Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-07-25

That the wage adjustment and
freight rate increase by the Interstate
Commerce Commission. which is ex-
pected soon. will have a buoyant eff
feet upon ow-priced and speculative
railroad bonds is the consensus of
opinion in local financial circles.
cae<a bonds have failed to discount
Improvement in investment position
that should result from an announce
ment of rates which will insure an in
como of at least 511 per cent on prop
erty Investment, in accordance with
provisions of the new transportation
act.
The low-priced railroad bonds are
selling on whole slightly above rec
ord low prices made in May of this
year. The average loss from the high
prices in recent years Tin January.
1910 is about 25 points.
There are a number of railroad
bonds which have never defaulted in
interest and probably never will. SELL
ing at prices lower than some rail-
road stocks. which have little prospect
OF paying any return in the near flu
ture. These bonds. moreover. are
likely to have a substantial advance
when money is easier.
Credit situation.
CONNIE nting on the approaching
crop moving season and the effect it
will have on the credit situation of
the country. the National Bank of
Commerce, New York, has this to say:
The crop moving season, during
which the country's credit require
ments reach their maximum inten-
sity, is now near at hand. Because
OF the difficulties Of transportation it
may be expected that the volume of
credit needed this year to finance
crop marketing will be larger than
usual.
while the traffic movement has
improved slightly, sufficient relief can
hardly be expected to the extent nee
essary to permit of the clearing away
of existing congestion and the re-
sumption of a normal movement of
agricultural staples this fall. The
crops. to an unusual extent. may have
to be held this year. Recent expert
enee has demonstrated fully the eff
feet of any Interference with orderly
commodity shipments in tying up an
enormous volume of credit.
This prospect enhances the i'm
portanee of the credit situation which.
during the current period of June Is
to July Is. has experienced no relief
from the tension of the last several
months. Since last November the
FEDERAL reserve Institutions and mem
Der banks have been seeking to cur
tail non-essential Borrowing, to limit
loans to necessary requirements and
to reduce gradually the volume of
outstanding credit.
In the former of these aims they
have. in large measure, been success
full. and there can be no question Of
the underlying soundness of the gen.
eral credit structure.
No Reduction In Aggregnte. :
There has thus far, however, been
no reduction of the aggregate vol
ume OF credit outstanding. The
efforts of the banks have simply
limited further credit expansion and
the volume of credit at the beginning
of July exceeded that outstanding at
the close of 1919.
THE failure to effect a normal cred
it liquidation before the commence
ment of the crop-moving demands has
in a large measure been due to trans
portation difficulties which have OBJ
structed free commodity moveme nts
and occasioned the credit stringency
which became pronounced earlier in
the year.
Were banks still operating under
the old banking system. the outlook
would be serious. But since the bank |
ing power of the country has become
well co-ordinated under the federal
reserve system. with it's nexibility for
meeting such situation. there is no
reason to apprehend serious difficulty
In caring for esse credit require