The news scimitar. (Memphis, Tenn.) 1907-1926, 1920-02-07
BY GEORGE WILLIAMSON.


Following period of apparent disre-
gard for impending money troubles on
the part Of an element in the trade, on
the theory that expected deflation in
many directions would not affect cot
ton, came rude shock during the past
week. Values crumbied and confidence
was given the worst jolt II has had in
many moons. Some readjustment of
ideas was witnessed. and II lots Of folks
are not badly mistaken, more is in
prospect Whether there is to be
gradual attrition in values, or one that
is precipitate, time alone will deter
mine, although the former appears the
logical thing to expect. Students OF
economics and business conditions seem
OF the opinion that the tide has turned
that high living costs will be subjected
TO some successful attacks. Because
abnormality pervades practically every
thing, the disposition IS to venture only
conservative guesses.
Overshadowing all other influences
in bringing widespread liquidation was
Fhe crumbling of foreign exchange, the
: index to the credit of the European
countries and measuring their ability
or Willingness to go on purchasing what
this country has for sale. AS an i'm
portant element in the crumbling of
values abroad was the recent stiffening
of domestic money rates, the raising
of the discount rate by the federal re-
serve banking system permeating every
financial channel of the nation. The
announcement that this government
would no longer extend credits to Eu-
rope, leaving 1t to the judgment and
willingness of private individuals and
institutions contributed largely to the
depreciation abroad and brought forth
not a little criticism of our policy. How
ever. it developed that this was not
inspired by officials and leading finan-
concerned, the need of checking i'm
ports to that country having been seen
and appreciated
Sterling Touches 1919.
The pound sterling largely increased
its discount from normal, the quotation
for demand touching as low as 1913, a
loss of fully a third. Other rates were
down in proportion and utter demorali-
cation threatened. The situation called
for drastic measures rather than so
much talk and apparently the first
steps will be to check imports and in
crease exports of finished materials, or
to reduce the wave of extravaganza and
stimulate production. Along with the
most extreme spell of weakness in rates
came the report that Great Britain
would put ban on imports of cotton
and some would be shipped back to this
country. This proved true only in part,
the government having no Intention OF
doing it, but leaving it to the trade
itself to withhold buying for n time,
pending manufacture of a large part
of their raw material supply and dis
posal of it. Reports have indicated that
the banking community felt that this
was the most effective method of bring
ing order out of threatened chaos, and
y the supply over there and en- route, ap-
. proxmat ely 100000 bales American
was sufficient to Justify Withholding OF
buving for a spell
While some improvement took place
in exchange rates, the extent did not
encourage much hope, and it remains
to be seen how effective will be efforts
to turn the tide. Opinion is divergent
as to what the future holds, but II
can hardly be questioned that the eff
feet on values of cotton will not be
upward, if the exporters continue out
of the market, as they have been for
some weeks The domestic spnners
would scarcely be disposed to go ahead
and buy much with competition reduced
in demand for raw material and ar
expected increase in offerings of prod
ucts from the foreign textile centers.
The reactionary trend in prices start
ed on the opening day Of the review pc.
riod, although caution was observed
The May position in New York sold a.
high as 34.50 on the first day, bu
rather scarce for overcoming the wet
ness of the soil generally. Less com
plant of lateness was heard, but M
surcease of plants as to scarcity OF la
Dor. Emphasis on the prospective high
cost of the new crop was given by tn
money situation, but time alone will