Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1920-05-29
VALL ST. RELIEVED
. BY PRICE SLASH|NG
Imminent Solution Of Railroad
Problem Also Eases Finan-
cial Tension

the only course to destination which
may serve as n base for economic read
jnstment, that Is to say, with full rec
ognition Of the necessity for an imme-
diate solution of the railroad problem
and with price cutting inserting a
wedge in the splitting process in the
high cost Of living, Wall street breathed
this week q freer air and felt more
wholesome sense of we'll being in the
general outlook.
The course. however, is certain to be
a long one and will not be smooth sailing
at all points. Labor has yet much TO
learn concerning its responsibilities in
the scheme Of things, that the too easy
flow of money into its pockets cannot
70 on forever nor even for long II maxi
mum productive effort slackens, that
the spring fever attitude toward work
Itself must be corrected.
Without high power production. price
cutting will not avail because as soon
as merchants shelves begin to reveal
bare spots, there must be new buying to
replenish. IL production continues TO
lag as IL has been tagging, the supply
Of goods will not be equal to the de-
mand and prices will go up again and
the vicious circle will begin all over.
Merchants Had to Cut Prices
II is recognized as true that the re-
volt of the people against paying the
exorbitant prices exacted before the
price cutting movement began gave the
impulse to the idea Of concession. but
II Is the purest buncombe, as n promi-
nent banker insisted, to say that mer-
chants cut prices in a patriotic desire
to start the ball rolling downward.
They cut prices because they had
to, and they had to because banks shut
down on credit. The bankers had no
alternative. There wasn't enough credit
to go around. The least essential loans
had to he eliminated if essential busi-
ness was not to suffer. 1t was a matter
OF necessity and not of choice.
IL the situation had been frankly
faced months before, the effect of price
shaving would have contained fewer and
less feverish suggestions of a possible
period of business depression which
conceivably might develop into a panic.
At any rate IL gave very good oppor-
tunity to the silly and irresponsible
to talk panic and listen to il. There
must be period of business depression,
Of course, since business cannot go on
forever with a whoop and hurrah.
No. country on earth has wind enough
to keep up such shouting.
The rank and file Of Wall street. il
would seem, has at last caught up with
the leaders in this conception of the
situation, and while it was prone to
feel pretty good over its ability to be SO
philosophical. 1t had to settle back fig
uratively into an easy chair to give
full and satisfactory expression to il,
The market for securities indeed re :
fected philosophic resignation. Trading
dragged from the beginning of the week
to the end, except for few brief in
tervals in which the shorts got a little
nervous. Call money rates ruled at
per cent throughout without stimulating
demand for accommodation.
There were rather freer offerings of
time funds for nearby dates at SA per
cent. This situation did not spell
money at actual ease. On the contrary
1T indicated q momentary uneasiness on
the part of lenders that some of their
funds might 60 unlent for the time
. being, thing abhorrent. to the banking
sense.
Nm IHcentive to Borrow
row, particularly on call, when the
NuNiV tiNuib sItuutioh was ~ tlsHL.
The banks had money to loan to brokers
one day. but both banks and brokers
knew that the next day the banks might
need the money for purpose alien to
strictly stock market purposes.
Railroad congestion, albeit in process
OF anelioration, was the picture ever
before the eyes of all. There were the
two billion dollar" questions to be
answered, the one billion for wages
and the other for freight rate increases.
Growing appreciation of the fact that
the railroad problem was the paramount
problem for the country to solve was
indeed the outstanding feature OF the
week.
At the hearing before the Interstate
Commerce Commission, Howard Elliott,
Speaking Of New England. said:
That section exchanges raw ma
terial and manufactured articles with
the whole United States and to put
It's transportation system in order is
important to the whole country
OF the South:
The existing roads there need large
additions to their facilities to keep pace
with the growth of the South, and ad-
dhional railroads are also needed be-
cause that part of the country is capa =
Ole OF much greater development.
VI the empire west of the Mississippi
and the country as whole:
All these great productive and con :
sumlng parts of the country are tied
together by the railroads and they are
dependent and interdependent each upon
and with the others and there should
be the freest movement of people aud
commerce between them all"
Should Increase Production
Price cutting without increased pro-
gucuon is as futile as increased pro-
GHction without the means Of adequate
distribution. The high cost of money
mas forced the stronger roads to pay
per cent and upward for loans in order
70 Duy equipment and otherwise to in
crease their utility. The same reason
makes investors reluctant to buy rail
road stock at par.
NM would be much, better" said Mr..
fIiott, III all these roads had been
ape to sell stocks for their needs and
snus obtain partners in the business
,ustead OF increasing the debts of these
ITouiPanies. That, however, was abso
tLulely impossible, as investors will not
sui STOCK in any large amount ut par
val, street, therefore, sat back this
r SteG TO watch developments and await
se', nSalls' The fly in the pudding of its
Hrsighed contentment was the persistent
discussion of the soldier bonus bill in
t tnu out of Congress. While the secre =
@ry OF the treasury was engaged In
iiu'elhg congressional extravaganza and
M nhding the means to meet appropri
a.ohs he could not curb. the measure
do, Tr saddling billions of additional bur
WI mo, on the treasury was kept alive.
rms was recognized as political
apedient to beguile votes rather than
: US 'lnlnll Iu L.. i