Evening star., 1920-05-30
BY 1. A, FLEMING.

BY 1. A. FLEMING.
Further progress has been made in
the work Of bettering conditions dur
ing the past week. That the peak OF
the rise in commodities had been
reached. that the liquidation enforced
had brought money more plentifully
| into use. were facts that were recog-
nized by insiders ten days ago, but
have been emphasized in the turn
the other way in commodity prices
at least some of them. and the free
offering Of time money on the streets
Of New York. with Industrial and
mixed collateral for sixty days. where
| a fortnight ago time money was
even scarcer than farm labor in har-
;; vest time.
While these are admitted facts, the
government through the federal re-
serve banks has relaxed not a whit
IN the urge of liquidation and careful
consideration OF credN-a fact that
Ymay be accounted for in part by the
governments need FOR credit accom- =
lie for conservation and economy on
1.-THE part OF the lawmakers that is not
needed.
A saving ana a producing era is
greatly to be encouraged. with much
better chances for the success Of a
movement along former lines than
along the latter.
some bankers have contended that
too much stress has been laid on the
need OF clarifying the credit situa-
tion to the creation OF some uneasi-
ness. where 1t ID admitted that the
banks are sound and no possible
chance OF any serious trouble.
Internationally the need of con-
servatfsm was brought about largely
by the inability OF the railroads OF
the country to perform their 7unc-
tions properly. as evidenced by the
great freight blockade now being dug
out.
Delivery OF the thousands Of tons
ef merchandise Of many and varied
descriptions would have resulted in
the liquidation Of obligations which
banks have been forced to extend.
Hundreds Of millions of. dollars
worth of freight have been fro1en In
by reason Of this trouble. which had
Its inception in the Unauthorized
many cities. = ~
0svernment Needs Fu,as.
The government has outstanding
y. .2oe. .000. 900. according to the author
ity OF the National City Bank Of Chi
cago, which has four to six months
maturity. nearly all of which have
been taken BY commercial banks.
Some OF these certificates are
against income taxes: others simply
the aid in tidins over the needs Of
the government until the further re-
Of the Treasury. =.
Banks Anticipated Needs.
Tho banks commenced the reduc-
tion of credits weeks before the pres
sure Of the Federal Reserve Board
VS. exertsd. The New York stock
market had been taking drastic liqut-
dating doses for, months and It was
we'll this was the case. as the urge
Eof dsdation on An inflated market
Wettld have been . serious matter.
Tho federal reserve system itself
WAS . medium Of inaAtion, just As it
has been used In the last few weeks
toward getting credits down to appro-
pirate levels.
In an address made some years ago
before tho District Bankers Asso-
citation Senator Shaforth, one of the
sponsors OF the measure, made the
declAfation that failure IL impossible
with this law on the statutes. A
bank may discount and discount until
when. Of course. the bank Will be
10 . certain extent this 10 a fact,
b4t che federal reserve system doesn't
'Dss1nk Of the discount Of collateral
ssas1 ~ aqss s,sss sf sstssse from
:nAlsr Develop in wall strsst.
Il % ne trouble e MQuidate seeufi-
ties listed on wall street. There IL
always = market 1t . Dr1ce--the price
may be law. but the market - there
When hsiidsys are erdersd.
With stroke out Of clear sky
this great market stopped function
ing On the bSeaking out Of the world
war. but it WAS fortunate for all In
tafested that it did.
wall street Sta1teA.
A stated Wall street started its Pc
riod of liquidation in advance OF the
spur of the reserve board-discount-
inE ~ usual. for this market waits
NOT for the stroke Of tho check. but
apparently listens for the first whirr
Of the wheels sn6 discounts the hour.
Investments show Improvement.
The greatest announcement Of the
week has been the decided impr0xe-
snene IN investments securities that
have suffered uest severely IN the
ass Lena. 1:ss 1sss e. e ws9 Rom ~ low ncss
Ice material imrr0vsmsmt. ana old line
fanhUaA toD1aD tAat have been drugs
on t1se mAfket took the bit I'm their
teeth. for 10sd rAlliea, This was fol-
|6tntinS against the perslstsnt preso-
urs Of bunch Of bearS who were
tmo,1od with the idea that values
must 90 way down before there Will
te any real bettsrment.
The market rallied, balf 1t met profit
taking salss oh rallies. ana reactions
followed. but 1t strengthened again
and made q fairly good record.
Must Expect Prs1t Tahi.g.
TrAdsrB and brokers must expect
pront takin1 to attend every good
advance. The long pull 10 not here
yet, and when profits are in sight the
trading element 10 going to take
them much quicker than In the big
bull market following the stock divi-
dend deci1ion.
A Losal Cell Money MaRlEet.
There has been some talk. since the
steek exchange dinner on the 2sth
instant, Of l. local oail money market.
ThA suggestion ts advanced by G1orge
10. watson, president Of the Liberty
NatienAl Dahle, that ths banks Of the
01ty notify the secretary Of the local
e1chAnto every m6rHfng gfvtnG the
Amouat Of money tfIat they have to
lean On call. with = view OF testing
The recent ansndmeHt to the Dts
tfict oode permits interest rates up
to per cent, 30 that q rsmuneratfve
rate might be a9Teed up0n. The Bank
would 6A informed Of the character
OF the cellatefal and In this way con-
ditiehs here materially improved.
That . call market would be con-
the statement Of one Arm that It
Would b In for million dollars at
the New York rats at any Time
DYok6ro eould submit their eoIlsteral
and make Agreement to fsspond to
Gall before 10 o'clock the next day.