The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-06-23
FINANCIAL NEWS
AND THE SITUATION
Midyear Financing a Factor
Prices Recover Sharply
After Irregularity.
CALL FOR EXEMPT BONDS
Outlook Is for Increase of Acl
tivity Following After
Signing of Peace.
CALL FOR EXEMPT BONDS
BY WILLIAM JusrUs BoIEs.

tereSt payments have to be provided
for. Those engagements and highly i'm
portant Developments. incident to the
German reply, give exceptional interest
to the fluctuations In security prices as
they reflect the persistent efforts of the
trading element to carry the rise fur
Their. The result is likely TO be a strik-
ing contest between opposing forces with
the odds favorlng those who counsel
moderation at the turn OF the fiscal year
Rarely, IL ever. have July investors con-
fronted a more interesting mid-year
market as the situation is without prece-
dent, owing to complications abroad and
the extraordinary experiment that the
most powerful banking interests have
entered upon in seeking to arrange the
huge credits needed to finance Europes
reconstruction requirements.
TIE Outlook.
This Is the season when the stock
market usually pauses to take its bear
ings. Investment buying or the best
type was manifest last week in the
broad demand for the s54.O0o,o00 issue
OF the Federal Land Bank AZ per cent.
farm loan bones offered by a large syn
dictate. All the bonds that could be de-
iNered were sold and the inquiry was
broad enough to suggest that a much
greater Offering would have been ab-
soroed quickly by the investing public
mad larger supply been. available. The
instant success OF the Offering directed
attention to the growing demand for tar
exempt ponds or the safe investment
type. There has been also good buying
OF high grade State and municipal bonds
available at prices which show returns
or 40 to 4.ss per cent. The huyIne
has been restrained naturally by the
delay in signing the peace treaty. but
me nrmness OF prices and the breadth
or the demand has testified TO the
strength OF underlying conditions. Most
OF the 5000, 100000 July dividend and in
terest fund will be paid out this week
and Its disbursement will be of great
assistance In further broadening the
demand for high grade securities
Inc chances favor the early reinyest-
ment OF much of that fund. provided
tnat the Germans sign the treaty. and
lhe world be able to take up the serious
work OF reconstructing Europe's crippled
industries. In addition to the forth
coming dividend payments there is a
considerable amount of investment
money awaiting employment in safe Sc
cufities The next three months will see
.he notation tn this market of many at
.acuVe loans by States. municipalities
and corporations of this and other co,,n.
uies. The failure Of the city of Amster
dam to obtain bids for it's $4,000. 600
loan. recently offered on a s per cent
pass. shows that Holland. like all other
countries, has gone to n permanently
nisher interest basis for the time being
AZ least. The real test will come later
on when Europe's reconstruction needs
are financed and foreign Governments
ordinarily OF high credit, ATTEMPT 10
hoat their loans in the United states.
The American investing public has MANY
problems to solve during the latter half
OF 1919. which promises to be a period
OF unusual activity in the principal Sc
curity markets Of the world.
Financing Foreign Trade.
Foreign buyers are fiockine here from
all parts Of the world in the effort TO
nnance' on a long term basis, record
purchases or American merchandise and
Hlateriai. That demand is SO enormous
as TO make 1t difficult for any group of
bankers to forecast the extent of ths
movement and to indicate just what
must be done to safeguard our own mar
kets during the period when unprecedent-
cd Foreign financing is under way, The
SITUATION is In strong hands, for the COM
mittee OF twenty-five under the guidance
or MI. Dawson may be depended on TO
mobilize the country's resources in such
manner as shall provide necessary
credits for sustained expansion of Amer
lean trade abroad. BY helping Eurona
In this emergency We are really helping
ourselves. as nations crippled by war
cannot make extensive purchases Of sup
plies In this country unless assisted
while their industries are being rs-
That assistance must be dispensed in
various forms, and the probability Is
that, aside from the advances made by
the dominating syndicate, large direct
loans Will be placed in the United States
for the benefit of foreign Governments.
Those demands and applications from
our own municipalities and corporations
VIII constitute the chief financial problem
during this reconstruction year. There
may be good deal OF truth In the asser-
ton that the burdens of financing the
world back to peace basis will be
second only in severity to the burdens of
financing the war. The situation calls
for the most skilful handling of the
worlds credit facilities in the effort to
apportion the supply where it will do
the most good and avoid disturbing the
lending markets, Europe has a right
to expect such assistance from US and
1t will be given ungrudgingly. Out of 1t
all will develop an immense volume of
business for our producers and exporters
and the probability is that we shall re-
tain a good portion OF the trade thus
gained.
The reparatlon payments by the Cen
trail Powers will place In funds some
nations heavily indebted to the United
States. In the last analysis the dis
bursements Of the great fund may tend
to liquidate a portion of our advances
to France, Belgium and possibly to
Great Britain. Those credits may be
used also Is security for fresh advances,
as was done in the case OF tho recent
loan by American banks under the So
called Belgian industrial credit. II may
be some time before the payments under
the fund will be OF material assistance
In providing capital needed to reestab-
lish industry abroad. But the payments
will help and will be ultimately of great
aid In financing the worldwide readjust-
ment on which the leading nations are
engaged. The demand Is by no means a
temporary one and 1t may be necessary
to continue aid In some form for a con-
siderable period. But the bankers in
charge Of the relief programme may be
trusted to safeguard the liquidity of the
Federal Reserve system that its redis-
count facilities may not be utilized to
finance the purchase OF long term Sc
curities.
Record Foreign Trade Balance.
According to tho Governments for
elgn trade return. Just published, the
United States ended in May the first
eleven months OF the present fiscal year