Atlanta semi-weekly journal. (Atlanta, Ga.) 1898-1920, 1919-06-24

Henry Clews & Co.'S weekly review says
III part: The stock market has not fully
understood the peculiar new conditions to
which it is subjected under the federal
reserve system. There was a deficit of
reserves at the close Of last week and this
deficit could most easily be made up by
larger discounting atsf federal reserve banks
for the purpose Of establishing greater re-
serve credits on the books of the banks
In spite of this call money promptly bound
ed upwards as in the old days when a def
icit of reserves meant a necessary curtail-
ment of loans. The fact is that the fed
eral reserve system could supply very mucn
larger reserves through the rediscount proc
ess, if it chose to do so, and the funds
thus provided-if once obtained by the
member banks-could be used in any way
the banks might see fit whether for spec
ulation for some other purpose. The
member banks have rediscounted heavily on
the strength of liberty bonds and certif-
Gates of Indebtedness as collateral, and it
is In this wa" that good deal OF the
recent upWar4 movement in the stock mar
ket has been financed. But the warnings
sent out by the federal reserve board and
its call for information as to the of
rediscount proceeds necessarily have caused
some anxiety to bankers who were already
carrying large lines and who would natur-
ally hesitate to put themselves into any
position that might invoke legitimate crit
icism. The reserve system has not func-
toned as it was expected to in this par
ticular. 1t has reasons to show for its
peculiar position regarding speculation IN
that it had been called upon to finance the
treasury so largely and at low and stable
rates. Still the fact remains that it is
the great source of supply of selnds, and
that the policies that it may determine
upon will in no small measure regulate
those of the actual lending banks In
short, the money situation has as never
before become the key to the stock mar
ket.
Are Stocks Too Hight
In view of the evident anxiety that is
being exhibited with respect to the use of
reserve funds, resulting, as already seen in
high money rates the question is fairly
asked whether stocks are too high? The
course of events during the past week does
not indicate that the country thinks so,
great power of recovery being shown on
Tuesday and Wednesday. No can
safely be a prophet in the present cir
cumstances. yet the Indicate would seem
to be clear that stocks are not as yet due
for any prolonged decline while the mon
from showing any sensational or danger
Gus advance. This would seem to mean
that the stock market is in a more or less
(for it, stable situa tion-likely, of course.
to .ffer ups and downs, while given stocks
may still afford good speculative possibili-
ties. For the present it is not as likely
as heretofore to undergo marked changes
in either direction will undergo them
when they occur only temporarily. Wheth-
er stocks are too high in the earnings
sense must remain to be demonstrated as
the country works further through the crop
season. At present agricultural conditions
seem to be of the very BEST while the dis
tinct improvement in the iron and steel
trade has encouraged business men and
manufa cturers. Copper is moving more
freely and at better values, and prices are
certainly high enough-and rising both at