Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-02-16

Satisfaction at the Federal Reserve
Boards warning that loans for specu-
lative purposes must be curtailed to
insure adequate credit for industry Is
quite generally reflected by the press.
Criticism is not entirely lacking, how
ever, some observers suggesting the
action might have come earlier. others
denying that the present credit struc-
ture is strained and few definitely
questioning the soundness OF the
boards course.
In the opinion Of the New York Sun
"the policy of attempting to conduct a
great banking business by means of
publicity Is undignified, ineffective and
politically dangerous" and that paper
objects to Its tactics in taking the
initiative to start o public argument
over the condition of credit and the
boards control of 1t. Altogether" as
sertS the Sun, "it would seem that
If anything Is wrong with the credit
situation the Reserve banks have ample
powers to secure relief through opera
ton of the regular banking machinery.
Let the board have the courage to
act vigorously and remember that in
central banking, as in many f1elds OF
activity. silence is golden"
On the other hand, typical OF the
majority comment. is this expression
from the New York Times: Pro
gressive reduction of the banking fund
available for financing the countrys
trade foreshadowed inability of the
Reserve banks or private banks to
keep the rate for merchants borrow
ings from rising to the height prevail
ing for loans on stock and bond col
lateral. The Reserve Board speaks
grayely of this disturbing aspect OF
the matter. It's declaration points out
with unusual frankness that con-
tinuance of these tendencies may be
expected to impair the future of legiti-
mate trade. {" The language OF
the board is temperate, but the fact
that so plain statement had become
necessary shows Of itself the gravity OF
the situation"
"The extraordinary Juror Of specula-
ton" advises the Rochester Times
Union. sis beginning to kill the goose
that LAYS the golden eggs. People buy
stocks and stocks go up, in the last
ANALYSIS because of what stocks earn,
If the high interest charges cut into
building and other business, the steel
companies, which supply building ma
terial, and all other concerns will see
their profits declining. How will this
affect stocks bought on the prospects OF
higher earnings and higher prices?'
The Buffalo Evening News believes that
earning power should be strengthened
rather than diminished by a policy OF
discouraging capitalization OF mere
hopes"
A sound basis for the warning is seen
| by the Syracuse Herald in the obl1ga-
| ton to conserve and insure proper dis
| tribution of the credit facilities at the
command of the Federal Reserve sys-
| tenn" The Harrisburg Telegraph be-
lieves that Investment and speculation
are so far removed from each other
I that what may check one might easily
stimulate the other" The Hartford
Times finds general realization that
the speculative enthusiasm of the time
must be kept within safe bounds"
Restriction of speculative credit In
| order that the demands OF commercial
credit may be met on reasonable terms
must exercise In the long run a con-
structive influence" declares the Phila-
delphia Evening Bulletin. Assuming
that high money means decrease In
profits and slowing down of business.
! tie Baltimore Sun concludes. Obvious
| ly, II the Reserve Board has reached the
+. point where, 1t says, such sequel Is In
eVlLaDle unless tIeTe Is sup w Pico-
ent speculation, its warning cannot
safely be disregarded."
X X X
| The Charlotte News views the warn
ing as perhaps mot far from being a
case of putting the paddock on the door
after the horse has been stolen" The
Birmingham News maintains that 'le-
Ultimate industry should be encouraged
rather than discouraged by the action
The Atlanta Constitution states that
"the stock exchanges have their useful
and lawful functions" but beyond
that they should not be permitted to
co." The Lynchburg Advance contends
that ut will be wise action If the board
can accomplish a gradual reduction OF
speculative credit, so that stock prices
may get upon whatever basis their In
trinsic worth iustifeAn