New-York tribune., 1918-11-01


Mills Building, IS Broad st.
Much Of the criticism aimed at
the money committee is unfair. The
committee is in an unfortunate posi-
ton. Whatever it does is bound to
I be unpopular, since any action it
takes is necessarily restrictive. But
to imply, as one critic does, that the
committee exceeded it's jurisdiction
III restricting loans at all is absurd.
10 charge that it's actions were
based on improper motives, as has
been covertly done. is worse than
absurd. No one whose opinions are
worthy Of respect would seriously
question the motives Of the money
committee. 1t is not impossible
that some individual advantage was
taken Of the situation, but to cast
aspersions on the integrity of the
committee as a whole is outrageous.
The fact is the local bankers
have been under pressure from
Washington for long time to bring
about the curtailment of Stock EX-
change loans, in order that credit
might be conserved for more essen
tial uses. Whether there is need
for such conservation may be a de-
batable point, but it is still true that
the Federal Reserve Board, quite
properly, as we believe, has insisted
for months that loans for non-pro-
ductive and n-distributive pur-
poses must be curtailed. The money
committee has merely carried out,
to the best of it's ability, the credit
conservation programme of the
board
Unfortunately, however, it seems
to have done the right thing in gen.
eral, but by means that were easily
misunderstood. When the acting
chairman Of the money committee
issued the first warning against cx-
pansion Of stock market loans, at
the end of last August. the Street
had been prepared for some such ac-
tlon and accepted the pronounce
ment more or less philosophically.
Nor was it inclined to criticise the
committee when, on September g.,
the first statement was supplement-
ed by another in more forceful
terms and by a demand on all Stock
Exchange houses for daily reports
OF their borrowings. These reports
began to be filed on September 8.
and the money committee had,
therefore, from that date forward a
complete record of the loan position,
not only in the aggregate but as to
the borrowings Of the individual
houses. The Stock Exchange au-
thorities very properly forwarded
the. reports of the individual houses
to the money committee under seal
and without examination, because
they rightly believed that it would
be a violation Of ethics to examine
the returns. 1t remained, therefore
for the money committee to see that
its rulings We're enforced.
But, in spite Of the fact that all nee
/ essary information was in its pos
session from day to day, it did moth
ing to check loan expansion as fa1
as is known, and when the demand
for stocks, stimulated by highl!
favorable war news and peace nego
tiationss expanded until trading eX
cceded million shares day aftel
day. there was no lack Of money fol
speculation. The houses which asket
Tor credit got it, although in this col
umn and elsewhere the attention O.
the money committee was many
times called to the fact that the re
strictions it had imposed were obvi
ously being violated. Without hin
drance or warning good man.
houses became "over-eXtended" In
deed. it was assumed in some quar-
ters that restrictions had been aban
doned
1t is contended that the none,
committee was not to blame 10
| thiS--that all it was interested ii
was in keeping the total Of loan
= down, without regard for the Dor
[ rowings Of the different houses. Blu
the plain fact is that only the com
rlittee possessed the information
and power necessary to restrict tn
! borrowings OF individual houses
! and in failing to exercise this powe
they permitted a very large eXpan
! sion in loans--an expansion esti
. mated by one banker at more thai
S400.00O.000. Then, when they di
act, it was in such way as to fore
liquidation and injure those VIII
had lived up to the letter and spiri
of tbe restricriOpS 40 xrell aS thOs