New-York tribune., 1918-08-22
Finance ECOnO171icS
WALL STREET OFFICE,
Mills Building, IS Wall st.

1CS OeClSlOH OIL Cnc issue CndC mas
been placed squarely before it BY
local bankers will be of greater i'm
portance to Wall Street than any
single thing that has happened since
the United States entered the war
Until the board settles the question
that has been agitating the financial
district since last April, when the
campaign for credit conservation
was launched, such things as heavier
taxation and price fixing, and posi-.
bly, even war news, will be regarded
as of minor Importance. For if the
board should decide that such loans
are non-essential, the death-knell OF
large scale speculation will have
been sounded. Without funds q
great speculative movement such as
that which eliminated in December
1916, would be impossible. The
best that could be hoped for would
be a market of some such volume
as has been witnessed in the last
three or four months.
It is, Of course, impossible to
foretell what the decision will be,
but it is significant that the board
has stated that loans for non-pro-
duction and non-distributive pur-
poses are non-essential, and that
among such loans are those for
purchasing or carrying property,
whether real estate or personal Sc
curities" When this statement was
issued The Tribune asked the board
for a definition Of the term "per-
sonal securities" and was informed
by the chief clerk that it "was IN
tended to cover simply stocks and
bonds" Seemingly, therefore, the
board favored the curtailment of
loans for speculative purposes when
it issued this statement last April.
Whether, with two Of its leading
members eliminated, it's attitude
would now be the same is question
which time alone can answer. In
any event, Wall Street will not be
surprised if the decision should be
averse, for it is realized that essen
tial industries must get all the credit
they require, even if spectators are
put on thin rations.
We are informed that a statement
in this column to the effect that
local banks have reduced loans to
essentials is not in accordance
with the facts; that the Federal Re-
serve Boards appeal for the con-
servation of credit has met with
little response or at best respons.
so small as to be negligible. Prob
ably there is something to be said
on both sides. Some of the banks
undoubtedly have ignored the ap-
peal, while others, perhaps minor
ity, have made an attempt to meet
the boards wishes as far as they
were able to do so under the circum-
stances. But it is true in the main
that the results of the campaign
have thus far been meagre, and un-
fortunately there is no indication
that it will ever meet with success
as long as reliance is placed solely
on exhortation. If the board were
to support it's propaganda with a
definite classification of industries
the campaign would doubtless be ef-
fective, but that seems to be out Of
the question in most cases. The
one which it now has under consid-
eration-namely, Stock Exchange
loans-is much easier to decide than
those which would affect commercial
credits, in which the matter of de-.
gree is an important factor. A
noted economist remarked yester-
day that there was only one bust
ness which he feels certain is 100
per cent on-essential-th impor-
tation of orchids from South Amer
lea. That, perhaps, is an exaggera-
ton, but certainly the problem of
classifying business is an intricate
one. Nevertheless, it should be un-
dertaken unless some other means
can be found of effectively curbing
the use of credit for non-war pur-
poses. Possibly the plan under con-
sideration by the Capital Issues
Committee would answer, but the
opposition to it is so bitter that it
is not likely to be adopted. Another
suggestion is that committees be
formed for each Federal Reserve
district which would act simply in
an advisory capacity. They would
pass on the character Of all bank
loans, determining whether or not
the loans were essential, but would
leave the banks free to act as thew
thought best after a loan had been
classified