The Washington herald., 1920-02-02
TRADE REVIEW
NlCOMMENT
Remedying Speculative In
Aation First Step Toward
, Sound Future Policy.

strong in many quarters. Recent
in Wall Street, some of
II drastic, has resultedNin placing
the stock market in a stronger
technical position. The bankers are
engaged now at the request of the
Federal Reserve Board in cutting
down unproductive loans, or loans
of the so-called non-essential class
The probability is that these efforts
will be successful and that the strain
upon credits will be materially re-
lieved as a consequence Of con-
sistent pruning down of specula-
tive commitments. A very interest
ing speculative account of large d.
mensions will be exposed at the
spring settlement of March in
the territory where the picturesque
in land has been an inn
portant factor causing credit strain.
IN SOHlc dSpCSls Nhio hdS Dtcn Ine
most interesting land craze that
the country has ever witnessed and
although it is not possible to ascer-
tain the whole extent of the move
ment, those familiar with the opera
tions believe that the total account
will show much the largest invest
ment of this character ever made.
Money, Credit and Investment.
Although the level of operations
on the New York Stock Exchange
has continued low call money has
again tended toward high levels.
20 per cent last week. The
action of the Chicago conference
of bankers on January 2S, con-
firmed the action already taken by
the New York Clearing House in
fixing a low uniform rate of inter
est upon out-of-tOwn bank deposits.
This practically leaves to the Fed
eral Reserve Board the power It has
desired in the making of actual rates
of discount. BY refraining from
for interior funds the
city banks 'Of the country are do.
ing what they can in a negative
way to make the rates named by
the board effective"
As yet there has been but little
basis for Judgment regard e
ing the operation of the new rates
on the basis first announced in New
York and other Eastern districts a
week ago. The new level OF rates has
been adopted practically throughout
the country ind constitutes Il much
more expensive basis Cvr borrowing
than any thus far established,
Heavy local demands for funds in
the interior have made ths return
flow of money to New York and
other centers usually expected at
this time of year far lighter than
usual. while the January liquida-
tloh or reinVestment of funds paid
out IN dividends and interest has
been OF unusually limited character.
The Federal Reserve Board evidently
has the support OF the banking COM
nunity in its contraction policy. while
the appointment of Secretary of Agri-
culture to the Treasury portfolio is
likely to strengthen those who have
favored a strict control Of rates OF
interest. Mr.. Houston being regarded
as decided Contractionist. From all
it must be admitted that
prospects favor not only a continu-
ince of high charges for money. but
also a maintenance of those conditions
which produce these rates
Prices of commodities are steadily
tending higher. while the effort to
INIT or reduce tho volume OF bank
oans have thus far been unsuccessful.
That still higher rates of rediscount
may be resOrted to at an early date
should the present level not produce
he desired result is clearly n posi-
oility. The reflection Of these high
discount rates in lower capitalized
values for securities as we'll as in
The necessity of higher rate offerings
on new securities must be expected.
Courage and Enterprise Needed.
We have now reached the point in
he backward swing of economic con-
litions where courage and enterprise
Is well as conservatism are likely to
DC needed. 1t will be impossible to
give up the extension OF legitimate
;redit to European buyers, while on
The Other hand the furnishing of do
nestle industries and enterprises with
he capital needed in the regular and
necessary expansion of their OPERA
lions will be equally essential Busi-
ness reports from all parts of the
bear witness to continued ac-
.ivity in buying, and to every pros
oect for continuance Of strong de-
nand. A process of adjustment be-
tween the older and the new credit
is now going on and may
asst for some time. 1t will Law the
for stronger, more exten-
sive and better business. RECOGNITION
II these facts should compel an ad-
mission of the great industrial val
les. present and prospective, under
ying many shares, and should pre-
'ent any undue development of pes
'imism growing out of present condi-
ions. The situation merely calls for
disposition and ability to look forward
'ver a period rather longer than is
Usually required in stock exchange op-
With the winter nearly over, the
will soon reflect the sort of
which often gain promi-
renee at the beginning of spring. In
lsmuch as this is a Presidential year,
he indications are that political un-
will loom large upon the
Investment horizon Until the nomi-
lating conventions have been held
n June. Several candidates on both
ides have already announced their
to abide four years in the
White House. At the moment it
ieems as if the labor issue would
lgure largely in the campaign. al
hough it is too early yet to tell Just
what the. real issues of the campaign
will be- A Presidential year how