New-York tribune., 1918-08-26

There were several things OF more
Athan casual interest in connection
with the stock market last week, but
perhaps the most interesting was the
fresh demonstration of underlying
strength. Confronted unexpectedly
with news that certain local bankers
had asked the Federal Reserve
Board to settle definitely the long
debated question of whether Stock
Exchange loans are essential, trad
ers were frightened into selling
stocks on a rather large scale. All
that happened was slight decline
in the general level of prices, and
that was checked before the day was
over. True, the market was narrow,
but selling pressure ordinarily would
have greater effect on narrow than
on broad market. That it did not
this time may be attributed to the
general belief that the market has
discounted nearly everything that
can happen, even the restriction of
stock market activity to the light
volume witnessed in most recent
sessions. At the end Of the week
the volume of trading expanded sud-
denly, and prices moved upward to
new high levels for the year in Il
great many cases-notably United
States Steel common, which sold at
11412, against the previous top of
113%, reached in the boom that cul-
minated the middle of last May. Sat-
urday's turnover far exceeded that
of any full session during the week,
and this gave rise to hopes that a
much broader market might be in
the process of development. But it
should not be forgotten that even
those bankers who were most
strongly opposed to the classification
of Stock Exchange loans either as
essential or non-essential were
equally firm in their statements that
the funds to finance a big market
would not be provided under present
conditions. Therefore speculation
on an important scale is, temporar-
lily at least, probably out of the
question.
No matter what the attitude of
the Reserve Board may be toward
Stock Exchange loans-and it will
no doubt be Influenced in reaching
decision, if it feels that a formal
ruling is required, by the excellent
manner in which the local money
committee has handled the situation
1t is certain that some additional
measures will have to be taken if
the board hopes to make it's plans
for the general conservation of
credit very effective. The banks are
handicapped in several ways, but
mainly through lack of authoritative
classification of businesses and the
degrees to which various enterprises
are essential. For illustration, take
an actual case. One day last week
customer Of a large bank, whose
business might be classified as at
least partly non-essential, requested
loan of $4,000 in addition to the
credit that had already been granted
to him. This bank, as it happens, is
one of those which examines all ap-
plications with the view to determin-
ing whether or not the loans asked
are for essential purposes. 1t decid-
ed in the case referred to that the
loan was not necessary to the prose-
cution Of the war or the comfort
of the people, and accordingly re-
fused it. But that was not the end
of the matter. The customer prompt
ly transferred part Of his account to
another bank, which was willing to
take advantage of the situation and
agreed to lend the $4,000. Incl
dents similar to this are of every
day occurrence, bankers say, and
consequently they are much more
cautious in carrying out the Re-
serve Boards policy than they would
be otherwise. One banker suggests
that if the board would create local
committees to which questions relat-
ing to the character of the loans
might be submitted they could ac-