Daily capital journal. (Salem, Oregon) 1903-1919, 1919-06-28
Now York. juno q. 1919.

The situation at Paris and Weimar
and the question whether the German
representatives will or will not sign the
peace treaty in the slightly amended
form which has been offered to them
still constitutes the central and over.
shadowing question of international
business and finance. Eventually the
Germans must accept the terms which
are offered to them, even though there
may be an interval Of hesitation or re-
fusal before the inevitable is reached.
Meantime this protracting of the dis
cussion is naturally source Of some
anxiety is regarded only temporary is,
however, indilated by the active efforts
now on foot for arranging the peaceful
financing Of our export trade upon a
grand scale.
Foreign financial conditions have thus
become the dominant factor in our Sc
eurities market. How to finance our
export trade on some sound basis Is
much more than an export problem. 1t
involves the question how much money
shall be allotted to domestic financing
and to the support of speculative oper'
ations at home. This situation came TO
a point last week with the establish
ment of a rate for call money which
at one time reached Is per cent, and
with the recognition on the part Of both
federal officials and local bankers than
the time had come for some action
which would be conclusive. This feel
ing has given risetO the establishment
of committees and the calling Of con
ferenees designed to produce some def
mite result within a comparatively short
time. The result, whatever it may be,
win exert the utmost influence upon
general market conditions II Is to be
expected that we shall not succeed in
financing the export trade upon the
very high and abnormal level now ex-
isting, but il is also to be expected that
we shall show both the good sense and
consideration for the needs Of European
industry which will provide for reason
able accommodations to foreigners.
Money and Stocks.
The stock market has not fully un-
derstood the peculiar new conditions to
which il is subject 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 diseounting at federal re-
serve banks for the purpose Of estab-
fishing greater reserve credits on the
books Of the banks. In spite Of this
call money promptly bounded upward
as in the old days when a deficit of re-
serves meant a necessary euriailment Of
loans. The fact is that the federal re-
serve system could supply very much
larger reserves through the redisCount
process, If it chose to do SO, and the
funds thus proyided-if once obtained
by the member banks-oould be used in
any way that the banks might see fit,
whether for seeulation or for some 9th
er purpose. The member banks have re-
discounted heavily on the strength Of
liberty bonds and certificates Of IN
debtedncss as collateral, and It is in
this way that a 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 eall for information as 10 the
use Of rediseount proceeds necessarily
have caused some anxiety to banners
who were already carrying large lines
and who would naturally hesitate to put
themselves into any position that might
invoke legitimate criticism. The re-
serve system has not fanetioned as II
was expected 70 in this particular. It
has reasons to how for il peculiar po-
sition regarding speculation in that il
had been called upon to finance the
treasury 20 largely and at low and sta.
bic rates. still the fact remains that
IL Is the great source Of supply Of funds,
and that the policies that It may deter
mine upon win in no small measure reg
ulase those Of the actual lending banks.
Ia short the money situation has a.