Evening star., 1921-01-15
BY sTUART r. WEST.

NEW YORK, January 1o.-A genera
and rather sharp fall in money rates.
continued recovery in the exchanges.
further heavy buying of investment
securities at rising prices and vary
ing, but in the main more hopeful.
trade reports. are the outstanding fea
lures Of the week just passed. There
can be no mistaking the gradual
growth of confidence in business cir
pes.,imism of a month ago is very dis
tinct. There is, OF course. a good d.Ii
of unpleasant news still TO come in
the shape of annual reports. Indus
trial company earnings for the first
quarter of the new year will. in the
ma jority of cases. be poor. But all
this has been expected and taken into
account.
The main thing is that, as compared
with the latter half of December. there
has been a marked revival in many
lines. in industries like cotton and
wooden goods and boots and shoes.
which were among the worst sufferers
in last autumn's collapse. Production
is on the increase. the lowering OF
wages has been accomplished with
an astonishing lack of disturbance
and the price readjustment has gone
far enough to attract new buying in
most directions although not in all.
The drop in the money quotations.
in call loan rates and in bank accept
ances has been remarkable. although
entirely expected Funds released
from the crop moving and from manu-
featuring channels as well have been
backing up upon the financial centers
from the interior Of the country. This
is what has forced rates down and
will in due time cause a similar low
ering of commercial discounts. The
investment market is fully bearing
out the anticipations of month ago.
1t was predicted then that money
would be easier after January !. that
trade liquidation would steadily in
crease the supply of free capital and
that with interest rates coming down
bonds and all other fixed income Sc
curities would go up.
Bond Market Active.
The bond market for the last two
weeks with it's all-around advance of
two. three and five points has fulfilled
this prophecy. Nor is there any sign
that the buying movement is on the
wane. Despite the very large offer
ings of new securities which the mar
ket has been called upon to absorb
during the last six months each new
high class issue is snapped up the
moment it is brought out. Longterm
mortgage bonds are being constantly
taken by the big investing institutions
as well as by individuals. and the pre-
vailng view is that. subject to Nh
usual reactions. the upward swing in
Investments still has some distance to
go before it has fully discounted the
decline in money rates. present and
prospective, and the increase in the
purchasing power of tn" dollar
The vitality of the investment mar
ket was the one bright spot all
through the crisis OF November ana
December. Corporations had to make
q heavy sacrifice when they offered
their new securities. but they We're
able to sell them even during the
worst of the troubles when in former
peri ods of strain it was hard to sell
at any price. The result was that Il
part of the credit Load which the
banks were staggering under was
lifted from their shoulders and passed
on to the investment community
To Aid Foreign Trade.
The investment market is about to
perform a similarly helpful function
in the foreign trade. Within the next
poration will begin operations. and it
counts upon raising it's capital
through the sale of debenture bonds.
This will mean that the investing
public will supply the funds to eX-
tend credit abroad and start up the
foreign trade, taking this RESPONSE
bility from the banks, which have
gone as far as they can in financing
the obligations of foreign customers.
Now a third way has been sug-
gested whereby the vast resources of
the investment market, and the evil
dent readiness to use them. may be
placed at the service of the cOmmuni-
ty in it's period of conVa1escence. 1t
is proposed that the $4,000. 100000
debt which the governments of
Europe owe to the United States gov
ernment be funded into loan and Of
fered to American investors The de-
tails of the project have not been
worked out. There would obviously
be many difficulties to overcome. The
bonds would be secured by the public
credit of the European nations. and
what is more important. would be
supported by the public credit of
America. They would therefore rank
with liberty bonds and would have to
be brought out in a way that would
| not injure the market for the latter
This could be accomplished only by
piece-meal fiotations. But with all
objections considered this seems to be
one of the most feasible proposals yet
made for solving the problems of gov
ernment revenue and redemption OF
nearby war bond maturities.
tightening Tax Burdens.
The whole question of the govern
ment's financial program with its ef-
| fort to tighten present tax burdens
while finding new sources Of revenue
| is OF great Importance to the invest
ment markets and in long range cal
| culations plays a larger part than
almost anything else.' The excess
profits tax should be done away with