Evening star. [volume] (Washington, D.C.) 1854-1972, 1928-07-29
CALL MONEY MOST IMPORTANT
AND NECESSARY TO STOCK TRADE
Bankers Direct Benehciaries From Brokers
Borrowings-Big Corporations Have
Recently Become Lenders.

, stock market is one of the chief reasons
for good call loan rate.
Country banks offer surplus funds at
the post when the crop movement is
practically over its rush; heavy borrow
ing by merchants and manufacturers at
the banks lessons the offerings at the
post, and naturally is reflected in
stronger rates
Brokers borrowings, that's what call
loans are, that and nothing more. For
months they have been enormous. and
they are not far from their high point
right now. The New York Stock Ex-
change, the banks of New York and the
Federal Reserve officials are continuous
ly familiar with the size of the borrow
ings, and are ready, If necessary. TO
sound warning, which would be most
ilKely TO effect the stock market adj
versely.
How 1t Works Out.
Here is a definite transaction that
will give in itself story of how it works.
The American Security g. Trust Co.
OF Washington, D. c., finds that it has
S250,000 more cash than it needs today.
Local Clearings indicate that it has a
credit balance. At IL o'clock In the
morning the proper officers of the
American Security e. Trust Co. notifies
the like official of the Riggs National
that it wishes to loan the amount
named on call in New York. The Ma
tional City Bank Of New York is the
correspondent Of the Riggs National
and the trust company also carries a
big balance there An order is given
to transfer $250000 of this balance to
the credit of the Riggs and in turn 1t
is transferred to the credit of the New
York bank. Then the money broker
is notified and places the loan.
Through the National City Co in this
city, the Riggs and then the trust COM
| pany are informed as to the borrower
and the list of collateral. Where there
| are no private wires, the list is mailed
in the afternoon of the same day and
is delivered the next morning, If
! possible
If, however, the broker desires to re-
| pay the loan he may do so on the Sec
| ond day. or. in the event of the lending
bank desiring to call" the loan he
| must do so before / o'clock pm. Nc
loans can be called after that hour.
! II the loan is for a longer perioc
! than one day. the borrower may max,
| substitutions of collateral and the lend.
/ err will be given immediate notifica.
ton Of the change
Some Hustling.
Whether a bank has surplus fund.
| for the call money market depend.
/ largely on the requirements of It's owr
! clientele Bank clearings invariably
| furnish information as to these de.
/ mands. In every large city there arr
clearing house associations and clear.
ings, the accumulation of checks or
other banks III possession of anothel
| bank, obtained in the conduct of bust.
ness, are exchanged with representa-.
tive Of the banks on which the check.
are drawn. while at the same tims
other banks return checks that thes
have accepted as cash from other mem.
/ Der banks
A Busy A. NJ. for the Bank.
After this operation is over each banl
knows just how conditions are. whether
| 1t will be necessary to draw on second.
/ airy reserves. borrow from Federal Re-
serve sources or have surplus funds Il
loan,
/ If the latter, then New York is asker
to place the loan on call New Yors
bankers do not guarantee the loans the,
make they charge 5 per cent on thl
interest paid by the borrower to tn
/ lender; they carry on their own book
three call loan accounts. first for thei
own account; second. for their banl
| customers. and third. for others. ths
latter including corporations and som
very wealthy people who not infre.
nusntly have sums for temporary loans
| Call money makes the mare go-i
/ furnishes the needful for complctinf
/ by cash payments all transactions or
| the New York Exchangc--tfe difTerenc.
between the margin put up by the Dor.
| rover and the cost OF the shares.