The Washington times., 1919-10-06
Boersianer's
Comment
on Business
D BoERsIANER.

A recurrent abnormal call money
rate-12 per cent has been a technical
incentive to bearish speculation.
Business, despite the steel and minor
strikes, continues at concert pitch
in lines not directly affected by
labor troubles. In all such indus
tries (includlng dry goods) fulfill
ments find Il difficult TO keep pace
with demands; thus money Is heav-
lily employed everywhere.
But money was never plethOric as
at present. Its abundance more than
meets commercial and financial re-
quirements. InveBtment-Wise it
seems to be ineZhaustible. Waving
sterling bond offerings, z per cent
preferred stock issues recommended
BY responsible firms are quickly alb
sorbed.
II follows that the abnormal call
rates do not conform TO real none
tary conditions. Artificial contriv-
ance Is an ever-ready explanation.
but at present its conventiOnality is
rendered less unintsresting by the.
perhaps significant campaign OF the
American acceptance council
The business Of this council Is to
broaden the market for acceptances.
To that purpose everything is grist
that comes to the councils mill. Cur
rently, the fiourishing propagandists
are making a nationwide distribu-
tiOn of a pamphlet by a vice presi-
dent Of a Boston bank who advocates
semi-monthly settlement plan as a
substitute for "the unsatisfactory
and unscientific stock exchange call
loan" who declares a 'sO-called call
loan is only callable in fair weather,
and Is, In fact, the most unliquid
asset outside Of a mortgage a bank
can hold. It seems remarkable that
this form OF investment has con-
tinued for 50 many years TO be re-
garded as a satisfactory second re-
serve, and that this impression still
persists in spite Of the many superior
qualities Of the bankers acceptance
as readily marketable liquid as
set"
The advisability or feasibility Of a
semi-mOnthly settlement plan Is q
matter Of opinion, though IL was tried
with disastrous results by the Chi
cago Stock Exchange in the eighteen
nineties. It has succeeded in London
in a form which was not completely
adaptable to the American markets in
any event. Plainly, il would make
and, indeed, make-for a type OF
speculation which is increasingly dis
coUntenanced by American fiscal
ethics.
But the assertion that "a call loan
is Callable only in fair weather and
in fact is the most Unliquid asset"
etc, etc. y-fies in the teeth OF a daily
experience which began with the for
nation Of the domestic stock ex-
changes.
A call loan is what its name i'm
plies. II is callable and is called at
the pleasure OF the tender, or the
borrower. A failure on the part Of
the borrower to comply with it's ex-
action was a confession Of insol-
vency. For a bank to refuse the
check OF the borrower in compliance
with cancellation or transference
were an impossible absurdity. In
periods Of commercial languOr and
money plethora. even some Western
banks have from 20 TO IS per cent Of
their deposits out on call in Chicago
and New York, irrespective Of the
higher percentage OF the New York
banks. The safety Of the loan is it's
Immediately marketable collateral; its
desirableness is its very caIlableness. /
As temporary placement for banks
nothing in the world Of business is
comparable TO the call loan. The
American Acceptance Council deserves
to be highly complimented for their
energy and Ingenuity In furthering
the market for aCceptances, but they
might choose an advocate whose as
5ertions are less obviously fallacious
than those OF the Bostonian.