The daily morning journal and courier. [volume] (New Haven, Conn.) 1894-1907, 1899-11-27

ploy their resources in call loans yield
1' ing them exceedingly liberal returns.
While the call money rate nominally
follows the natural law of supply and
demand, 1T can readily be seen that
great profit might accrue to big opera
tors through assisting nature" by
supplying an artificial stimulus to the
call money rate, the effect being to
force down the prices of securities to
levels at which the bears could cover
their short contracts with rich profits
TO themselves. Such Assistance" it
was openly charged about two months
ago, was being openly resorted to, the
method employed being for a firm to
contract to borrow a certain sum on
| call-such sum thereupon being with
drawn from further offering for the
day, its withdrawal decreasing the days
total available supply to SO much--and
then, instead Of taking the money for
actual use, merely paying the days in
terest on it; in other words, locking up
part of the funds the effect being a
rapidly increasing loaning rate for the
rest. as well as drop in the market
An official inquiry into this matter was
instituted by the governing committee
of the Stock Exchange, the outcome
being the adoption by that body Of the
following regulation:
Resolved, When a member has con-
tracted to borrow money on collateral,
the simple payment of the interest by
the borrower to the lender after three
o'clock p. M, without actually effecting
or properly endeavoring to effect a
40 L@ ALL ~ - .
the contract and an act detrimental to
the interest and welfare Of the Ex-
change, and the offending member may
be proceeded against under Section 6,
Article XVII, Of the constitution.
Under this section the offending mem
Der may be suspended or expelled from
the Exchange, upon conviction.
The rates exacted for call loans vary
with the collateral offered, and it is de-
clared by loan brokers that the loans at |
thirty. thirty-five and forty per cent,
which have caused so much comment, |
were made on collateral consisting |
largely of "industrials," it being posi-
BILE at any time to secure call loan at |
about six percent. il the collateral Of |
fered was mainly standard railway
preference shares or the stock Of estab-
lished "industrials'' like Sugar, Consol-
idated Gas or Brooklyn Union Gas. AS
a rule. the collateral offered is mixed" I
of dividend paying and nom
dividend-paying railroad stocks and in
dustrials; and eighty per cent. of the
total market value is advanced by the
lending institution. When the market
goes down, the values of the securities
pledged against certain loan shrink
with the rest, and the bank calls for
enough additional collateral to keep the
of loan to market value as
eighty or one hundred, or else 1t de-
nands that its loan be reduced, the bor-
rover finding it necessary often to sell
part of his securities in order to protect
The rest. AS call money becomes
too, the banks scrutinize more
and more closely the collateral deposit
ed with them, often insisting that GER
ain securities, especially industrials,
shall be replaced by others Of better re-
,ute in the market
While there are several members of
he Stock Exchange who loan money on
all or time In the money crowd" by
ar the most conspicuous and well
Known of their number is Howard p.
picturesque personality
# the financial world. He is a special
st in the negotiation of time and call
oans, and the only member of the Ex-
hange who confines his operations SOLE
v to that field, placing as the trusted
gent of many banks and trust compa-
lies millions Of their moneys daily in
pans. Rather under the middle height,
With head which the Strenuous life"
f the Stock Exchange has thinned of
1uch Of it's natural covering, and
hrewd eyes peering out through glass
s. and displaying in manner and habit
{ speech kindness and alertness which
rake for popularity, he shows himself
hat which he is widely known to be, a
Vail street hustler. Practically all his
fe has been spent In the street, for he
7ent to work in May, 1874. when he
-as a lad Of twelve as office boy for
ne old time firm of Zerega, Berry &
o. He had two ambitions then--to OBJ
lin a seat on the New York Stock Ex-
hange and to gain a fortune-and both