The New York herald., 1921-11-21

1t"leu CefoTe HefnoerS or the Amer1-
can Iron and Steel Institute Friday.
has doubled its gross business in the
last ninety days. though profits as
rule have been little or nothing, due
to. high costs and low prices" That
Is the difficulty in the way of a return
to prosperous times in nearly all in
dustries. but IL Is clear in discussion
everywhere that the problem of equal
izing costs with reduced prices is to
be attacked this winter with more vigor
than before.
Railroads Point the Way.
The railroads have pointed the way
with their plan for wage cuts of 10 to
Is per cent. coincident with a marking
down of freight rates on a wide range
of commodities. From one angle Of
examining railroad plans It would seem
as though the managers are so con-
fident that the Railroad Labor Board
Will give early attention to their pro-
gramme that they have arranged for
10 per cent. cut of rates on agricul-
tural products for a six months test
period without making such action con-
tingent upon lowered payrolls.
The Industrial advance is proceeding
slowly. although there Is no question but
that 1t would gain momentum rapidly
IL production costs were marked down.
The price Of capital is going down. The
bank position denotes a continuing
process Of currency retirement (Which
may be effected for a time by seasonal
demands next month) and Of the reduc-
ton Of loans and deposits. Outstand-
ing Federal Reserve notes are at their
lowest total since September 90, 1918
The ratio of cash to note and deposit
liabilities last week was the lowest since
October 10. 1917. Whereas currency in
creased $59,000.000 between September
Is and November II, 1916-a year Of
active business--it has declined nearly
s94,000.o00 In the corresponding period
this year. The promise of 4 per cent.
redscount rate in some Eastern Reserve
districts is held out as a possibility OF
the next three months.
A tremendous demand for first class
bonds. which has disclosed no signs Of
abating in the last two months, is a
true forecast of the drift Of credit COSTS
and 1t remains for some of the other
components of high business costs to help
in the general situation.
Foremost of these factors Is taxation.
The hope held out for lowered taxes in
the conference OF limiting armaments
was reflected last week In dispatches
from all the prominent foreign centres.
A cut of $500. 900 in American naval
expenditures would. by itself. have only
a slight effect upon the public tax bill.
but the application of a corresponding
reduction by England and Japan, and
the suggested scaling down of military
outlay by these and other nations would
have a pronounced bearing upon the
capital of the world. The financial
communities everywhere have realized
in the last few days that the con-
ference is likely to have a more incisive
reflection In the field of capital than was
believed possible when this meeting was
first considered.
Market watches Tax Outlook.
The stock market has been paying due
attention to the tax outlook With opti-
mism which appeared to be shaken only
slightly in the decision OF the House to
set the maximum surtax on incomes
at so per cent. instead OF the compro-
mise figure Of 40 per cent. proposed by
President Harding. IL is difficult to see
anything In the actual business situa-
ton which would forward a broad buy
ing movement OF stocks, but the mar
ket is won't 10 move In accord with i'm
pressions of future prooa biilties a.
much as In connection with evidences
OF prosperity. II could not be said that
stocks were In wide demand: on the
contrary. the market was highly un-
even most OF the time. Yet II was noted
all the way along that partisans OF the
falling side of values met with little
success and sales were absorbed with
considerable ease.
In the bond market a rather amazing
demonstration OF vigor was presented
In subscriptions equal to more than nine
and three-quarters times the s5o.00o.o0o
New York Telephone per cent issue.
Undoubtedlyakhls heavy oversubscrip-
ton rcprc sentcd swollen applications
from dealers, who hoped thereby to get
fair share of their desired quota. but
the comment OF investment houses in
dlcated that an issue much larger than
the actual amount could have been
taken and disposed Of.