The New York herald. [volume] (New York, N.Y.) 1920-1924, 1920-11-08
FINANCIAL NEWS
AND COMMENT
Republican Victory Is Not Yet
Discounted-Public Likely
to Respond Later.
CREDIT CONDITIONS EASE
Grounds for Optimistic View
Of Future-High Money
Restricts Trading.
CREDIT CONDITIONS EASE
BY WILLIAM JUsTus BoIEs.

BY WILLIAM JUsTUs BOIEs.
The Wall Street markets paid little
victory. but they will give heed to the
far reaching changes later on because
the event has been by no means dis
counted and represents. without doubt,
the most bullish development that has
taken place since the world war ended
two years ago 1t Is the kind of change
that mas strengthened all investments,
put the country on a safer footing and
eliminated en- element OF uncertainty
which hampered business and forced the
holding up OF projects having to do with
individual Initiative and corporate enter
prise.
The investment community long ago
made up Its mind about the election,
but no ono could have foreseen the
dimensions Of the victory and its broad
Significance to the men and women who
have money to invest. 1t Is change
which will be better understood and in
crease in influence as time goes on
because the President-elect Is man of
sound ideas who appreciates his own
limitations and the necessity for taking
competent advice.
Grounds for Optimism.
Quite apart, therefore, from it's politi-
cal aspect ana thinking only of its
bearing unou The Investment. industrial
and business outlook, the election out
como proviiss a basis for increased
optimism asd high encouragement.
Under the new order OF things the coun-
try may be expected to go ahead with
its foreign trade expansion, carry
through business undertakings and pro-
vide in addition for such a readjustment
of taxes and reduction Of public ex-
penditures as shall mako It easier for
the average family to make both ends
more than meet. The strain of high
living costs has become almost intoler-
able and. although REIMBURSEMENT of mer-
chandise prices has provided some relief,
a sure corrective will not be found until
the cost OF running the Government has
been materially reduced.
Easier Credit Conditions.
There are some signs OF easier credit
conditions and for the first time In many
weeks there has been a reduction in the
volume of outstanding Federal Reserve
serve banks are at virtually record level
and those represented by commercial
paper show an unprecedented total. But
the credit strain is lessening somewhat
and with heavy Government withdraw
ais provided for, banks are giving a
good account OF themselves in north
noted for intense pressure.
The strain has not been the same In
all lines, and with the releas, of credit,
through the reaction in textiles. leather,
the motor industry and +oAe of the
metal branches. it has been possible for
tho Federal Reserve banks CT Philadel-
phia. Cleveland and Boston to take over
nearly $3.50, 900, 900 of loans from reserve
banks serving sections where the crops
are being marketed, or the credit STRAIN
is most acute Through that shifting
device by which the Federal Reserve
banks relieve one another In tines OF
acute stringency il has been possible 20
finance the marketing Of the crops and
obligations growing out of the INN ,nse
financing of foreign government loans
without unusual money market disturb
ance. Had ii not been for shat coopera-
ton between the reserve banks OF vari-
money market would have been very
different.
As to Debating.
But the country is taking the liqulda-
ton well and coming through the price
readjustment infinitely better off for
the curtailment OF credits that has taken
place. The bank position is sounder,
but there is no available surplus 10
place at the command of the borrowers
on Stock Exchange collateral. That
situation Will continue until after the
January disbursements have been made
and the crop movement fully financed.
Before those engagements have been
provided for there VIII be small chance
OF reducing call loan rates to a level at
which the public can borrow heavily for
speculative purposes. But the banks will
be in a position to grant the necessary
accommodation to commercial borrow
ers and to aid legitimate business under
takings.
Through special sales and price reduc-
tons largo merchants are converting
immense merchandise stocks into cash
balances. which will show UP hand
somely in the January 1 statements
That readjustment is causing some in
crease in commercial failures as In usual
in times OF credit strain. when banks
are advising their clients to reduce high
priced inventories and strengthen their
cash position. October failures increased
246 over September and 81 per cent. In
liabilities. But that increase was chiefly
accounted for by a few important sus-
pensions in manufacturing lines.
Intrinsic strength.
Those occurrences are not pleasant.
but they are not nearly as disastrous
as would be the consequence of contin-
uing the irrflatlonary movement with
its attendant evils. The ratio Of imports
to exports In September was only 60 per
cent. which IL il per cent. less than
normal for that month. There are indi-
cations that the country is building UP
It's potential purchasing power by the
good old fashioned method of spending
less than II earns.
New York savings banks in the year
ended on June 30 Increased deposits
more than 10 per cent, an excellent
showing considering the prevalence OF
extravagant living and the temptations
10 spend money Since then largo saw
ings banks OF the territory in a recent
canvass showed further gain OF to
per cent. in deposits, which Is highly re-
assuring and confirms reports made by
New England savings banks concerning
lager savings OF their depositors, not
withstanding shutting down of mills and
operation OF huge plants on n four or
Ave day schedule. against a six day
schedule a year ago.
When a nation OF 107. 100000 we'll 10