New-York tribune., 1918-08-25


news and the announcement that a
call money market for bank and
trade acceptances is to be started by
J. P. Morgan & Co., which would
tend to prevent the calling Of out
standing Stock Exchange loans. COM
bined with Mr.. Morgan's assertion
that he would be reluctant to call a
loan in the latter class at this time,
an irresistible argument for buying
stocks. They bought heavily and
enthusiastically, rushing prices up in
a manner such as has not been wit
messed since the collapse of the
short-lived bull market last May.
AS stock after stock reached and
passed the previous top prices of the
year, enthusiasm grew correspond
ingly and the volume of trading ex-
panded swiftly, a considerable part
Of it coming from spectators who
had previously sold short in antici-
patton of decline that failed to
materialize. The result was that
the turnover in the two-hour session
exceeded that of any fve-hour session
during the week, and at the close
prices were close to the high level
Of the day. In the ecstasy Of rising
prices the shortage Of funds for
speculation, which had restricted
dealings throughout the earlier part
Of the week, was forgotten for the
time being. Nevertheless, the short
age Of funds is a continuing factor
and one that spectators will have to
reckon with. So long as the volume
of trading remains of moderate pro-
portions there will probably be
enough money to meet Stock Ex-
change requirements, but bankers
have repeatedly stated that they
can not and will not provide the
funds for speculation on a large
scale. And it is probable that even
if they were willing to finance big
market Washington would not per-
l)it them to do so. The Stock Ex-
change performs an indispensable
function in war time as in peace. A
market broad enough to establish
values for securities is essential and
should be encouraged. But gam
bling in stocks such as was witnessed
in 1916 is not essential, and should
not be permitted when there is
urgent need of all the credit avail
able for war uses. 1t may be said
indeed, one banker has said-that
credit enough for all purposes could
be supplied simply by initiating, but
further imitation for the purpose of
building up speculation would be in
toleAble.
American banking preparations
for trade conquest after the war are
progressing rapidly. Already some
forty branches of United States
banking institutions have been es-
tablished abroad, while several
banking corporations which will
specialize in foreign business have
been formed. Equally important is
the formation of banks, similar to
the discount companies of London,
whose business will consist largely
IN discounting paper arising out of
foreign transactions. The Federal
Reserve Board is doing all it can to
assist progress along these lines, for,
as 1t says, additional accommoda-
ton and exchange arrangements will
stimulate the development of our
commercial relations with other
countries. S'In spite of the obstacles
afforded by the war and the interrup-
q tions to trade which inevitably grow
out of it," the board says in the
latest bulletin, "the conditions under
which such banks can be established
are to-day much more favorable for
making a beginning than they are
likely to be after the close of the
war. 1t is in the interest of the
country that American institutions
continue as rapidly as possible with
the mapping out of the field and the
doing of foundation work necessary
to insure the United States it's due
share of the development of the
worlds business" 1t is in this con-
nection that the creation of a call
market for acceptance here is es-
pecially interesting, inasmuch as it
may do more to stimulate business
of this character than anything that
has yet taken place.