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EX-OFFICIO MEMBER9 W. P. G. HARDING, GOVERNOR PAUL M. WARBURG, VICE GOVERNOR 3FREDERIC A. DELANO 'ADOLPH C. MILLER CHARLES S. HAMLIN WILLIAM G. MCADOO X-383£! SECRETARY OF THE TREASURY Chairman JOHN SKELTON WILLIAMS COMPTROLLER OF THE CURRENCY FEDERAL RESERVE BOARD H. PARKER WILLIS, SECRETARY SHERMAN P. ALLEN. ASST. SECRETARY and W A S H IN G T O N Fis c a l A g en t ADDRESS REPLY TO F E D E R A L RESERVE B O AR D Septa nibor 17, 1917 Dear Sir In view of the anticipated heavy demands upon Federal Reserve banks, the Board looks with approval upon the suggestion that the practice be encouraged of having 3hort time commercial paper run for not longer than four months instead of six months as is frequently the case today. It seems desirable that the commercial banks of the country should have in their portfolios a maximum amount of paper that can be rediscounted with Federal reserve banks. As the Federal reserve banks can rediscount only paper which ha3 not more than ninety days to run, it follows that if in vestments of member banks are in six months p^-par, on an average of only 50$ of such paper is available at any one time for rediscount; but should the investments be in paper having four months or less to run, at least 75$ would on an average have not more than ninety days to run to maturity and would therefore be immediately available for U30 at the Federal reserve bank. The Board is of the opinion that the suggested change would greatly improve the banking condition of the country, as the banks would make a turn-over three times a year instead of twice, and the credits which they would provide would come up for consideration three times instead of twice a year. The borrower in good credit would have no reasonable grounds for complaint and the borrower in doubtful credit would be strengthened by frank conversations with bankers at more frequent intervals than at present. It is suggested that if the bankers of the covintry will undertake thia change in methods of borrowing and insist upon four months paper instead of six, the credit situation will be greatly improved within a short time; responsible borrowers would have greater assurance of credits and the banks themselves would be in position to meet contingencies with at least 50$ more confidence than under the existing borrowing conditions. hi3 Very Respectfully, Governor,
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