New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-09-24
Monday, September %, 1912

laws. The rule OF reason is the
only thing that goes in these days of
urgent financial necessities. When a
half dozen bankers think it neces-
sary TO calm a troubled money mar
ket they call a meeting, compare
notes and agree upon a fixed course
of action. After that the call loan
rate is "pegged" at 6 per cent, Wall
Street becomes less feverish and
stock market liquidation ceases. The
procedure is simple, direct and most
effective. 1t Is the short cut to quick
results at a time when the money
market must be prepared to finance
the greatest government loan ever
f1oated and provide in addition for
the huge dividend payments of the
quarterly disbursement period. The
process has been simplified by the
facilities of the Federal Reserve sys-
TEN, for in the old days of scattered
reserves, when New York banking
was done on the catch-as-catch-can
principle of each bank seeing to 1t
that its own % per cent reserve was
! intact, it was a difficult matter for
| bankers to agree upon terms Of
broad money market relief. But a
5000, 100000 loan offering in war
market is a sufficient task for even
the shrewdest bankers to wrestle
with. The loan has to go, whether
anything else goes or not, for bank
ing these days must be conducted on
the principle of government first"
I in all money market operations.
This need is better understood at
Washington than it was at the time
Of the first Liberty Loan flotation,
when the 1900 members of the
American Bankers Association con-
/ tributed their time and one or two
million dollars of their money to in
sure the success of that huge under
! taking. The Treasury officials APP
preciate now the proportions of such
a task, which they lightly regarded
| at the time that the preliminaries
of the first offering were being
planned without the aid Of the bank
ers, whose advice was eagerly sought
as soon as the magnitude of the I'M
dertaking dawned upon the Wash
ington imagination. The situation
now is different in that a selling or
ganization has been perfected and
the details arranged for getting in
touch with final investors every
where. But the money market diff
ference between June and October
is about the difference between the
warmth of summer and the cold of
winter. The putting through of a
$4,000, 100000 project in an October
money market, when dividend dis
bursements, tax payments and cor
poration Indebtedness have to be
settled for, is, therefore, rather haz-
ardous. The present situation has
been complicated by uncertainty as
to what the ultimate demands of war
taxation will be. Most of the large
corporations are setting aside large
sums of money each month in antici-
patton of paying the excess profits
tax later on. The probability is that
these accumuations will be much
larger than are actually required,
which increases the strain upon the
banks. The aggregate demands of
this autumn's money market are,
therefore, more formidable than
were ever before encountered at this
season. But they are being properly
provided for, and serious disturb
ance is unlikely to result.
Under these circumstances, it is
essential that the bankers should get
together and secure the cooperation
necessary to the success Of such a
life and death undertaking as war
loan really is. There must be free
dom of action if the markets are to
be saved from the shocks incident to
the shifting of credits that are in
evitable during a period of unprece-
denied government financing. Five
picked men are to-day managing the
railroads as one great system so as
to develop the greatest efficiency in
the movement Of government freight,
human and otherwise. One freight
car is now doing the work that two
formerly did, and shippers every
where are cooperating with the
Committee Of Five in speeding up
the unloading process, so as to avoid
the delays which figured so largely
in the countrywide freight conges-
ton of last winter. In this way the
benefits Of properly conducted
pooling system are being advertised
in a manner that is likely to impress
the public mind with the need of
continuing a warproof system in
peace times. 1t is evident that large
reforms will result from the econo-