Evening star., 1920-06-05
BY STUART p. WEST.

NEW YORK, June 5.-The Wall
street market has given very convinc-
ing evidence all week of it's well
liQujdated condition. Bear raiding.
which was successful during the
greater part of last month. has ceased
to make any headway; on the con-
trary. operations for short account
have for the last fortnight almost
uniformly resulted in loss.
There is only one thing which might
provoke a moderate renewal of selling
and give the short interest chance
to cover, and that would be the nomi-
nation by the republican party next
week of a candidate who would be
classed as radical. Barring this. it is
difficult to see what could happen to
precipitate any important downward
movement from this price level.
The worst is known regarding the
credit situation, and just as Wall
street started last autumn to dis
count the troubles which did not
fully reveal themselves until six
months later, SO now 1t is ready to
discount the relaxation in the credit
strain which 1t may take the rest of
ed forward to with confidence.
Perhaps too much has been expect
ed in the shape Of immediate loan re-
duction. 1t must be remembered that
the federal reserve authorities have
been chiefly concerned with prevent
ing further imitation. They have not
wished to cut off credit to enterprises
that are in any way essential.
Dehation to Follow.
They will be satisfied If commercial
loans first cease to expand and then
very gradually begin to contract. 1t
would be better. of course, if enough
deflation occurred between now and
August to provide the fresh credit
supply that would be needed for the
new crop moving. But if this does
not happen it will still not be vital
matter.
After all, the harvest demands are
something temporary. They tie up
for a period Of four to five months a
certain large sum of bank funds
which are subsequently released for
use during the remainder of the year.
Knowing that a shrinkage in the
reserve ratio due only to the crop
requirements would be temporary and
would be made up quickly after jan
uary /. the authorities would probably
not be much concerned If reserves
were to run down the last four
months of the year.
Not a Critical Position.
The comparison between our situa-
ton and that of England is again
worth bringing out III reply 10 tnOSe
who base ultrapessimistic conclusions
upon our present banking position.
Suppose our federal reserve system
instead of having ratio of reserve
to liabilities of AZ per cent had a ratio
of less than IS. Suppose this country
instead of being a huge creditor in
the foreign markets had obligations
like the Anglo oFrench loan that were
soon to mature and would require a
considerable draft upon hard
pressed gold stock to meet. Then there
would be some excuse for talking
about the critical state Of things.
Yet the conditions here described are
those of England today. and are the
English markets acting as if they
were on the verge of a crisis?
The Bank of England between
Thursday week and this last Thursday
made a strenuous effort to build up
it's gold holdings, presumably getting
ready for a further shipment to the
United States.
Increasing Gold Stock.
In order to gather in gold it had to
expand its circulating note issue very
heavily. and as a consequence the re-