New-York tribune., 1918-10-25
Money Committee
Clamps Brakes on
Stock Speculation
Margins on Loans Raised
From 20 to 30 Per
Cent
May Increase Again
New Restriction to Become
Effective ON Novem-
Der 4

Benjamin Strong, acting in his Ca
pacity as chairman Of the money com
mittee, yesterday afternoon announced
that there had been undue specula-
ton" on the Stock Exchange, resulting
in considerable increase in the loan
account, and as a corrective measure
recommended to the banks that mar
gins on loans for Stock Exchange pur.
poses be increased from the customary
20 per cent to 80 per cent beginning
November a. A letter from Mr.. Strong
to II. G. S. Noble, president Of the
Stock Exchange, revealed the decision
OF the money committee after four
protracted conferences this week on
the effect Of the recent broadening
stock markets on the credit Of the ma
ton.
The text Of the letter follows:
The reports now being made By
the members of the New York Stock
Exchange disclose d considerable III
crease in the loan account, although
advices from the money committee
have been that. having due regard
to the financial requirements of the
government, there should be no in
crease in borrowings for Stock En-
change purposes
The financing Of the fourth Lib
erty Loan will impose d burden upon
the credit resources Of the country
materially larger than the financing
OF any previous loan, and the future
financial requirements Of the govern
mcnt will impose further heavy bur
dens upon the money markets. In
view Of the current increase in the
amount of Stock Exchange loans, the
money committee deems 1T necessary
now to take steps to prevent a further
expansion OF such .oans, and will
forthwith recommend 70 the banks
that for the time being 80 per cent
margin be required OF all regular
loans instead Of the customary 60
per cent margin, and correspond
ing increase in margin on other
loans, these increases to be made ef-
fectivc on and after Monday, No
vember 4, 1918. The committee may
later find it desirable to- recommend
further increase in margins.
1t is hoped that this measure will
prove effective and that advances in
money rates may be avoided.
terms for loans growing out of sub
scrptions to and secured by bonds
of the fourth Liberty Loan, and tho
recommendation of this committee
are not TO be construed in any way
as referring to such transactions.
1t should be clearly unders TODD
that the present recommendation or
any future recommendation by the
money committee is not to be con-
strued as expressing any views as
to values represented by current
prices of securities, but is designed
solely to conserve the public interest
by preventing, in SO far as possible,
undue speculation at time when
the credit resources of The country
must be marshallcd for the use Of
the government in carrying out its
war programme.
At your suggestion we are inclos-
ing with this, under sealed cover
list showing the increases and de-
creases in the total loans Of each re-
porting member Of the exchange
since the date when reports we're
first completely made, and desire to
express our appreciation Of your
proffered cooperation.
copy Of this letter is being given
to the press, and l would thank you
to promptly make known the con-
tents hereof to the members Of the
Stock Exchange.
Suspense for Two Days
This statement of the new policy Of
the money committee was issued at 5
o'clock in the afternoon. For two days
stock traders and the public waited in
suspense for news of the committees
conclusions. The atmosphere of Wall
Street was heavily laden with rumors
and reports. As result The move
mcnt of stocks was again Irregular yes
terday. The opening was uncertain, but
toward the middle of the trading ses-
sion the tendency was clearly down
ward until declines of l to 2 points
were common. Later a recovery came,
and many Of the active shares closed