New Britain herald., 1917-09-29
Henry Clews Weekly Letter
Especial to the Herald)

New York, Sept. 29-The money po-
 sition has been responsible for the re- actionary trend which developed with
 some degree of force in the market l for securities this week. Despite ef-
 forts to keep the banking situation
 under control supplies of funds were
 offered sparingly, resulting in fears
 that the large sustained demand for capital by the Government will pre- l vent any early return to normal con-
 d1t1ons. The approach of large new offering of Government bonds with
 the books open for 3 weeks means a
 sustained demand for funds. Mean
 while the Treasury is continuing its
 advances to our Allies. Secretary Mo-
 Adoo is called upon also to draw down
 Treasury deposits in the banks of the country in order to provide for these ] advances and to meet the huge ex- 1 penditures that are of daily occur l ence. While it is true that all these I funds are being spent in our own country, the various shifting opera
 tions are unsettling. The Treasury ] through the Federal Reserve banks will surely prevent the money situa- tion getting beyond control Nevthe- less, it is obvious that we are ap-
 preaching point where important de-
 mands may be expected.
 There appears slight reason to ap- | prehend that banking and other large financial interests will abandon their
 recent view that the success of the new
 Government bond offering requires
 that investment conditions as whole
 must be maintained in such condition
 as to create a favorng financial at- mosphere during the period of mar keting the new Government issue. It Is significant that the 3k per cent.
 Liberty bonds, which were sold in June, should command a small pre-
 mium at time when 4 per cents are
 to be offered in large amounts at par.
 Of course, the privilege of conversion into the new 4 per cents places them,
 so far as people with moderate 1n- comes are concerned, upon more at- tractive basis. It Is doubtful, however, whether there will be any widespread
 movement among the larger holders to transfer them into the new secur1- ties that are about to be offered, since they would then lose a very valuable tax exempt privilege. I refer to their tax free privilege as regards the large surtaxes on incomes contained in the new War Revenue bill which is soon
  dent.
 It is rather difficult to reach a sat- isfying conclusion as to the real ill- f1uence on the market for securities of the announcement by the govern ment of the iron and steel prices that were made public on Monday of this week. The new figures are the result of an agreement between our government and representatives of our steel manufacturers. The prices when compared with those recently current represent, it is true, very substantial reductions, as, for instance, a decline from $5S per ton to $33 for pig iron. from $5.5O to $2.90 per cwt. for steel bars, from s6 to $3 per cwt. for shapes and from $11 to $3.25 per cwt. for plates. But all these new prices are far above the quotations current before the war, when, for ln- stance, pig iron instead of being $33 was $14 and coke was $3.32 per ton instead of s6. Steel bars were $23 instead of $68 per ton, plates $22.8O instead of $65 and shapes $23.20 in stead of $60.
 At first report was published that the new figures would apply to all the old contracts upon which deliv- CT10S Hdu HOL UCC1l l1lduc Dy luc ufacturers a feature that would have meant a severe cut in anticipated profits. Later advices from Washing ton, however, explained that while it was intended that the new scale of prices should apply to all business for domestic as well as government &C., count it was mot the intention to in terfere with non-governmental con- tracts already placed. However, some of these contracts are understood to contain clauses protecting the buyer in the event of price reduction; they necessarily will be reduced auto matically to the new level
 Now that the prices have been defi- nitely fixed it is possible that there may be a revival of business in the direction of domestic orders. Re- gently business of this character not 1 unnaturally has been restrained be- | cause of the expectation that sub stantial reduction would become 1 available in the price. In these cir ! cumstances it would have been un- wise to have proceeded with large ] purchases for construction or other 1 work. The new quotations cannot fail 1 to leave their imprint in form of re- duced earnings of some of our large l 1nduSCrlal plants. buC there IS ample l leeway for such reduction when the l extent of the former prices is consid | cred. Under the new conditions, ac cording to the agreement between the l government and manufacturers, there | is to be no reduction in the wage | scales of labor. Last week for the 1 fifth time since the war started the 1 United States Steel Corporation ad- 1 yanced wages 10 per cent. and other l large manufacturers soon followed. 1 The high wages that are current | throughout the country represent a buying power for our country that l never before has been equalled. Our 1 a aericultural interests in at least 1