New-York tribune., 1919-06-02
City Bank
Would Check
Speculation
Appeals TO Bankers to Pre-
vent Further Expansion
in their Loan Accounts
Credit Position Abnormal
Disaster Invited by Contin.
uation of Credits Based OH
National War Securities

The National City Bank. in its
monthly circular, out to-day, appeals
to bankers to keep speculation in
check and to prevent a further ex-
pansion of loans. 1t urges further
that at least a start be made toward
dehation, "for none but the most
superficial observers can think that
this wholesale depreciation of money
values signifies real progress"
"The bankers of the country should
recognize the present state of credit
expansion is abnormal and not to be
accepted as permanent" the statement
says. "The circulating credi. which
is aloat against government war Sc
curities in the banks is pure imitation.
1t belongs to the war financing, and
it ought to be eliminated from the
peace situation as soon as possible.
The longer it remains a factor in the
situation the more difficult it will be
to eliminate it, and to go on from this
level to still higher degree of in
1ation will weaken the position of
the country and invite a disastrous re-
action
Calls for Debt Reduction
because the nations Of Europe are
helpless to avoid it is all the more
reason why we should keep our own
foundations sure. With this great
crop to be sold at high prices, and
with the abundant trade which is in
prospect for the coming fall season,
there should be surplus earnings and
profits enough to accomplish sub
stantial amount of debt reduction
without imposing serious restrictions
upon enterprise, and the bankers
should make it their policy to achieve
this result. If the recovery of com
modify prices and general state of
prosperity this year is made the basis
of more Indebtedness, through land
speculation and stock speculation, it
may prove in the end to have been un-
fortunate that we did not have more
drastic liquidation this year.
"The prospective demands upon the
money market are large The Secre-
tary Of the Treasury has stated that
there will not be another general loan
campaign. but as the Treasury must
continue to borrow largely this means
that he will be looking to the banks.
Business is now revivng and prices
have recovered from the decline which
followed upon the armistice. An un-
prccedented amount of bank credit
viii be required to handle the> years
crops, and finally. if this county is to
l,,+, -
called in world affairs it must supply
a large amount Of credit for that pur-
pose.
Cheap Money Improbable
"In the presence of these impend-
ing demands cheap money is not to be
expected, and any relaxation must be
temporary. The country seems to
have passed over the langer of gen
eral business prostration, and certain
ly this is true if we make the sales
abroad which for every reason we
ought to make. Under present CON
ditions cheap money would be an
anomaly anywhere, signifying that the
country where that situation existed
was not related to world affairs.
"On the other hand, it should be
possible to meet these demands with
out further expansion Of credit. and
we believe that the banking authori-
tics of the country should direct their
policy to tina. end.
Furthermore, if there is any natural
relaxation in the credit situation the
slack should be devoted to a reduction
Of the rcdiscounts of the Federal Re
serve banks. These banks. although
in strong position as compared with
the central banks of Europe, are cx-
tended much beyond what should be
considered their normal position, and