Evening star., 1929-06-28
RESERVE BOARDS
CREDIT PLANS LAID
Easier Money Predicted, but
viii Come GraduaI-BilIs
of Exchange Increase.
BY DAVID LAWRENCE.

Members of the Federal Reserve
Board are scattering to their homes for
the vacation period, leaving behind
them policies fairly well laid out for
the handling of the credit situation of
the Autumn season.
Easier money, a term so often con-
strued as meaning overnight improve
ment In the present tension, Is to come,
out 1t will be gradual. The beginning
OF the policy Of ease in the latter part
OF May was hailed by some elements as
sudden change, when, in fact, it was
intended to be a slow evolution. Pur-
chaSeS OF bankers acceptances of bills
OF exchange will tend to show 9. grad
ual increase on the part of the Fed
eral Reserve system, although the full
effect OF the policy cannot be deter
mined on the bills Of exchange already
on the market, but rather on the new
olllS which VIII come In August when
grain and cotton start to move. The
rate can hardly come down on trans
actions already financed, and there Is
scarcity Of new bills at the moment
News Of Credit Spreads.
News that the Federal Reserve is
going to provide such credit facilities
Tor the harvest season has begun to
spread through the agricultural regions
and II is coming at q time when the
Feoeral Farm Board Is expected to be-
gin its all-important operations,
What has been dificult for some of
the observers of the Federal Reserve
system to understand is that the de-
mand Tor credit presses the board here
from all sides and that the banking
pressure for security loans Is only a
part or the general structure.
It Is known that as the Federal
Reserve Board members 20 on to their
vacations. they. are q unit In the
formulation OF the present policy. There
nave been reports Of division in the
early months Of the year, but it is true
Cnat an accord has been reached not
only inside the board, but that the New
York banks are working in closer CO.
operation. too, with the authorities here.
Rise Excitcs No Attention.
The sudden rise in call money In
New York has excited very little at
tention here, as 1t is felt that the large
sums held by big corporations can be
Withdrawn at viii just as large amounts
are Withdrawn by banks in order to
make their July statements show A
large amount of cash and lower bor-
rowing at the Federal Reserve banks.
The expectation is that after the first
OF July, the normal trend of call
money will be gradually downward. The
view Is expressed here that $50, 600 600
could affect the call money rate very
easily when withdrawn and that this
Is a relatively small part of the funds
loaned out on call In New York by
large corporations and banks from
other parts of the country.
Not Interested In Stocks.
One curious aspect Of the whole SIT
uation Is the widespread impression
that the Federal Reserve Board as such
has views on the values of stocks.
Letters pouring in here Seem to take
the position that the board when it
thinks stocks are too high starts re-
stricting credit and eases 1t when
STOCKS are worth what they are being
bought for.
The fact is the board isn't concerned
with the values Of stocks at all: indeed,
~ LS Salq tnat In some quarters OF an
Official character, which stand BY what
the Reserve Board is doing, the idea g
held that most stocks are probably
worth what they are being quoted at.
What the board insists 1t Is con-
cerned about Is the use Of Federal Re
serve credit, and that whether stocks
are high or low there should never be
an excessive amount Of borrowing at
the Federal Reserve banks to continue
the speculative process. Capital funds
OF the individual or the banks them-
selves can be used for that purpose
without criticism from the authorities
here, who feel that the rationin9 of
credit, while dif1cult thing to do. Is
something the borrowing world must it.
self regulate, recognizing that there is
. limit to the amount Of Federal Re-
serve credit that can be obtained for
security loans as distinguished from
commercial transactions.
(copyright. Ie7e)