Evening star., 1921-05-15
BY I. A. FLEMING.

II Is peculiar proposition. nut HoHe
the less true, that money cuts COM
paratively little figure in the domestic
American business conditions of
today.
There is no question but that the lack
of it in the European countries and
the depreciation of their currency is
largely responsible for the lack of
export business that would keep our
: factories busy and market our excess
agricultural products. Nor is there
any question but that money or its
synonym. credit. is sadly needed by
many great industrial concerns,
loaded with fat inventories which
they are, it is to be hoped. gradually
reducing. Unfortunately many cor
porate credit lines are exhausted.
Unemployment is keeping money
from tens of thousands of individuals Is
whose buying is thereby restricted.
But for all of this. there seems to be
a great abundance of money in the
banks and with the people.
The regional banks of the federal
reserve system have 5S per cent re
serves. The Federal Reserve Board
has been grilled time and again be-
cause it has not taken the initiative
and forced member banks to lower
rates.
Whether let-up in rates would
help agriculture or bring any relief
to our foreign trade is matter that
is open to argument.
1t is unfortunate, but none the less
true, that there is still much liquida-
tion to be put through. and the sooner
1t is undertaken in the interest of
NurryinE the recovery of normal the
better.
There seems to be plenty Of money.
After short cessation-1ust
breathing spell-the printing presses
are again running day and night
turning out bonds and other securl-
9es-not alone in the United States,
But in the chief cities of the world,
and all intended for distribution in
the most prosperous country on
earth-the U. :. A.
Belgian. Italian and scores of other
issues of foreign bonds are daily
traded in -on the New York stock
Exchange. together with many of
the leading city municipal issues OF
Europe.
Billions Of dollars of foreign Sc
curities are offered in the American
market, and the success of one big
domestic industrial loan is encour-
agement for another, piling up debt
and increasing fixed charges.
And the American market trades
in these bonds in daily averages of
about 100000.
Moreover, there is market for
everything at price, and some or
the prices are heartbreaking to in
~estors who considered that they
were especially conservative when
they acquired stocks or bonds in re-
tuSc fc-c -.heir cash.
Press reports are full of the bit
terness of Japan against America
and yet we have listed on the New
Il no. nd u
trading in, f137,677,000 of japanese
bonds.
Evidently world financiers. who un-
derstand conditions better than the
politician or the layman. have small
fear Of any ructior between the Unit
ed states and Japan. Civilization
would not stand for it: England, or
rather. Great Britain. on the other
end OF the alliance with Japan (Which
/. still has some months to run), would
mot permit
Conservative investors of today. and
there are thousands of them, who
will not take market chances. and to
whom the Z and per cent invest
nents of today are not attractive.
turn with eagerness to government
Treasury 51s per cent certificates as
they are issued periodically.
That this is fact is evidenced
from the speedy subscription to the
latest issue, by wire and within an
hour or two after the books were
opened.
Attractive per cent rates of many
foreign issues do not appeal to the
conservative investor.
Liberty bond issues are moving
very freely. and here again the con-
servative operator is placing his
money for safety. When per cent
per cent. short-term issues, ii is evil
dent safety is a consideration.
Every one, admits that there has
been some Improvement in business,
3ust as they will admit that the
difference between the normal of
far away.
In the first great famine on record
seven fat years were followed by
like number of lean. This country
has had its fat years. and it is now
in the lean-year chart. but that it
viii take anything like the seven
year term to pass through is not be-
lieved by the American people. though
they will remember the shift from
the fat to the lean for seven times
seven years.
Blaming the eFderal Reserve Board
for the heavy defation forced al the
senith of the expansion. is not espe-
cially popular with the banking fra
ternity. though some fault is stu
found that the attack on credit ex-
tension was so acute. ana more, On tilc
fat profits of the regional banks. IL
the same results could have been es-
tablished by gradual curtaii OF
credit. then the jamming on of brakes
was harsh, to say the least, but there
are those who claim that il was need
I'd and none too drastic.
Hand-to-mouth buying continues
and is, perhaps. comm endable for
some time TO come. We are in the
Cycle of declining costs, not in the
upturn, in the larger supply of mer-
ehandise and not the period of
scarcity.
Buying as needs require encourages
the ability to anticipate declines and
TO give the public the benefit of such
price concessions as soon as they are
made. The public seems to anticipate
and look for concessions.
Wise bushes men in these days
will seek less the profit and more the
security of safety, of reduction of
inventories and the lessening of bank
loans.
A Matter Of Dividends.
On the stock exchange today the
ouestion uppermost in the minds of
traders seems to be the ability OF
corporations TO meet their dividends
Many corporations have passed their
distributions; others have reduced.
Cutting Of dividends Is "a serious
proposition TO those who depend on
what some are pleased To term "un-
earned income" even though the
money to pay for the investment has
, been earned by toll.
Directors of corporations have 10
consider the safety of the corporation
whether or not the quarterly or semi
annual distribution can be made With
safety. and. more now than ever, the
need of keeping cash resources well
I'm hand as against cventualities
This is especially true of directors
honestly Aoieacor fo manage