New Britain herald., 1916-12-09
Henry CLeus ,
 Weekly Letter
Especial to the Herald)

1 NeW Ofk, DeC. 9.-FOr some weeks 1 past this market has been ruled by l monetary conditions. Owing to the
 tremendous drain upon our banking resources the supply of loanable funds ] had been materially curtailed. Since 1 January 1 foreign loans have been 1 issued in the United States to the ex- | tent of nearly $1,4OO,OOO,0O0 while l the new capital applications reported l by domestic railroad and industrial corporations aggregated $2,07O, ,00O,- | coo, a total of $345O, 100000, or 1 about $90,000,000 more than in the l first eleven months of 1915. These 1 figures cover only the prin cipal states, 1 and do not include the loans put out l by municipalities or states, nor the 1 innumerable issues by smaller con- cerns, of which 1t is impossible to keep close track, nor the millions of repurchased foreign holdings of Americans. In addition to these de- mands upon our supply of capital there has been the enormous drain
 upon banking resources arising from the extraordinary activity of trade and the high prices of commodities. The consequence of these demands is now being felt in a diminished sup
 ply of loanable funds and the result
 ant possi bility of too large an ex-
 pansion of credit. It was these con-
 ditions that doubtless induced the
 Federal Reserve Board to issue a
 notice of caution against a too free
 absorption by banks of foreign loans
 and notes; and the situation was fur
 ther aggravated by the low condition
 of bank reserves at New York, the
 total surplus reserve of the New York
 Clearing House banks week ago
 being only $41, 100000, or $13S, S,OOO,-
 900 less than a year ago. This de-
 cline was partly due to the absorp-
 tion of gold by the Federal Reserve
 banks in various parts of the coun-
 try, these institutions holding S59S,- OOO,OOO of the precious metal Decem-
 Der 1, an increase in twelve months
 of over $10O, 100000. The, Clearing House banks held s326, 100000 in specie, an increase of $63,000,000 compared with a year ago; while loans stood at 37O,OO0,oOO, or s23o,O0O,ooo more than last year at the same date. The wisdom of pre- venting a too rapid absorption of for eign obligation is not therefore ques- toned; although, on the other hand, there was no indication of excess in this direction as yet, especially as the security was prime and the placing
 of British treasury notes would have proved a protection of our own gold supply in event of smaller exports
 and larger imports making it possible
 for Europe to recall our gold later
 on. If caution were needed anywhere,
 it was in the fotation of a number
 of industrials of a questionable char acter, especially, those based upon present abnormal profits which can not be permanently sustained. Even tua1ly losses from such ventures will far exceed those upon best govern ment issues; some of which will later on provide good profits at present prices. Another complication in the monetary situation was the necessity of the British government maintain ing sterling exchange. Great Britain is particularly interested in preventing dear money at New York, and to aid ! in this direction another considerable amount of gold has been engaged for 1 this market of which over $35,00O,- 1 900 has already arrived from Can l ada During the latter portion of the l week the money market showed an easier tendency owing to gold inn ] ports and partial return of funds from the interior.
 Congress opened on Monday and l the presidents message proved dec1d- l edly reassuring. His appeal for jus | tice to the railroads will receive the { approval of all fair-minded people. 1 His declared resistance to the de- l mands of a small body of organized 1 labor who would paralyze the whole | railroad system of the country to se-
 cure their wants was also in the line 1 of safe and sane policy. His recom- 1 mendation of an enlargement of the l interstate commerce commission was | wise and necessary. The compulsory l investigation of railway labor strikes, 1 which has worked we'll in Canada is 1 also a step in the right direction. So, l too, was his support of the Webb bill
 designed to facilitate American ex- 1 ports. Happily the president avoided | any recommendation regarding the | high cost of living. which is a prob- l lem congress intends to investigate, l although legislation can do little | toward solving what is really a world 1 wide economic problem. Dear food
 :! clothing and shelter are almost en, l tirely due to the war. Supplies hava 1 decreased; waste has increased. There
 l is no cure foI such conditions ex
 l cept increased production and econ
 omy which results will naturally fol-
 low high prices quicker than any arti- ficial regulation ur legislation Specu-