New-York tribune., 1918-08-30
Warns Against
Big Speculation
Based OF, Credit
Money Committee Takes
Stand Against Unrestrain-
ed Market Activity

Yesterday afternoon Gates w. Nc
Garrah, head of the Mechanics and
Metals National Bank and acting chair
man of the bankers money committee,
issued the following statement:
The efforts to stabilize money rates made
since the first Liberty Loan was offered
have met with cheerful and sincere CO.
operation on the part of borrowers and
lenders. The government in prosecuting the
war requires constantly increasing
amount of money. and while every effort
VIII continue to be made to maintain rates
at the present level. it is thought wise. in
view OF the present progress of the Allied
armies, to point out that any disposition to
indulge in speculative commitments, based
on borrowed money, must of necessity lead
10 an increase in rates that will prove
corrective.
;, promptly upon the dissemination of
tne statement throughout the financial
,als1rlct, the stock market, which had
peen advancing with a fair volume of
actlVlty, turned downward, and prices
Oh representative stock issues sustained
substantial declines. running from ~ r.,
z points and more in some instances
The selling, while not particularly
heavy, indicated desire on the part of
many spectators to Tighten the current
commitments in order to be prepared
Tor any steps that might be taken fur
ther to curtail stock market loans.
Statement Issued After Meeting
The McGarrah statement was issued
after meeting of the bankers money
committee, at which the general monev
market situation was thoroughly dis
cussed. Mr.. McGarah refused to com
ment upon or amplify in any way the
statement put out on behalf Of the
committee.
Bankers outside of the committee
expressed the belief that it might be
construed as a warning to the specula-
lively inclined to go slow in the future.
AS one banker put it, the committee in
les statement was to all intents and
purposes serving notice upon the finan-
cial community that should there de-
velop any important speculative activity
IN stocks the committee would stand
aside and withdraw its support from
the money markets. with the result
that money rates would soar to a level
that would automatically check the
speculation.
A member of the committee, speaking
for himself, said that the present stock
market could in no sense be called
speculative, SO that as long as opera
tlons continued on the present scale
the aid of the money committee in
keeping mohey rates from rising to
Prohlbltlve levels could be relied upon.
But as for permitting any large specu-
latlve operations, based upon borrowed
money, that, according to this banker,
would not be countenanced by the COM
mlttee, in whose hands rests the con-
troll of the money market.
Bankers Have Not Agreed
There has been much difference of
opinion among bankers for months as
to whether the committee should under
take to keep the call rate from going
above 6 per cent. Some bankers have
insisted that, as money is commod-
ity, it should be permitted to take its
own course, like other commodities
and that the law Of supply and demand
should govern the rate from day to day
But other banks, and the majority, have
held that some such stabilizing influ-
ence as has been exerted by the COM
mittee was necessary to insure against
undue stringency during tie Liberty
loan campaigns.
The money committee was organized
last September for this purpose, and
the organization has been made perma-
nent. Since it's formation the COM
mittee has operated in the market with
2OO,O00,O0O pool at it's disposal, with
the result that it has managed to keep
call money at 6 per cent or less when
at times, had the market been left to
itself, much higher rates would have
been established.