New-York tribune., 1906-12-07
SCHlFF MAKES A STIR.
SPEAKS ON CALL LOANS.
Asks for Investigation of Stock Esr-
change Practices MORcy Tight.

that q prominent banking institution made
practice Of calling its loans mornings when
the rate of interest low. and waiting until
the rate went up before lending more money.
This practice, he said. forced up the rate.
The resolution of Mr.. Schir came as a sur
prise as he got up in the meeting and read it
himself follows:
Resolved. That it be referred 10 the Commit
tee on Finance and Currency TO examine into
and report upon the practcability of devising
measures through which the interest rate be-
yond per cent upon call loans made at the
New York Stock Exchange can be better regu-
lated than is the case at present
The resolution was passed with much applause
! after Mr.. Schf said:
We find ourselves again in the midst of condl-
tons to call loans at the New York Stock
exchange which nothing less than bar
barous. While at times. under existing methods
and conditions, money is liable to advance be-
yond the legal rate OF interest. I cannot for
moment believe that II is necessary for the rate
| OF interest on demand loans at the Stock XIX
change 10 advance a single day from to {
per cent, in the morning to - or 30 per cent,
ana higher in the afternoon. 1t must be in the
long run destructive Of the best interests of the
country. and there must he means. even if they
are difficult to find. to regulate such state OF
anairs. Such means may be actual methods or
moral methods.
1t is stated. for instance and do not hesitate
10 say so. because il is stated with much en-
phasis. that one Of the prominent financial in
stltutlons in this city which is large loaner OF
a
morning is only or : per cent. to call its loans
and to wait until the rate has advanced. which
II naturally does in consequence of large calls TO
consent 10 loan its money again.
such methods are reprehenSible and ought to
ne corrected by moral pressure and moral
means: but there must be actual means. which.
possibly. is the Clearing House. and possibly the
Stock Exchange itself. l believe that the COM
mittee on Finance and Currency. IL 1t looks into
the question, can suggest something which 10
some extent at least will. even if the present
condition cannot he greatly improved. improve
II 10 some extent.
II was said by several bankers that the inst-
tuition referred to by Mr.. Schiff was one of the
big trust companies.
Mr. Schiff's speech before the Chamber Of
Commerce last January on money market con-
ditons precpitated mild panic, but his re-
marks yesterday were without appreciable ef-
feet on stock prices. In his January address. he
said in part:
We have witnessed during the last sixty days
conditions which nothing less than dis
grace 10 any civilized country Other countries
have had a wider speculation than the United
States. In France, in Germany. in England,
speculation is rampant. and has been rampant
at all times, at certain periods, and still you
have never seen the money market for sixty
days in such a condition that rates have varied
all the way from 10 to l25 per cent / say that
is disgrace TO a civilized community. There
must be a cause for II. and all know the
cause The cause is in insufficient circu-
lating medium or the insufficient elasticity or our
circulating medium. If this condition of things is
not changed. and changed soon. will get
panic i'm this country compared with which the
three which have preceded it would be only
chds play. There is no disaster upon
but this is the time to prepare for It.
The president of one of the largest trust COM
panies, when asked for his opinion of the practi-
cabiIity of Mr.. Schif's suggestion for regulation
Of the call money rate, said:
In the old days, before the state in it's wisdom
saw ft to change the Csury law by removing
which
legally be charged for the of call money. il
was not an unusual thing for y or - per cent
even l per cent. a day to be charged for call
loans. If an agreement such as Mr. Schiff sug
gests should be entered into by the Clearing
House institutions should again see, I be
lieve, rates similar to those prevailing when the
state restriction in force. When money is
in demand borrowers viii pay for II what they
must The underlying cause of the tiShtness Of
money is the Sub-Treasury system, under which
gold and legal tenders. the vitals of credit. are
withdrawn from circulation.
President Pomroy Of the Stock Exchange
said that he had heard that number of banks
and trust companies were in the habi, of manip-
ulating call money rates in the de
scribed by Mr. Schifr but that ne did not know
whether or not the charges were true The
Stock Exchange authorities, he said, would glad
iy cooperate with the Clearing House in any
possible way with the object of checking the
wide fluctuations in rates
There seems to be enough money 10 go
around" he added. for the brokers always
manage to get accommodations at some rate or
other and apparently the money is there,
whether it is loaned per cent at time
OF day or - per cent al another, and would
only he too glad assist in any movement to
establish less violent fluctuations. Thus far we
have been unable 10 devise any plan for so
doing"
The prevailing judgment Of the bankers asked
to comment on Mr.. Schin's address was that no
restrictive agreement could be effected in end
ing the present condition Of occasional violent
fuctuation in the call money rate The opening
rate yesterday was ~ per cent, at which figure
most Of the days loans were arranged The
high level Of the day ~ per cent. and
the last loan placed was at - per cent AT the
close Of the market it is said, as much as - per
cent was bid. but no funds were available for
oaning
The stringenCy in time money increased yes
terday, loans being placed at these figures:
Sixty-day money Sl3 per cent; ninety days
per cent: four and five months per cent: six
months 6la per cent. The legal rate of interest
for time loans is per cent. but in tight mar
kets commission is also paid by the bor-
rover The stock market yesterday was in
huenced throughout by the money market con-
ditions in contrast to its apparent ignoring of
those conditions early in the week. and the close
showed material net losses in most Of the issues
in which transactions were had.
EDUCATION BILL ADVANCED.