should be educated to feel that when his crop is raised and harvested, that under these abonrmal conditions, he should sell the crop, instead of asking you to furnish credit for him to speculate and hold for possibly better prices assuming that he can secure fair prices for his output. The manufacturer also has the same problem. The manufacturer finds to-day, in working up his product, that he is liable, for instance, not to be able to get the wool that he wants or he is not able to get the amount of iron or steel or some other material, and the natural tendency is for him to say: "Why, I want to borrow a little more money because I would like to carry a little more material all of the time to protect the operating of my factory, so that I can manufacture and have the material ready, etc." There again comes the question between reasonable and the unreasonable use of credit. No one can tell here, as we are talking together, what is the wisest thing to do in each individual case, but I am speaking of this because these are the problems that you gentlemen are called upon to settle and solve, and it seems to me that there is danger along the line of the manufacturer speculating and depending on your bank to supply the credit for this speculation. The same thing applies to the distributor, i. e., the wholesaler or retailer. Only this morning it was reported to me in the bank that some of the wholesalers in the Central West were accumulating an undue amount of different kinds of commodities so that they would be prepared when the time came in the fall to supply them. That is perfectly legitimate in normal conditions. But if it leads to an undue accumulation either of coal or wheat or of merchandise, it seems to me it is not justifiable under present conditions. And the banker to whom the jobber or the manufacturer comes for these loans, he is the man who, it seems to me, should investigate these conditions as to the reasonableness or the unreasonableness of the request for credit. It is not an easy job. These men that come to you-you have had personal relations with them for years, and they say: "Well, I have some securities as collateral with you and just at the present time I do not want to sell them," and so ask you to carry the loan longer. It is probable that you have carried them for three or four years waiting for "the golden time" for the market prices to rise so they can get out at a gain. But I submit to you, how long can you carry this kind of loans in justice to the situation? In the small banks, there are a great many loans that have been carried for long periods on payment of the interest, and that is a perfectly legitimate thing for the banks to do in normal times. But I feel there never has come, in the history of each one here, as good a time as you have at present to "clean house" in your bank or distributing house or any other place, and I feel that it is the duty of every distributor, every manufacturer, to run with the lowest amount possible to supply the things which are absolutely necessary for the Government needs. There are opportunities now for banks to insist upon their customers reducing and paying off loans which have been carried for a long period in the institution. By compelling your customers to pay off these loans it will have a beneficial effect upon them, leading them to economize as they have not been doing before and as the situa tion now demands they should. We are in this war to win,, and we have got to supply the credit that is necessary for the Allies and ourselves, and can secure part of the credit needed by saving it. We must insure this by taking every precaution and husbanding our strength to exert it forcefully in the proper direction, and give telling blows, as much in credit as in arms. Get this into your heads, rather than follow a day to day course of "business as usual," which would fail to bring the results most earnestly desired. We are here to-day to talk about supplying the Government in advance, underwriting the credit which will be necessary for the Government before the next Liberty loan, and it will need the money just as fast as it is possible to secure it. In the last campaign for certificates of indebtedness, we were asked in January by the Secretary of the Treasury without much warning, if we could distribute so many certificates every two or three weeks, and after we had thought the matter over, it seemed to us that the most helpful organization that we could secure immediately would be in New York State Bankers' Association, and Mr. Gregory, the president, and Mr. Gallien, the secretary, rose to the occasion, selected a number of bankers throughout the State and called them together hurriedly. They took hold of the matter and this district took its full quota of the certificates of indebtedness of each issue as they came out; in most of them we took more than our full quota and great thanks are due to those men who served. Now, at this present time, instead of three or four billions as before to put out, we have six billions of certificates to sell in the four months. It is a big job for any rich country; it certainly is a big undertaking after what has been already placed upon the country. But I feel confident we will do it well and quickly. Every man, so far as this district is concerned, is going to stand by us and see that each and every bank, so far as possible, does its full share. We are publishing a little book giving a list of these banks which subscribe to each issue. This plan has been followed for some time in the other Federal reserve districts. They have found this works well. It seems equitable, that those who are doing their proportion or more than their proportion should know what the other banks are doing. We all recognize that there are some banks which by reason of local conditions may not have been able to take their full quota of the two issues just put out, but every bank ought to take some certificates of each issue and in the aggregate they should make every effort to take their allotted share,, thus cooperating in this movement and not placing upon some other bank any burden which each bank should carry for itself. We must do our part to make the Government financing a success and thus the bankers will be contributing their share to winning the war at the earliest moment. Irepeat to you, gentlemen, this is your job and you must assume it. We have formed a new organization in the Federal reserve bank to direct this work. Mr. Ray Morris will be the director in charge, Mr. H. M. Wilson, Mr. R. T. Crane, and others will be associated with him. They have enlisted in the work. You have done the same and we will make it a big success. Mr. Morris is here to tell you the details of it. I will now introduce Mr. Morris to you so that he may go on and explain what we expect of you. Mr. Morris is a man of known ability, of patriotism, willing to go to still further self-sacrifice to make this thing a go, and I am sure he will have your full support. REMARKS OUTLINING THE ORGANIZATION OF THE CERTIFICATES OF INDEBTEDNESS DEPARTMENT BY MR. RAY MORRIS, DIRECTOR OF SALES. Mr. Treman, by reason of being both deputy governor and an up-State banker, has given you such a clear picture of the fundamental problems affecting the certificates, that I am going to skip right over that part of it and come down more or less to the details of the organization, as we have been able to plan them out. This is a new problem, and it needs to be met with some new measures. I want to say at the outset that we all feel that to the extent that the New York end can be subordinated and the real influential work done in the up-State counties, to that extent it will be done better. I do not know whether a man ever lived anywhere that liked to have somebody 200 miles away tell him how to do his business, but I am sure there is no one like that in New York State, in the 12 northern counties of New Jersey, or in Fairfield County, Conn. Now, this job-I won't say it requires urging that is not the word-because there is not a banker in the district who is not just as keen about winning the war as we are; but it needs explanation; it needs demonstration; it probably needs encouragement. My proposition is just this: That to the extent that the explaining and demonstrating and encouraging can be done locally up-State by the strong, influential bankers, in contact with their neighbors, it will be done right. I am a considerable believer in the bolshevik principle of selfdetermination, and I should regard the work of the sales department as perfect if each up-State county found a way of meeting its own problem so effectively that the sales department would be reduced to being a historian of the movement, and if the only literature we need put out would be bragging letters aimed at the other Federal reserve districts. [Laughter.] As to the difficulties; we all know about the difficulties. I guess I have got in my file a hundred careful, earnest letters, written in a spirit of mingled patriotism and perplexity, from your colleagues, who realize the need, but want to be shown the way. We all know that the banks have a lot of Liberty bonds on hand which they are carrying for customers; they have got slow securities of various sorts they can not afford to sell; they have got many of the kind of quick loans that never quite get paid off at maturity, and for reasons of business courtesy there is a natural limit to the pressure they can apply to their customers. Now, what is the answer? Mr. Treman has spoken to you quite fully as to what the answer is. I think there are two answers. I think the first answer deals with the spirit of the transaction, and of that I need say very little, because every one of you gentlemen has it, or you would not be here. Mr. Treman received a telegram from one of your number, who probably would not want me to give up his name, but what he said was: 'All of my time and all my resources are at the disposal of the Government to help in the war." Well, that comes pretty near being my text, as affecting the spirit of the enterprise. As to the ways and means: As a newcomer in the Federal bank organization-I have been in it just about a month—I want to speak for a minute as the outsider that I was a month ago, and say this: That without the Federal bank machinery I think we would be facing an insuperable difficulty to-day. It would certainly be insuperable along the lines of the relatively simple and easy method in which it is now presented. I do not need to ask you gentlemen if you ever considered how we would be fixed if we had to finance the war with the banking machinery that this country had in 1907. You know the answer as well as I do. Everybody would be hoarding reserves. Nobody able and willing or willing and able, to take care of commercial borrowersclearing house certificates, and all the rest of it; and then, inconvertible paper money and a currency depreciation that would take about 15 years to work out after the war. Now, by the grace of God, and at the eleventh hour, this country has got a banking system which our English critics say is the best in the world, resting solely on the proposition that short, prime paper of a self-liquidating nature is the basis for credit, whenever a bank need it and to the extent that it needs it; and that principle has an immense bearing on this problem, because no matter how fast the Covernment progresses with its war needs, no matter how seemingly impossible the demands of |