The Norfolk weekly news-journal., 1907-11-29

the use OF government lunuS lot STOCK
gambling operations These men say
there never could have been any mon
ey stringency in the face of the extra
ordinary prosperity in every legitimate
line of trade had 1t not been for the
vast sums needed to continue the wild
speculative game in Wall street.
1t is asserted freely, and some treas
ury officials as freely admit, that only
a small percentage Of the government
deposits in New York banks actually
have been used to assist in crop NOV
ing operations in the south and west
A great deal went to enable brokers
and trust companies to hang on to
stocks and bonds held on margin
Other sums went to fortify individ-
uals whose failure on the stock ex-
change might have precipitated runs
on banks in which they were inter
ested.
An unknown percentage Of the re-
serves of New York banks went into
speculative channels, and the money
deposited by Secretary Cortelyou
when the situation became acute was
said to fortify the New York banks
themselves, and mighty little of 1t
went into the agricultural section of
the country
1t is a significant coincidence that
four or five senators and dozen or
two of the representatives who have
dropped into Washington within the
last ten days have been preparing bills
looking towards some kind of govern
ment regulation of trading in margins.
One senator today outlined a measure
which he expects to introduce provid-
ing for a tax of 10 per cent on all
trades in which one person sells a
thing he does not own upon a margin
put up by another person, who does
not expect nor want the property ac-
tually delivered to him.
Il believe" said the senator, that
trading in margins on the New York
stock exchange is wholly responsible
for the panicky conditions of the last
month. The operations of Heinze,
Morse, Thomas and other so-called f.
nanciers were all based upon stock
jobbing values. They established
strings Of banks merely to secure
money enough to control the stock
markets. No deliveries of stocks or
bonds were actually made by anybody.
| There was no question as to the in
trinsic value Of the property which
was supposed to be represented by Sc
curities. Vast sums of money were
poured into the stock exchange to
build up or break down values of Sc
curities, and every cent of that money
was taken out of the legitimate chan
nels of trade.
at is a fact, as most people know,
that the prosperous west has been out
of Wall street for long while. 1t
was not directly concerned in the col
lapse of the Heinze copper corner or
in the downfall of Morse and Thomas.
What did concern the interior, and
what does concern legitimate business
interests, is the fact that money has
been diverted to speculative purposes
which should have been held for legiti-
mate business. The farmers and man
ufacturers in the west are not only
solvent, but have a surplus. They are
not merely prosperous. they are rich.
"The only mistake western banks
made was in depositing money in New
York financial institutions and in loan.
ing money there because Of the high
rates of interest which were not cur,
rent in the west. The demand fol-
money for speculation made New York
commercial paper seek western banks
and the crash on Wall street tied VI
New York banks and they in turn tied
up western banks, which could not col
lect on their New York collateral ant
so could not supply money to move
the crops.
81 believe states ought to prohibit
trading in margins. The federal gov
eminent cannot prohibit, but 1t car
tax. A slight extension Of the system
adopted in the war revenue act o.
1898 would put an end to the practice
Of dealing in stocks and bonds OF
margins. l would not tax any legiti
mate sale or contract to sell in the fu
ture, but the principle Of buying ant
selling stock or commodities, putting
|, up margins sufficient to cover ordinar!
fluctuations, without any idea of trans
. ferring the property itself from ont
person to another, is vicious"
ROOSEVELT'S PART IN 1T.
, President Roosevelt's part in the
-. I.