The Birmingham age-herald., 1917-06-24

and call loans the rate, as has been pointed out fluctuates with the demand.
 Ordinarily a stock exchange broker with
 only a moderate business will be bor-
 rowing. steadily, from s2000.0OO to $5,- OO0,OO0 on call money. broker, having
 rowing anywhere from $10,0O0000 to $20,- O00,0O0 on call. Very active brokers like John w. Gates, for example, have been
 known to borrow, at one time as much
 as $50,O00,O00 on call
 For weeks and weeks past the rate on call money has been around 21s per ceft
 Early this week because of the usual de-
 mand for money caused first by the lib- erty loan bond payments, and then by the July interest and dividend financing, call money rates advanced to per cent
 Naturally, the banks having money out at 21a per cent called their loans, re- newing at the steadily advancing rate.
 Calling of loans by the banks invari-
 ably brings abou. liquidation in the stock market; it costs MT, A. a great deal more
 to carry his steel purchased on a margin
 when call money is per cent instead
 of 21a per cent and he says to Broken B.
 guess you had better let go of that
 steel" Such selling in the stock mar
 ket invariably results in price decline such as was witnessed this week.
 Call money would have gone much
 higher than it did this week but for one thing. On Monday England sent us by
 way of Canada $22Ooo,OOO in gold; on
 Tuesday, another $11,00000O came. On
 Wednesday another $11,COOO0O, and so on.
 England's object in letting us havex that
 gold was to stop the advance in money
 rates So far this year we have im-
 ported from across the border $45O 0O0, 900 of the yellow metal; since exports began on February l. 1915, we have increased
 our gold holdings by $1,50O, ,000,O0O
 England sent us that gold so that she
 would, first, keep our interest rate down and thereby borrow money cheaply, and then buy war supplies to advantage. An increase Of 1,500 000,000 in the gold hold ings of our banks means an increase of $500, 100000 in lending power for mil lion dollars in gold can be used by a bank as the legal reserve for loans amounting to $5,000000. In other words. under the law every million dollars loaned by the banks must be secured by not less than s20O,0OO in gold in vault.
 England twill continue to send us gold, on the present movement until interest
 rates on time and call money go back to their old level, which probably will be as soon as the June 2S installment of IS per cent on the liberty bonds Is cut of the way, and the July interest and dividend payments have been financed. What is then going to happen stock mar ketwise depends partly on the final action taken by Congress in its pending war tax legislation, and partly in the interest rate to be fixed by the government op it's next war loan. If the war supply corporations are forced to lower their prices when selling to the government
 and at the same time these corporations are soaked" to use a Wall street phrase with war taxes, such action will be reflected in stock market prices And
 prices of bonds and stocks will both de. cline if the interest rate on the next liberty loan is to be raised to 41s per cent, as is now predicted That would cause further readjustment R. L. B.