The Washington herald., 1921-02-07
FINANCIAL WORLD
KNOCKS AT WALL
STREET FOR HELP
With Huge Gold Reserves
U. S. Dominates For
eign Trade.
MARKET IS FLOODED
Securities Are Dumped Here
More Rapidly Than
Absorbed.

NEW YORK, Feb. S.-With the
NNhole-worId knocking at Wall
Streets door for permission to leave
securities and take funds, and with
the American banks straining every
muscle to finance the Industrial cor
porations which, by reason of small
er business and large inventories,
need additional working capital,
there is considerable uncertainty as
TO whether the stock market can
withstand the flood of new domestic
and foreign securities that are about
to be fiOated in the United States.
The public received a bad licking
IN the recent comprehensive down
ward movement in the prices OF
stocks, and as yet has not started
to show signs Of recovery. Com
mission houses, which represent the
public, are bare of stocks and their
loans have been reduced to a mini
mum. Even the volume of orders
usually placed under the market
by investors is the smallest it has
been for many months.
Gold Lodged Here.
The greater portion OF the world :
gold is lodged in the United states,
and Europe is desirOus of obtain
ing credits in exchange for seCuri-
ties so that it may grease it's in
dustrial machinery and expand its
manufactures and thus increase its
exports with a view to enhancing
it's credit as expressed in foreign
exchange rates.
Relative steadiness of foreign ex
change at those levels is attributed
by important hackers to the smaller
purchasers of American products by
Europe and the fact that the for
cign countries are paying less for
American goods than they did a year
ago. Firmness Of sterling exchange
S due to smaller offerings of bills
here and less worry with regard
10 EngIand's labor troubles. There
has also been some speculation for
the rise in sterling. France and
Italy have also been purchasing less
cOaT from the United States. Ex-
ports Of cotton are also showing
falling off compared with a year
ago: in fact. the contraction last
week was about 80 per cent, COM
pared with last years shipments.
The sale of foreign government. mu-
nfcipaI and railroad securities is also
helping stabilize the market for Eu-
ropean exchange.
Stm Comes In.
Gold is altering into the United
states from all parts Of the world.
Within the last fortnight shipments
of the precious metal came from
China. Sweden. Australia, Bombay
France and Turkey. Bankers state
this movement represents Exchange
transactions" The truth of the
matter is that the foreign countries
are shipping because when meas
ured in their paper money the gold
creates much more credit than pay
ment with bills Of exchange. Such
shipments also have a strengthen
ing influence on exchange rates.
Important bankers state that the
financing Of industrial activity in
Europe by the United States in the
long run will result in a gradual
hut steady transfer of credit to Eu-
rope. which. in turn. will relay the
credit back to the United States in
payment of debts.
Canada Is Borrower.
Canada promises to be a larger
borrower in the United States. Over
lures are being made for the plac-
ing of Canada's premier industrial
sacurfties in American markets The
movement will start with the secu-
-ties Of paper companies and will
be followed by the obligations of
steel and hydro o-electric enterprises.
Negotiations are already under way
for the sale of a large block of
bonds Of at least two of Canada's
important paper companies An
nOunCement on these negotiations
NAV possibly be made this week
The premium existing in Can
ada for New York funds makes
the American market look extreme
~ attractive to the Canadians. One
dollar OF New York funds is worth
S11O in Canada. so that our neigh
Dor to the north can offer their
securities under prices prevailing in
their own country, and at the same
time receive as much or more in
Canadian funds.
Floating Debts.
Many OF the ills of the Industrial
CORPORATIONS as represented by float
ing debts and depleted working cap
itaI are being cured by the fota-
tion of new security issues which
transfer bank loans to the investor.
This process is expanding, and there
is some Apprehension that II may
he. carried so far as to glUt the bond
market with new offerings. Signs
Of Indigestion in the market for
bonds have started to appear. Most
Of the recent issues were soft the
latter part Of last week Approx
mateIy S1OO,OOO,OOO of new financ-
ing is expected to find it's way into
the market this week. While each
new offering is substantially over
subscribed and would seem to indi-
cate rapid absorption, the fact that
q fair amount of the new securities
coming into the market would in
dicate that some houses and dealers
may be speCulating in the bond