Evening star., 1920-02-22
REVIEW OF THE CONDITIONS
IN FINANCE AND BUSINESS
Period of Unfavorable Factors and Adverse
Problems Situation Averted.
Position of Market Improved

off for price reaction, is a phase that
had been plainly foreshadowed, and
is one which may ConceIVably bring
more wholesome economic conditions.
Significance Largely Political.
Although new trend has been
given to the foreign relations of the
United States and to the European
situation generally during the past
week by developments here. the sig
nificance of this situation is as yet
largely political and has not fully re-
fected business conditions thus far.
In commenting on the present situa-
tion the banking house of Henry
Clews & Co. says:
Regardless of the political situation
the market has experienced a more en-
Couraging condition, showing an upward
tendency in prices in many issues as
well as an ability to get away from the
excessively high rates for money which
had been Characteristic of the week pre-
Ceding. This is partly due to the fact
that liquidation had gone to so advanced
a point as TO make various issues evil
IDENTIFY assume a bargain character and
hence to rally to their support strong
investment buying which had previous
lY been lacking. An interesting and en-
couraging factor in the situation has
been the improvement in the prices of
high grade bonds. particularly railroad
issues. which has occurred during the
past day or two A good deal of buy
ing has been developed in the interior
of the country and, while market oper-
atiOnS have been on n relatively re-
stricted scale, the situation has certain
iy been more promising. Call money
has ruled around per cent during the
most of the week, and We're it not for
the high rates on time funds as well
as the scarcity of accommodation of
this class. the money prospect would
have been reCkOned decidedly more ia
vorable However, the reduction of the
federal reserve ratio to only about 43
per cent ut the beginning of the week
was taken by operators as very dis
couraging symptom, they being assured
by their bankers that the continued de-
cline OF the reserve percentage neces-
sarily means Il tightening of credit at
the reserve banks. and. accordingly, a
limitation of the volume of funds which
they can consider available for invest
ment purposes.
Bank Credit CurtaiIed.
There has certainly been very de-
cided curtailment of bank credit in New
York and the districts adjacent thereto,
but much of what has been saved there
has been offset by corresponding ex-
pansion in other parts of the country
America upon large scale during the
past few days also gives promise of a
reduction IN the gross amount of re-
serve at reserve banks, which is likely
10 be reflected in a corresponding fall
ing on OF the ratio of reserves to La
plilues even If the present high dis
count rates should be effective in cur
taiilng the loan account in the way that
is expected OF them. 1t will be some
time before the outlook in the reserve
system can clear itself very materially
and until that period arrives banks are
likeiy TO continue chary about commit
ting themselves on time contracts 60
that the call market, even when rates
are favorable. will be more or less
unstable.
Immediate Outlook,
While the money outlook continues
unsatisfactory and while foreign AZ.
ralrs, as already pointed out, are in
iar from settled condition. the mast
week has undoubtedly thrown some
creams OF light upon a situation that
had become discouraging. The mar
ket AT present offers many oppor-
tunitles for investment which exceed
those that have presented themselves
for months past. While the bank
loan situation calls for continued
caution in making commitments, and
while there will undoubtedly be re-
actions in industrial issues from time
to time, enactment of the pending
railroad bill should open a better era
in transportation stocks and the i'm
provement of money conditions
when effected should gradually re-
store a normal position in the gen.
eral investment market. With re-
spect to the industrials their ground
is less sure than that of the rails, ow-
ing to the talk of industrial reac-
ton: but even should this take place.
it is n question whether 1t has not
been fairly well discounted in the re-
cent heavy break. 1t would seem so
for the time being at least. What
will be the result later in the year
remains to be seen. Most people will
saw Sufficient unto the day is the
evil thereof -