The New York herald., 1921-05-31
FINANCIAL NEWS
AND COMMENT
Influential Developments Are
in the Making-Prices
Trend Lower.
EXCHANGES MOVE WIDELY
Stock Market Falls Back. Due
to Failure of April's Prom
ises TO Materialize.
EXCHANGES MOVE WIDELY

| Just now it is much easier and safer
to apply day TO day events to current
conditions of business and the markets
than to try to interpret them in terms
OF things yet to happen. The reason
is that many influential developments
are shaping up. but have not been COM
pleted. The forecast has been made
that the railroad labor boarr will de-
\ eide on June l 10 order wage reduc-
tions of 10 to Is per cent. The percent
ages are believed in financial circles TO
be fairly accurate. but no one outside
the board knows the way in which the
cuts will be distributed among several
classes Of workers. and until they shall
be made public the savings entailed
for the railroads will be strictly in the
field OF conjecture. With a wage bill
last January running in excess of
s3 TOO, 900, 900 ear il is certain that Is
per cent. lowering of costs would
amount to some hundreds of millions
provided that basis of reckoning SIM
ago still held good. 1t happens. however,
that working forces have been reduced
by 100000 or more hands since re-
trenchment got under way last au-
which the carriers will be assured of
can be measured only in terms OF the
exact wage cuts, the size of the payrolls
on July /. when the reductions go into
effect and the state of traffic at that
TIME. The same sort OF uncertainty en-
yelops the German reparation payments
and their influence on international
trade.
wide Exchange Fluctuations.
In the last week some remarkable
fluctuations OF foreign exchanges oc-
Cured, sterling swinging through
range OF aa much as six cents to the
pound in single day. Those gyrations
were not altogether explainable, bpt
hinged to a degree on monetary trans
fers between Berlin. London. Paris and
New York Germany is due to CON-
plete the payment of 5000, 100000, the
first reparations instalment. by the end
OF this month. Presumably the ex-
changes have been moved down vio-
lently by purchases Of dollars at Con-
tinental centres for German account, as
credits in the United States appear
desirable to the Allies and have recov-
cred at times through speculative trans-
actions, the origin of which is by no
means clea1.
unusual variations of exchange values
as those of the last few days. He
needs stable market to guide him
in making forward contracts for goods,
and at the moment the market is 50
full of cross currents that one is at
loss to decide how rates viii be a month
hence.
In respect to industrial conditions. the
future is difficult to forecast. fully as
hard as It would be to guess the re-
suit OF pending railroad wage cuts.
There was encouragement in the out
look OF important steel makers at las
weeks meeting Of the American Iron
and Steel Institute: nevertheless Judge
Gary and other leaders OF the industry
indicated belief that prices will have
TO fall further before a real revival of
several lines OF manufacturing is evil
IDENTIFY over. Normal orders incident
to the passing of winter kept some fac
tories busy for six weeks. notably auto
mobile plants and allied factories, but
contracts failed to maintain the pace
Of March and April and production has
dwindled. The tendency of prices to-
ward lower levels is emphasized every
day or two by new announcements of
reductions.
stock Prices More Unsettled.
1t was less these underlying indica-
tions that trade was not out OF the re-
adjustment period, however, than the
evidence Of past poor business which af-
fected last weeks stock market the
hiOSl. AOlt bH5tllieHlenL OF prices re-
suited from the passing Of the Central
Leather Company's preferred stock divi-
dend than from the fluctuations OF ex-
change, the Silesian situation and the
problematical outcome in profits OF the
rail wage reduction. The dividend was
omitted because it was not earned. The
management elected to withhold from
shareholders their usual quarterly re-
turn instead OF drawing in advance prof
Its expected to be made later on. And
that action was taken despite signs Of
Improvement in the leather market and
IN the face Of such rigorous writeoffs Of
inventories Of 1920 origin that a hand
some surplus had been absorbed in the
process.
Accumulated profits which looked sol
Id in balance sheets year and half
ago In many cases have flown away
What Is not being earned does not look
like a dividend TO directors Of corpora