Evening star., 1914-10-25
New York Banks Almost
Wholly Wipe Out Their Re-
serve Deficits.
MONEY RATES EASE OFF,
MAKING LOANS FREER
Opening of Stock. Exchange Eagerly
Awaited-Foreign Liquidation
Fear Passes.
BY w. S. COUSINS.

whatever angle the financial situation
in America may be viewed. it is posi-
| lively certain that n distinct improve
ment may be noted. The loan situa-
ton Of the New York Clearing House
banks has grown to such an easy posi-
tion that the huge deficit under which
they have been laboring has been al
most completely wiped out. August
l, on which date the last detailed
clearing house statement was issued,
the associated banks of New York had
surplus over their required legal re-
serve Of more than sS,0O0,OO0. One week
later. August s, their statement showed
that they had nearly s44.000.000 less
than their legal reserve in their vaults;
In other words, that their loans and
Withdrawals drew out more than $780,
100000 from their available quick as
sets" One month later, September S,
this deficit had been reduced only to
about $3S.000,000; but since that time
the splendid efforts of our American
bankers have wrought such evolution
ary improvements in financial condi-
tions that each week has contributed
to the wiping out of this awkward
$17.O00.O00. and October II less than
$1,000.0O0. The known movements of
money during the past week make it
positively certain that the deficit will
be converted into comfortable sur
plus.
Moreover, there has been an appre-
ciable easing off in money rates. which
is the only logical sequence of an in
crease in the supply of funds. No
surer evidence of the strengthened
could be furnished than the fact that
they are also retiring their emer-
gency currency notes and clearing
house certificates. Both of these serv-
ed their purpose admirably and will
doubtless continue to be used for some
conditions which called them into
being have largely disappeared.
Money Rate Decreases.
forerunner of the fact that the
clearing house banks had surely wiped
out their deficit was seen in the fact
that more than one of the larger COM
mercial banks loaning money on call
reduced their rate from to ner cent
and did not then find borrowers for all
the money they were Offering. While
some of the banks have maintained n
per cent rate, this has been available
Tor only their regular customers and
1or limited amounts. so that the pre-
.iS idtC oil the majority OF loans
mas been held pretty steadily at s per
cent up to this time. At the present
time more money is available at the
lower rate. and New York bankers are
Of the opinion that before long this
VIII be the ruling quotation. This
change for the better has been accom-
plfshed through a good degree of CO.
operation by the borrowers, who have
exerted themselves to reduce their com
mitments as opportunity offered to dis
pose of some of the securities pledged
under them as collateral 1t has also
been fastened by the influx of money
into New York. The banks which ad-
vanced the first s10,00O,OOO of gold to
enable the foreign exchange commit
tee to begin sales are now receiving
other centers. Then, too, the contrac-
tion in business the country over has
lessened demands for commercial pur-
poses and has operated to increase
cash holdings Money promises to be
plentiful enough to make 1t possible to
resume security dealings whenever
other factors, thought to make 1t in
advisable to open the exchange now.
have been surmounted.
opening the Stock Exchange.
The most important question now be-
fore the financial community, and one
that becomes more acute as each day
brings no definite solution, is that
which concerns the opening of the New
York Stock Exchange. On the one
hand we have the position of the ex-
change members and all the intricate
machinery of strock trading in a posi-
tion of utter helplessness, while ex-
penses are accommodating at an alarm
ing rate. On the other hand, the banks
not only of New York, but in the
smallest towns and cities, hold as col
lateral millions of dollars worth of
many cases they would be subjected
to serious losses should these stocks
be thrust on the market under an Off
cial valuation much below that on
which they loaned their funds A
banker from a small city in northern
Connecticut said to the writer: ::If
the New York Exchange opens tomor-
Connecticut said to the writer: eff
is obvious. therefore, that ample pro-
lection should be furnished the loan
ing institutions. which are to a larger
extent than any other class the vic
Tins of unfortunate circumstances
The governors of the exchange still
refuse to permit transactions in listed
stocks. unless guaranteed dividend
producing. on a lower basis than that
Of July 80. This policy has caused a
great deal of dissatisfaction, especially
when 1t is remembered that the pro-
HlDlllou Is causing serious and ire
trievable losses to people whose ex-
igencies require them to sell their se-
curities to care for other pressing OBJ
legations. AS the matter now stands.
1t Is not possible to do any business
through regular stock exchange
house. with the exception of bonds and
of the dividend guaranteed stocks. The
real market for stocks is of course
below the level of the July prices. and
hence those who are compelled to real
ize what they can on their holdings
which are not very particular either as
to their code of ethics or as to the OBJ
servance OF rules and regulations
Thus prices are being forced downward
to much larger extent than they
would under legitimate trading con-
ditions, and this has tendency to
create uneasiness not only among
holders OF high-grade stocks, but in the
financial institutions. the funds of
which are loaned thereon.
Needs of Exchange.
It has been we'll pointed out that what
the exchange needs most of all are:
First. the establishment of a responsi-
BILE market, and. second. a more abiding
confidence in the real intrinsic value of
stock exchange securities. The stock
exchange governors can and should at
once provide the former. The latter
must depend In large measure upon our
lawmakers, from the President down to
municipal off1cials. The President has
iet De known that the administra-
tton's program against big business
has been completed. Hence there is
reason to hope that national antapon-
ism that has been restraining national