Has not last year's experience shown us the excellent results that concerted effort can produce in dealing with problems of this kind? The educational campaign for a diversification of the crops, which resulted in a largely reduced output of cotton in the fall of 1915, brought prosperity to the South, while another large cotton crop on top of that of 1914 might have proved fatal. May we not hope that we may be able to deal scientifically with questions of manufacture as well as those of agriculture? The country will need its highest degree of efficiency most urgently when, after the war is over, we must meet the competition of European manufacturers forced by necessity to strain every nerve in producing at the lowest possible figure, and under the heavy handicap of weakened exchange standards, strained or exhausted credits, and high taxes.

If we are prudent and avoid both banking and industrial inflation, if we use this period of affluence and unexpected protection to increase our efficiency and complete our organization, I do not see why we should not calmly trust our ability and intelligence in meeting any emergency the future may have in store for us. It is with this point in view that I so strongly urge our bankers not to lose this opportunity of perfecting our banking machinery for the purpose of developing relations with foreign countries. The only distinct effort in this direction has been made in New York and, to a certain extent, in Boston and Philadelphia, for the rest of the country appears to be so busy making money that apparently it has not found the time to provide for the future.

Our opportunity for successful foreign trade has been vastly increased because foreign business is carried on largely with credit, and in granting credit the United States will, after this war, be stronger than any other country. There is a close interrelation between loans to foreign nations and business transactions in those foreign

countries. It is true that foreign loans stimulate foreign trade, but it is equally true that it is impossible to place large loans unless there exists in the creditor country an intimate knowledge of the condition of the debtor nation.

If thousands of our merchants know South America or the

Far East, and spread their knowledge in our country, they will create that atmosphere of intimacy and confidence without which it is absolutely impossible to create an extensive investment market for foreign securities. In the past we have not conquered foreign markets to a greater extent largely because we have been too prosperous at

home and because we did not think it worth while to

accommodate ourselves to foreign methods or to grant

credits in far-away countries.

The enormous lending power that we shall enjoy will give us a tremendous advantage in the future. It will be for the American business man and investor to decide to what degree the United States shall become a nation of world bankers. Our great prosperity should not make us forget those opportunities almost beyond measure, lying

I am very grateful to you, gentlemen, for having permitted me to discuss with you to-night some of the problems as they touch your own individual work, that of the Federal Reserve System and the larger aspects of these questions as they affect the entire Nation.

The ultimate outcome of the most gigantic of all struggles ever fought is still shrouded in mystery. But, out of the mist, our future looms large, resplendent with opportunities yet burdened with serious obligations. Simply to wax prosperous through the misfortunes of others can not be the destiny of this great country. Sometime and somehow the future must bring us an opportunity of giving back to the world in service what fate is now lavishly throwing into our laps. Whatever our tasks and duties then may be, I know that you, business men of the United States, will meet them in the same broad and helpful spirit that has guided you in the past in struggling with the problems of our country.

Class C Director at Dallas.

W. B. Newsome, Dallas, Tex., was on February 10 named by the Federal Reserve Board as class C director for the Federal Reserve Bank of Dallas and designated as deputy chairman and deputy Federal Reserve Agent. Mr. Newsome fills the place made vacant by the withdrawal of Edward Rotan.

Mr. Newsome was formerly president of the Collin County National Bank of McKinney, Tex., but has now retired from active business, although retaining his interest and directorships in various enterprises such as the Texas Cotton Mills, McKinney; Collin County Mill & Elevator Co., McKinney; Burroughs Mill & Elevator Co., Fort Worth; Morton Milling Co., Dallas; and the Simmons-Newsome Grocery Co., Dallas.

He is in close relationship with the industrial and commercial life of the Southwest and especially with cotton and grain, which are large products in that section.

Gold settlement fund-Summary of transactions Jan. 20, 1916, to Feb. 20, 1916-Continued.

Below are reproduced letters sent out from time to time over the signatures of the officers of the Federal Reserve Board which contain information believed to be of general interest to Federal Reserve Banks and member banks of the system:

Trade Acceptances.

The Federal Reserve Board is in receipt of a letter, copy of which is herewith inclosed, suggesting as a temporary modification of Regulation T that the statement required under paragraph V, in regard to bills indorsed by banks and bankers, in certain cases, be considered as applying to the banks or bankers, rather than to the drawers and acceptors of

bills.

After due consideration the Board expects to meet this request, and when reissuing the regulations for the year 1916 intends to make the corresponding change. Pending that, you are authorized to buy such bills of exchange drawn in foreign countries on American acceptors, provided, however, that where it may prove impossible to secure information from the acceptor or drawer, it will be necessary that a satisfactory statement from the indorsing bank or banker should be previously obtained covering the financial condition of said indorsing bank or banker. Such bills may be taken at rates within the range fixed from time to time for bankers' acceptances. JANUARY 21, 1916.

[Inclosure.]

DEAR SIRS: A considerable volume of trade acceptances is coming forward from the Orient, drawn by sellers of goods in the Orient upon well-known importing and manufacturing concerns in the United States. These are purchased in the Orient by the branches of leading banking institutions and other similar banks and bankers. The branches of these banks in the United States receive the bills from the Orient, have them accepted, and then sell them in the open market with their indorsement. Such bills sell at a rate equal to or approximating closely the rate for bankers' accept

ances.

Regulation T provides that "before purchasing domestic bills of exchange, the Federal

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Reserve Bank must secure statements concerning the condition and standing of the drawer of the paper, and, if possible, also of the acceptor the nature and quality of the paper to be purof the bill, sufficient to satisfy the bank as to chased."

In the case of bills of the kind I have described it would be manifestly impossible for us to secure statements of the drawer and we feel that it would be impracticable for the present, at least, to obtain statements from the acceptors, since they have no interest in what becomes of the bill. Yet it seems to us of importance that we should be able to buy such drafts when indorsed by responsible banks or bankers (from whom we could obtain satisfactory statements of conditions).

Possibly in the forthcoming regulation in cases where such bills are indorsed by banks or bankers and are sold on their credit, the statement required might be that of the bank or banker. We are anxious, however, to make progress in the matter promptly, and I am writing to inquire whether it would not be possible for the Board to advise Federal Reserve Banks, as a temporary modification of Regulation T, that the statement required under paragraph V, in regard to bills indorsed by banks or bankers, might be considered as applying to the banks or bankers, rather than to the drawers and acceptors of bills. JANUARY 13, 1916.