Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-10-10
MONEY WITH COMMODITIES
INCREASING IN SUPPLY
Government and Commerce Commission
Recognize Fact-Barometer of Rates.
Local Securities Firmer.


Money has commenced to follow the
commodity markets, showing less
speed in it's readjustment than has
been evident in commodities. for the
reason that so many enterprises and
so much financing out of and in the
essential class have been forced to
await larger supply of funds and
that are now urgently seeking
credits.
But the government and the Inter-
/ state Commerce Commission have
both recognized the fact that money
is more plentiful, the former through
the lowering of the rate of interest
on Treasury certificates and the lat
ter through reducing the rate paid on
new issues of notes. bonds. etc. of
the railroad companies seeking loans
for the purchase of equipment. etc.
In some quarters it is held that
neither of the instances named is an
evidence of more plentiful cash, as
the Treasury Department may have
acted in reducing the interest rate
in a measure to please the banking
element which found the high rate
of per cent too great an inducement
to their customers to invest and be
responsible for heavy deposit with
d1awals: while the ~ per cent Or
dered by the l. c. c. on an equipment
issue was not important enough in
amount to be taken as a criterion.
Bankers Admit Larger supply.
Bankers. however, admit that there
is a larger supply of money available.
This may be due. in large part, to
the 1essened business activity. too
evident to be refuted. and partially
to the thrift habit that seems just
at this time to be making itself
greatly felt. after the long era of
reckless and extravagant spending.
Less activity in business makes
for less demand for credit from the
retailers of the country and, on the
same reasoning. from the jobbers,
wholesalers, and eventually the man
<ufacturers.
the slide of high prices was thor
ough and long in preparation. with
more or less stubbornness in initial
ing the slide, but it is we'll under
way and will run it's course to the
bottom.
Beginning with wooden goods.
breaking out in leather. sensationally
in automobiles. it has quickly spread
through wheat and other cereals,
rubber goods, cotton. copper, food
stuffs and scores of products.
1t is not SO much the concessions
that have been granted as 1T is the
expectation that further concessions
galore will be in order.
Effect on Loans.
The federal reserve bank of New /
York city predicts that the effect of
the lower prices will be an increased
demand for loans.
After calling attention to the fact |
that credit requirements are usually !
at their peak at this season of the |
year, the transition to lower prices |
is thus referred to:
"Such a period calls for a credit |
policy on the part of the banks look |
ing to conservation of sound BUSH j
ness Such additional credits as are !
Required are not for further expan-
sion, but are for the protection of |
industry. They are to enable bust |
ness men to undertake in an orderly |
manner the reduction of inventories |!
and the descent to lower price Levels. !
That the readiustment, which has !
been quite radical in many industries, |
has proceeded quietly and confident |
| ~, has been due in very large part |
to the helpful and constructive at
titlde of the bankers, who, in spite |
of the heavy Withdrawals of their |
del osits and the unusual movements
of funds, have not hesltated. II nee
essary to increase their borrowing
from the federal reserve bank TO 1ur,
nish such credits for production and
distribution as conditions nave re-
quired."
barometer OF Rates.
The action of the Secretary OF the
Treasury, covering the last eleven
months, is an excellent barometer OF
the value of money during that Pc
Rod A year ago the Treasury was
able to place certificates at Az per
cent, later Az. and in June Of this
year paid the highest rate ever made
by the government for money, 3 per
cent. The actual working of this
barometer was as follows: