New-York tribune., 1917-06-11
Monday, June II, 1917.

The huge displacement Of funds
that is now taking place as the gov
ernment's war needs develop is be-
ginning to make itself felt in various
ways. AS time goes on it becomes
increasingly apparent that financial
requirements Of private and corpo-
rate enterprise have been sidetracked
10 give the government the right OF
way. This is, of course, as it should
he and as expected. Interesting fig
ures are just coming to hand which
show plainly the extent to which the
United States in its war borrowings
has crowded corporations off of the
map for the time being. American
corporate financing has fallen since
this country entered the war to the
lowest level in years. In the United
States last month the leading corpo-
rations. which in normal times arc
frequent and continuous borrowers
in the American investment market,
pared their credit demands to a
minimum. Figures compiled in Wall
Street during the past week showed
that in the month of May corporate
borrowings amounted to S60,000,0 900,
against S15O,0OO,o0O in April and
S135, 100000 in May, 1916. The May
total was one-ffth of the March to-
tai, which was the largest amount of
corporate financing done In any one
month this year. The tendency here
is the same as in Great Britain. Over
there corporate borrowings have
fallen off enormously, and there is
no likelihood of any change in the
situation until hostilities have ceased
and the reconstruction period begins.
The local money market is enter
ing upon an interesting stage. Last
week loans of the Clearing House
banks increased approximately $780,
100000 as a result of the large gov
ernment borrowings, while the United
States deposits carried with local in
stitutions, proceeds of the Treasury
bill sales, stand at S136,530,000. This
new week will see even more inrpor-
tant operations, which may result in
a substantial hardening Of money
rates. Not only are payments of the
first instalment of 2 per cent due on
the Liberty Loan subscriptions, but
income tax payments are also due on
the 18th of the month. 1t is esti-
mated that initial payments on the
Liberty Loan mean something like
I $50,000,000 at this centre. Then
there are some S125,000,000 Of in
come tax payments to be made here,
50 that the total drain Of funds from
circulation into the channels of the
Treasury and the Federal Reserve
banks will not be far from S200,000,-
900. That the Treasury Department
will do its best to keep the situation
as easy as possible despite these
large impending transfers is certain.
The extent to which this is already
tc.ng done is indicated by the fact
that in the last week, although the
visible movements of currency at
New York pointed to a cash loss by
TIE Clearing House banks in excess
Of S175,000,000, the actual reduction
in reserves amounted to slightly more
than S2S,000,000. This means that
r1uch Of the transferring of funds
that has taken place has been han
cled in such way as to involve
shifting of paper balances through
bookkeeping operations.
Money rates hardened toward the
end Of the week and borrowers
against Stock Exchange collateral
had to pay Az to 51z per cent for
accommodation, the rate depending
on the maturity and the character of
the securities pledged. Call money
at the Stock Exchange held around
80. TO per cent, with a substantial
demand owing to the activity in the
market. While bankers and borrow
ers generally do not look for any
pronounced rise in money rates un-
less something entirely unexpected
occurs, there are no indications of
any easing Of rates provided gold
imports on British account are not
resumed. Such shipments, however,
are likely at any time, for the metal
Is Icing held in readiness to inject
into this market when the need
arises. Commercial borrowers dur
ing the past week obtained funds on
q firm basis Of ) per cent, the level
at which most of the prime mercan-
tile paper changed hands.
The general investment market
continues under the influence of the
Liberty Loan transaction. Bond
prices moved irregularly during the