The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-11-30
Money stimulus for Business.

Money Stimulus for Business.
All the aspects of money are encourar-
ing TO active efforts to do business Funds
ape described as almost unlendable in
London and after its fashion London is
likely TO press credits on borrowers hero
while the London money market almost
guarantees no pressure on our gold sup
phes. The international money mar
ket supports our domestic situation.
but more than that the new Federal re.
serve banking system, with iis enormous
capacity or credit accommodation, backs
up the general money market, which A,
threatened with an unprecedented pleth-
ora OF funds so phenomenal as to be in
comprehensive
One mas only 20 consult the returns
OF the New York Clearing House Associa-
tloh 10 see what has resulted from the
establishment OF the Federal reserve
banks and the statutory reduction of re-
serve requirements. Quite properly the
bankers explain that a surplus of s133-
100000 more or less which has suddenly
appeared IL only the effect OF dronpinr
tho reserve requirements. bu. II is a
Solo surplus just the same. and the
excess or reserve holdings has always
been the basis OF American banking opera-
tons. Also the present IS per cent. level
OF reserve stipulation. with its reinforce
hent or reserve bank redlscount facilities
ana note issue provisions, IL safer mini
mum Tor banking transactions than the
20 per cent level ever was and there is
nothing surer than that the banks are
going to employ their reserve surplus
Indeed the Federal Reserve Board In re-
fusing TO lower rediscount rates immedi-
ately has said IN almost so many words
that the general banking position can take
care OF any kind OF borrowing demand
which business and financial enternriae
can conceivahly make upon II In the near
future
We may expect TO see the complete
withdrawal OF clearing house certificates
soon and retirement OF emergency
currency, II the Treasury does not inter-
fcrn through its cotton loan operations
and other expressions OF its monetary
obsessions. Bu. these retrements can
only make the money market safer with
out affecting much the present situation
OF superahundant credit supplies. for
which use must be found The action ~.
stocks has already begun to resemble a
response to monetary conditions closely
experimenting state OF prospective In
fttion and furnishes a cue 10 general
business to enter more coura Geously ON
commitments anrripatory of expanding
consumptive demand The Federal Re-
serve Boards policy az outlined shows
that 50 far Il is possible brakes will
he applied 20 infiationary processes, but
II can I've said that there is room for q
good deal OF imitation without passing the
bounds OF economic liberation. For
long time before the war business depres-
sion was widening and deepening on
account OF financial stringency and the
war II responsible FOR a vast amount oS
strain which the money market mus,
take up
As Wall Street sees IL the outlook is
hopeful. The Federal reserve system does
not contribute directly to securities
market expansion. but IL docs SO In
directly, and "A large supply of money FOR
tho uses OF the securities market in liaue-
flying the country's stores of capital seems
to be assured. on present Indications il
can be almost predicted that before long
money Will be flowing freely through the
stock market. II precedent holds trading
will expand and prices rise by way OF
anticipating or dlscounting general husl-
ness recovery. Financial conditions seem
TO have been established which can have
the consequence OF growing volumes and
improving prices starting with securities
and extending into trade and industry.
What will come after that is another
question which does not define itself at all
clearly now and the answer to which is
therefore TO be postponed.