The Bridgeport times and evening farmer., 1919-06-24
e,RealEStafea and IHnSuHeanc

through the rediscount process, if it chose to do so, and the funds thus provided-if once obtained by the member banks-could be used in any way that the banks might see fit, whether for speculation or for some other purpose. The member banks have rediscounted heavily on the strength of, liberty bonds and certif- cates of indebtedness as collateral, and it is in this way that good deal of the recent upward movement in the stock market has been financed. But the warnings sent out by the Federal Reserve Board and its call for information as to the use of re- discount proceeds necessarily have caused some anxiety to bankers who were already carrying large lines and who would naturally hesitate to put themselves into any position that might invoke legitimate criticism. Tha reserve system has not functioned as it was expected to in this particular It has reasons to show for its pecu- liar 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 re- mains that it is the great source of supply of funds, and that the policies that 1t may determine upon will in no small measure regulate those of the actual lending banks. In short the money situation has as never be- fore become the key to the stock market.
 Are Stocks Too High?
 In view of the evident anxiety that is being exhibited with respect to the use of reserve funds, resulting as aI- ready 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 one can safely be a prophet in the present circumstances, yet the indi- cation would seem to be clear that stocks are not as yet due for any prolonged decline, while the money situation will probably prevent them from showing any sensational or dan gerouS advance This would seem to mean that the stock market is in a more or less (for it) stable situation likely, of course, to suffer ups and downs, while given stocks may still afford good speculative possibilities. For the present it is not as likely as heretofore to undergo marked changes in either direction will undergo them when they occur only tempor- arily. Whether stocks are too high in the earnings sense must remain to be dem monStrated 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 manufacturers. Copper is moving more freely and at better values, and prices are certainly high enoug ugh-and rising both at home and abroad. Barring some unfavora- ble European developments it would appear that nothing except some un- foreseen interference of Providence could prevent prosperity from con- tinuing to increase during the present season. With financial conditions as well stabilized" as they now are, even in the face of heavy Government demands and undoubtedly difficult problems to be met in some branches of the export trade stocks should be in a safe position for a good while to come.
 New Securities Offerings.
 The new securities offerings origin ating with domestic enterprises are elready unprecedented but they are ely to be followed by offerings of a Ii " kind-those growing out of for. eign financing. As already intimat- ed the need of some positive action is already admitted by those who ore studying our export relation ships It is also conceded. however.