The Washington times., 1928-11-27
MONEY LACK To
HAL | RISE IN
STOCKS
By vi. s. COUSINS
tCopyrisht 1875. by international
News servsce)

-
News service)
NEW YORK. Nov. z7. Lnbrica.
ton Is essential to smoothly moving
machinery and money is needed for
2 quietly advancing stock market.
Cut off the oiling apparatus OF
highly geared machine and IL would
soon grind itself out OF existence.
Cut off the money supplies from
the steam-roller stock market and
the downward crash would not be
long delayed.
Talk TO any one Of = dozen or
more OF the biggest and most prOmi.
nent bankers and investment heads
in Wall Street today: men who
stand supreme In their own insti-
tuti0ns; whose word IL law in their
own houses: whose skill and tudgs
ment has been undisputed in the
past: who have always been able
to call the turn on important
events affecting American Industrial,
financial and Investment conditions.
Thousands to Lose
They viii tell you that sooner or
later the pyramiding or bank credit
in d topsy-turvy stock market will
end iii q severe jolt for the SKYE
flying tendencies Of the market; that
the reaction, when It comes, will be
severe and painful: that the profes'
af0nals who are running the mar
ket.s now will have d soft berth be-
hind their bags Of profit; and that
thousands OF small investors will be
holding. the bag as they have done
in every big bull market in Wall
Street history.
The bankers are not 50 much
afraid Of high stock prices, in the
closely held jazz babies" that have
been plunging skyward so reck.
lessIy In the last few weeks. They
fear for the credit basis behind the
whole market. the process by which
many Of these stocks are blown up
Ike balloon partly with specula
tors fnoneybuf partly also with
money borrowed in New York and
Oshkosh, Barriers Falls and Chi
cago and even London and Am
sterdam.
Answers to Questions
The magnet Of high money rates
has brought money to Wall Street
! European banks, savings deposits.
old stockings and other hiding
places and the spectators have
used it as part of the purchase
price Of their swiftly rising spe.I
clalty stocks on the big board and
other exchanges. When the money
gives out, aa surely 1t must some
day. what viii these spectators dog
This question is answered In part
at least by George =. Roberts, the
contact man" Of the National city
Bank Of New York. the writer of
All of its very excellent treatises on
financial and economic matters and
/ one Of the most brilliant banker
economists Of the country.
A year ago, Roberts points out,
call money was loaning at per
cent, against the s to 3 per cent
rate prevailing lii the last few
months. Commercial paper rates
have risen / 10 III per cent and
1ong-term investment rates have
been higher, which means that
prices Of prime bonds have de-
cIified. What does IL all mean and
what isssthe cause OF the sudden
lacking up OF srates2 Did the hank. j
ers squeeze up the price of money,
OF how have they contributed to
the result, IL at all?
Money Gone
No. they did not. Big traders
and little traders in the stock
market, bidding for funds with
which to pursue the rapidly rising
stocks, have cleaned up all the
avafhble money in sight. What
tiiffefence to them IL they paid s.
per cent. or 5 per cent, or even 10
per cent lper year1 interest on the
money. when they were making
profits of 10 per cent to so per
cent in q week or even day?
Now there Is to be a show down.
The bankers will positively tighten
up an their requirements for money
i borrowed on the stock market and
! II will be surprising II that does
not clip the wings of the sky.
scraping Industrial and specially
stocks which appear to have been
"discOunting" not q year or two OF
prosperity but a decade or more
Of big earnings for industry.
II they do all OF their discount
Ing now, what will they have to
afarntIFNk Una :. ~, 4vxyn R,,ov.o ko1n .