Washington, March 10.

A SIMPLE but lawful way to get around the cumbersome provisions of the securities act may be found by American companies through the co-operation of commercial instead of investment bankers. This is the interpretation placed by officialdom today on the news that a syndicate of eight large commercial banks of new York and Boston had agreed to make a two-year loan to the American Metal Company for $10,000,000.

Commercial bank loans do not require a regulation statement at the Federal Trade Commission if they are for less than nine months. The loan made by the various banks in this particular instance is covered by three-month notes with contractual stipulation that seven renewals of three months each shall be granted.

It may not of course be possible always to get loans of the excellence of the American Metal Company, but it is believed that some high grade companies would rather borrow two-year money from commercial banks and take up the question of refunding through investment bankers later than take chances on the Securities Act.

The commercial banks have never eared to invade the field of investment banking but nowadays notes of two and three years are considered as short-term credits. Indeed, a survey is being made of the possibilities of what has been called intermediate credit, namely notes ranging from one to five years. While legislation might be needed to set up an intermediate credit system for this purpose, ways and means are being sought to bring this about through the co-operation of the banks.

The possibility that these notes would be considered eligible for dediscount at the Federal Reserve banks, if they were kept on a three-month basis, is being commented on, for if this is achieved a superabundance of capital is available for these business loans.

The American Metal loan was first considered by British banks. This raises an interesting question of foreign competition for gilt-edged loans. Foreign banks are not under the control of the Securities Act. Should American banks stand by and see 6 per cent, loans go to other countries? Naturally they want to make money by lending it and with the bond market stagnant and relatively few good bonds available except at low yields, the banks are looking toward 6 per cent, loans as promising them a chance to overcome these last three years of meager return.

Official Washington is not in any sense critical of what the syndicate of commercial banks has done. In fact, if the truth were known a considerable element of high officials here is glad that the ice has been broken. For it is believed the securities act cannot be materially revised at this session of Congress anyhow, so any maneuver that is lawful and gets capital into circulation is welcomed as a step that may accelerate the processes of recovery.