New-York tribune., 1919-10-20
In Wall Street

ried tho level Of the Industrial stocks
to new peak a week ago slowed down
last week when Wall Street finally
came to realization OF the serious
! nature of the stringency in stock mar
ket money. Speculative borrowers
were forced to pay high prices for
credit accommodation all the week.
Rates touched Is per cent one day last
week and on Thursday and Friday call
loans renewed at the extremely high
level Of 10 per cent. While high
money rates did not in itself check
the advancing tendency in prices, the
possibilities Of further reduction IN
the available supplies of credit for
speculative purposes through con-
certed action by the banks were
enough to bring 8 slackening Of the
buying and increased profit-taking
as we'll as professional selling for tho
Ddeclinc. 1t was. however, q very err
ratio market, particularly in the in
dustrial specialties, which in many
cases touched new high records; but
on tho whole the performance was
more orderly than the week before,
when speculative enthusiasm reached
the highest pitch since the recovery
began.
Public participation in stock trad
ing fell off perceptibly, putting the
market back into the hands of the
professional element. The experience
of last June and July, when stringency
in money not only checked the rise
in speculative security values but was
the forerunner of q severe decline,
appears not to have been forgotten by
the public. All sorts of rur-ors were
current last week in connection with
the persistency with which money
rates were held at abnormally high
levels, some of them charging the
financial authorities with deliberate
attempt to apply q brake to the rising
wave of speculative enthusiasm. While
such rumors appear to be unfounded,
it is a fact that the banks do not
favor the further expansion Of the
stock market loan account at this
time, for the reason that they are still
borrowing heavily at the Reserve Bank
through rediscounting. And SO long
as they continue to do so they feel
they should not go on offering un-
limited amounts of credit for use in
the stock market, however attractive
the rates may be. To continue to re-
discount their paper at the Reserve
Bank on a large scale and at the same
time encourage the expansion Of the
stock market loan account would
probably bring criticism from the
Federal Reserve Board At Washington.
Beyond question a real shortage Of
money existed last week. This shortage
first began to show itself the latter
part of September and has become
more serious since, particularly so, in
asmuch as the expanding volume of
trading in speculative securities has
required larger amount of credit for
financing day to day operations. Bank
ers in touch with the situation in the
money market attributed the shortage
largely to the heavy transfers of funds
in recent weeks to the interior, where
crop-movirg demands are now at the
peak of the season. One week alone
this month approximately 100000, 900
in gold was transferred to interior in
stitutions through the medium of the
gold settlement fund of the Federal
Reserve system. At the same time in
terror banks, which normally carry
large amounts on deposit here with
correspondent institutions, much OF
which is put out on call as tenn.
porary Investment, have been with
drawing such deposits for use in con-
nection with crop-moving. In time
these funds will begin to flow back to
New York, and it may be that this week
will see the beginning of the return
movement; but until that takes p &C
little hope of any pronounced ease in
Wall Street money can be entertained
There were other restraining in.
fiuences at work last week to check
the rising trend in security market
values, although they were secondary
to the money shortage, so far as being
directly responsible for the slowing
down of the market. At the beginning
of the week some perturbation was
caused by the doubtful reports re-
garding the nature Of the illness o1
President Wilson. This served to cause
hesitation, while another factor exert
ing similar influence was the labor
situation. which unsettled sentiment
For a time fears we're expressed tha
the industrial conference at Washing
ton from which much has been ex
pected in the way Of settlement O.
the differences between labor and cap
ital, might break up without results
The serious situation in New York will
regard to the strike of the longshore
men added to theuncertainty. but towart
the end of the week these influence
gave way to the money stringency a
a disturbing factor. At the end Of tn
week many observers held that no
much mere than professional tradin,
market can be looked for until easie
money is in sight and the other un
certainties are removed. In certai
banking quarters predictions wer
made that the top Of the general ad
vance in industrial stocks had abou
been reached, although it was admitte
that individual issues may 60 highe
owing to special reasons.
1t is quite plain that the banks, i
keeping with the policy laid down sew
: eral months ago by the Federal Re
serve Board, are doing all they can t
insure an adequate supply of CONNER
cial borrowers. This, of course, is be
ing done at the expense of the stoc
| market which is nrnner Last xea1