The sun., 1918-08-19

This Is the week when the money
market ordinarily develops interest
Ing demands in connection with the
movement Of crops at the West
heavy financing by corporations and
the large number Of mercantile trans
actions which have to be arranged fol-
at this season. The situation this year
has been made a hundredfold more
Interesting than usual by the efforts
Of corporations and individuals to ad-
Just their expenses in accordance with,
the extraordinary tax burdens and by
the campaign undertaken. by various
public bodies to cut out unnecessary
borrowing. The money market situa-
ton, therefore. is wholly unprecedent-
ed and must be Judged in connection
with the provisions to supply first OF
all $5o.000.000 a day for the military
needs of the Government.
Effective Safeguards.
| In such a situation 1t was natu-
raj that Wall Streets famous money
committee, which came into existence
fifteen months ago at the time when
the First Liberty Loan was in progress
should have resumed lending opera
lions last week. The War Finance
Corporation also became an active
factor in the money market by low
ering from per cent. to its inter-
est charge on temporary loans to
banks to cover advances made TO
farmers and merchants in connection
with the marketing Of wheat and other
crops. This move was of great i'm
portance and will enable banks every
where to realize up to rs per cent
of the face value of agricultural paper
maturing within four months. The re-
discount facilities of the Federal re-
serve system are also being used to
good advantage in connection with the
harvesting arrangements and the day
to day requirements of American
business men.
Relief Agencies.
Although the demands now made on
| the money market are unparalleled,
the relief agencies are more numerous
| than ever before and fully adequate
| for even the needs Of a war market.
The country's bank position is splen-
didly safeguarded and through an I'M
| precedented gain in foreign gold since
| the European war began a reserve
basis has been created to support a
vastly larger loan expansion than has
yet taken place. These unused lend
| ing facilities are Of great Importance
| and provide a sort OF credit insur-
ance for the whole borrowing COM
| munity. But there Is nothing in the
| situation to suggest that the banks
could respond to the Government de-
mands and support in addition an ac-
| tive speculative campaign In the stock
market. This was why a rise in stock
market prices was checked 80 abrupt
| ly last week at the moment when
public participation appeared to be
broadening and there were signs Of re-
newed speculative enthusiasm.
Checking Speculation.
There are many reasons why good
securities should command higher
| prices, and It is probable that specula-
| ton by this time would have developed
| interestingly had it not been for the
necessity of heavy Government bor-
rowings. This demand comes ahead Of
everything else, however. and is the
| overshadowing influence in a money
market which is about as abnormal
| AS any money market ever was. No
taxpayer knows yet what proportion
Of his income will be taken in taxes
| by the Government next year when
| the income and corporation taxes .are
paid The tendency Of most corpora
| tons will be to make generous APP
preparations for the tax fund. with
! the result that the Accommodations will
| be larger than are actually needed.
| Similar precautions will be taken by
| individuals in the effort to finance
an unknown demand. The probability
| is therefore that much of the fund
that Is being accumulated will be in
vested in the forthcoming issue of
certificates of Indebtedness, which the
Treasury will accept in payment for
the new taxes.
Paying Government Bills.
With Government expenditures at
virtually the high level OF the war
period it is of the utmost importance
that disbursing officers should eXpe-
dite as far as possible the payment of
| bills for war material. An immense
amount of money is tied up in these
contracts, and since the banks are con-
stantly asked to make large advances
TO manufacturers and contractors in
terested in this work 1t will be OF real
assistance to the money market II
the bills are paid with the utmost