New-York tribune., 1921-04-11

Before undertaking excursions on
the bull side, spectators seek to
satisfy themselves regarding the per-
manency Of the easier credit situation.
The time money rate is better guide.
Rates broke last week below Z per
cent, but still remain high. Brokers
are disinclined to make long loans on
the basis of prevailing rates, prefer
ring to take chance on what they
consider will be falling market
With average price changes adamant,
public interest in the market remained
at low ebb. Outsiders preferred the
investment market. The spectacle Of
rising prices is relied upon by brokers
to reawaken popular interest in the
stock market when conditions seem
to justify an upturn.
Notwithstanding the cautious wait
Ing attitude Of spectators, there is
a fairly general consciousness Of an
Improvement in the credit situation.
The question of frozen loans is the
chief remaining thorn in the side Of
bankers. A sign Of the improvement
Is the greater willingness of bankers
to discuss phases Of the situation
about which in more critical months
they were silent. Inability Of many
commercial borrowers to pay off their
bank loans on time led to many COM
plicated adjustments, which took
bankers back to trade, whence they
had sprung historically. Bankers,
aware of the fact that they were pass
ing through a readjustment period
during which collateral against loans
was shrinking, tried at times to be
helpful. They preferred bankers
committee to receivership. One
banker remarked the other day in
conversation that, in considering the
case of customer who could not pay
off his loans, he was always con-
fronted with the problem of whether
to let the borrower work for him. His
formula was to let borrowers who
had been in business on an efficient
basis before the war remain in busi-
ness, and to take over bodily mush-
room concerns which grew up during
the boom and we're, unable to nav.
AS speculative money continues to
ease, the present system of the money
desk on the floor Of the Stock Exchange
Is likely to be increasingly untitled
to the needs of the situation. The ar
tificial restrictions in connection with
money lending on the floor were adopted
during period of strngency to pro-
tect brokers from bidding up rates
against one another needlessly. Now,
with the facts to degree reversed, the
from the barriers both borrowers and
lender from coming together on mu-
tually agreeable terms. To escape
from the barriers both borrowers and
lenders on occasions have met in an
unofficial, free market outside. AS
soon as the banking and Stock Ex-
change authorities are convinced that
all danger of speculation's being
starved from lack Of credit has
passed they ought to act to remove the
fetters and restore q free market.
Very likely radical changes in meth
DDS Of financing security speculation
will be seriously considered. More
than year ago Paul M. Warburg
brought the question of term settle
ments into the realm Of practical finance
The banker proposed to abolish the call
money market in connection with the
stock market and to have instead only
time loans. The recommendation was
not rejected, but shelved after con-
ferences between brokers and bankers
The Stock Exchange Representatives
explained that the question Of the term
settlement could not be considered un.
til the new Stock Clearing Corporation
for clearing both stock balances anc
| loans, had been placed in operation
| They contended that in technique the
| new methods constituted movement
toward the methods which a term set
tlement would involve. Last month al
| the apenciea Of the EtnrL C1o. ~ - =