Evening star., 1923-02-25
BY HARDEN COLFAX.

The Federal Reserve Board nipped
in the bud last week a frenzied bull
market on the New York Stock Ex-
change. The ways were all creased
for further sensational upswing in
securities, greater and more spec
tacular, according to information
placed before the board, than any ex-
perienced in the past three years.
The board met the situation by put
ting up the price of money at New
York and Boston and is prepared to
doesn't act as q broke.
The advance in interest rates fol-
lowed. by twenty-four hours. the
meeting here of the federal advisory
council. composed of representatives
of banks and financial institutions in
the twelve regional districts. and was
the outgrowth Of the meeting. The
council devoted considerable time to
the consideration of the trend toward
imitation in the business and financial
world. 1t found that, with the sin
gle exception of New York, bankers
everywhere are proceeding with be-
coming caution.
Millions in Manipulation.
In New York, the council found.
In the manipulation of stocks. With
In two weeks rediscountS alone at
the New York Federal Reserve Bank
had increased $9S,000,000, but even
that sum reflects only Il part of the
calls on the national and other banks
for more money Most of the addi-
tional money lent. according to re-
ports made public by the board. went
into the stock market An unofficial
estimate of money lent by banks on
GO 6Yr~ hA Gre t,,,14 INzl.
ruary places the total at more than
$100.000,000 u week.
With this Information before it.
tho council decided that the time had
come to put the brakes on stock
speculation. Accordingly, IL was un-
derstood when the meeting adjourned
that the New York and Boston banks
would seek the boards authority the
next day to increase their rediScount
rates from per cent to " per cent,
an advance of one-eighth in it's in
terest rate. The banks sought and
the board authorized the increase as
agreed
AS tho board itself cannot initiate
tho move to advance interest rates,
but simply passes on the applications
for such increases made by the in
dividual reserve banks, the move to
increase rates had to come from the
New York and Boston banks. The
oretically, that is tho procedure; but
absolutely the rates. Moreover,
through it's system of leased wires
and hourly reports of transaction the
board is in intimate touch every day
with what is happening at any and
all reserve. banks and consequently
is in a position to meet promptly any
situation that may arise.
First Meeting of Year.
The advisory council is created by
law to advise the board in matters of
policy and must meet four times a
year. This meeting was first held in
1928. The personnel of the council.
most of whom were present, consists
of Alfred l.. Aiken of Boston. Paul
NJ Warburg of New York. l.. l.. Rue
of Philadelphia, c. F. Sullivan of
Cleveland. John NJ Mitchell, jr. of
Richmond, Va: FestuS J. Wade of St
Louis, q. H. Prince of Minneapolis,
T.. +. Swinney of Kansas City, r. l..
Ball of Dallas and d. w. Twoby of
San Francisco.
The writer is reliably advised that
the council and the board are in
harmony on the subject of preventing
runaway markets. should the occa-
sion arise. through a policy of stiffen-
ing interest rates and thus making
dear money with which to finance the
the situation, the council pointed out
banks throughout the country. except,
per cent. save for New York and
Boston where the stock movement is
greater than anywhere else.
lnrraaCa " OF tIA trxyn