THE  MONEY  MARKET

x  19

right  limitation  to  restrict  borrowing  and  to  curtail
loans  and  credits.  These  may  be  said  to  have  culminated ­
  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  account ­
  by  providing  through  drastic  measures  that
“  for  the  present  there  should  be  devoted  to  the  security ­
  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  conventional ­
  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  indicated ­
  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  prevailing ­
  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  conservation ­
  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.