Evening star., 1937-09-14

JcCLtDeS OF hOOSeDetL QQn1tu1SLTQ-
ton, program being based on the
ory that high rates had contributed
to stagndtion of business depres-
sion. Successful in bringing rates
do1on, Governments action OF this
1Ueek tolloaUs appearance OF indi-
cations that money market wds
about to stifen.
BY the Associated Press.
Credit-easing activities of the Treas
ury and Federal Reserve Board should
boost bank supplies of lendable money
to the billion-dollar mark by October,
officials said today.
Secretary Morgenthau threw into
operation his part of the two-way,
low-interest credit program late yes
terday, freeing 10000, 900 of gold
from the Treasury's hitherto unused
"sterilized" account.
Certificates against the gold, Nor
genthau said, were issued to Federal
Reserve banks which credited the
Treasury with $500, 100000 of deposits.
The Treasury chief said the deposits
will be withdrawn to meet general
Treasury obligations and to retire
$50,000,000 discount bill issues ma
turing weekly.
This operation, he said, will speed
a stream of cash into the Nations
banking structure, hiking the supply
OF lendable money
Boost Over Billion Seen.
Authorities said the present $780,
100000 total Of excess reserves-bank
funds available for lending-probably
will be boosted above the billion mark
by October, but that Fall and Christ
mas credit and currency needs will
pull the supply downward. More than
S400, 100000 of lendable bank money.
they said, may flow into business be-
fore the year end.
Thls security buying also will inject
additional lendable cash into the bank
ing system. Officials said 1t will be
SO adjusted as to maintain credit sup
plies at level high enough to insure
continued low interest charges.
Announcement of the new program
had mixed results on security markets
yesterday. Some persons held it re-
sponsible for a break in stock prices
and flrming of Government bonds.
Downturn in Market.
Reserve Board authorities said, how
ever, the downturn in stock quota tions
may have resulted, in large part. from
previously placed orders to sell and
other technical factors"
Morgenthau, asked for comment on
the market break, replied that "the
question Of the stock market doesn't
come under the Treasury"
Displaying chart showing Govern
ment bond prices improved, he said
the Federal security market had been
highly satisfactory"
Il feel that the move was one in
the right direction" he added. "It
is a long distance move. Even if the
Government bond market had fallen
on today, still would have thought
it good move"
Reserve Board Report.
A Reserve Board report showed
member banks in 101 cities sharply
reduced their sales of Federal securi-
ties during the week ended Septem-
Der 8. Net liquidation for the week
was set at only $1,000, 900, compared
with $43,000,000 in the previous week.
Failing commodity markets mean
officers.
Some authorities said yesterdays
market movements carried the i'm
plication that prospective huge sur
pluses in major crops were offsetting
a natural reaction to low money rates.
A. A. A. officials said they prob
ably would decide next month whether
to make corn loans. This grain was
included with oats, wheat and other
surplus crops in President Roosevelt's
understanding with congressional
leaders to protect depressed COM
modify markets in exchange for a
promise to make crop control legis-
lation the first order Of congressional
business next January.
Effect on Commodities.
Crop loan officials said that norm
ally, the Treasurys move to release
S300,0o0,000 of sterilized gold would
have had an inflationary effect on
commodities. Capital usually shifts
to such tangibles as cotton, wheat and
corn in its fight from securities.
Instead, wheat sagged to new low
prices for the season at Chicago and
New Orleans cotton sold off so to
30 cents a bale. Many stock issues
plunged to new lows for tho year
at New York.
The CorSmodity Credit Corp. said
cotton's dip below the Government
Scent loan basis undoubtedly would
prompt active demand fer loans.
First advances on the 1887 crop
probably will be made tomorrow,