Atlanta tri-weekly journal. [volume] (Atlanta, Ga.) 1920-19??, 1920-07-06
FINANCIAL
OUTLOOK
BY STUART r. WEST

WALL STREET, New York, July
S.-The stock market this week has
/ followed very precisely along the
lines anticipated by the best judges
| At the low levels of May prices had
| discounted all the unfavorable fea-
lures of the outside situation. They
| had taken into account the high
| rates for money, the severe restric-
tons were ON credit, the troubles
with labor and the falling off, pres
ent+ and prospective in industrial
There ensued month of inaction
during which stocks were quietly
picked up by the class of people who
buy when the general public are
timid and are holding off: This ac-
openly during the past week and
has been favored by the talk that
there would be nothing doing in the
market until after the fourth of
July holiday when the worst of the
midyear money troubles would be
over and the results of the Demo
cratic convention would be known.
AS expected those who have listened
to his talk find that they have
they wish to buy now will have to
paw considerably higher for their
stocks. In looking ahead to the pos
sibilities of the next month or so
there is certainly no ground for ex-
travagant optimism. ..--.-.,-..-, 49,. =.
Money for Wall street uses will be
in freer. supply. but it will not be
cheap. There cannot be any return
to low money rates until the fed
eral reserve banks reduce their pres
ent scale of discounts and this can
not be expected until some time
next year at earliest. All that can be
anticipated in the market is an in
crease in the amount of lendable
funds sufficient to allow a moderate
expansion in. speculative: activity per
been selling below what they are
really worth to get back to their
value. line and in their advance bring
ing about modest rally in the gen.
railway rates will of course, if it
comes, have a powerful reaction up
on the whole market. But it will
constantly be borne in mind that
there could be no old time specula
ton with credit conditions as they
are and with the extra demands Of
the crop moving in immediate pros
pect. ~ " Dr.
. The fundamental changes for the
better in the situation, as compared.
with month, ago, are. first, the sue.
cess of the restrictive, and coercive
measures adopted by the federal re-
serve authorities in putting a stop
to credit expansion and bringing
about a small, yet convincing i'm
provement in the general banking po-,
sitlon; second, the greater stability
given to the foreign exchanges as it
has been shown that the suggestions
of collapse in financial Europe were
unfounded. and that foreign obliga-
tons in this country are to be met
either through the transfer of gold
or through the f1otation of European
government bonds in our market;
third, the complete upset of the
theorists who were predicting a
slump in the foreign trade, the May
figures of exports and imports af-
fording the strongest evidence vet
given on this point; fourth, the re-
markable Improvement in the crop
outlook, the official cotton estimates
now indicating yield considerably
| In excess of last year instead of
the threatened serious shortage of
a month ago, while wheat and crops
have progressed under weather condi-
tions that have been exceptionally
favorable.
Financial Situation
Along with these developments has
| come a clearer conception of the
| financial situation at large and a
recognition that the propaganda of
! pessimism, which was so widespread
| IN the early part of the year was as
| ill-founded as it was mischievous.
1t is now seen that the three main
| Clldl oSIO1 lSLlCo VI IIG
crisis of the past-over-productio
low prices, unemployment-are in the
present conditions absolutely revers-
| ed. With some exceptions, which are
well known the demand for the out
put of the mills and factories is still
! far ahead of the ability to supply.
| This, of course, being emphasized by
the transportation difficulties
Maximum Production
instead OF prices SO low as to in
Cuce a curtailment of Industrial eff
fort there is every incentive to keep
production at the maximum. Instead
of a labor surplus, with great num-
bers of people. out of work, there is
an extraordinary scarcity of labor.
Instead of being heavily in debt,
where we would have to export like
Japan, our net credit balance dur
ing and since the war has amounted
to ST., 100000. Finally, if Eng
land is not seriously worried when
it's bank reserve ratio falls below
f9 per cent, what possible right have
we to worry with our reserve ratio
to liabilities of A per cent?