New-York tribune., 1918-10-28

take drastic action to check stock
market panic, but the imposition of
restrictions designed to prevent the
development of a bull market is
something new in Wall Streets ex
perience. Yet that is what hap
pened last week. Out Of an eX-
tended period of dulness and hest
tation there suddenly emerged an
extremely active and broad specula-
tive market. The accumulation of
favorable war news, which the mar
ket had, long practically ignored,
overenthusastic predictions of an
early peace and wild gyrations of
such issues as Mexican Petroleum
all at once took an irresistible hold
on the speculative imagination, and
a scramble to buy stocks-particu
larly the so-called peace stocks
ensued. Transactions rose above a
million shares for the first time in
months, and then a series of million
share days followed. Prices moved
sharply upward, with very few ex-
ceptions, new high levels for the
year being reached in the averages.
Meanwhile, in spite Of the warm
ings issued by the money committee
a month or six weeks before, to the
effect that there must be no expan-
sion of stock market loans, the
supply of funds was equal to the
demand and the total of such loans
outstanding increased according to
one banker, by at least $350,000,-
900 or $400,000,0 1000, and possibly
more.
That obviously could not be ig-
nored, especially as there were in
dications that the market might be-
come even more active than it was.
Further expansion of loans would
hardly have been countenanced in
Washington, inasmuch as the Fed
eral Reserve Board had for months
been urging the curtailment Of non
essential loans in order to conserve
credit for essential uses, and had
stated, in effect, that loans for pur-
chasing or carrying stocks or bonds
were, in its opinion, none essential.
Therefore, the money committee
acted, Recommending" that the
margin required by the banks on
collateral loans be increased from
20 to 80 per cent and intimating
that further increases might be ell
forced if the first one should prove
ineffective. Apparently this action
has already discouraged speculation
TO q considerable extent, for trans
actions since the recommendation
was made have been on a much
smaller scale, although the new
restriction will not be put into eff
feet until November A. Whether
speculative enthusiasm will again
break out of bounds when war or
peace news arouses enthusiasm to
new pitch remains to be seen; but
il the money committee carries out
its announced intentions any undue
speculation will necessarily be Of
brief DURATION
The restriction to be imposed
next week is not altogether unfa-
vorable, even from the Wall Street
point of view. The danger of build
ing up an over-extended speculative
position is lessened, and the weak
ness inherent in the existence of a
large number of weakly margined
accounts reduced to minimum.
The dominant development in the
money market last week was the
recommendation Of the money COM
mittee. The action of the commit
tee was taken in order that credit
might be conserved for essential
war purposes. Money from interior
banks, whose deposits have recently
been swellcd as result of govern
ment expenditures, flowed into the
New York market all week and
helped to give it an easier tone.
New time money-$5, 100000 of it