The sun., 1916-11-29
FINANCIAL NEWS
And COMMENT
Reserve Boards Warning
Sends Stocks Down, bat Aids
Basic Conditions.
CAUSES NEEDED CAUTION
Spectators Frightened, Bears
Press Advantage and Cali
Money Is Fifmer.
CAUSES NEEDED CAUTION

Warnings that may serve TO upset the
calculations OF spectators are disagree
abls to the persons concerned. but they
tend to strengthen the framework upon
which speculation 10 based by sliminat.
ing overextended accounts and BY ere.
ating q more cautious attitude at . time
when caution 10 most desirable. AZ least
from the poin. Of view Of the conserva.
tive element In the financial community.
II was the Federal Reserve Boards
warning regarding the investment Of
American funds In foreign treasury bills
that was the direct cause OF stock mar.
ket liquidation yesterday.
Many conclusions we're drawn In Wal
Street rs to the real meaning and the ui.
innate effect Of the Reserve Boards
statement. but In wholly speculative cir.
cles only one analysis was made and
only one conclusion reached. Spectators
long Of stocks were frightened by their
own, conclusions and reduced their hold
ings, while the bearishly inclined trad.
ers helped the movement along by an
nouncing for public consumption that the
Reserve Boards warning foreshadowed
an end OF foreign buying In the Ameri.
can markets and In consequence . cessa.
ton Of business prosperity here.
Nothing OF the SORT. however. reed b
looked for. Foreigners win continue tc
buy American goods and pay for them
but . riot Of Wholesale credit operations
for foreign accoun doubtless viii bs
prevented,
The Federal reserve system was ere
ated to control the banking transactions
IN this country along orderly and saf,
lines. and the warning Of the Fedora
Reserve Board 70 membsr institutions
and, its advice to private investors ar,
wholly within the limits Of reason ans
within the power delegated to It by tn,
act establishing the Federal reserve sys
TEN.
Spectators who are dreaming Of al
uninterrupted advance to stock marke
values will not agree with this state
ment. 'They asserted yesterday that tn,
board was taking a narrow view OF tn,
situation. but In conservative quarter
II was pointed out that there was espe
ciai need for caution at this particulaI
time md that the board had performed
q public service In Its various sugges
lions.
The SPECTATOR should remove from hi
mind the idea that we are not 70 exten<
further credit to the Allies or that vi
are to surround ourselves with . wal
against exports Of war supplies. Tn,
against overextension Of credit and ha
mildly criticised the prospective sale o
foreign treasury notes here. That's all
Stocks were affected also by an ad
vance In call money to 8 per cent. b.
further talk OF peace and BY anothe
sharp drop In the wheat market. the las
named factor being effective In satract
Ing liquidation Of stocks to protec
traders who were suffering from tn
break in cereal prices. Time money, a
well IS call loans. was firmer. but tn
advance did not appear to posaes - tn
element of permanency.
In view Of last Saturdays Clearin
House exhibit many Of the banks nm
need for ~retrenchment In the matter q
loans. but Of course such an operatio
tends to affect adversely speculation
stocks which Is based on borrowe
money. That the money market lie nc
to run into q period OF long continue
high rates for accommodation IL fore
Swallowed by the resumption OF gold In
ports. which In the current week hav
amounted to more than 100000 an
by the assistance the general loan maj
ket may obtain from the rediscountin
privilege Of the Federal reserve bank
Both the decline In stocks and the con
modities market yesterday should ten
to ease the money situation.
Final losses In stock market price
were not heavy. although a large volum
OF 'AQuidat ion was reported. Unite
States Steel and the other leading indui
trials bore the brunt Of the selling. whic
In the main was we'll absorbed: while III
rails were conspicuous by reason of the
hrmness. which In a few instance
amounted to positive strength.