The Bridgeport times and evening farmer., 1920-01-05
HENRY CLEWS'
 WEEKLY LETTER

So far as the holiday season has been productive of definite news de- velopments, they have been of an op- tintstio nature. The fact that there is closer approach to agreement among the different factions that are at work on the peace treaty gives promise of some accomm odation be- fore the new year is far advanced; end the resumption of discussion among representatives of the Allied Powers in Paris regarding the ad- justment of terms of peace means the development of important arrange ments at an early date. Congressional attitudes on the railroad question are on the whole promising. The indus trial conference named by the Presi- dent appears to be approaching an understanding with reference to a program that may appeal to the best sense of the country and may thus become the foundation of legislation designed for the promotion of indus trial quiet Abroad, encouraging symptoms of recovery from war con- ditions are visible in Great Britain; and there is promise of a better situa- ton in France and elsewhere. The pre-h oliday market showed decid- ed return of strength after the reac- tion of Monday, but it is realized that the United States has serious pro- blems to meet in connection with it's financial outlook and 1t would be foolish not to recognize their nature or to indicate the remedies that must be pursued in the process of settling them; and these must be given due consideration in forming an opinion of the market.
 Money Situation.
 
 serious and pressing is afforded by the money situation. The Federal Reserve system has raised its dis count rates in such a way as to wipe out entirely the so-called "differen- tial'' which has existed between the rates charged for the rediscounting of paper coIlatera11ed by government bonds and certificates and the rates charged for commercial rediscounts. At the same time the Treasury has announced that its next certificates of indebtedness will be Issued at a rate of "A per cent. This quite plainly recognizes a higher rate for money as having been established in the commercial loan field. At the same time the rates for call funds have gone as high as 25 per cent. during the past week, with daily re- newal rates on standing loans of 15 per cent. The fact that the Reserve bank percentage has fallen to the lowest point in it's history. and that still lower ranges may be expected in the near future indicates that there is little or mo prospect of re- dqction of interest rates for any con siderable period in the future. It is entirely possible that the so-caIled turn of the year. payments may be followed by easing of the rate sit uation from it's extra ordinary condi ton, but this easing can hardly be more than temporary and superficial so long as existing business conditions prevail. This means that the early part of the coming year is likely to be a time of very continuous finan- ciaI strain, although it may be feasi- ble to relieve 1t if all those who have need for loan funds endeavor to keep their applications within bonds and use their resources in a strictly con Servative manner
 Prices and Business.
 The price situation throughout the country is evidently in a state of un- stable equilibrium. Shrinkages have occurred in basic farm comm oddities such as meats and meat products, while farmers who have bought land
 
 lent still have upon their shoulders the necessity of carrying their obli- cations and of iquidating them as they faN due. Business men and in- diyiduals who have financed them selves upon a paper basis, in the be- lief that prices and profits would con- tinue as at present, can make good their commitments only in the event that they are able to go on with much the same volume of business and the same rate of profits as in the past. There has been a trem dous imitation of credit aM over the coun- try; and to keep things up to theil present level of values it would be essential to have this outpouring o1 credit and currency continue. A: just noted, however, such a continu ous supply of resources can hardly be looked for; but on the contrary there must almost inevitably be { period of reduction and contraction which will tend to carry operations to much lower levels. This is a stu ation which points strongly to tn need for business caution and for tn establishment of all possible protect i've and safety devices in the financing of industries.
 Financial Outlook.
 The shrinkage of prices in tn market which occurred during tn early part of the present week an was followed by partial recovery i likely to be only one of series o such occurrences, should like condi tiops recur from time to time. Whil conditions just at the year end ar probably characterized by greate strain than at other dates, it remain true that the immediate cause of diff ffculty such as the reduction of re serve percentages, followed by risin rates for call money, and the advanc in Reserve Bank rediscount rates ar, likely to recur at almost any momer and must be recokoned with as ele