Evening star., 1920-02-22

In surveying a period such as that
Through which the market has just
passed and the accompanying events
which have impressed themselves
upon financial and business condi
tions. the Bache Review says:
"A tight money market generally
affects the stock market before any
other will and. if long continued,
Wall street has to give up funds
first. before the country's speculative
business yields at all. Liquidation
of securities accompanies the milking
process. and If carried on too far
wholesale unloading of holdings fol-
lows. All unfavorable factors then
become impressive. and if the stu
T. tion is clouded with other adverse
aproblems besides the lack of funds.
real liquidation by investors may take
Ep,ace. This point had been reached
on the Wednesday before Lincoln's
birthday, February II, and toward
the last hour of that session there
appeared to be some selling from
,vhat is called strong boxes, fore
ga sting a much more serious situa-
tion. This was happily arrested the
day after the holiday, and the price
list has since advanced-the rails.
after long period of dropping, being
1nost improved.
This latter improvement is due to
tine TACT 1naC tne conf trtllCc bllI- IL
BIZ passes the Scylla and Charybdis
of the House. the Senate and the
president. will be the first Construc-
tive railroad legislation which has
Ibeen enacted for years While very
deficient in provisions for rebuilding
railroad credit and making available
the vast sums needed TO get the roads
Into position to adequately care for
the country's business. it Is. never
theless. a step in the right direction,
and on this long look ahead some
Speculative uplift in the railroad list
has taken place. The task of rcstor-
bng the railroads to any such basis
of prosperity as exists in some OF
our best industrials is an Herculean
One.
Credit Situation Unchanged.
"The credit situation does not ap-
pear, by last weeks bank statements,
to have improved, Notwithstanding
that the restrictions put in force by
the Federal Reserve Granddaughter re-
discounts and rationing of credit
have been in force for month or
more on February IS. the reserve
Ratio WAS 49, per cent-the lowest
lon record: and the total loans were
S2 $50. .O35 .0OO-the largest on record.
hiigher rediscount rates may have to
be put into effect. Meanwhile, moth
hng is being done to stop the outgo of
gold. nearly S110,00o,0OO having been
Exported in the last nine weeks. cor
respondingly reducing the gold re
serve. Nor is anything being done
about refunding the liberty bonds at
higher interest which would distinct
ly relieve the situation.
THE technical position OF the mar
ket is better, but the credit and money
|situation stand at present as an OBJ
stacle to much improvement, During
the week. however. there has been
some liquidation evident in merchan-
disc and commodities. due TO high
money. to difficulty in renewing spec
uiative loans on merchandise and to
more cautious buying by jobbers."
Dun's Comment on Market.
Commenting on the effect the price
Question and market def1ation has on
khe general financial situation, Dun's
bays:
with increasing force, the price
Question governs business operations in
Various channels. and waiting for fur
kher market defiation has lately become
more noticeable feature of the gen.
eral situation. Exceptions to this con-
tiition are not absent, appearing con-
epicuously in iron and steel and in GER
hahn other industries, but the main ten
dency is clearly toward growing con-
servatism and caution among buyers,
many of whom are more disposed to
purchase for immediate and well-de-
fined needs than in anticipation OF fu-
kure requirements Doubts among some
sellers regarding the holding power Of
rrices moreover. have found tangible
Expression in offerings of goods for for
ward delivery at lower quotations than
those now current. and resales at con-
ressions of merchandise previously
taken on speculation have afforded an
Cther indication of the present trend of
eentiment. Rejecting these character
bstics, which have not been unforeseen
1n some quarters. Dun's list of whole
tale prices this week, for the fourth
Consecutive week, discloses more re-
tessions than advances: and it is sig
nifcant that the declines are begin
hing to cover a wider range of COM
Jnodties, and that consumers are de-
irving some benefit from the reduc-
tions.
while the severe storms of the
winter. with their accompanying re-
straint on production and distribu-
tion, have had decided bearing on
the recent slackening of business ac-
parts Of the country, yet the funda-
,nental causes of the slowing down
process have manifested themselves
in the movement toward credit con-
traction through closer control of
banking accomm odation, in the i'm
pediments to export trade resulting
from the extraordinary depreciation
Of foreign exchange and In the more
general recognition of the fact that
prices still remain on an unnatural
basis. and that readjustment is in
evitable. That sellers no longer domi-
nate about all markets and that many
buyers are not now competing keenly
for available supplies but are holding