Evening star., 1920-05-29
BY STU ART p. WEST.

| NEW YORK. May 29.-The turn for
the better in the speculative market
! this week has been very definite and
convincing. but it is of far less con-
sequence than the change which has
come over the investment market.
All competent judges have predicted
that when money conditions eased.
, when there came a 1et-up in the credit
strain. il was to be accepted as the
signal for a great revival in bonds
and in all other securities the yield
on which is fixed We have begun to
see during the course of the week
these predictions verified. The dras-
,tic measures put into force by the
federal reserve authorities to curtail
/ loans to essential enterprises
have started the credit def1ation which
could not be accomplished by the
raising of official discount rates. The
improvement in the traffic situation
and the belief that it will be carried
further has counted heavily along the
same line. Frozen bank credits are
j in rapid process of liquidation. and
the practical result has been seen al
ready in the increased offerings at
reduced rates for time money-the
first break in the time money mar
ket deadlock in over a year.
Credit Situation Better.
With abundant evidence afforded
that the credit posi- ion is on the mend
and with the appearance of an in
creaSing supply Of time funds. shrewd
investors realized that the market
for bonds and preferred stocks had
reached bottom and that much better
times lay ahead. One would have to
go back to the autumn of 1914 to
find a week where bond prices made
any such gain as they have this
week. 1t has long been realized that
gh-grade bonds were on the bargain
counter. but investment capital has
not cared to act until it saw signs
that money was going to be easier.
This assurance having been given in
an unQuestionable way there has been
a veritable rush of buying. Liberty
bonds have led the way. In a few
ground lost in more than a month.
Corporation bonds are up 2, 3 and S
points, and at the close of the week
there are not only no indications of
a let-up. but. on the contrary. the
buying movement seems ito be ac-
liquidation Of commercial credits has
been the principal factor in producing
the change. But the resumption of
gold imports and the prospect that
these importations will expand until
they reach a total possibly as high as
mer has been an almost equally pow
erful influence. It was worry over the
problem Of the crop moving, the fear
that these extra demands on top of
an inflated credit structure would
produce another crisis like 1907 that
has been responsible for three-fourths
of all the depression in the financial
markets of the last month and half.
Fear Is Dissipated.
Now this fear has been pretty well
dissipated. People have begun to
recognize the essential difference be-
tween the present situation and that
Of thirteen years ago. namely. that
then there was no central controlling
agency in the banking system of the
country and that now there is. The
Federal Reserve Board, despite all
former shortcomings. is proving its
great utility. 1t has the power and it
has now shown that it also has the
bility to prevent the crisis that
might have come within the next few
months had there not been a rigorous
cutting down of loans in order to
provide a fresh supply of free credit
available Tor financing the new har-
vests. The criticism against the pres
ent measures comes from purely in
terested quarters. Merchants and