The sun. [volume] (New York [N.Y.]) 1916-1920, 1918-07-15
UNCERTAIN PRICE MOVEMENT DUE TO MONEY
STRAIN AND IMPENDING DRIVE.
Tendency Stock Market Prices Last Week.
Suggestive Changes During a Period of Extremely
Interesting Developments
By WILLIAM JUSTUS BoIES.

= y
last year. while the production Of ali
grains, including winter and sprine
wheat, corn, oats, barley and rye, win
be $4,000, 900 bushels greater than
the last harvest. The Government
estimate Of 8s1, 10000 bushels for tina
total wheat crop has been criticised
by some as too conservative, in view
Of the improvement shown in soma
of the West where severe
had been reported. A record
breaking corn crop Is apparently as
sured. provided unlocked for vicissi.
tudes are not encountered before
harvest.
Safeguarding the Banks.
One Of the strongest reports ever
formulated by the Federal Reserve
Board was given out last week, touch.
ing the unsoundness of the proposal
to establish q Federal guarantee Of
bank deposits. Tho board contends
that the Government could not safely
and wisely undertake the guarantee Of
bank deposits without exercising 4
degree Of control over banking loans
and investments which would In effect
amount to q Government guarantee Of
such loans and investments. This
would mean ultimately bringing bank
ing credit under complete control Of
the Government and cause no little
confusion. It IL an interesting point
not touched upon in many Of the
memoranda filed by opponents Of the
measure, and will strengthen the posi-
ton Of thinking people, who contend
that such guarantee would put 4
bring discredit upon our whole bank
ing system. The board strongly op-
poses the suggestion and deorecates
the Injection into the banking situs-
ton at this time Of the bitterly con-
troverted question Of the guarantee Of
bank deposits as preJudicial to the
development Of the Federal Reserve
system and a. msnacing to the sue.
cessful financial conduct Of the war
because of the agitation Of mind pro-
duced in the business and banking
community" The suggestion is made
that . fund might be created under
control of the Federal Reserve banks
to insure the immediate determination
Of the value Of the assets OF failed
banks and to provide for their prompt
distribution. This would relieve the
depositors Of failed banks and avoid
the delays in adjusting the accounts Of
such institutions.
Financial Lsadsrship.
This refusal to countenance the
scheme shows that the board Is worthy
Of the confidence reposed In It, The
nve members appointed by the Presi-
dent have given good account Of their
stewardship. They have rendered note
worthy service to the country at time
when intelligent leadership in financial
affairs was essential for the nations
we'll being. II the board had approved
the guarantee there is little doubt
that Congress would have acQuiesced,
with the result that most unsafe law
would have been on the statute books
and the financial outlook greatly con-
fused. 1t has been of the greatest
beneht to the country. therefore, to
have strong men on the board during
a financial crisis which has tried the
nation as nothing else has tried II
since the national bank act was ap-
proved. The men who took the strong
est grounds against the enactment Of
such legislation were experienced
bankers, familiar with the perils OF
unsound banking, and who, in oppos-
ing the measure, were actuated by the
motives Of patriotism and Jealous re-
gard for the country's prosperity
during a period Of difiicult Government,
financing.
II the guarantee Of bank deposits
had been approved by Congress other
proposals Just as radical would have
been suggested in the effort to pertec,
the system Of Government control Of
credit. investments and loans. 1t :,
easy to see what confusion would
have resulted and how serious woult
have been the entanglements had the
country once become committed tc
legislation of this character. AS Il
the suggestion that a guarantee Of
bank deposits would have brought
to light many hidden deposits" OF
! money now concealed in old shoes
stockings and household banks, which
the owners were afraid to trust e
regular depositaries without the Gov
ernments guarantee. the board say
there is no sufficient evidence to es
tablish that there are great sums Of
currency and specie now in hiding
which would be drawn out and depos
tied in national banks beyond wha
already 10 being accomplished by thu
postal savings system and the wal
l savings stamps associations" TIT
Federal Reserve Board members alsc
point out that the enactment Of q
guarantee law would stimulate a splr
Of competition and antagonism he
tween State banks and national banks
and 80 disturb the harmony which to'
the first time In many years exist
| between the two systems.