WASHINGTON, Nov. 4, 1929 (UP) - Control of the call money market has passed once again into the hands of the banks, after eight months of domination by corporations, individuals and foreign financial interests.
This development, one of the most significant of the many changes in the credit structure brought about by last week's violent decline in stock prices, is shown in the statement of the New York banks filed with the Federal Reserve Board.
Known popularly as the brokers' loan reports, this statement revealed the combined total of loans placed on call last week by New York banks and their out-of-town contemporaries at $3,095,000,000, a figure $652,000,000 in excess of loans on call by "others."
Not since March 13, when the "others" item passed the combined bank loans for "own" and "out of town" account by $97,000,000, forcing ahead of the bank funds on call for the first time in history, has a similar situation developed.
At that time the banks were declared to have surrendered "control" of the money mart to the many corporate, individual and foreign interests represented in the "others" item.
The altered situation may mean much, or nothing at all, dependent altogether on the future course of the market, according to authorities here.
It is known that reserve authorities are desirous of having the "others" figure below the bank loans in volume, but not at the cost of any expansion in the latter.
This "others" account has long been the subject of considerable concern to members of the Federal Reserve Board, who have termed them "bootleg" loans, because of the irresponsibility of the lenders to the nation's credit structure.
Authorities have feared just such a situation as developed last week, when $1,380,000,000 was withdrawn from call by these interests at one stroke.
Only the excellent position of the New York banks, in co-operation with the Federal Reserve System, which enabled them to throw $992,000,000 into the breach, forestalled a very serious situation.
This danger was pointed out in the current review of the New York Federal Reserve district. The review pointed out that "these movements illustrate once more the facts that loans to brokers and dealers by lenders other than banks constitute a potential drain upon bank resources, which is most likely to become an actual drain in periods of emergency."
The "emergency" nature of last week's development has raised the question in local financial circles as to whether or not the "control" assumed by the banks when other lenders withdrew, will not be relinquished as readily when the market assumes a measure of its former stability.