The Washington herald., 1919-01-04
STOCK MARKET
"DRY AS A BONE
Worlds Money Market
Controlled by London,
Says Holland.

Says Holland.
BENJAMIN Strong jr., who is the
governor Of the Federal RESERVE
Bank of the New York district mas
listened patiently, even willingiy'
to the many suggestion which nave
come to him and inquiries Whlch
have been put to him by those VINO
are anxious to have a good under
standing Of the reasons why IL Is
deemed imperative that the restrlc-
tion upon loans which represent
transactions in the stock exchange
are to be maintained for some time
Many of the inquiries have been
based upon the feeling that there
seems to be something OF paradox
in the fact that we continue 10
grant credits to our allies and may
grant as much as two billions more
within the present year, while at
the same time we are restricting
credits for stock market transac-
tiOns.
Recently word has come from
England that gradually but surely
the British government has relaxed
her restrictions although not suffi-
GENTLY as yet favorably to affect the
British stock market. That market
has been for several years what is
technically known as a dry mar
ket." A superficial appearance Of
activity is caused by the dealings in
acceptances. II is upon these deal
ings that Leopold Frederick in part
bases his belief that London still
commands the money market of the
world.
Restrictions Removed.
In other respects the London stock
market is, as one weIl-informed man
said this morning. "as dry as bone.
The hope has been entertained that
the British restrictions may be so far
removed as to permit our own citl-
zens to make use OF the London mar
kst for their securities transactions.
Just as James r. Keene was accus-
toned to do almost exclusively for
his larger transactions for several !
years before his death.
Governor Strong, who has revealed |
banking and business craftsmanship |
OF a very high order since he became !
governor OF the Federal Reserve Sys- |
tenn bank of New York. and whose I
cooperation with the government has |
been constant and Of great value, :
recognizes the force which is con- |
tanned in some Of the statements and |
objections that have been made to !
him relative to the restrictions which /
have been placed upon the call loan I
market. as it is known. He has learn !
ed that in many parts of the country |
the objections to these restrictions |
are greater. OF are at least more /,
fOrci5iy expressed. than Is the case in I
New York. This proves that the re-
strictiOns are not merely Of local in I
terest, but Of nationwide Importance. !
Purchase Foreign Securities.
There are many who say that the |
only way by which the allies who /
have borrowed billions from the |
United States Treasury can pay the |
debt is by the purchase with Ameri- !
can money of foreign securities OF
all kinds that are Of unimpeachable /
character. In other words. there !
must be an investment Of American !,
capital to the amount of billions in /
foreign securities if this debt is to .
Se Iiquldated. The understanding Is I
hat this view does not differ ma
terialIy from the one which Governor /
Strong holds Yet it has been pointed /
out to him that the only practicable |
Vay by which the great majority OF /
American Investments in foreign Sc
Curities can be made is by the utili-
zation Of the New York securities |
market, nevertheless the restrictions /
which have been placed upon that /
market are gradually hut surely .
bringing this market to the condition |
which has prevailed for several years
in the London market Our market
a. Try
show a depreciation in almost all of !
the securities. although it is deemed /
certain that II the market was free
Iiduid and imPeTsOnal quotations (
would rapidly appreciate. France. |
for instance. has placed French Sc
curities here, both national and those .
issued by some of the cities OF /
France. Paris leading in that respect /
which are now listed on the Stock Ex- |
change and might be heavily dealt |
in. were It not that the market il !
restricted
II. :. Loans Eight Billions.
Then again it is deemed certain |
that many persons have suffered Sc
yereIy because they have been unable
TO meet the requiremntS necessary un-
der the restrictions to meet, If they
ire TO carry their lines of stocks. With
The advent Of peace foreign seCuri-
ties. enormous in volume. will be
placed in the American market Some
Z these will be foreign government
yonds. some bonds of Industrial, mer-
rsntile and railroad corporations.
-oroperlv handled. this new market,
,oupled with the fact that We nave
,ent foreign nations more than eight
billions should make 1t easily practi-
cable for the United States to main
tain supremacy over the money mark
cts Of the world No other nation
r,ossesses such an open Alrket as
that which exists in til, United
states or did exist before these re-
strictIons were established. 1t has
been spoken of by men of high aU-
thority as one Of the great national
Assets.
Governor Strong is understood to
believe that there Is something more
than mere plausibility in these state
nents, Nevertheless. he holds and
irapkIy stands by his belief. that it is
sot wise at this time in view of gov
= rnmentaI needs in the next twelve
r honths to open the door to full and
: re- operation in the securities mar
ket
IL is the wiser part. therefore. in
his view to take such action, yolun-
tary though it be and enforced only
by moral authority, as will enable the
government to look forward through
the year 1919 to money market condi-
tions which will have been so estab-
=