The Caldwell tribune. [volume] (Caldwell, Idaho Territory [Idaho]) 1883-1928, 1919-07-18
Business and Finances

New York, July II, 1919.

New York, July II, 1919.
Sensational reports of ~ per cent
r.te for call money in New York, the
h;ebest rate since the Inauguration of
,he Federal Reserve System in 1914,
mist not be interpreted as an index
nf prevailing money rates for any ex-
tended period. In fact the rate was
rot reached until after the close of
Monday's stock market, when, it was
reoorted, a few millions were loaned
at the high rate. In partial explana-
t;on of the furry in the money mar
let it may be said that the govern
rnent had withdrawn some OF its de-
nos;ts with the New York banking
institutions and that further calls
we're likely to be made during the
week. A great deal of stock exchange
business had accumulated over the
bol;days, making the opening day an
exceedingly heavy session and &C
Counting for the more than 100000
shares which changed hands on that
day.
Manv 30 IL are unable to compre-
bend the apparently exorbitant rate
paid by active traders in Wall street
Tor demand loans on stock exchange
Collateral. By a special law call rates
in New York may be made at any
figure agreed upon between borrower
and lender, and, in the last analysis,
is determined by the demands of gen
eral commerce for credit. The first
care Of all good banks being for their
mercantile customers, the buyer and
seller of securities for profit must pay
the market price for credit after the
merchants needs are supplied.
Under the Federal Reserve System
scarcity of credit for mercantile uses
in normal times is thir~ of the past,
for. whereas in the old days each
bank carried its own legal reserve,
now the legal reserves have been
safely lowered, and the Federal Re-
serve bank is their custodian. Should
a bank need credit for customers
uses it has but to re-discount the
paper in its portfolio to restore loan
ing capacity.
Money flows to the source OF high
est return, and thereby an abnormal
Wall street money rate is reduced to
normal proportions. Of course, the
shifting of money for payment Of
government bond Subscriptions ere
ates a temporary ruffle in the money
market, as do the half-yearly pay
ments of interest and dividends, ami
the need of agricultural sections dur
ing harvest for actual currency to pay
labor. Bankers are almost unani-
mously of the opinion that money
rates will from henceforth remain
nearer to normal than they have been
during the July disbursement period,
and that the supply of credit, both
for commercial and for speculative
purposes, will be ample for all re-
quirements.
Stock Market.
As the stock market generally runs
to extremes, with prices never too
high for bulls or too low for bears
when they are in the saddle, it is log
ical that there should be diversity
OF opinion as to whether spectators
ale facing a period of panic or profit.
Little heed has been taken OF TIE Ic-
peated warnings and protests against
unbridled speculation, and apparently
no conception of intrinsic worth and
values of investment stocks is needed
by spectators to determine the
changing market prices of their Sc
curities. They buy or sell with the
hope and expectation OF tiuctuation,
up or down as the case may be, and
their profits are determined by the
extent of the fluctuation. Profits have
created SPECTATORS, and hence the
financial district is filled to overflow
ing with able-bodied men who ought
to be more usefully employed.
Of course the underlying basis for
the bull market is the continued i'm
provement in general business condi-
tions, for never have the recognized
business barometers been so favor
able, or business leaders so optimistic,
as they are present. 1t is not strange
that with all the forecasts of pros
perity which have been made by in
dustrial and banking experts that the
public should not be drawn into the
stock market. The announcements
could hardly have worked to any
other end, and now the predictions
which were taken bit skeptically are
BEGINNING to weave themselves into
truths and the tendency pointed Out
by the reserve board is nationwide
There has Deen no chang except for
the better in most lines of endeavor
and until there is such change i,
may be hard to shake the confidence
and the enthusiasm of the public, &C.
q -.