New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1918-12-08
Senator Owen Says Bankers
Are Considering Adoption
of Fortnightly Settlements
Would Aid Trade, Is Claim
Reduction of Rates i'm Amer
lean Discount Market to
Meet Competition of Lon.
don Is Urged

system of fortnightly settlements
for the New York Stock Exchange is
being considered by bankers and Fed
eral Reserve Bank officials, according
to Senator Robert r. Owen. In an
interview yesterday at the Hotel AS
tor the Senator said that BENJAMIN
Strong, Governor of the Federal Re-
serve Bank of New York. had recently
told him that he was in favor Of abol-
ishing the present method of daily
settlements. Senator Owen added that
he understood Mr.. Strong would take
the matter up in the near future with
the Stock Exchange authorities.
This statement came as q surprise
to officials of the Exchange. II. G. S.
Nobel, president, informed The Trib-
une that the proposal had not been
suggested to him by Governor Strong.
1t is understood that the plan, if
adopted, would be patterned after the
London usage, according to which Sc
curtes contracted for sale during the
PACSSulHS are UcllNeTeQ anu
paid for on certain days arranged some
time ahead by the London Stock Ex-
change committee. Settlements on the
New York exchange arc now made
daily.
Says Change Would be Beneficial
Senator Owen, who will sail on the
IQnl0n1 TnocIou
his proposed plan for the establish
ment Of Federal Reserve foreign ex-
change bank, said that fortnightly set
Elements would be "better for the Stock
Exchange, much better for the banks
and far better for commerce." He
added that in recent conversations with
leading bankers they had emphasized
the need of a change from the present
methods.
London has fortnightly settlement
for those who handle stocks on the ex-
change" he continued, land the New
YORK Stock Exchange, the New York
banks cooperating, should arrange
ment plan in order that the funds now
tied up on daily stock loans may be re-
leased in part to more fully accommo-
date commerce. Banks which desire to
function as servants of commerce.
should not think too largely in terms
OF the daily fluctuations of the Stock
Exchange.
az understand that the very high
money rate in New York is alleged to
be justified on the ground that a high
rate is necessary to restrain excessive
speculation in stocks. This alleged
rate is not justified, and is most in
furious in keeping up the high rate
when our domestic commerce is en-
titled to low rate. The remedy is not
justified, because the banks can pre-
vent excessive speculation by withhold
ing loans beyond reasonable limits for
such purposes"
Emphasizing the need of q broader
discount market if New York wants to
hold the commanding position in world
/ finance 1t has attained because of the
world war, Senator Owen, who is chair
man Of the Committee on Banking and
Currency of the United States Senate
declared that money rates must be
made to conform with the standards Of
Lombard Street and Paris, and that the
government should be able either by
direct ownership or strongly central
! lied supervision to direct the trade
routes OF American shipping.
"The Bank of France" he said, "is
required by it's charter to be the SER
want of the business interests of
France. The Bank of England func-
tions under its management not as
money making bank, but as the servant
of the British manufacturer, producer
and merchant. The Bank Of England
during this war. and the London banks,
have furnished money to the British
manufacturers and merchants at II
per cent Tor the vital purpose of pro-
noting the industries and the produc-
tive power of Great Britain.
"The American banks should recog-
nize similar obligation; they should
extend the use of acceptances at
rate at least as low as is allowed in
London, and should encourage COM
fore the war France and Belgium en-
joyed uniform per cent rate. Amer
lea must not overlook this.
"The banks in New York and the
Federal Reserve banking system
should establish the most intimate, cor
dial relations with London and Paris,
and New York State should encourage
by legislation the London banks to
place agencies in New York to help
make New York what it ought to be,
one of the great world financial CEN
tres. A spirit Of true cooperation
should exist between the New York
banks and the London banks, md both
should function as the servants Of
commerce."
In addition to going 70 London and
Paris, Senator Owen said that no would
also visit Rome and Madrid in his
search for data on tho European dis
coune markcts.