The Washington times., 1929-02-19
CLAM P
Of BOARD A
BENEFIT
By w. S. COUSINS

NEW YORK, Feb. ID u.N.S.).--
The effect Of the reserve board :
speculative credit restrictions may
be seen in the transfer, to the
second half of the year. of a con.
siderable volume of trade and in.
dustrial production that was def.
nitely on the cards for the first
half Of 1929.
In the long run the process may
be beneficial though forcing a mum.
ber Of "readjustments" that will be
somewhat painful, not only to the
new generation of dabblers in the
stock market, but also to many
lines OF bushes which were enjoy
ing, directly and indirectly, the
benefits of the golden tide of Wall
Street speculation.
False Hope Built
The runaway bull market in
stocks was undoubtedly building up
false hopes in many breasts, incit-
ing and enticing business and indus
trial heads to expansions of manu-.
featuring facilities and outputs
above the capacity of the markets
to absorb. Just as the physical
body is rendered unhealthy by un-
restrained gorginE followed by a
period Of feasting or abnormal re-
Striction of the taking of food into
the system, the industrial and bust.
ness corporate mechanism suffers
from booms and spasms> in national
business.
taken the thanklesS and ungracious
task of spreading normal, healthy
prosperity over the whole year,
and at the same time of correcting
abnormal tendencies in finance and
business.
The process is going to hurt
some people; make no mistake
about that. But il it succeeds in
sending back to the desk and the
wheel and the plough and the
household thousands Of men and
women who thought they had dis
covered a new method of gaining a
livelihood, without work and worry,
1t will have accomplished a great
deal toward the continuance of the
prosperity that has been at the
root and foundation of the bull
market in the last four or five
years.
Profit and Work
This is what many prominent
business and industrial heads had
In mind in their frequent references
to work as the basic element of
national and personal success and
progress, fact CT which too little
cognizance is taken when specula.
tive profits come pouring in like a
golden stream into the pockets of
the spectators.
When the worm turns, and the
market reacts, as it inevitably
must. the feeling is not quite SO
pleasant.
It is difficult TO see how the re!
stricting of the use of bank credit
and corporation money in the stock
market can be anything but bene.
ffcial to business.
It may cut off the big profits
now being made by some of the
corporations that have been sup
plying the so-called bootleg money
to the call loan market; but there
is not an economist in the land who
does not condemn this system as
Injurious and embarrassing to busi-
ness generally and to the corpora
tions themselves in the long run.
Has Honor Roll
The National City Bank of New
York has gone so far as to compile
an honor roll of industrial corpora
tions refusing to be beguiled by the
promise Of big returns on their sur
plus cash turned over for speculative
use in the call loan market Some
of the biggest and best known in.
dustrtal corporations in the country
wear the blue ribbon. and it is pre-.
sumed that others will be induced to
join this honored company.
However painful the forced read
justment in the stock market may
be, the ultimate results will be bene-
ficial. The Reserve Bank heads are
particularly concerned with eIiminat-
ing unsound banking methods, and
will not permit their hands to be tied
by the stock market or any other
agency. They hold the power over
the money market and will not hest
tate to use it if necessary.
Moreover, the strong Endorsement
of their stand by the reserve advisory
council and leading business men all
over the country has sounded the
challenge to the leaders Of the abnor-
NAL activity in the stock market.
The stop, look and listen sign has
been flashed at a very appropriate
time and its warnings will not be ig-