Salt Lake Telegram | 1919-11-20 | Page 11 | Stock Slump due to Speculation

STOCK SLUMP DUE TO SPECULATION Governor of Federal Reserve Reserve Re Re- Reserve serve Declares W Warnings Went Unheeded Dy fly Associated Press Pre WASHINGTON Nov No 20 The 20 The re recent recent re- re recent cent break In the New York stock mark market market mar mar- k ket t was due to unbridled speculation Governor Harding of the federal reserve re- re servo serve board said In a 1 letter to Senator Senator Senator Sen Sen- ator Owen of Oklahoma who had asked for a direct explanation of the price crash Speculators took tool no heed of warnings warnings warn warn- ings InKs Issued by the board and by the federal reserve bank at New York that representatives were declining and that thata a halt must be called Mr Harding fl said paid ld and the speculative movement continued These circumstances he heI I added then forced the tho New York bank bankI I to call the attention of ot rediscounting banks to the tho situation In order that I demands of ot regular customers for tor call money In handling commercial transactions transactions transactions trans trans- actions might be bo protected The Tho board had made the tho specific announcement announcement announcement an an- Mr Harding said that It would not sanction any policy which would require ted federal ral reserve banks to withhold credit demanded by commerce and Industry for the tho processes of ot production production pro pro pro- and distribution In order to enable member banks to furnish cheap money for speculative purposes Relative to the boards board's position when the tho market decline e was evident he explained that In normal circumstances circumstances circumstances circum circum- stances one means of checking It would have been to advance discount rates This was not considered practicable practicable practicable however Mr Harding said be because because be- be cause cause- the government had marketed more than In Liberty bonds a substantial portion of ot which was sold to persons who were paying for tor them out of savings or accrued in income In- In I come Such action would have worked a hardship the board believed I The high rates for call all money he continued were in themselves clear Indication of the strained position into which the unbridled speculation had thrown the stock market A readjustment readjust readjust- ment was rendered Inevitable unless the resources of ot the federal reserve banks were to be Indirectly drawn upon I for stoc purposes purpose