New-York tribune., 1918-12-05
Margin on Stock
Loans Reduced by
Money Committee
But Strong Warns Brokers
That No Increase in the
Supply of Money for
Speculation Is Probable

Responding to a suggestion from II
G. S. Noble, president of the New York
Stock Exchange, the bankers money
committee yesterday announced that
the margin requirement on loans for
stock exchange purposes would be
forthwith reduced from 80 to 20 per
cent, thus restoring the basis in force
prior to November. This action was
decided upon at prolonged session
Of the committee held Tuesday after
noon.
A letter from Benjamin Strong,
chairman Of the money committee. to
Mr.. Noble revealed the decision. The
text follows:
There has been change in the situa-
tion to justify increase in the total of
the Stock Exchange loan account and it
is not probable that additional loans will
be available for Stock Exchange loans so
long the government continues to be
borrower on the present large scale.
Nevertheless, as your letter states that
the exchange is amply able to control the
situation without continuing the require
ment by the lending banks of additional
margin. as outlined in the committees
letter of October "a 1918 the committee
has decided to accede to the request con-
tanned IN your letter of November 30 and
will at once communicate with the asso-
ciated banks in this city to that effect
In the event Of developments necessitat-
ing such action the committee will re-
quest the associated banks to exart re-
aulrements for additional margin
Requirement Worked Hardshin
The letter sent by Mr.. Noble to Mr.
Strong. under date of November 30. ane
submitted to the money committee
suggesting a restoration of the oil,
margin basis. follows:
The Importance of keeping the voluy,. Of
loans upon securities from increasing at
the present time is thoroughly understood
and appreciated by the financial COM
Inunity. 1t would seem. therefore. that
the money committees requirement Of a
margin of from 80 to 37la per cent on
otock Exchange loans has ceased To he
necessary. " '''
This requirement works many hardshins
and produces serious injustices and h,,
ieving as they do that the influence of tbo
banks and of the exchange is amply able ~
GohIrol the situation without it. the Stock
E2change committee, of which I am chair
man would urge that the money commit
1ee coosluer the advlsability of having this
"un,l'onhi margin requirement withdrawn
ne decision Of the money commtte
was not expected in Wall Street. I
TACT. 1t was reported last week tha
such step would probably be taker
IN view Of changed conditions. Thi
ls the second step taken inside of
week toward removing restrictions ur
on the money market. the commtte
last week having made it possible 70
houses engaged in the business of dis
tributing bonds and notes to increas
their loan accounts.
Will Aid Some Houses
Brokers pointed out yesterday, this
the restoration of the old margin basi
on loans, while step toward furthe
relaxation of the artificial control c
the market. would in no way increas
the amount Of money that would b
made available for stock purposes. Tn
amount that will be available will sti
be limited by the old restrictions
The only difference VIII be tha
houses borrowing from the banks wi
be required to maintain a margin b,
tween the amount OF the collateral an
he amount of the loan OF 10 pc
cent less. This it was asserted, woul
p.-'batly help some houses with insu.
Scient collateral to meet the require