The Washington herald., 1907-10-26

Treasury CorteIyou continued to-day the
deposit Of government funds in the ma
tiOnai banks J. p Morgan & Co. and
the banks associated with that firm in the
work Of restoring normal conditions
again supplied funds for the call money
market
The savings banks Of the city, in order
to avoid the sacrifice Of bonds on a de-
pressed stock market and to protect in
this way the interests of their depositors.
agreed TO demand notice Of Withdrawals
in the event Of anything resembling a run
on the institution
The newly-formed clearinghouse com
mittee for trust companies performed its
part Of the work by assisting both the
Trust Company Of America and the Lin
coin Trust Company, with the result that
there was decided abatement in the
yisor Of the run on both Institutions
As a further measure Of relief it was
suggested that clearinghouse certificates
be issued and exchanged in settlement Of
the balances between banks, as was done
in the last Cleveland administration.
Brokers and private bankers clamored
loudly for such action and many Of them
insisted that the clearing house had de-
cided TO issue certificates tomorrow.
FrOwns on the Plan.
But the clearing house committee at
an important meeting this afternoon. ar
which J. Pierpont Morgan and James.
Suilman We're present as conferees.
frowned upon the proposition. The com
mittee made no recommendation that
clearinghouse certificates be issued. and
ii was said by one Of the members to-
night that such an expedient IS not CON
sidered necessary
The clearing house committee has power
only to recommend the issuance Of Ger
thcates and 10 call general meeting OF
the Clearing House Association 10 act
lpOn the recommendation. A member
OF the clearinghouse committee said to
night that no meeting would be called
unless there developed unexpected occur
rences tomorrow.
OF the six trust companies and banks
in the b0roughs OF Brooklyn and the
Bronx which temporarily suspended pay
ment to-day. the action Of the First Ma
tional Of Brooklyn caused particular con
cern 10 Secretary Cortely0u. Mr. Morgan,
and the bankers working with them.
The First of Brooklyn was not only a
national bank. but a clearinghouse bank.
and it was feared that its suspension
might diminish confidence in the assur-
ances Of the clearinghouse bankers that
the situation in clearinghouse circles was
well in hand, and that no depOsit0r need
fear the suspension Of a single clear
ing-house institution.
Acts as Clearinghouse Agent.
The facts were that the First Ma
tional Of Brooklyn did not suspend
because Of the refusal Of the Clearing
House Association 20 come 20 It's relief.
It's suspension was brought about only
because OF the fact that Il was clear
ing-house agent for the Williamsburg
Trust Company and the Jenkins Trust
Company. on both Of which there were
runs and both Of which suspended pay
mont
stock exchange history was made to-
dag in the fact that there was prac-
ticaIly no speculative dealing in
stocks on the exchange. Almost with
out exception brokers refused to buy
stocks on margins If a customer de-
sired TO purchase. he must tender the
entire purchase price. brokers insisted.
In the very few exceptions 10 the rule.
margins Of so per cent or more were
ex9cted.
That customers must buy for cash was
insisted upon by the bankers who were
supplying the money for loans on stock
exchange collateral These bankers let
brokers understand that money would not
be forthcoming in case stocks were
bought on margin. for the reason that
the supply of money. though sufficient
for the needs Of all parties who were
selling stocks to liquidate loans. or for
other purposes. was not sufficient To
finance speculative purchases Of stocks
and bonds. The bankers who formed the
pool to supply money on stocl-exchange
loans held back their money as on the
day before until the last hour of the
market session in order TO see that their
advice was taken
No Loans en- Margins.
In brokerage circles there was a gen
eral concurrence in the ideas of the
bankers respecting marginal loans One of
the strongest and most responsible mem
bers OF the exchange said that it was
the duty of the brokers to hold up the
hands OF Mr.. Morgan and his associates
in every way that was possible for the
brokers to assist"
The action Of the savings banks IN
agreeing to demand thirty days notice
OF withdrawal of deposits in the eventof
a run, was commended in high financial
circles.
This action, 1t was pointed out, Injured
to the advantage of depositors. for since
savings banks can only keep a small part
Of their aggregate deposits in cash a
run on them would necessitate the con-
version OF bonds or mortgages into cash.
Under present conditions neither security
can be sold except at big discount on
It's cost value or ordinary market price.
Continued on Page 2 COTuUu .