The sun., 1918-10-25
BANKERS MOVE TO
CURBSPECULA7D0N
Will Require 80 Per Cent
Margin on All Regular
Loans After Nov. 4.
AIM TO CONSERVE CREDIT
Expansion Of Trading in Stock
Market Causes Restric-
tive Measures.

A new step In the direction OF con.
servation Of credit, curtailment Of
loans and check of speculative ACTIVITY
was taken, yesterday by the money
committee. cts chairman. Benjamin
Strong, Jr,, governor OF the Federal
Reserve Bank OF New York. announe.
ing that on and after November 1 the
banks would require for the time being
so per cent. margin on all regular
loans and an increase In margin on
other loans. The margin had been 20
per cent. on regular loans. and the new
requirement increases that margin By
so per cent. with a corresponding In.
crease on all other loans.
Gov. Strong's announcement took thu
form OF letter to II. G. s. Notl.
president Of tho New York Stock Err
change with a request that he com.
municate the information to all mem.
bers of the exchange. 1t was written
by unanimous authorization OF the
members OF the money committee. The
letter shows that the action was taken
to prevent further expansion In the loan
account, and the statement was mads
quire It the committee would find 4
desirable to recommend a further IN.
crease in margin.
For the last week the stock rnarse,
has shown old time activity, with million
share days the rule rather than the ex.
ception. This, the letter says, resulted
in a considerable increase in the loan
account notwithstanding the measure.
that had been taken to suppress II. The
money committee watched the situation
with care and has held daily meetings to
find the best way to curb speculation
with the consequent increase in loans
Until yesterday the committee was un-
able to find a solution or to agree upon
the move, which must be drastic, yet
delicate enough to prevent hardship Al
ter the devotion of more than twenty
hours to this problem the money CON
mlttee went into yesterdays session re.
solved to settle the matter one way or
another.
At ESQ the members OF the committee
assembled and went into another see-
sion. and In half an hour the COMMITTEES
summoned four OF the leading members
Of the New York Stock Exchange, who
learned at first hand of the money COM
mittees momentous decision. These men
were II. G. s. Noble. president OF the
New York Stock Exchange; James
Mabon. a former president; Winthrop
Burr and Henry K. Pomroy.
The letter points out that the money
committees only care Is to proven, un-
due speculation and that the action Ia
not to be construed as the expression NJ
airy view as to values as represented BY
the current prices OF securities II was
learned unoi1icially that last September
when the money committee issued It's
first warning against undue" specu,a.
ton and when the daily statement Of the
amount OF brokers' outstanding time
and call loans was first requested Tie
total amount of these loans was close 70
$500. 600. 900. Within the last few days
the aggregate has Jumped between :S
and 80 per cent. and in some indtvidua.
cases the increases have ranged from
so to 100 per cent. The greater part o.
this expansion in loans has occurred this
week. for the bank statement issued las.
Saturday and showing the actual con
dition on Friday showed a decrease IN
the loan item.
The letter refers TO the increased bur
den upon the credit resources Of TIA
country by reason OF the financing o.
! the Fourth Liberty Loan and to the Fac.
that the future financial requirements
OF the Government will impose further
burdens upon the money market. !.
says nothing regarding fine financing O.
essential industries, which some bauS-
ers estimate will require $500 100000
within the next two or three months, AMI
| nothing regarding the financing Of rail
| road requirements, which. Il Is est
mated. will run into an equally large
| figure.