The sun., 1918-08-23
FINANCIAL NEWS
AND COMMENT
Market Breaks on Impression
Security Trades Were to Be
on Cash Basis Only.
THE BELIEF ERRONEOUS
Strictly Speculative Loans But
Seven Per Cent. of the
Aggregate.

Traders gathered the impression yes
terday Of a concerted movement on the
part Of New York bankers to place Sc
curity trading entirely on a cash basis
from the publication OF the fact IRE
quently gossiped about in banking cir
Giles, that two more or less insurgent
bankers had written an informal letter
to the Federal Reserve Board requesting
a specific ruling as to whether loans for
Stock Exchange purposes are to be re-
garded as essential or non-essential. As
a result there was an unexpected revival
OF selling pressure, which caused net
losses for the day ranging from n to
~ points. 1t can be stated on the high
est authority that no such concerted
movement has ever been contemplated
and that 80 per cent. of the bankers are
cooperating fully with the Federal re-
serve banks and the money committee in
working along as best they can. under
present circumstances.
Seldom has a more unsound and I'M
timely suggestion been made than the
one that either speculation should be
given a freer rein or business should be
done on a cash basis, coming as II does
at the time when Government withdraw
ais are for the moment at an end. when
there is a slight relaxation in stringent
money conditions and when every effort
Is being made to induce county banks to
make greater use Of rediscounting facili-
ties. The consequences of placing the
Stock Exchange where 1t was for a few
months after the outbreak of war. APP
parently. were not taken into considera-
ton. and had the market been in a less
sound technical position or the big inter
ests not been aware that the suggestion
should not be taken seriously the re-
suits might have been serious. As II was
there was no increase in the volume OF
trading and the matter can be dismissed
a - the Federal Reserve Board did with
out further comment.
1t may be of interest to note in view
Of the limited volume Of stock transac.
tions that the Stock Exchange business
is carried on with only per cent. OF
the total loans and discounts of New
York Clearing House banks as reported
last Saturday. At present call loans in
round numbers are only $275.000,0 0C
and time loans only S40,000,00o. n total
OF s315.oo0. 900, against aggregate loans
and discounts OF $4.515,51S.000. In
other words loans and discounts for
Government. war needs and commercial
purposes amount to approximately
$4,000. 100000. or nearly fourteen times
as much as the sum devoted to stock
Exchange purposes.
Despite the increased selling pressure
net losses in the active list Of point
or more were shown only by Canadian
Pacific, Marine preferred. Mexican Pc
troleum and Norfolk and Western
Elsewhere the losses were confined to
fractions except for the rise of az
points in American Hide and Leather
preferred, and fractional net gains by
Car and Foundry. General Motors. Vir.
sinia- Carolina Chemical and one OF
two rail issues An announcement re.
garding the railway rental contract IL
bond market was heavier than or
Wednesday, with total sales of $500.
600. of which all but 100000 was In
Liberty issues. The tax exempt issue
again eclipsed previous records by sell.
ing at 102.50. On the curb the Farm
Loan bonds. also tax exempt, made a new
high record
There was no supply OF time money
md caH money, with little or no re.
course to the money pool loaned
throughout at 6 per cent. for mixed
collateral and ga per cent for all in.
dustrial In foreign exchange the fea-
ture was further weakness in pesetas
which declined % points. and in Swiss
francs. which eased . points. Francs
were firmer and other rates were steady
in a very dull market.