The sun., 1916-09-18
LOAN REDUCTION
treasures BULLS
Reserve Position Of Banks I'M
proved in Spite Of Big
Speculation.
GOLD STILL COMING IN
Conservatism Needed In Order
to Avoid Pitfalls-Out-
look Encouraging.

stock market bulls Of the thinking
variety we're more than satisfied with
the statement issued on Saturday by the
New York Clearing House Association.
Those who had been wondering how
soon pressure would be applied In order
10 prevent dangerous weakening OF the
technical position regarded the report Of
the associated banks as assurance that
bankers would not DO forced to take
prccipita.e action and hat their judy
ment would not be modified by uneasi-
ness as to purely banking needs.
The most surprising feature OF the
statement was IN actual decrease NJ
loans. II was known that the majority
Of stock market accounts were strong
aud that brokers We're having little diff
hculty In obtaining liberal margins from
their customers. Nevertheless. an in
crease Of several millions In the Loaf
account certainly would not. have been
surprising. Apparently. the weak and
timid part OF the speculative public has
not yet been convinced OF the reality OF
the current bull swing, and barring ur-
foreseen developments there Is basis for
belief that any reactions which may he
DGOuHn. dHDut MS Wtth VIII pt NoIu-
III ratiyely small.
Reserve requirements OF the banking
institutions were increased moderately
because more han $40. 00O. 600 was added
10 the deposits. but an Increase OF more
han 10000 400 In aggregate reserve
raised The excess sl9,l46.S \ The ratio
of excess reserve to reserve requirements
now is almost l6 per cent. compared
with approximately leia per cent. one
week ago. Ill per cent. two weeks ago
and with n low record for the year OF
less thai 9N per cent.
Reaction Prospects.
The action Of prices in the last week
has been remarkable In several respects.
! Had there been no real foundation for
the upward movement the bearish argu-
| ments which were available when trad
ing started last Monday would hay"
, been effective, hut. as pointed out ut the
time IN this column. they did not appear
particularly important when analysed.
In spite OF this fact many experienced
! operators believed the time was about
ripe for a reaction. Their realizing and
the increased selling for short account
were no, suficien, to check the advance.
and though the o OF stock UNI
loaded was tremendous the demand was
continuous and impressive.
A substantial reaction. however - IN
evitable sooner or later. II will come
even though Business and financial skies
are not clouded and though the bears
are not aided by any u~nfavorable de-
yclopment. Reactions are technical and
psychological necessities. and when II is
realized how many pitfalls may he ahead
the need for caution at this time Is APP
parent.
There has been some discussion re-
Gently Of the supposed attitude of bank
| ers toward the question OF our gold sup
PLY. Continuance OF he import move
| ment has served as reminder OF the dan
, ger OF credit imitation. and the statement
has been made In more tina one quarter
! that the bankers do not look with favor
! on further large receipts Of the precious
metal.
Theoretically this may he their atti-
tude. but ~ banker may believe an
| abundance OF gold might be detrimental
IN the country and still In his own case
b. willing to take the chance
1t. IL true that dangers attend a sud
den Increase Of prosperity and the golden
food which Is pouring into this country
symboliZes the increase In our prosper
ity. But no one wishes 10 spurn wealth
because Of It's perils. We will continue
TO receive all the gold that can he spared
by the belligerent Powers. and IL our
financial leaders hold steadily TO rom
sentative policies our gold supply Will
! stand us in good stead during the post
bcllum readjustment period.