Evening star., 1921-04-09
THE BRITISH LABOR CRISIS
IS CHIEF MARKET INFLUENCE
So Serious That It Should Be Quickly Set.
tied Interest in Degree of Industrial
Recovery-Gold Movement.

covery. and that this recovery will
spread slowly and irregularly until
in the closing months of the year it
Will comprise the countrys trade as
q whole.
Status of Money Market.
We have had somewhat the same
experience in the money market this
week as we had two months ago.
When Wall street. apparently sur,
to oE per cent the interior banks.
| which We're lending out their large
balances on stock market collateral
promptly called their loans on the
ground, very obviously, that they
could find more profitable employment
for their money at home.
AS result, the lowering of call
rates proved ahortive. as it had in
February. and there was n quick re-
bound to 61a and per cent
Two months ago this reaction
wound up in a certain degree of
actual strngency, which is hardly to
be expected now, owing to the very
considerable strengthening of the
federal reserve ratio which has oc-
CURED since then.
Our imports of gold since January
l aggregate more than $3.50. 900, 900.
and this is practically the net addi-
ton to the nations stock of gold, be-
cause exports during the same period
have been negligible.
This gold movement plus the relea Sc
of capital for mercantile channels, has
meant large expansion in the supply
of lendabe funds. 1t would have
forced down money rates far more had
it not been for the policy of the Federal
Reserve Board in holding to it's extreme
scale of discounts.
There can be no criticism of this
policy. even though these discount
rates are plainly artificial. If the fed
eral reserve authorities were influenced
only by the question of the money
supply they would, no doubt. have low
cred their schedules before now. But
they want to see frozen credits
further reduced. as they must be. in
order to restore banking conditions to
normal; therefore. they are maintain
ing scale of rates which is not
justified by the relation of demand
and supply.
The Crop Reports.
The April crop report. so far as its
effect upon financial calculations is
concerned. has proved something of
a paradox. 1t was so good in point
of indicated wheat yield as to be dis
tipctly bad for the outlook for prices.
With an estimated promise Of winter
wheat crop 37,000.00O bushels larger
than last year, and with a fourth of
the 1920 harvest still in farmers
hands it is easy to see why prices
have been so persistently going down,
and it is hard to see how the agricul-
tural industry can look forward to a
larger profit margin unless it can sue
ceed in materially lowering it's pro-
duction costs.
Once again. as has happened often
in the experience of the last seven
years. ld-fashioned economic theory
has gone aStray.
Theoretically a condition of very
low prices-where the producers con-
tend there has ceased to be any profit
at all-will cure itself through re-
stricted output. So far from this hav-
ing occurred the acreage covered by
the present wheat crop is one of the
largest on record and the indicated
yield has been surpa ssed only three
times in the history of the country.
Copyright. 1921, by Stuart p. West)