gress and of every patriotic citizen. A more urgent and pressing peril is forced upon our attention by the obvious fact that we are dependent so largely on the efficiency and strength of these corporations and on our railroads for speed and success in preparing for and prosecuting the war.

The corporations referred to supply light, heat, power, and electric railway transportation for passengers and freight. They touch intimately the daily life of the people. In normal times they have been favorite targets for sneers and savage criticisms from large parts of the public and the press. In some instances, doubtless, they have deserved and invited hostility. In others, the attacks upon them probably have been unjust and unreasonable. Frequently they have been the victims or beneficiaries of local politics, suffering injury in the end in either case. Yet, generally, they were able to serve the needs of their communities with reasonable efficiency and to earn fair returns on the money invested in them. Now they are threatened with ruin. If they are allowed to sink into inefficiency, much of the most important war work of the Government will be crippled or paralyzed.

The work of war has thrown upon many of these corporations strains which they are unable to endure without prompt help. . The costs of their labor and of all material for operation, betterment, and upkeep have increased heavily and suddenly. They are required to increase radically and quickly their service and facilities. Industries manufacturing war munitions and materials demand of the public utilities corporations constantly greater supplies of power and light. At the industrial centers, car lines are being rushed and overburdened by new armies of workers. The gas companies are called upon for gas for cooking and heating in quantities beyond all normal calculations and far beyond their present capacities. They are urged continually to furnish more coke and coal by-products, toluol, and other elements absolutely essential in modern warfare. Where cantonments have been established, the demands on the resources of water, lighting, and transportation companies are especially severe; ability to comply with such demands is necessary for the safety and comfort of the fighting men in training.

A committee representing the four leading associations, which include all the principal electric light and power companies, street railway companies, and the most important gas companies of the country, recently submitted to this office a report in which attention was asked to the increase within the last two years in the cost of materials they must use for the maintenance of their properties. They gave a list of percentages of additional cost, showing among others the following items:

The continued and increasing efficiency of these corporations is important for the successful conduct of the war. This efficiency is not possible with present conditions. Corporations proved by their own

figures to be approaching bankruptcy can not obtain money for improvements or maintenance. On the other hand, banks and citizens suffering severe losses from investments in the securities of these entirely legitimate and once promising enterprises will be discouraged from lending money to the Government or deprived of the means to lend.

The first and most direct relief to the public utilities corporations can be given by the State public utilities commissions and municipal and local authorities, with the broad-minded cooperation of the people generally, understanding the necessities of war and realizing that the more promptly its burdens are accepted the sooner they will be lifted. It is essential that forbearance and consideration be exercised by the State commissions and municipal authorities, and that the corporations also be permitted to make such additions to their charges for service as will keep in them the breath of solvency, protect their owners against unjust loss, and give them a basis of credit on which they may obtain the funds with which to meet the strain put on them by the Government's needs. The breaking down of these corporations would be a national calamity.

Because of the gravity of the situation in this regard, I am moved to ask for it the careful attention of the Congress and the public. I am impressed with the importance of early consideration by the Congress of some measure to provide directly or indirectly for advance of funds on some conservative bases to such of these corporations as need help most urgently, so that they can give adequate service to the Government. The remedy would be unusual; but the times are unusual.

The amount of railroad and other public service bonds owned by the national banks June 20, 1917, was reported at $763,000,000. This is equal to approximately 70 per cent of the capital stock of the banks.

With appropriate aid from the Government through the Congress; with liberal recognition by local authorities of the present acute conditions; and with some practical provision to enable the corporations to meet their own needs and those of the country, the danger now pressing and becoming more serious with each day will be removed, the general business interests of the country will be fostered, the ability and readiness of the public to respond to calls for money will be maintained, and urgent requirements for the defense of the country's life and assurance of our freedom and peace will be

met.

BANKS SHOULD NOT TAKE ADVANTAGE OF WAR CONDITIONS TO EXACT HEAVY INTEREST.

While it is of great importance that fair and considerate treatment should be accorded our public-utility corporations by State and municipal authorities, and that unjust burdens, greater than they can bear, should not be imposed upon them, it is of equal if not still greater importance that these corporations should not become the prey of any profiteers, whether those who supply materials needed for operation or who furnish the funds and capital required for extensions and enlargements or for maturing obligations.

A disposition is being manifested on the part of some banks and bankers to exact, from corporations of high financial standing, terms in the shape of interest or commissions which are wholly unwarranted under present if not under any conditions.

Instead of exercising moderation in fixing charges for providing for the wants of customers applying for renewals or new credits, these banks and bankers, as shown in cases which have come to light, are exacting commissions and interest rates of corporations of unquestioned credit which are intolerable and wholly without justification.

The banker who imposes a 9 or 14 per cent rate upon a customer or client, whether an individual or corporation, for a high-grade loan which he has every confidence will be paid at its maturity, and which in peace times he would have been glad to get at 6 per cent or less, is paving the way for the well-merited condemnation of patriotic men.

UNITED STATES A GREAT CREDITOR NATION.

The following table shows our exports and imports of merchandise for the past four calendar years. Our favorable balance of trade for this period has amounted to $8,465,217,666, an amount sufficient to pay off entirely our indebtedness to the rest of the world. as it existed at the outbreak of the European war, estimated at not far from five billion dollars, and to leave us a creditor nation to the extent of several billions of dollars.

Imports and exports of merchandise, calendar years 1914, 1915, 1916, and 1917.

This huge credit balance has been settled partly by importations of gold, of which we have received, since August 1, 1914, in excess of the amount exported, $1,050,609,000, and partly by loans and credits which we have made to the other countries, both belligerent and neutral.

In addition to more than two billion dollars of bonds and obligations which various foreign nations have placed with individuals, banks, and other corporations in this country, the United States Government has advanced to our allies, to November 1, 1917, a grand total of 2,717 million dollars. The granting of these large foreign credits by this Government has had a potential effect in enabling the manufacturers and producers of this country to carry on the unprecedented foreign commerce expressed in the above

statement.

We have thus converted the tremendous production and output of our fields and mines and factories, not required for our own consumption, into huge credit balances with the allied belligerent nations and with neutral countries. Our farmers, merchants, and manufacturers have been enabled to receive cash for their products, because our Government has sold some billions of dollars of United States bonds, the proceeds of which it has loaned to the Allies, and with these same funds the Allies have been enabled to pay us cash for our surplus production of wheat and cotton, for coal, steel, iron, copper, leather, and the thousands of other things embraced in our enormous foreign commerce. These resulting credits are now being largely reflected in our greatly augmented banking totals.

VAST INCREASE IN NATIONAL-BANK RESOURCES.

The resources of the national banks on November 17, 1916, had reached their highest point since the establishment of the nationalbanking system, but the returns of November 20, 1917, show that there has been an increase during the year over those record figures of more than $3,000,000,000, bringing the aggregate on the latter date up to the unprecedented total of $18,553,197,000.

The following table shows the comparative figures of resources and liabilities of all national banks on November 20, 1917, as compared with November 17, 1916:

The following table shows the growth of the principal items of resources and liabilities at the time of the autumn calls every five years from 1897 to November 20, 1917:

1 Figures for reserve held include reserves of national banks located in Alaska and Hawaii which are not members of the Federal Reserve System, consisting of cash on hand and balances due from approved national bank reserve agents, amounting to $2,374,000.

New reserve requirements (except as to nonmember national banks in Alaska and Hawaii) went into effect June 21, 1917, providing that only balances with Federal Reserve Banks should count as lawful reserve. Besides the $1,077,701,000 carried with Reservo Banks on Nov. 20, 1917, the national banks held on that date cash in vaults amounting to $516,120,000 and had $1,770,184,000 due from other banks.