Albuquerque Morning Journal

ENTERPRISES NOT HELD ESSENTIAL ARE DISCOURAGED

(BY MORNING JOURNAL SPECIAL LEASED WIRE)

Washington, Jan. 26.—The first definite step toward limitation of non-essential enterprises requiring capital expenditures was taken today by the federal reserve board which announced the appointment of a committee of three bankers to act in an advisory capacity to the capital issues committee of the board in passing on applications for approval of issues of private securities. The system is based entirely on the theory of voluntary co-operation on the part of capitalists. The federal reserve board's capital issues committee will give or withhold sanction to proposed issues of large amounts.

Railroad Financing Excepted.

Railroad financing will be left entirely to the government railroad administration, and the federal reserve board system will apply only to securities involving municipal, public utility and industrial financing. Later the board hopes to devise a nationwide method of dealing with lesser traditions.

The advisory committee consists of Allen B. Forbes, member of the firm of Harris, Forbes & Co., New York, bond dealers; F. H. Goff, president of the Cleveland Trust company, and Henry C. Fowler, president of the Fidelity Trust company of Kansas City. The committee's counsel will be Bradley W. Palmer, Boston lawyer, and the executive secretary will be Stephen I. Selden, an engineer, formerly of Denver, now associated with the aircraft board. James Q. Newton of Denver, is to be assistant executive secretary. All will serve without compensation. The committee will have a staff of experts in Washington.

Big Amounts Only.

Temporarily, the federal reserve board's capital issues committee will not pass on individual securities issues aggregating less than $500,000 in the case of industrial and public utility corporations and $250,000 in the case of municipalities, nor upon securities having a maturity of less than one year.

At each of the twelve federal reserve banks local committees will be organized to assist the central committee, consisting of the chairman of the board and the governor of the reserve bank and three other bankers or business men.

Will Pass on Purpose.

It is distinctly understood, says the federal reserve board's announcement, "that the capital issues committee will not pass upon the intrinsic merit of individual cases but only upon the question of whether the objects for which money is to be raised and be spent are essential to and compatible with the national welfare at this time."

Applications for approval of security issues are to be sent to Washington. The system is somewhat similar to that of Great Britain.