The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-06-09
FINANCIAL NEWS
ANDTHE SITUATION
Higher Money Fails to Check
the Rise in Prices in the
Stock Market.
PROFESSIONALS ARE BUSY
Greater Strength Follows the
Reaction, but Movements
Are Extraordinary.
PROFESSIONALS ARE BUSY
by WILLIAM JUsTUs BoIEs.


week its first thoroughgoing reaction
since the inception of the present up.
ward movement in February. The
sharp rise in money rates with the Fed
eral Reserve Boards warning concern.
Ing evil effects OF unrestricted lending
on speculative collateral at a time wher
the country was about to harvest the
largest crops ever raised accounted fol
most OF the selling. The recessions
ranging from one to sixteen points II
some stocks. were largely made good be
fore the close of the week, the marke
showing great resiliency. with confiden
buying in some quarters.
1t is apparent that money conditions
will be the governing factor in the stu
alton until after the semi-annual in
terest and dividend payments ar,
financed toward the close Of this month
In addition to those disbursements Their,
will be the second instalment OF in
come taxes OH June Is, aggregatini
more than $1,000, 600, 900, to be provided
for. Reckoning the payments of tn
July disbursement period Mt $3.50, 900, 00
and having regard for the other obliga
tons which have to be financed at tn
beginning of a new fiscal year. the tota
| engagements will approximate $500,
100000, a formidable sum for the mar
kets to provide even in these days o
billion dollar banking and to be raise,
Just before the opening of the harvesting
season when the largest crops ever pro
duced will be marketed.
Another factor having direct bearinl
| on the money market outlook Is tn
movement under way to organize a ma
tionwide syndicate of banks and bank
| ing houses to finance the restoration o
Ind tutv It To
bilious undertaking of the sort ever at
tempted and as 1t IS essential for ex
pansion of American foreign trade Their
is not the slightest doubt that it will
succeed. Those who have canvassed tn
| situation thoroughly say that credit
ranging from $1,000, 000, 900 to $4,000,
100000 will be required to provide tn
foreign countries with the necessities o
life and commerce. The demand Is to-
broad for any group of bankers to fore
cast at this time what will be require,
and the probability is that in addition
to syndicate advances there will be larg
credits extended by private firms an
| corporations engaged in foreign com
| merce.
Helping Europe Helps Us.
In attempting to restore Europe
crippled industries to n peace basis tn
banking interests OF this country ar
| beginning formidable investment cam
paign which may call for larger tota
! OUTLAWS than those under discussion, be
cause the movement is of internationa
proportions and will comprehend variou
forms of relief. including large drec
sales Of foreign securities to America
| investors. In helping other nations t
do business with us we are financing tn
rtt al
though the credit basis Is very 6ifferen
from that which prevailed before tn
war. The foreign loans that have bee
| sold here have been offered on 4 6 O
| ~ per cent. income basis, which in tn
| judgment of international bankers. rer
resents as generous terms as borrower
could expect to obtain in this marke
when most of the world seeks accom-
mediation here.
Those considerations show that ex
| tremely interesting developments In tn
| investment situation are pending an
| that the last half OF 1919 will be a pe
riod in which money conditions ar
likely to be the dominating influence /
the security markets. There is a var
| amount of financing to be done in th
| country as soon as the railroad tanCle
| Strengthened out and the great industrit
| corporations see their way clear to Init
| ate new Improvement work. The none
supply will be augmented by the info
of Canadian gold. as the developments
the last fortnight indicate that II
movement will reach considerable pre-
portions. All such assistance will I
needed before the year ends. as Il
money market requirements of the r,
construction period are likely to al
proach the demands of war times.
the final aDa1ysia ~ Ia apparapt n,
cept for the extraordinary borrowing
when the war was at its height, Il
transition period, during which Il
stronger nations will be called upon
finance the industrial revival of Il
weaker countries, will develop unprec
denied financial demands.
Price Levels Inflated.
The whole country is doing business c
an inflated price level, which means tn;
the daily turn over is abnormally heay
and that the country's bank clearing
probably will continue EXCEPTIONAL
large for the time being at least. Pric.
in some industries are being stabilize
but the basic commodities. with one
two notable exceptions, have not bee
reduced appreciably. The testimony
retail merchants at Industrial centres
that well to do wage earners are buyir
literally at the higher price level and
many cases more intelligeptly. Less
heard of unemployment, and in Detroi
Baltimore. Cleveland, Minneapolis ar
other cities there Is scarcity OF skille
labor, Notwithstanding demobilizatiC
and return of workers from plants TO
merly engaged in Government contra
work. The probability is that the farme
will have to pay this season q recoI
wage to attract competent men and thu
good helpers will be scarce.
Whatever emergency financing be a
tempted will be based on natural turf
of the money market rather than {
dictates of patriotic finance In such
situation it is right for the bankers
obtain normal rates for accommodate
and not to adhere to the Az or Az p,
cent. interest basis OF the war los
period.
American bankers and business m,
have entered an era of lucrative develo
ment work, the total profits of which a
beyond the calculation OF even the fna
cial experts employed by the Econom
Council at Paris. Every business m;
has been forced to enlarge his visit
and adopt the international viewpoint
the only means Of forming an intellige
estimate of what Is likely to happen du
! ing the next year or two of world wi
. financing. Various obstacles will have
: be overcome before an adequate pr
gramme for extending relief to crippl
/ nations can be formulated. But duril
the interval nothing will be permit
to interfere with orderly expansion
our foreign trade and such developme
. of domestic industry demanded by pre-
perity of the country and largely
creased spending power of the Americ;
people. In such a situation the sto
market is bound 10 develops interes
inEly and, notwithstanding the sustain
I rico that has taken nlaca n Is eyide