Evening star., 1921-08-27
BY STUART p. WEST.

NEW YORK. August 27.-Further
of surplus bank reserves.
bringing the ratio for the federal re-
serve system to a new high for the
year and the highest sincesthe early
spring of 1918. an accompanying re-
duction in money rates, a sensational
advance in cotton prices and a stock
market which. for the most part. has
given a very good account Of itself
under trying circumstances make up
the outstanding financial features of
the week. 1t is quite possible that
federal reserve institutions in the east
will wait bit longer into the crop
moving season before coming down
any further in their discount rates.
But the reserve ratio Of TAG in the
New York district is 80 per cent above
what it was two years ago, and for
the twelve regional banks together
the present ratio of 66.5 contrasts
with ratio OF 81 op per cent at the close
was the prevailing rediscount quota
tion for the country generally. This
simple comparison of banking
strength makes the present 5h per
cent rediscount rate seem altogether
too high.
Increased Value Of Cotton.
AS between the low Of June and
this weeks high. cotton has risen
nearly 4 cents in the pound. From
last years low the recovery is about
S cents. This means. figuring up the
probable yield Of cotton this year plus
the carry-over from last years har-
vest, an addition of something like
5000, 100000 to the value of the sea-
sons cotton holdings. What effect
this will have upon economic condi-
tions throughout the south is perhaps
the most Interesting question which
has come up in the course of the
week. It would seem reasonable to
conclude that 1t will put owners of
frame Of mind, accelerate the lfquida-
tion of bank loans in which cotton
forms the collateral, and ultimately
revive for the benefit Of general busi-
ness the buying poVer Of the south
ern states, which seems reasonable
holds. AS to the permanence Of the
upward movement, II the August re-
port Of the government shows any.
thing like the startling shortage pre-
dicted by private Investigators. there
will not be much doubt of the warrant
behind the higher prices.
Profits to Producers Essential.
In the view Of most critics there can
be no return to prosperity until the
cOuntry's basic commodities get back
to prices where producers will have
profit, be able to pay of
debts and begin to buy again. Cot
ton Is one Of the essential -commodi-
ties which has certainly taken q most
forward step, and the cot
ton grower represents one class at
least of the Agricultural population
which once more can do business at a
profit. Unfortunately, the same can
not be said for the general run of
grain farmers. The latest govern
ment report Of prices on the farms
which was under date Of August l.
showed that wheat was bringing only
$1.05 bushel. against $2.52 a year
ago; corn 81 cents, against $1.64, and
pats "a cents, against 81 cents.
Hope In Agrieultufal Bin.
The wheat crop Is below the recent
average. but there 10 no shortage at
all comparable to that in cotton. The
corn crop promises another huge ad-
dition to the overhanging surplus.
The principal trouble does not lie with
the export demand because breadstuff
shipments, although smaller in value,
are larger in volume than they were
; year ago. But buying, whether for
foreign or home~eccount, would have
10 be greatly stimulated before the |
world excess Of supplies could be !