The Washington herald., 1920-06-14
RAILSHARES
DUEFOR
Western Roads Weaken AZ
ter Chicago & North
western Drops.
HIGH MONEY BLAMED
Amounts Borrowed by Fed
eral Reserve Causes {
Anxiety.
By C. b. EVANS

Chicago. June 13.-The courage
of the business community caused
| by the continued large demand Tor
standard merchandise and the
political outlook is tempered by a
number of incidents.
Two Western railroads or hign
standing, the Great Northern and
the Northern Pacific, have shown
the white feather by a decline in
their stocks. following the slump in
the shares of the Chicago and
Northwestern. Two of these three
roads show increases in net earn
ings the current year. the Northern
Pacific scoring a decline of S1,I00,-
600. bat the main reason for con-
scrvatism is the uncertainty of the
future even with the changed atti-
/ tude of the public and the govern
/ ment. The action of these three
stocks is blow to those who have
been hopeful as to railroad shares,
though they have had abundant
warning of one kind or another of
the weaknesses of that line of in
vestment
Failures Unnoticed.
But the railroads are not alone
in disclosing weak spots. There
failures of considerable propor-
tions recently, to which compara-
lively little attention has been paid,
and some of the Chicago bankers
have taken the position that there
ought to be more. IL the liquidation
is to be carried on as far as II
should be. The Mogi failure was
TO be expected after the develop
ments of the past few weeks in
Japan. 1t cuts into many countries.
but affects the United States only
In certain specialties and some pro-
lection against its results was
achieved weeks ago by the decline
In raw silk and the consequent
warnings. Few, IL any, Chicago
houses will be affected.
Setbacks Welcome,
Among other possibly depressing
influences little emphasis need be
placed on decline in prices of mer-
chandise, for such happenings thus
far are of the most superficial sort.
but the slowing up of business Cue
TO high money is a real thing. Eft
is case of insufficient and clogged
] machinery
We need the product Of labor more
/ than ever before. and the rest of
I tAAS WI ~ anus our steer and the
manufacture thereof in much great
er quantities than can be delivered
But the best thinkers on this sub
ject are glad of any setbacks in ac-
tivity that fall short of serious dis
aster because they will prevent a
! great collapse later on.
1t is all up to the Federal Re-
serve System" said a leading bank
! er today.
IF on a slight relaxation in the
! money market the managers of that
I system continue to lend freely and
! thus maintain the imitation. there
| viii be no cure to the evils under
which we are now suffering II they
| lend sparingly, we shall be let down
to the normal in an orderly way"
High Discount Rate.
The amount borrowed At the Fed
| eral Reserve Banks is still a subject
| of anxiety among the bankers. and
! Federal Reserve officials appear 10
/ be as much impressed with tAe ne
I cessity of conservatism as eyer. on
| these grounds ii is easy % under
stand the welcome that the bankers
! give to anything that sets business
back moderately. Better little at
a time than much in a bunch.
! Increasingly the bankers are de-
manding that the discount rate az
the Federal Reserve Bank shall be
| above that in the open market rath-
( er than below. and that is what we
/ are now coming to The Federal
| Reserve can find an outlet for. its
money where the other banks do.
In starting out TO rebuild a world
the experienced contractor will un-
derstand that in the process some
soft earth will be encountered, some
joists will get out of place. and the
life of a worker will occasionally
be lost. Also when the cost of labor
gets too high work will be sus-
pended.
| IPuhlic Ledger Service.l