Evening star., 1915-11-14
Fact Favorable Commentary
on Operation of New Federal
Reserve System.
STIFFENING OF THE RATES
INDICATED NOW, HOWEVER
Government Crop Report Encourag-
ing-U. S. Gaining in Fight for
South American Trade.

bumper crops of 1915 have been
financed. Heretofore the harvesting
season has been the signal for tight
money and correspondingly high rates.
when the banks from the interior"
have called upon their reserve agents
not only for their own surplus funds.
put for whatever extra money could be
loaned for this purpose. This year, in
addition to the regular domestic re-
quirements. American bankers and in
vestors have been indirectly called
upon to contribute to the extraordinary
expenses of the European conflict. This
has been done in two ways-first. the
repurchase of American securities held
abroad; and. second. the granting of
regular and special credits through
the Anglo-French external loan as well
as through private arrangements be-
tween firms and individuals. All this
has been accomplished while bank sur
pluseS have increased instead of de-
creased, and simultaneously with the
advent of one of the greatest bull
markets that the stock exchanges Of
the country have ever known. The
operation of the new banking system
has contributed in no small degree to
this condition of money redundancy.
Money Rates Stiffening.
During the past two weeks, however,
reports from the interior indicate
stiffening of money rates as result of
the increased demand for cash for in
dustrial expansion. Thus the president
of the largest national bank outside of
New York city is quoted as saying:
Our deposits have begun to work low
er. Cincinnati and Louisville bank
today asked for a large amount of re-
discounts. Minneapolis and Kansas
City are beginning to ask for credit
AS the money is drawn from US farthe
west and northwest we in turn shall
reduce our balances in New York and
in consequence there will shortly follow
improvements in rates. And 1t all
shows that the present talk OF lncreas@
in business is not merely an expression
of a wish, but a statement OF condi-
tions." This statement is in Keeping
with the estimates of increasing busi-
ness activity outlined in this review
for the past three months.
In the stock market the tendency 10
discard the war specialties and to SUB
stitute the more substantial dividend
railroad and industrial stocks has
been very much strengthened by the
course of market prices. The latest
published statements of railroad earn
ings are very gratifying to the holders
of this class of securities, and the IN
dications are for the continued popu-
larity of railroad stocks and bonds.
Investors are studying for themselves
and are learning to discriminate. They
know that increased earnings mean in
creased profits. and that values are
based upon the power to yield earn
1ngs to the stockholders. In this re-
spect a number of the standard in
dustrials have given good accounts of
themselves recently, the dividend rec
ords having been excellent. In addi-
ton to regular dividends goodly
number of extra disbursements to
stockholders have been made by the
Studebaker Company. Kelly-Springfleld
Tire Company, Caney River Company
and others Resumption of dividend.
or increases in regular disbursements,
were announced by the Central Leather
Company. General Development Com
pany, American Cotton Oil Company
and others.
Crop Report Encouraging.
We are becoming so accustomed to
good news concerning Americas COM
mercial and industrial progress that
we are beginning to take such state
ments as a matter of course. The gov
ernment'S final crop report this week
is another important contribution to
the literature of good times" This
report gives the estimated corn crop
~
addition to the October estimate, and
about equal to the record crop of
1912. Final reports on all crops will
be issued by the Department of Agri-
culture December Is. when it is conf
IDENTIFY predicted that the wheat har-
vest will exceed one billion bushels, as
compared with an average during the
past five years of 6S7,000.000 bushels.
The government statement of the
amount of cotton ginned out of the
as 7.3S4,000 bales. compared with
9.S26,00 bales for the corresponding
date last season. AS the final crop of
1914 amounted to 14.907.000 bales,
however, there are still prospects that
this years production will be well
above the average. Meanwhile. as the
south has this year given special at
tention to the much-needed program of
diversifying of its crops. it undoubtedly
is participating in the benefits that
farmers will receive from the huge
corn production this year
Wall street already is beginning to
tremble in anticipation of the reas-
sembling of Congress next month.
Congress is always a bear factor in
the stock market, and this years ses-
sion, in view of our delicate interna-
tional situation, may offer many oppor-
tunit!es for veal or woe in so far as
American business is concerned 1t is
too much to expect that erratic con-
Sressional discussions can be entirely
kept within bounds, though it is to be
hoped that those who sympathize with
one or the other side in the great Euro
pean struggle will with due proprietv
refrain from expressing themselves on
topics which are irrelevant to the ma
terial progress of the United States.
1t is extremely fortunate that Presi-
dent Wilson has not been hampered
by congressional interference in his
attempt to solve grave international
problems. and it will be more fortunate
if minimum of such problems are
offered for solution while congression-
al orators are unrestrained.
U. S. Trade and Commerce,
American bankers and business men
are becoming more and more convinced