New-York tribune., 1918-09-01


position now which makes it prac-
tical impossibility for them to ex-
pand their loan account. And of
course loans must be expended if
there are to be important specula-
tive operations in stocks. So there
appears little danger that the warn
ing of the bankers money commit
tee against excessive speculation
will not be observed. AS a matter
of fact there has been no real specu-
lative activity to speak of in the
market for months. Professional
traders have been swapping stocks,
but such transactions have usually
been opened and closed the same
day. eve look now for quiet
trading and speculative market" said
the member of a Stock Exchange
Yesterday. 'It will likely be about
the same kind of a market as we
have been experiencing for weeks.
No house wants to- go contrary to
the wishes of the bankers, and any
how there is not enough money to
finance a large speculative market.
If we were to-day to borrow large
amounts of money on call for our
customers to speculate with we
would find ourselves inconvenienced
almost every day by the calling of
such loans and the necessity of bor-
rowing the money elsewhere. There
will be no increase in the average
of stock exchange loans outstanding
for the period of the war. That is
certain. What will happen will be
that outstanding loans will be
shifted from bank to bank from
time to time. 1t is not improbable
that loans may decrease somewhat :"
Interesting points regarding the
money market are raised in the Ma
tional City Banks September re-
view Ol CCOuOIIlIC COuOlClOiiS III cAAS
United States. 1t says:
In normal times the fall demand
for money is just getting into full
swing on September l, but this year
the seasonal requirements have come
earlier, as result of the early
movement of the great wheat crop
and the general inclination to be
forehanded in replenishing stocks.
The demand for the industries has
been increasing through the summer,
and money would be very tight if the
supply was restricted to the old
time facilities, but with the spillway
for demand into the reserve banks
the pressure is scarcely noticeable to
the public Accomm odations are OBJ
tainab!e for all approved purposes
and interest rates are kept at level
which is artficially low, considered
in relation to the demand for money,
the general level Of prices and the
other conditions. The supply of
"money" is increased to meet the
demands by means of the credit ma
chinery which has been provided.
We see no reason to expect that the
demands will fall off or that the
credit machinery will fail to take
care of the new demands. As a re-
suit of the rapid movement of sthe
wheat crop the sections in which it
was produced will liquidate indebt-
edness and have some free capital,
but the wheat will have to be car
ried somewhere until it is eaten,
and the cotton crop is coming to mar
ket at the highest price level on
' record.
The bank sees limitations upol
the use of credits, however, AM
warns against imitation, pointing ou
that it must not be thought that tn
Federal Reserve system and tn
War Finance Corporation, or an,
other agencies that may by devise,
for creating creditor any addi
tions to the gold reserves-will en-
able us to go on multiplying credit
indefinitely without i'll results.
adds:
Bank credit, like paper money, is
a facility which within limitations
is useful in promoting production, but
neither paper money nor bank credit
can be used except to put the physi-
cal agencies of production into eff
fective use. If the industrial equip
ment of a country is not working to
full capacity, if land is going untitled
for lack of labor while labor is with
out employment, if cattle are dying
in one section for want of feed, or
being forced upon the market in unfit
condition, while in another locality
there is feed for sale in abundance:
or wherever production may be in
creased by the use Of agencies now
idle, then crdit may be profitably
employed. But when all the physical
agencies of production are already in
full use the attempt to use more
money or credit spends itself in driv-
ing up wages and prices.
Precisely that situation exists to-
day. We say that high costs and
high prices make it necessary to
use more credit, but it is equally
L oc