The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-11-23
FINANCIAL REVIEW
OF THE PAST WEEK
Aspect of the Reserve Bank Be-
ginnings-COttOn Market
Resumption.
WALL STREET Is HOPEFUL

couraging record in the accomplishment
of banking and business adjustments to
the war abroad and the provision Of ia
clities and accumulation of resources to
meet whatever strain the future may
have in store. The outstanding features
of last week In the Wall Street regard
were the establishment of the Federal
reserve banks. the resumption OF trading
on the cotton exchanges, the manifes-
tation of a constructive attitude by the
Washington Administration toward BUSH
ness and the further relaxation OF re-
strictions on dealings In securities. Tho
fact that IL was possible to float a Brit
ish war loan of $3.50. 0O0, 900 on "a 4
per cent. basis had gratifying implica-
lions for tho financial markets generally,
and the comfortable aspects of the do
nestle money market were emphasized
by n general shading of rates, including
the price of call loan accommodation to
borrowers on stock Exchange collateral.
who found funds available as low as An
per cent.
From different parts OF the country
came advices showing response OF re-
viving confidence to the matters which
the financial community had noted with
SO much satisfaction. including among
other things. evidence that our foreign
trade recovery. especially on the export
side. was proceeding on an expansive
scale Financial sentiment was itself so
much improved that for time around
the middle of the week II seemed likely
that the experiment OF opening the Stock
Exchange for transactions in the bond
department would be undertaken, al
though It was not proposed to make
business absolutely free. That ofr,ciai
supervision would be exercised to main
tain graduated and changing price MINI
NUNS, as we'll as to protect values from
any sudden rush OF liquidation. especially
from foreign sources, was obvious
Ii seemed. however. that calculations
on this score were rather premature. The
idea had hardly gotten about that so great
a step forward in the resumption of BUSH
ness In the organized securities market
was imminent before 1t WIS announced
that difficulties had develop ID which COM
PEELED n postponement of such a departure
from the more cautious lines OF action
which had been so far followed Indeed,
the reported movement took some obser-
vers by surprise anyway. The Interstate
Commerce Commissions decision In the
Eastern railroad rate case and its bear
ings on values remained to be reckonei
with and the shift OF opinion in banking
quarters in favor of "A broader restoration
of the market for securities hal appeared
on several grounds to be a somew hat sud-
den conversion.
The most convincing explanation offered
OF the conclusion reached to wait a while
longer for any marked alteration in Wall
Street conditions was that the Federal Re-
serve Board had advised delay. There Is
every disposition In the banking com
munity to allow the Federal Reserve
Board to assert centralized leadership
In American financial affairs to-day pro-
| vided leadership is not assumed and eyer-
| cised under the domination of the Treas
| ury. and it is known that the board has
pad a good deal OF attention recently to
the problem denoted by the huge foreign
| oldings OF American stocks and bonds.
The Paish- McAdoo negotiations may have
served at least to define the nature Of this
problem in respect to the menace of Sc
we're arrangement of our financial founda
tions through European investment lqui-
dation here. The presumption then would
be that the board hopes in some way to
dispose OF this difficulty and is asking
only for time within which TO estimate 1t
and arrange to cope with 1t.
II is believable also that the mere ad-
vertsement of a prospect for an lmmedi-
ate resumption of open market dealings in
bonds brought TO light prospective selling
pressure from abroad which inculcated
the wisdom of prudence. II there were
no other occasion for the Federal Reserve
Board TO concern itself with the Stock En-
/ change question the wish TO avoid unset
Ting complications until the reserve banks
are running smoothly would afford IT. The
new machinery did not become automati-
cally incorporated In the country's auto
matte equipment by the mere fact OF set
ting II up.
Nevertheless, the state Of sentiment re-
veaed toward Stock Exchange reSump-
ton was signitican; of the impression pro-
duced by events in recent months r~-
pcCially this month. While not SO long
ago the banking attitude was that reopen
ing OF the Stock Exchange should not
even he talked OF. il has become some
thing to approach In a determined fashion
for the purpose Of facilitating reopen,ns.
The long range necessity Of placing the
organized securities market az the service
of finance and. business generally is still
left, and tho advantages OF the earliest
reopening possible are more clearly recog-
niZed than ever
The whole financial and commercla \
situation Is now such that banking ener-
gies can he very largely concentrated on
the solution OF the Stock Exchange prob
lem All the economic apparatus In Other
fields has been put In working order and
is operating again. Only the regular
stock markets are still In state OF sus-
pension. Moreover. the initial stage or
transition from inc ola 10 the new bank
ing system has been passed without dis
turhance or hitch. and the country has
been potentially endowed by tho new Fed
eral reserve organization with n pro-
dlgious increase of financial muscle OF
which the leaders OF banking endeavor
can make efficient use.
Policy of the Federal Reserve Bon I'd .
II i. too early yet to say much Of
the Federal reserve system that was not
said over and over again In advance OF
, its inauguration As business gets into
the reserve banks and as the banks get
! into business opportunity will be aTorde |
10 appreciate through the test OF fact,
Just what the now system means for the
! financial and commercial outlook IL tho
Treasury keeps its hands off tho ", deral
Reserve Board or IL the board resists the
Treasury efforts TO control It, the political
onrgers inherent in the Federal reserve
, act Will be minimlzed at the outset
one could wish that the board had no,
lent Itself to tho Treasuny's cotton pool
/ scheme, which IL wholly outside its du.
ties as Secretary McAdoo himself ad-
mts' sun. In making practical appli-
, cation OF the terms OF the Federal re.
serve law by interpreting It into policies
or banking management the Federal Re,
serve Board has made a most auspcious
! beginning. The protests which are al