The citizen-Republican. (Scotland, Bon Homme County, S.D.) 1???-19??, 1920-06-03
BUSINESS WORLD
more OPTIMISTIC
Financial Difficultiss Heing
Corrected, So Wall Street
Crawls Out Of It's Cloak
Of Pessimism.
~ WALTER 3. BROWN.

ASeAN1E - s#MidA
Editor the New York Commercial.
: New York, May 3L.-Recoyery. in
written for the United Naws.l
h stock market evident during the
greater part of the week appears
to have been based upon natural re,
action from the depressing influences
so long in control.
NOW that definite steps have been
taken to correct the difficulties be-
setting the orderly conduct of busk-
ness, Wall street seems to have TAX
en- heart and ccawled out from under
its cloak of pessimism.
The mere act that the country
shows signs of under standing the SER
iousness of the credit situation is
sG.ss.s:sat to s.vs So.e.1ss
while the favorable showing of the
last bank statement, though not re-
vealing all that could be desired.
nevertheless indicates that the ef-s
forts of those in control of our H..
nancial affairs were beginning to be
felt.
Program Counts for Much.
1t does not follow that we are by
any means out of the woods SO far
as our credit difficulties are con-
cerned, but 1t Is a great deal to have
laid out q program.
This REIMBURSEMENT of credit condi-
lions is bound to have some rather
disturbing effects from time to time.
The price cutting among retailers is
an outcome Of it, influenced also by a
revolt on the part of the public.
Inventories have been too large,
and the banks nave made 1t plain to
such customers that it would be far
better tt reduce them rather than
apply for renewals Of loans to carry
them. This class Of borrowers has
also realized the advantage Of ar ar
rangement of this character, as 1t
was far more profitable to turn ex-
cess merchandise into cash than to
pay prevailing rates for new loans.
1t has, OF course, led to a great
deal of hysterical price cutting, re-
sulting In stimulated consumption in
stead Of stimulated production. which
is the real remedy for the trouble.
The outcome will naturally be de-
pleted stocks from which will arise
an abnormal demand and higher
prices later to be followed. in turn
by other cuts with the probability
that the general price curve will show
a wavey line, but with the general
tendency downward.
Exchange Situation Improves.
One of the factors entering into
the situation is the improvement
in exchange following imports of gold
for British account. A shipment of
$40, 000 900 came in during the week
via San Francisco from China which
may be anticipation Of the payment
of the Anglo-French loan due in the
fall.
Incidentally, the Argentine rate OF
exchange has again become favorable
to shipment Of gold to this country,
but as Argentine has already large
gold credits here, it was merely nee
essary to release some Of it to &C
complish the same purpose.
Another effect of the high price of
money due to the credit strain, is
The predictment in which the far
mers find themselves Il attempting
to finance their crops, and the pur-
chase Of livestock, farm machinery,
and the like. They have petitiona1
congress for an emergency fund Of
say, $4o,O 0 70, 900 for this purpose, to
use as a revolving fund. If it were
only possible to move their remaining
crops this extra financing would not
be necessary, and in fact a great
deal of the excess credit strain could
be averted, but with conditions as
they are, prompt action is necessary.
as the season is getting lat0 and the
opportunity will soon be gone.
Farmers are also in a difficult sit
uation because of the shortage of
farm labor which has deserted the
fields for the higher wages offered
in the industrial plants. Farmers
complain bitterly because of the
competition of the automobile factor
les in paying fancy wage scales,
which they can easily pass on to the
buyer in these days Of abnormal de-
mand. In Is respect it seems rath-
err inconsistent for the farmers to
complain as they themselves are the
largest buyers of automobiles.
Must Watch Crop Situation.
The question Of financing the new
crops is, of course, preliminary to
providing a suitable amount of credit
to move the crops after they have
DCSh laioSN, In dlLIiou6H IHIS is
several months away. preparations
are already being made to provide
the necessary funds.
Incidentally, it is of considerable
interest to note that the winte-
wheat crop in the southwest is max
ing a much better showing than
from earlier reports seemed possible.
Severe winter conditions usually have
the afect of forcing growth UNDER
ground, so that the strong roots thus
developed are more than likely to
result in a heavy yield per acre.
The crop situation must be watched
from now on as any reduction in the
buying power of the agricultural
community would Immediately react
upon industry, and in turn upon the
financial situation. In fact, a crop
failure would in all probability bring
on a period of depression, if not an
actual panic.