The sun., 1918-08-26

Enough happened last week to ex-
cite q spirited response from any
stock market that was not held down
by the prospects Of war financing and
the extraordinary complications which
a more intensive participation by
American forces in the world war
have brought about. There was never
any reason why . banker in such a
situation should have asked the Fed
eral Reserve Board to rule whether
collateral loans could be regarded as
essential loans in the light Of Gov
ernor Harding's suggestion an to what
constituted "a judicious curtailment Of
credit" in a war market. The Gov
ernor Of the Federal Reserve Board
had already declared what every sem
sibie banker knew, that "the board
cannot suggest specific ways in which
credit should be conserved or unneces-
sary expenditures curtailed. as each
banker must determine this for him
self after comforting with the bust
ness men OF his community and after
a careful study of his local situation"
No Hard and Fast Rule.
1t was utterly foolish, therefore, to
suppose that the board should make q
blanket ruling to cover all collateral
loans or that 1t should suggest the
withdrawal of bank money from loans
based upon listed securities. Tho ex-
igencies Of war have forced the Gov
eminent to extend its control over
private enterprise in q remarkable
way; but it is incredible that any
banker should have expected the Fed
eral Reserve Board to do his thinking
for him, or to instruct him how to
conduct his business at a time when
constantly shifting conditions make 1t
necessary to deal with nc 81! problems
almost hourly. 1t is not for the Fed
eral Reserve Board to instruct the
banks what to do in such a situa-
ton, beyond the suggestion OF a SEN
sible policy which 1t has already pro-
posed. The New York bankers have
handled the situation admirably and
through the fundamentally Of the So
called money pool they have been
careful to increase the supply Of loan
able funds whenever the money mar
ket became seriously strained. But
they have properly declined to finance
broad speculative movement on the
lines of the autumn of 1916. reallxing
that such operations would be not
only hazardous but in the highest
regrse unpatrlotic at q time when
the Government was calling upon the
banks for temporary advances aggre-
eating $1,000,O00,O00 a month. The
New York bankers are competent,
therefore, to deal with this situation
without recourse to ruling by the
Federal Reserve Board, which in the
last analysis could do little more than
ask the banks to continue the eau
tious lending policy which they have
followed since the United States en-
tered the list Of belligerent nations.
Little Speculation.
The stock market has made no re-
Spouse to the remarkable successes
achieved by the allied forces in
France, although the incentive for a
sharp rise in prices has been the most
compelling observed at any time since
the world war began. The public,
however, is not in the mood to specu-
late. although it is watching the sit
xytfh fet vfll ha
heard from in no uncertain way after
the money market complications have
been adjusted and the new tax sched-
ules have been announced. Trading
has been almost wholly professional,
but no attempt has been made to start
the speculative ball rolling, owing to
the disinclinat!on of the banks to in
crease their volume of time loans. at
the moment when the Government
was borrowing so much money. No
broad speculation can be attempted
while these conditions prevail for ex-
perienced spectators would never
think Of entering upon a campaign
for higher prices without protecting
their commitments by securing large
loans for fixed periods. No bull cam
paign was ever financed with the use
OF call money alone, for with it the
spectators would be always at the
mercy Of the banks. Until the money
situation becomes sufficiently easy,
therefore, to Justify the banks in en-
larging their loans on time. it Is SAT.
to say that Wall Street will not see
thoroughgoing bull market. No one
need ask the Federal Reserve Board
for light on that point. A little hard
thinking will suffice.
Rise in United States 81 Per Cents.
The new high price level touched
last week by the first Liberty Loan
3h2 per cent. bonds reflected the broad
demand from individuals and corpora
tions having very large payments to
make under the proposed system OF
increased Government taxation. This
movement was coincident with the
publication of Washington dispatches
indicating that the Government was
planning to float three war loans ag-
gregating $4,000, 100000 during the
next twelve months, IN addition to
raising $4,000, 100000 through taxa
ton. Almost at the same moment
Secretary McAdoo was quoted as say
ing that those who sold their Liberty
bonds when they were not compelled
to do so were "quitters" and were
acting uHpatriotically. These stric-
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