The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1906-12-21
WALL STREET NOTES
Shaw Annoyed Because Banks
Promote Speculation.
SUGGESTS USE OF RESERVE

I Financfers DisapprOve idea of See
rotary of Treaxury--BeIieve Relief
Will Come Through Government
DepOsitS-HenVy Loans Paid on.
Discount Rate on London Is Up.
New York, Dec 2O.-Private advices re-
ceived in Wall street from Washington
to-day said that Secretary Shaw was very
much annoyed because the banks did not
use the money placed with them hereto
/ fore in a way which ne thought best cal
cuiated to afford real relief 20 the situa-
! ton. His contention. according TO these
/ dispatches. is that instead of conserving
/ their increased resources to provide for
ordinary needs. the banks at once turned
the new money loose TO promote specu-
! latioin. II is said that under the cir
/ cumstances the Secretary is favorably
considering the ACCESSIBILITY of allowing
the banks to dip into their reserves on
/ the ground that reserves are maintained
| emergency has now arisen. IT, instead
/ of placing deposits with them, he should
allow the banks TO use their reserves.
/ they might take measures to get the
money back so as 10 make a strong show
/ ing. at least at times Of making their
quarterly reports. In this way the re-
/ serves might soon be restored 10 their
normal level. thus becoming available to
meet another emergency If one should
arise.
/ Local bankers do not agree with the
! ideas of Treasury relief outlined above.
which. they say. would involve a greater
disregard Of the Secretary's power than
/ Mr. Shaw has yet shown. They say that
while a bank is below it's legal reserve
it cannot pay dividends or lend more
( money, and that there are few bank
/ ing institutions in New York that
would be willing to subject themselves
+ to any such restrictions. The opinion in
1 influential circles here is that Treasury
relief. # granted at all. viii come either
/ through additional deposits with the
| banks or further purchases OF the bonds
which mature next year. or possibly
both.
/ Some heavy loans were paid of to-day.
bringing an easier condition into the call
money market. but it was suspected that
no small part Of the decline I'm rates was
due 10 the greater freedom with which
bankers loaned funds. believing that
I washington might come 10 the aid Of
/ borrowers in the near future.
Ii was even intimated that certain
bankers were anxious to give as strong
/ an appearance Of an Improvement fn the
situation as possible 50 as TO induce the
/ Treasury 10 suspend action. in which
/ event high rates and good returns might
/ be secured by lenders again before the
/ end of the year.
On only one point do the traders feel
anything ike certainty in regard 20 the
/ possibilities of Treasury relief this being
/ that on whatever day announcement IS
mad@ it would be after the close of bust
ness.
/ The private discount rate on the Lon
/ don market IS higher than the bank rate.
and If New York should make q serious
attempt to draw gold from that center
/ the Bank OF England would certainly PIT
up it's rate 10 any extent necessary 70
prevent an outflow The effect Of this
would be disturbing. 10 say the least
/ There is nothing very improbable IN the
rumor that some of the fnanciers who
/ called on Mr. Shaw on Wednesday 10
[ give gratuitous advice. and incidentally
! to pump" the Secretary, went away from
/ the meeting hurriedly to cover their shorts
! in the stock market.
/ Ordinarily the directors Of Anaconda
do not meet until the fourth Tuesday Of
the month The fourth Tuesday Of the
present month viii be Christmas Day.
and as the meeting could not take place
4 then. to-day was chosen-so runner said
as the most convenient date for the di-
/ rectors to consider the dividend matter.
! Although the meeting was said to have
/ been held early, no news of 1t came
/ through the usual channels. the Wall
street news agencies being apparently
/ unaware that there was any expectation
/ Of action so far in advance of the usual
date; but il was notable that at the time
/ the meeting was supposed to be in
/ progress. both Anaconda and Amalga-
mated made their highest prices for the
/ DAY It was denied, however, that any
/ meeting had been held. or that call
! for one had been issued. although the re-
port was insistent that the dividend had
! been declared. and that ii was at an in
/ creased rate.
What shrewd traders expected TO hap
pen in the Hill stocks came to pass-the
shorts found that the floating supply was
small, and that only by bidding up prices
could they obtain what they needed to
/ I'll their requirements. The bears seem
/ cd to have entirely ignored the Wall
| street pToverb that 'Hills followers
never sell" The Hill stocks are held for
| investment here and abroad. very largely
abroad The stockholders OF Great
/ Northern have been treated so generously
/ In the last ten or fifteen years that they
are ready To stand by Mr.. Hill under all
/ circumstances and to put up their money
for any new enterprise which he may
undertake.
/ Ia this spirit they went into Northern
/ Pacific, and in this spirit they will re-
main in il. They exercise all their rights
on new stock. and put the new certificates
away with the old ones. They cannot be
I tempted into selling by high. nor scared
out by low prices. They had confidence
/ In Mr.. Hill at the start, and he has
made good. Their confidence now is
/ all the greater. Wall street may argue
/ that there will be no more rights for
/ some time, but the, investor in Great