Great Falls tribune., 1921-01-23
By STUART p. WEST.
Copyright by The Tribune, 1921.

Special to The Tribune. .
New York, Jan. o.. - While the
highly irregular course Of the markets
this week might seem to suggest
greater uncertainty over the outlook,
there has really been no change in the
underlying sentiment Of the financial
community.
The note of cheerfulness. or return
ing confidence, which was sounded
with the new year and, deepened as
security prices rise in the first two
weeks of January, has not been dimin-
ished. Leading financiers and busi-
ness men are looking forward just as
much as before to trade conditions
getting back to normal, with the course
Of 1921. The general banking position
as shown by the reserve ratio Of the
y regional banks is considerably
stronger than it was at any time last
year and has in fact, regained all the
ground lost since the middle of 1919.
No Lower Rates.
1t is not to be expected that money
rates will go much lower yet awhile.
The six and a quarter per cent quota
ton for time funds represents the
maximum reduction likely to occur un-
til commercial liquidation has gone
still further and commercial discount
rates have come down. 1t was signif-
icant that when Wall street lowered
its bid for call money to six per cent,
banks out of town which had been
large lenders in the New York market,
began to draw back their funds. They
were willing to take per cent on
the readily convertible securities Of
fered by stock exchange borrowers as
compared with putting more money at
eight per cent into mercantile loans in
their own localities. But when the
Wall street rate fell to six per cent
the discrepancy became too great and
the interior banks called in their New
York loans in order to use their money
at home.
The essential thing is, however, that
the credit strain in the serious stages
which it assumed for the greater part
of 1920, has definitely passed.
Bank reserves, as compared with
whereas a year ago they were just as
steadily going down hill. When the
reserve ratio gets somewhat higher
and when the reduction in bank cur
rency and bank loans has been carried
far enough to bring this item back to
level that may be regarded as con-
servative, then we may expect to see
the federal reserve board lower its
scale of discounts and this will be the
signal for resumption Of the decline
in interest rates generally. Until this
happens, it is probable that many of
the old line investment issues which
have been on the up grade since last
June, have about reached their limit.
The demand will more likely shift to
bonds of somewhat inferior rank which
still offer an attractively high return
and to bonds brought out at high
rates during the last year, which are
selling in the market at prices where
the yield is anywhere from six and
one half to eight and onehalf per
cent. The objection to this latter class
of securities is that they have only ten
years to run and besides have pro-
vision whereby they will be gradually
called in at even shorter periods. Nat
urally the long range investor has pre-
ferred mortgage issues of distant ma
turity.
No Extraordinary Appeal.
These have now had such an ad-
vance that their yield has ceased to
make the extraordinary appeal it once
did and the investment buying move
ment has turned to the shorter ma