Amarillo daily news. [volume] (Amarillo, Tex.) 19??-current, 1920-06-13
INVESTMENT HOUSES PREDICT LOWER
PRICES As LIQUIDATION PROCESS
HAS RUN ITS COURSE SOME BELIEVE

AulA AH'is June L. ne llktslilltuA
houses arr seeing signs that the s-Cur.
ity market has about run ~ course Of
liquidation Such representations are
not. however followed hy the usual a.
rsrtiNc f.aivMvH q that tny market VIII
therefore haprH,t Liquidation b. q
stcp ~ the pruyv. 90 iriliiiun The
first indications that % la srruu- mus
ment toward lower pn,r levels ar, 81.
pcrficisl. a. mieht be- expected. but
there has been no cessation in thr 81.
forts which have been part U. Tue
forcing proves
Interest rates are s;If commercial
lapcr II high quality u selling AZ an
lscT cent a. cunt Mn, pyr cent IS
not unusual and ib, best information
j.. that b,fof On, end oi the summer
rates may ~ as high a. a. per cent
and even higher These arr the rates
for paper that usually holds a preferred
position and b. in demand There IL 4
god deal II O. b, had and u h. not
all taken ln the end these rates must
have the effect 81 signing up business
Unquestihahly. there are thousands ~
business mrn who would be- eager O.
engage IN new enterprises or .nlarg,,
old ones II they could secure capital a,
lower rates. The Federal Reserve Bans.
are In control o! the situation The
policy being pursued Is based on the
assumption that credit has been "a
banded entirely out 10 proportion o. ir.
creases IN production. The procrss a.
described by the Governor II the Frd
eral Reserve Buard Is "by ursiug upon
member banks the wisdom az shouing
borrowers the necessity Tor thr curtai.
ment of general credits and especially
Ter non'essentisl uses. a. well a. con.
unuing 10 discourage luans fur ,spii 10
and speculative purposes. by checking
excessive borrowings through the ap
laication Of higher rates
The discuuragencnt Of ioans for sp,,
uiative purposes Is a iu-icai step. but
why loans for capital purposes should
he placed IN the SAME undesirable cate
cory Is not entirely clear II produ,
tinn h 10 be Increased u Is most ulog
teal 70 curtail credit L. be employed in
the agencies ot prediction \ lare.
iart Of credit for capital purposes b. -
employed. Under the application 81 the
present policy ~ the Reserve Board.
therefore, the reflatiunaH proves T. q
he accompanied by a decrease u pro.
duction and production Is the remedy
Tor the difficulties that exist The ~.
ficiai world % finance il then m the
situation % seeking o. lower prices by
decreasing production which makes
prices higher.
az cour,s. there i no such defined
purpose and, as the Reserve Board has
lett to the operating banks the ds,e.
mination of the question as 10 whether
or not an enterprise ia engaged IN the
production a. essentials. the hanks viii
use discretion and eventually. With ths
restoration Of transportaiiun facilities.
the country viii work out % it, diff.
culfics
The preliminary report II tho Valua
fion Cowmitl.e u the Interstate Com.
'nerce Commission wa. significant. q
showed that Tor 50 railroad systems the
cost Of reproduction az 1914 prices
would be higher than the book valuation
o. the roads Obviously reproduction 4
NJ present prices would D. enormously
higher. This u an eloquent answer
70 TIE Allegations that all railroad stock .
y watered- and u may h. that there Is
hotning approaching serious dampness
IN the stock q any II the railroads IN.
way Il. therefore. opened or IN, in.
crease In rates which viii b. necessary !
70 place the railroads on an earning
"ssis even II Il IL also necessary 10
meek the extreme DEM ds Il their en-.
Poyes Tor higher wages To gain the
Honiuonai revenue needed 10 offs., tho
I'rcsent deficit the railroads will have Z,
nave sc eral Increase 81 isss NJ
cent In all sevenue which wo,,l
amount 10 t,0I5.7fs.sss annually Tn.
decision on the rate question l. NJ, "a.
pected until September. while the war.
decision l. expected during the preSen,
month II the wage inrrrases arr
Efanied. then rate Increases will have
gree.
u % ag s.uicf b. n a.
provement In conditions In IN. money
market. Credits are being restricted A
rate OF per cent az the reserv. hank.
means : pet cent on commercial loan
ana the margin Of profit on the usual
commercial transactions il to- small "a
warrant such rate II NAV seem
strange. but the major factors which
soNern the price level d. not Indicate
I"wer prices IN the near future Re.
,niers and wholesalers and also manu-.
iActnrers are just nov content with
reduced margin u profIi but when Labor
IeceiVes an average of 40 pr cent of'
'ne sale price in final distribution Il Is
pam that there can D. mo- material or
" tneu' = h'f "a i1 fri,e. .thaI Q
IN command. ~ u Vel organized
strongly disposed O. ~. IL. power. ana
IN the year - presidential election
its y IN position O. make o. demand.
Effective. Any further Increase IN
wages viii b. met by a slackeneins d.
lnand' and manufacturers and arricul.
isral producers A. well as are quiet q
meet slackeninE demand with IA cur.