New-York tribune., 1918-07-14
Finance
WALL STREET OFFICE:
Mills Building, Is Broad st.

Some commentators have been
disposed to attribute the recent
weakness of stocks to the tightening
of the money markets. They argue
that the dearth of time funds on
Stock Exchange collateral, combined
with the higher rates now prevailing
for call money, has discouraged
speculative buying and persuaded
traders to turn to the bear side of
the market. But brokers have been
unable to obtain time funds, ex-
cept sporadically and in small
amounts, for many months and the
to 61a per cent call rates would
hardly act as an important check on
speculation, for in relation to the
returns obtainable on many of the
favorite mediums of speculation
money is cheap at the present
prices. 1t is obvious, for example,
that no hardship is involved in car
rying Steel common with 61a per
cent money while it pays dividends
at the rate of II per cent a year.
But while money conditions have
probably exerted little restraint on
speculation up to the present, and
are not likely to do so as long as
trading continues on such a small
scale as has been witnessed during
the last two months, there is good
reason for believing that it would
be difficult to finance big bull mar
ket such as some optimistic Wall
Street persons have been talking
about of late. 1t is probable that
such a movement would be ham
pered before it had gone very far
by lack of the funds necessary to
conduct speculation on a gorgeous
scale, no matter how strong the po-
sition Of the local banks might be.
1t will be recalled that the Fed
eral Reserve Board, in it's April
bulletin, told why, in it's opinion,
curtailment of non-essential credits
is necessary. Within the last few
days it has brought this matter to
the attention of the banks more
forcibly and directly than it did in
the bulletin. In a letter addressed
to the presidents of the various in
stitutions, Governor Harding COM
mends the banks for their generous
to the appeal of Secretary McAdoo
for subscriptions to the Treasury
certificates of indebtedness, urges
them to be equally liberal in SUBJ
scribing to succeeding issues, and
proceeds:
The Federal Reserve banks will be
prepared to place their facilities
directly or indirectly-at the dis
posal of such subscribing banks as
may legitimately need assistance in
taking their allotments The board.
however, feels in duty bound to re-
iterate that the banks can render
greater service to the country in
this connection not merely by sub
scrlblng their allotments and by using
the rediscounting facilities of the
Federal Reserve banks in making
payments, but by providing the
necessary funds for meeting paw
ments for certificates of indebted
ness purchased, by employing for
this purpose the accretion Of new
deposits, and by utilizing the funds
that may be made available by judi
clous curtailment of credits asked
for essential purposes.
Government financing, Mr.. Hard
ing continues, involving as it does
the providing of large amounts for
waste and destruction rather than
for permanent addition to the ma
tional wealth tends to imitation
and contributes to a rapid increase
IN the price of necessities" And
the only counterbalance is to he
found IN reduction of consumption
not only of goods, but of credit. for
there IS not an unlimited supply of
credit or of goods, or of man power
Wherever possible all such resources
should be conserved and set aside for
the use of the government. Credit
extended for non-cssential PURPOSES
involves the use of labor, of trans
portatlon. of material and reserves
which ought to be kept free for the
use of the government. Unrestrict-
cd credit involves unnecessary COM
petition with the government and
necdlessly advances prices. besides
impeding and delaying governmental
operations.
Business as usual" and "life as
usual" are impossible at time when
the supreme business of the country
is war, and can not be approximated
without interfering with the work of
the government and inficting serious
harm upon the nation as whole.
The staying power of the country
IN this emergency depends upon the
extent of its resources in men, goods
and gold. An unnecessary use of
credit, n needless recourse to the
discounting facilities of the Federal