New-York tribune., 1918-04-23
Cllrtail1nent of
Loans to Garry
Stocks Suggested
Reserve Board Classics
Them as Non-Essential;
May Check Trading

The Federal Reserve Board at Wash
ington has definitely classified loans
for the purchasing or carrying of
stocks and bonds as being, in it's opin-
ion, non-essential. In it's April bulle-
tin the board stated that loans for nom
productive or non-distributive purposes
are usually not essential to the prose
cuton of the war, and placed in this
class loans "for purchasing or carry
ing property, whether cal estate or
personal securities" In response to
an inquiry from The Tribune the chief
clerk of the board states that the term
personal securities" was intended to
cover simply stocks and bonds. The
reserve board has suggested that all
# possible. loans falling within this
classification. The board states, how
ever, that "discrction must be used in
not forcing borrowers to reduce loans
TO an extent that is unreasonable"
Would Curb Speculation
Bankers and brokers in the Wall
Street district expressed the opinion
yesterday that the suggestion Of the
Reserve Board, if carried out, would
undoubtedly reduce speculative oper-
ations in the stock market. 1t was
asserted that already, to a certain
degree, there had been a cdktailment
by the banks in the matter of credit
accommodation granted to stock ex-
change houses. so far as collateral
time loans were concerned. This ten
dcncy, it was pointed out, had been
more or less voluntary on the part
Of the banks which had sought to
strengthen their resources through
the reduction of time commitments
in order to be in a more liquid con-
dition to meet the heavy govern
mental demands While admitting
that there had been general dis
position on the part of the banks to
reduce loans to non-essential indus
tries, it was stated that to date no
direct request had come from the Re-
serve Board to curtail Stock Exchange
loans.
An official of one of the large ma
tlonal banks declared yesterday that,
beyond the question Of doubt, the
Federal Reserve Board would under
take to check undue speculative ac-
tivity in stocks, provided the war was
indefinitely prolonged. In the opin-
ION of this banker, no hard and fast
rule could be laid down covering loans
for speculative operations. Each case
he believed, would have to be judged
OH it's individual merits, and the banks
would have to be allowed certain
amount Of discretion in making loans
OF this character. In undertaking to
curtail speculation, it was asserted,
care would have to be exercised not
to interfere with the normal and
legitimate investment market, the need
OF q free and open market for securi
ties being generally recognized.
Money Pool Active
Owing to the heavy government
Withdrawals and other Federal financ-
ing, tension in the local money mar
ket increased to a point yesterday
where it became necessary for the
bankers money committee to draw or
its S200,000O0O pool to the extent of
approximately S1C.O00,0OO, that amount
being loaned by the committee in the
Stock Exchange call market. The
banks called loans heavily during the
day, sending the rate to per cent
for demand accommodation.
Government operations in the local
money market were unusually heavy
There matured yesterday the first Sc
ries of certificates of Indebtedness is
sued by the Treasury this year, an is
sue of S4O0,0OO,000. bearing interest at
4 per cent. AT the same time the
government was paying off this issue
and drawing on its deposits to do so
the banks were paying for their sub
scriptions to the latest offering of
S500,000,o00 of Az per cent certif
Gates. The following table shows the
present outstanding Treasury certi-
Gates of Indebtedness arranged as to
date of maturity: