The sun. [volume] (New York [N.Y.]) 1833-1916, 1914-09-19
DERIDES BABSON IDEA
FOR STOCK TRADING
An Exchange Governor Sees AD-
surdity in Rcopening
Plan.
MIGHT TROUBLE BANKS
"Ncw Loans" and "Old Loans"
He Says. Offer Prospect
Of Tanglcs.

Commenting on tho article in THE SUN
Of last Sunday by Roger w Babson. en-
titled why the New York Stock tx
change Should Reopen" a governor Of the
Stock Exchange made the following
statement:
I'm reply to a questloner who asks Mr..
Babson what borrowers OF money would
DO II on opening the markets bonds
should decline in price so that the mar
gins on bank loans should be exhausted
and the banks call for additional margin,
Mr Babson says: so far as new loans
are concerned the banks are entitled to
the regular margin. based on the new
prices. but loans existing when the ex-
change closed the banks should leave
intact rs they were Sc l am asking
myself tperhaps should ask Mr.. Bah
SOM how long the depositors would leave
their money In the banks II they knew
from the decline in prices that on the
millions OF money loaned by the banks
the collateral was worth less in market
price than the amount OF the loan.
II am asking him what the bank
examiner would say to this. am asking
him IL he thinks any one would make "A
new loan at the new price. with the
usual margin. when he could let the old
loan stand without any margin.
He also says the foreign holdings Of
American securities that remain to he
liquidated are the one thing that stands
in the way OF the resumption OF Stock
Exchange business. and then he proceeds
To ind ways and means for absorbing
these securities. but he signally falls TO
provide ways and means for paying the
a.ll his ba ha L..
Gus OF receiving and IL entitled to. and
he fails to see that the reason the for
etgner desires TO sell In not that he dis
trusts the security but that he wants the
money. Mr.. Babson's scheme is to take
the securities and eventually. In the
course Of three or four years, to sell the
foreigner enough foodstuffs, &c, to re-
mburse him for the stocks and bonds he
has parted with
I'm short, although this country sold
these same securities TO the European for
cash to provide the means for develop
ing this country. now that he wants his
money back that he may help his own
country Mr.. Babson would make him
wait for IT, and eventually pay him in
bread and butter. In old fashioned times
only two words would describe this. re-
pudiation or WEIGHING.
Having read so carefully Mr.. Babson's
theories possibly IL will not be out Of
place for me TO give him Few facts.
When he says I believe that the
banks did the right thing in closing the
stock Exchange ne is as far from right
as are his theories.
The move to close the exchange was
made by the president of the exchange
and one or two members of the govern
ing committee after the close of the mar
ket on Thursday. July 20. as they saw the
handwriting on the wall and the leading
bankers were conferred with. ON Friday
morning before . o'clock a meeting of
the governing committee was called. and
while they were assembling member OF
the governing committee was delegated
to tell the officers OF the Bank Clearing
House Of our proposed action and 10 ask
whether or not they agreed with us as
10 the necessity OF closing They con-
CURED TO Use the exact language Of the
bank official who spoke for the Clearing
House committee. And the country was
saved from panic; not only Wall Street
but the country.
"Mr. Baheon may rest assured that the
banks will concur before the exchange
opens, and when they and the govern
ing committee OF the Stock Exchange
deem II wise to resume business II will
not be on the foundation he promulgates"