Paul M. Warburg, chairman of the Executive Committee of the American Acceptance Council, made the following statement of principles relative to trade acceptances at the first meeting of the Executive Committee of the Council on April 14th, 1919:

"We are preaching the gospel of the trade acceptance for no other purpose than that we believe its use makes for sounder business and banking conditions.

"We do not say that single name paper is not good, or illiquid; but we may fairly say that the trade acceptance is better and more liquid.

"We do not say that the trade acceptance serves all purposes and that all cash sales and all cash discounts ought to be avoided; but we do say that where business is not done on a strictly cash basis, the trade acceptance will be found the safer, sounder, and in the long run, more economical method than the open accounts.

"Indeed we believe that it is so much of an improvement over the open account that in some cases sellers, at present sacrificing a very heavy cash discount for the purpose of avoiding the dangers and inconveniences of open accounts, might find it to their advantage to consider the economy involved in the use of the trade acceptance when dealing with customers of strong credit.

"We do not want to appear as wishing to force upon anybody the adoption of the trade acceptance, unless he considers it as serving his better interest. We do wish, however, those who can profit from the method to study it carefully and not to hesitate to adopt it.

"The American Acceptance Council's interest in the matter is that whatever makes for better morals in business and for better credit and banking conditions is a decided benefit to the United States."

In the banker the acceptance should find an enthusiastic friend. From purely business considerations its merit should appeal to him powerfully. To him and his interests-its general use would mean a better business tone, higher business morality, safer business risks, sounder assets, cleaner commercial paper, greater liquidity, a broader scope of usefulness, and the diverting to the bank of profitable business functions which logically belong there, but which at present, under the antiquated and inequitable open-book account method of treating credits, are performed by the seller of merchandise not only without profit, but to his distinct disadvantage.

The business man who now sells upon open-book account, and who suffers from the injustice which follows its use by his customers, should hail with delight the relief suggested in the coming of the acceptance. None can realize as he the awkwardness and even danger of trade burdens which had their origin in bad business practice and which find their only justification in the sorry fact that business weakly allows itself to tolerate them. Why the manufacturer or dealer will allow his perfectly good capital to be tied up in frozen book accounts for unreasonable periods of time, determined by the whim of the buyer, when in the use of the trade acceptance there is suggested a means whereby each transaction virtually will finance itself, and be paid definitely at maturity, is a thing difficult to reconcile with the conceded cleverness of the American business man.

It is difficult to understand, too, why this class of business men should tolerate open-book account evils in the form of indefiniteness, overdue obligations, bad debt and interest losses, disturbance of profit calculations, collection annoyances and expense, and the rest of a long list of undesirables - when every proper protection for their credit interests is provided in the acceptance method.

The interest of the buyer of merchandise in the acceptance, although perhaps less clearly apparent than that of banker and seller, nevertheless is a substantial one, particularly in view of the fact that in the series of commercial processes which extends from production to consumption, every buyer but the last is a seller, and every seller but the first a buyer. In this way every buyer except the ultimate consumer buys that he may sell, and hence in his attitude toward the acceptance both points of view must be included, (From an address by Mr. Lewis E. Pierson, President of the Irving National Bank).

D. C. Wills, Chairman, Federal Reserve Bank of Cleveland, says:

"Trade acceptances automatically furnish that highest class of credit data, namely accurate information, enabling bankers to estimate more intelligently the responsibility of their borrowers. A high grade trade acceptance will find a wide market.

"Every time a trade acceptance is substituted for a promissory note based on the mixed and undefined credit of the maker or for a book credit of still more ambiguous character, a step has been taken toward the ideal of sound trade credit."