The Washington herald., 1918-11-01
EXPLAINS WHAT
MONEY POOL is
Holland Sees Advantages in
Service Of Bankers
Committee.

Money-Pool Committee or new
York This interest is probably to
be traced to a widespread dispost-
tion to take advantage Of the op-
portnnities offered in the New York
securities market, for discounting
the future as well as for invest
ment II Is enough to say that the
so-called Money-Pool Committee
represents more than fifty OF the
banks and trust companies of New
York. 1t was organized for the pur-
pose OF cooperation in the consery-
ing of our money power and also
TN controlling, wisely, securities
market conditions. The bankers
who are members of this COMMITTEES
are for the most part men who have
done so much to make il possible
with comparative ease to finance va
rious situations as they have arisen.
They are the same men who united
few days after the European war
began for the purpose of providing
1900, 100000 in gold so that in that
way very difficult situation could
be relieved. They are the men who
made IT possible for New York City
TO meet in the fall of 1914 obliga-
tions which. had they not been met,
would have resulted in the pro-
testing OF New York City notes.
many Of which were held abroad.
They are the men who. in 1914. in
eo-operation with bankers in other
parts of the country perfected a
large gold pool which made IL pos
sible for American merchants and
!. manufacturers who had immediate
obligations to meet in Europe. and
especially in London, but who could
1N l. L. e
exchange conditions prevented 1t.
to meet their obligations. Their re-
sources were ample. but on account
of these sudden conditions were not
Immediately available. The bankers
money-pool quickly pit an end to this
difficulty.
They are for the most part the men
who in co-operat ton with other Amer
lean bankers under the leadership OF
j. Pierpont Morgan made it possible
for England and France Jointly 10
market in the United States in 49,
an issue of notes aggregatinG a halt
billion dollars. They are also the men
who, acting in cooperation with the
Treasury Department and the Federal
Reserve Bank, made it possible for the
|, New York Federal Reserve district
no meet in full even to OveTsuoscribe,
the allotments for the various lib
erty loans
Since the late summer this commit
tee has had under consideration per
haps the most delicate and difficult
proposition that has yet come before
US, or is likely hereafter to be the
subject Of discussion. 1t involved the
taking of such action as would tend
TO check the unpuestiOned disposition,
in nF
country than among the citizens OF
New York. to begin and to carry on
n great speculative campaign.
The committee has uudoubted
pow e- completely to suppress specula-
rion so far as that is encouraged or
aided by New York banks. 1t can do
this IN several s~nays. BIt. there
arises the question of the co-opera-
zion Of banks and individuals in other
parts of the country. The so-called out
side banks have been lending heavily
In the New York market chiefly
through their correspondent banks in
New York City There is abundant
precedent for this. In other times, the
so-called interior banks. finding tempt
ing opportunities in the New YORK
securities market. have sent large
amounts OF money. most of which has
been loaned upon call. At one time
when speculative activity was very
great these interior banks sent to New
York in the aggregate considerably
over 81 900. 900, 900. most of which was
utilized in the form of call loans.
There was a striking example of this
at the time when China was seeking a
large foreign loan. willard ID,
Straight. who was then in China, In
formed the Chinese government that
there would be no difficulty in secur-
ing 5000. OOC in the United States. But
AZ that time the South African sttu-
alton had become so strong and money
was there so plentiful that men of
capitaI there who had contemplated
..lEnding to China saw better oppor-
Nunities for the use of their money by
sending it to the United States. They
did send many millions and these
funds were loaned chiefly for stock
market transactions.
II the interior banks will now CO.
operate with the so-called Money
Pool Committee Of New York, which
is in effect the unified New York
banks, then that committee will be
able to some extent a least to re-
strain the tendency towards specu-
lstion.
But another question and very
important one is raised when action
of this kind is contemplated. The
New York Stock Exchange is to-
day the only free securities market
in, the world. 1t has attained. after
wears of experience the unique posi-
tion of being an absolutely liquid
market. For that reason II is now
spoken of as one of the great ma
tFonal assets. II il maintains that
position, il is sure to become per-
haps the worlds greatest center for
the marketing of securities after
the war is ended. Coincident with
a position of that kind will be the
bringing from abroad to New York
OF vast amounts of money placed
upon deposit in American banks
1obr the purpose of maintaining bal
ances in this country.
II is of vital Importance that this
LIQUID. free and impersOnai character
OF the New York Stock Exchange shall
be maintained. But il the money-pool
committee. acting in cooperation with
American banks, should put severe re-
strictive measures in effect. that would
be sure to some extent to impair the
high quality the securities market now
possesses as a free. liquid and imper-
sonal market for security transac-
tons. Therefore the committee has un-
doubtedly found il a somewhat deli
cate and not the less important task
so to act as to restrain the tendency
to speculation without at the same
time fmpairing what are sometimes
called the legitimate operations of the
stock Exchange
Some are of the opinion that as one
result OF the action of the money-pool
committee, there may follow impor-