Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-10-03
BY 1. A. FLEMING.

BY l. A. FLEMING.
There has been a very material in
crease in the supply of money. even
if the rates have not shown any de-
crease 1t is not evidenced in the
usual manner, through growing de-
posts in the banks. but rather
through the large outpouring of cash
whenever a desirable issue of 71a to
8 per cent interest bearing securities
is placed on the market.
Every issue-French, Belgian, Nor
wegian, Bell Telephone. Swiss, ETC.
is no more than offered before the
books are closed, with oversubscrlp-
ton the general rule. 1t is exactly
the same way with the Treasury GER
tificates bearing 5a and per cent
interest There is money waiting for
the issues to the extent of the offer
ings.
This money must come out of the
banks, and it is unqueSt1onably the
cash of conservative investors, VINO
will not buy industrial stocks, with
the wave of price cutting unsettling
earning power to such an extent that
no one can tell with any assurance
of accuracy what their earnings Will
be for the calendar year. AS most. OF
these corporations are not given 10
handing out interim statements, there
may be some surprises at the end of
the year, when reports are made pub
lie AS stated before. it is probable
that this large investment demand
comes from a desire on the part of
investors to take advantage of the
going high rates of interest.
Merchants VIII Need Less Cash.
The employment of such large sums
in more or less permanent invest
ments may delay the easing of the
money market, but this Will. in
measure, be mitigated by the lessen
ed amounts needed by merchants in
their business. Wise merchants will
not stock up with goods. but will
rather go back to the before-the-war
plan of keeping stocks replenished
as the shelves are denuded.
1t goes almost without saying that
production of merchandise in many
lines has more than caught up with
the demand, hence the frequent shut
downs, some of which are made with
a view of reopening on new wage
scales.
This is further evidenced by the
week end statement of Marshall Field
& Co. of Chicago. reporting smaller
distribution of goods and a smaller
volume of new business. The sales
of print cloths at Fall River were
but 10000 pieces for the week. and
the curtail of production 100000 pieces.
Mail order houses further recognize
the lessened demand. and the waiting
of every one for the expected price
recessions. More seasonable weather
may hold manufacturers and mer-
chants. Retail buyers are 1aggards
in placing orders so that it is case
of waiting all along the line.
There are many who believe that
the price cutting movements will not
go much farther-that if there is no
cut in wa ges the reductions in val
ues will have to stop before long.
So far there have been no indications
that the end of the movement is
near.
Reserve Bank Buys Certificates.
Local bankers report that the Rich
mond Regional Reserve Bank is in
the market for large amounts Of
5R, So and 6 per cent Treasury GER
tificates. endeavoring to buy back
from banks these certificates that
the demand from investors may be
cared for.
This is the first intimation of a
movement of this kind and only ac-
centuates the fact that there is an
enormous amount of cash seeking in
vestment in the hands of the general
public and that the government OBJ
legations are held in high regard at
a time when other investments are
more or less widely and
when price cutting is disturbing the
entire industrial situation.
This inquiry for Treasury certih-
Gates augurs well for the next issue
when marketed.
The recent issues of certificates at
6 per cent is the highest rate the gov
eminent has paid for money. The
Secretary of the Treasury may deem
it wise to again pay per cent for
money, in which event, the success
of the sale would be assured. al
though it would no surprise If he
tested the money market with an is
sue at a lower rate.
Some bankers complained that the
6 per cent interest rate would result
in heavy Withdrawals Of deposits for
investment in the issue, and 1t may
be that the Secretary will consider
their views on the matter.
Much Financing Needed.
The past week has developed the
fact that many big corporations have
financing to do: some of the tire COM
panies, motor concerns, retail mail
order houses and others who. by max
ing attractive offers and making re-
spectacle showing as to right to
credit, are being cared for by bankers
at attractive rates.
With all the investment movement.
there does not seem to be much OF an
inquiry about notes, and few appli-
cants Of this kind are being marketed.
Commercial paper is again being
taken quite freely, with the highest
grade bringing per cent without the
slightest trouble.
Turning to Rails.
Investors have lately turned to
high-grad rails. this being especially
evident during the last few days. Be-
fore that it was the spectators who
were carrying on in the low-priced