The Washington herald., 1918-12-03
FAVORSLIQUID
LOAN MARKET
Holland Sees Need of Free
Dealing In Securities
Following War.

been received in New York which
Ustifies the belief that in all parts
OF the country. at least in all the i'm
portant financial and banking centers.
the action OF the so-called Bankers
Money Committee of New York in re-
stricting loans based upon the securi-
ties OF the United states is short
sighted and. II continued. may De
harmful. Nevertheless II is the opin-
jon Of those who should know that
this committee will not at present, at
least, remove these restrictions. II
should also be reported that through
out the country there is gentle critf-
cism OF the Bankers Money Commit
tee because the action suddenly taken
by this committee makes 1t clear that
there does center in New York as
great money power as was alleged
TO be the case before the Federal re-
serve banking system went into effect.
We are to have speedily a move
ment. greater. probably. than has
ever been developed in either London.
Paris or Germany. which IL fully met
will entail the corporation of a liquid.
free and impersonal market. The only
organization which has these qualities
for there is none in London or ParisJ
iC the New York Stock Exchange. In
that exchange there can be provided
an instant and fair market for con-
sidera5ly more than SlO0. eco. .OCI.OJO
worth Of securities Under the super
Vision Of the governors OF the stock
exchange these securities can be listed
and IN that way anyone who wants
TO buy or to sell securities will be
glad to crafty his desire and to do
u Instantly, He will be assured that
the price which he pays when buying
securities. or receives when selling
them, will be an excellent test OF the
value Of the securities at the moment
me order Is executed. When the mar
ket is broad. then the price is fair.
and In that way he who buys or he
who sells will be satisfied.
Peace to Bring Vast Dealings.
There is no doubt that with the con-
clusion OF peace negotiations and the
ratification Of treaties. securities in
enormous amounts, both foreign and
domestic, will be dealt in. If there be
fair free and liquid market. in the
New York exchange and to some ex-
tent in other exchanges in the United
states Mr. McAdsO knows as do
our leading bankers. that securities
IN vast amounts representing govern
Hent. railroads and industries abroad
viii be offered in the American mar
ket, for there Is no other which at
this time can so easily and fairly deal
with these securities. Furthermore
there will be very large amounts Of
foreign money deposited in American
banks because merchants. manufac-
turers and importers abroad will be
anxious TO establish large balances in
the United States.
Many persons who are not well in
formed are OF the opinion that the
transactions IN the securities market
are represented by actual cash. But
" these transactions were limited to
over-the-cOunter dealings. entafing
the use Of spot cash. a very limited
market for the great body Of seCuri-
Hes would thereby be entaiIed. Cred
IS essential Manufacturing sinin-
INK. transportation. all depend upon
the sale OF securities for high de-
velopment In order to secure a mar
ket for them there must be a bread
and immediate market. II there were
not, then n corporation would have
to pay a high price for its financing.
where Credit Comes From.
The great majority of those who
purpose dealing in securities turn
to their brokers for credit. Now
The Bankers Money Committee Of
New York has placed restriction
upon that credit. This has been
done for motives which are Justi-
fable. They are based upon the
view taken at Washington that gov
ernmental claims and others are
entitled to prior recognition.
1t Is said by one who is familiar
with these questions that loans
made upon cotton aggregate about
$500, 900. 900. The lint cotton which
has been harvested this year is
worth about $500. 900, 600 and the
by-products perhaps a billion more.
The money which has been advanced
to enable the cotton planter to hold
his crop at the highest level in fifty
years is reckoned at about 20
per cent Of the total value OF the
crop. It is. also estimated that be-
tween $500. 900. 900 and $500. .OOO, 900
~ been allotted to the securities
market in order to furnish credit
necessary for dealing in listed val
ues in excess of $1,000 0O0. .0OO. 900.
Therefore the allotment of $780,
100000 is no more than one-half Of
l per cent.
Expects no Undue Speculation.
Many have assumed that If all re-
strictions were removed and il there
were to be absolutely a free, liquid
and irnpersonal condition in the Sc
Curities market, then there would in
stantly be developed speculation
which might be carried to a danger
Gus extent. In reply to this it is
said by competent authority. "Busi-
ness men have been accustomed to
take their cue from the course of the
security market. Its barometric ex-
preston furnishes guidance for the
future. II is therefore somewhat dis
conceFting al a time when the whole
world is beginning to feel the first in
vtgorating pulses OF a new life, to
witness the spectacle OF wavering Sc
curity values"
Incidentally il Is also said that the
Inauguration of a restrictive policy
Of this kind does not promise well for
the permanent establishment of New
York as the leading financial center
of the world
those who are best informed be-
lie,Ee that we are soon to see a re-
lease OF money IN large amounts,
which. Of course, will be utilized in
investment. Business is likely to find
itself upon a peace footing many
months before 1t was believed. last
summer, peace would come. There
fore it is the common opinion, an
.opinion which will be welcomed
throughout the country. that speedily
the supply of money viii be so plenti-
full as to relieve all danger OF strin-
gency.
WASHINGTON PRODUCE.