﻿THE MONEY MARKET

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right limitation to restrict borrowing and to curtail
loans and credits. These may be said to have cul-
minated in September-October, 1918, when the
money committee acting through the governing
body of the New York Stock Exchange checked the
imminent tendency to expand the collateral loan ac-
count by providing through drastic measures that
“ for the present there should be devoted to the se-
curity market no additional credit beyond the funds
now so used.” 11

The result of such intervention was to replace to
a large and increasing extent competitive by con-
ventional conditions in the New York money
market, with immediate sympathetic reflex in all
capital markets of the country. The degree to
which this “ pegged ” condition was realized is in-
dicated in a well informed summary of the money
market during September, 1918: 12 “In a word,
the money situation in New York may be said to
have been stabilized on a six per cent, basis for all
classes of loans for whatever business was permitted
to pass.”

If with the foregoing facts in mind the cost of
capital during the period in which the United States
has been at war be compared with the rates prevail-
ing in the eight years preceding, it appears that the
war rates have on the whole been higher than the
rates prevailing in the four years from 1908

Federal Reserve Bank of New York regarding the conserva-
tion of credit, in response to Governor Harding’s letter of July
6, 1918 (Federal Reserve Bulletin, August, 1918, pp. 741-2.)

11	Federal Reserve Bulletin, October, 1918, p. 935.

12	Commercial and Financial Chronicle: Monthly 'Review,
October, 1918, p. 17.