Evening star. [volume] (Washington, D.C.) 1854-1972, 1913-06-22
From Treasury of Re-
serve Fund Acts Like Tonic
on Panicky Market.
RUDE JOLT FOR BANKS
AND LOAN RATES DROP
Speculation and Investment Broad.
ems as Fresh High Ground Is
Reached in Price Recoveries.
BY w. G. NICHOLAS.
spOndence Of The Star.

BY w. G. NICHOLAS.
Special Correspondence Of The Star.
NEW YORK, June Il, 1913.
Ten days recovery from bottom prices
ranged from 8 to z points, most of which
was held. The improvement was ex-
tremely grateful, after a declining move
ment that had carried quotations down
SIS to $50 a share, and rolled up a gross
record paper loss of $1,000, 100000 to 81,
600, 600 900. There was enough actual loss
In this shrinkage in quotations to con-
stitute a calamity, for the humiliation
Of q. sum even In excess Of a single
billion dollars represents the cost Of q
mighty war between nations.
l. The record of the tape shows that at
the extreme inside range thus far reach
ed there was loss Of So points in
Canadian Pacific. % in Union Pacific. SC
in New Haven, q in Lehigh Valley, d
in the Cans (allowing for "a per cent pay
ment of accrued dividends on preferre6
1872 in Steel, 10 in Amalgamated Copper,
IS in Reading, 10 in Southern Pacific. II
in Pennsylvania, Is in New York Central.
Is In Baltimore and Ohio, ii in Atchison
and II in Erie
well tried stocks were as serious, on the
average, as among the rainbow and good
will promotions. In the class last
described the shrinkage did not seem
real. In many cases distribution OF the
shares Of the new promotions had not
succeeded, and the certificates were left
on the hands of promoters and under
writer's. The loss in such cases was
largely paper" and consisted of fortunes
not realized-the disappearance or some
thing that never existed.
In more cases, however, real loss &C
companied the slump in prices. 1t as
sumed the proportions of disaster. The
total ravage was probably as great as
that in 1897. but the conduct of the
massacre was more orderly. The death
list was horrifyingly long and the hos
pitfalls the country through are filled with
a myriad of men financially nutilated.
The cnange in the tone of the market
dates from the unexpected and placid an
nouncement by Secretary of the Treasury
McAdoo that he was custodian of Treas
ury reserve fund of $500, 600. created
for the salvation of the financial situa-
ton in case Of panics or for protection
the fact that he had authority to issue
the entire amount, if the occasion should
arise, or any part of it, borrowers being
only required to put up good collateral
and pay Z per cent for the accomnoda-
ton The country at large and half the
drich provision against financial convul-
sion.
+ Bankers Saying Nothing.
The bankers were keeping quiet about
this enormous salvation fund. They had
plenty of money on hand, but were giving
open and somber currency to dark talk
about tight money" and the need of ex-
cessive caution in making loans Fright
ened borrowers were only too willing to
pay liberal commissions" for back door
accommodations, and for weeks there
were fat pickings for nOne-too-scrupu-
lous corps of brokers of influence in Shy
lock manipulation. The practice had grown
to the proportions Of greedy scandal
and threatened the safety Of the financial
situation. The scare, which had been
developing for weeks and going from bad
to WORSE to the expressed CONSERVATION
of the leaders. was becoming genuinely
very, very serious, and the street looked
In vain for succor In quarters where 1t
should have been offered.
And then 10! upon the stage Sauntered
the quiet and homely figure of Mr.. Nc
AdoO, Secretary Of the Treasury. The
great bankers and their allies mad not
given Mr.. McAdoo a thought. Who was
McAdoo, any way, and what did he know
about national finances? Least of all
what did he know about hidden and for
gotten Treasury resources, and the uses
WHICH tncy were CTedtcu. II ucVelOp-
ed, however, that in the construction of
a $75.OOO,00O tunnel under the Hudson
river and sections of New Jersey and
Manhattan he had acquired several Of
the rudiments Of the art of subterraneous
financing. He had been obliged to pay
dearly for his education and the great
truths he had absorbed were not forgot
ten. He didn't have to dig far to uncover
that $JOO,OOO,OOO and recall it's existence
and purpose to the recollection of The
multitudes
Effective Bit of Stage Work.
The resurrection of that half billion-dol-
lar asset was as effective a piece of stage
business as Wall street has witnessed in
years. The entire absence of fireworks
blinded the audience for a time to the
significance and Importance Of the play,
but when the bankers began to squirm
and scream about the blunders of the
tunnel-digging financier, transplanted
from the Jersey sWamps to the manage
ment Of Uncle Sans Treasury, the mean
ing and magnitude of the move struck
In. Wall street (the big bankers except
ed broke into hoarse roar of amuse-
ment and satisfaction.
Interest rates have been sliding down
steadily for fully week Money is
being placed generously within easy
reach of borrowers. They are told that
the financial stringency has relaxed and
that unlimited capital at 1a4 to 21s per
cent could be had on call. and to AZ
per cent on time. 1t filled the bankers
with rare tOy (p) to feel that conditions