The sun., 1918-09-02

The extremely interesting develop
ments in the financial situation last
week had chiefly to do with the ar
engagements by the Government to
finance the fourth Liberty Loan and
the efforts Of New York bankers to
assist every detail of the we'll directed
Treasury campaign. This sort Of CO.
operation represented the most splen-
did generalship that the New York
money market has ever seen and
means that the sixty banks allied In
Wall Streets money pool--in all re-
rpects the strongest and most power
full money pool ever formed in this
making every other form
Of financing subservient to the Gov
ernment's appeal for funds with which
to finance it's part Of the terrific world
war.
Ahead.
Every banker capable of thinking
straight in a national crisis must in
dorse the stand taken by Gates w.
McGarrah. chairman OF the Money
Pool Committee, in declaring that ANY
disposition to indulge in speculative
commitments, based on borrowed
money. must Of necessity lead to an
Increase in rates that will prove cor
rective." This means simply that call
loan rates will be pegged at per
cent. only 80 long as speculation is
held in check. and that any attempt
to start a bull campaign for higher
prices will lead to a sharp advance
sible way Of dealing with an over
wrought money market situation. and
recalls the procedure followed by the
late Frederick d. Happen. who was
in control of the Clearing House Loan
Committee during every money panic
that occurred between 1893 and 1901.
Mr.. Tappen invariably lent out pool
money at the highest prevailing rate
and declined. when relief committees
were formed. to make heavy advances
at 6 per cent. until a greatly decreased
demand justified the naming of a
normal rate for call loans.
Guarding Against Initiation.
II money market conditions in those
days called for the adoption Of strong
measures the situation to-day. which
Is a thousand times more complicated.
demands the most painstaking effort
to conserve the supply Of loanable
funds. Any other course would lead
to serious imitation and ultimately to
nationwide unsettlement in money
market affairs. 1t is fortunate, there
fore, that the mechanism Of the money
market is In control OF men with
vision enough TO realize what it means
to finance the Government through
the most expensive OF all wars and at
a time when excessive costs Of living
and doing business impose unprece-
dented burdens upon the banks. Would
not the New York banks be exposed
to the sharpest criticism II they were
to make large advances to support
speculative activity In the stock mar
ket at a time when the Capital Issues
Committee at Washington was turn
ing down hundreds Of applications for
loans from hard pressed industrial
corporations? In such a situation il
is eminently proper for New York's
great 100000, 900 money pool to scru-
tinize every loan application with the
idea of safeguarding the country's
bank position during the period oil
huge war financing when total Gov
eminent demands surpass all similar
borrowings in the history of world
finance.
Underwriting Civilization"
The inquiry for high grade securi-
ties is charging along strictly invest
ment lines. The public is becoming
interested in the market In limited
way and only to the extent that il has
surplus cash over and above the funds
required to make the fourth Liberty
Loan operation a loud enough success
10 be heard from New York TO Berlin
This great loan must go strong
whether the interest rate be Az pei
cent. or ! per cent. A subscription &c
this loan is equivalent to a premium
for insuring the continuance OF civ
ilization and supporting the policies
OF Woodrow as against the policies o.
Wilhelm II is not q question Of
sentiment, therefore. but hard bushes:
sense for the people OF the allied ma
tions must contribute every dollar tha
their Governments require to insure
the success OF their military cam
paign. But the wealth OF this natior
Is so great and the reserve accumu
lations Of the last four years have
been so generous as to enable thu
people to make heavy investments II
other securities than Liberty bondi
and the Governments Temporal.
leans. But the Government must come
first of all, irrespective of how grea
its demands may be, in all these finan
cial operations.
War News as Market Factor.
The news from the western from
has been about as rea assuring as an,
war news could be in these days of in
tensive lighting. The markets hav'
largely ignored 1t not because the pub
lie did not appreciate its mportanc,
but because 1t was too much takeI
up with other things to interest II
self in speculation. The liability o
brokers to secure their l. suppl,
of time money has made g. impossible
for them to furnish their customer
with the facilities for speculation
which otherwise they would have beer
glad to provide at 4 time when de
yelopments In the war area APPARENT!
Justify a spirited upward response