New-York tribune., 1918-08-25

~ purposes essential?
This query burst into Wall
Street like bombshell during the last
week. The news that certain leading
bankers had addressed such an inquiry
to the Federal Reserve Board thor
oughly aroused the financial COM
munity. The essential or non-essential
character of loans to finance Stock Ex
change transactions and the carrying
Of securities became a topic Of uni
versal discussion in the district for
several days.
Of course, 1t was nothing new for
the Stock Exchange to be challenged.
1t was not unprecedented for a sug
might not be most essential. But even
in these momentous days, when this un
expected has become the usual, it was
distinct novelty for an inquiry re-
garding the essentially Of loans for
Stock Exchange purposes to come from
certain of Wall Streets foremost
bankers.
If the news Of the query stood alone
without sketch Of the background
which gave it point, an outsider might
at first be tempted to think that Boil
shevism had filtered into the financial
centre Of the world. 1t might readily
seem under such hypothetical circum
stances that an agent of Lenine had
stealthily wended his way into the Of
fees Of several of Americas financial
giants and convinced them that ALPS
wrong with the world.
Why Bankers Asked
For a Ruling
Such, however, is not the case. A
sketch of the underlying reasons
which caused such a question to be
asked, the spirit in which the inquiry
to the Federal Reserve Board was made,
the attitude of representative bankers
and brokers to the request for informa
tion, and the significance that a de-
cision on the part of the Federal Re-
serve Board to classify loans accord
ing to their essentially might have on
the stock market and on the general
credit of the nation-to throw light on
these aspects Of the situation is the
purpose of this article, which is de-
signed to record events and opinions
impartially and not to pass judgment
on the merit of different views.
To begin with, no authoritative group
the Stock Exchange is non-essential 1t
is conceded all around that the market
serves useful economic function and
that to destroy it, especially in war
time, would have serious effects on the
financial health of the nation and the
people.
The desire for information as to
whether Stock Exchange loans were
essential did not spring in the least de-
gree from opposition to the exchange.
The mere fact that the inquiry was
made by certain of Wall Streets lead
ers dismisses that suggestion immedi-
ately. Behind the-puestion was the pa
triotic inquisitiveness which wanted to
be told authoritatively how much sac
ritice-in a financial way-would be
necessary to win the war. There was
no hint that it might be wise to cancel
all loans, but merely a request that the
various kinds Of loans for Stock Ex-
change purposes be classified according
to whether they were more or less es-
desirable to know whether loans for in
vestment purposes were essential and
whether those for excessive speculation
and stock gambling were non-essen-
tial.
In other words, the seekers after in
formation wanted to know more def
nitely what the Federal Reserve Board
meant when it said in its current bull
letin: "The board called especial at
tention to the fact that it would be nee
essary to distinguish clearly between
loans for the support of essential busi-
ness and those which are clearly not
needed for the prosecution of the war
or for the health and necessary COM
fort of the people"
A canvass of representative bankers
revealed that not every banker felt the
necessity of further definition of the
relative need of loans for Stock Ex-
change purposes. A very important
group felt that it already had suf-
fciently clear ideas on the subject, and
among the brokers-wel. thew whose
very existence, according to some In
terprctations of the query, was threat