New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1920-05-03

in its present stage to be taking cog
nizance Of the broader and more far
reaching factors at work in the financial
and economic situation. With scarcely
an exception, these are such as would
naturally cause conservation and cau~
ton.
The average price Of thirty industrial
stocks dropped to 9277 last week. The
low Of the week before was 95. The low
reached on the February break was
8S.70.
OF the many adverse influences play
ing upon the speculative markets, those
having to do with credit and with labor
occupy first place. There is no doubt
that much Of the trouble from which
securities are now suffering is bound up
intimately with the general credit situa-
ton. Efforts on the part of the Federal
Reserve authorities to bring about de-
fation have perhaps been successful to
some degree, yet the situation is still
acute. It has been aggravated by the
recent railroad labor disturbances which
by seriously deranging production and
shipment schedules has thrown an in
creasingly heavy burden upon the banks
which were already hard pressed by the
ordinary demands Of business and in
dustry. Moreover, the condition Of the
investment market-new issues have
been going slowly-has also added to the
load Of the banks. Bankers are con-
WINGED that the situation will work out
without serious difficulty, but they can
see little prospect of lower money rates.
Stock exchange borrowers last week
paid as high as IL per cent for accom-
mediation. The commercial money mar
ket is perhaps better index of condi-
tons. There borrowers continue to pay
per cent as q rule. The effect is to
restrict borrowing, and in the long run
the result will likely be contraction Of
loans, which is what is desired by the
financial authorities at this time.
Paul M. Warburg, former vice-gov-
ernor of the Federal Reserve Board,
sounds note of warning when he says
that we must fight imitation with all the
means at our disposal, and must call a
halt in further bank credit and note
issue expansion, thus destroying the at
mosphere of easy money and individual
prosperity that is conducive to general
extravaganza and fosters discomfort
among the masses. Imitation and inef-
ficiency Of labor are closely joined
Developments during tho last week
have tended to emphasize tho world
wide shortage Of capital. Corporate
borrowers are paying per cent and
more for funds. That does not seem to
be out Of line when the British govern
ment is Offering q new issue Of securi-
ties in the London market on 4 basis
of approximately z per cent.
Pessimism, like optimism, is conta-
gious. Many holders Of stocks sold last
week because prices were going down.
They are tho same kind Of people who
buy stocks when they see them going
up. The market has been through q
whole lot in the last six months, and is
probably pretty we'll liquidated. That
| however, will not prevent prices from
going lower. The market has a way of
going to extremes. In bull campaigns
prices are likely to be put too high and
in bear market too low.
Wall Street is deeply concerned over
the bonus tax discussions going on in
Washington, although it does not be.
ileve the extreme proposals warrant Sc.
rious consideration. What is causing
apprehension In financial circles is the
apparent willingness of certain public
officials to jeopardize the business of the
country by rspressive tax measures with
out giving serious thought to the con.
sequences. One Of the numerous adverse
influences upon the speculative and in.
vestment markets Is this attitude on the
part Of a certain element toward pro.
ductive enterprise which seems to b.
looked upon as being mainly a tax pro.
Queer. 1t is unfortunate that industry
should be SO hanpered and bothered a;
a time when there are so many othe,
problems to worry about.
How the financial community views
the present tax policies is set forth in
an interesting manner by the Mechanics
and Metals National Bank in it's Nav
letter, q part Of which follows: "Oppo.
sion on one ground OF another to one
tax in particular-the present excess
profits tax-is constantly growing both
within and outside of Congress, so that
its radical modification or elimination
seems certain at the earliest favorable
opportunity. In practice tho tax has
proved unjust and vexatious; it has dis
couraged economy and promoted waste
That is because, as tax, it is funda-
mentally unsound. Taken together the
excess profits and the income tax con.
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