The New York herald., 1921-07-05
FINANCIAL NEWS
AND COMMENT
Last Half of 1921 Begins With
U. S. Better Prepared to Aid
World EndeavOr.
RAIL CONDITIONS BETTER
Steel Industry Making Ready
for More Slashing of Wages
and Prices.
RAIL CONDITIONS BETTER

OF past events IN BUSINESS ana finance
and OF seeking to determine what in
ferences they carry in respect to the
future. 1t is trite to say that the first
six months of 1921 brought difficulties
and disappointments. dimly anticipated
in the closing months of 1920. 1t was
a hard half year for every one engaged
in manufacturing, in distribution OF
goods at home and abroad and in
financing trade transactions So great
a fail OF prices was never known be-
fore in the history OF business vicissi-
tudes in this country. The writing
down of inventories converted many
surplus accounts. which were fat at
the middle Of last year. into decidedly
modest totals in many cases: some dis
appeared altogether Trading ventures
which had all the appearance of con-
tinued success and profit a year ago
have, in numerous instances, brought
figures ON the wrong side OF the ledger
Production in many lines became more
and more sluggish as time passed.
But the half year was not without its
eompensations. The medicine was Bit
ter but the recovery has been satisfac-
tory. The statement is safe to make
that American bankers and business
men are much better equipped to take
a permanent place in expanding world
endeavor than they would have been
without the experience gained in the
80 u, Ia 1t.
The second half of the year opens
amid developments which are worth re-
counting because of the undoubted con-
structive influence that they will have
later on On this side of the water the
railroads are entering a period of re-
duced wage costs. A IL per cent. reduc-
ton of pay, on the average, and the
elimination of wasteful special wage ac-
payroll containing probably $50. 900 fewer
names than it did year ago. Railway
managers calculate that at least 10 per
cent. more freight can be handled than
Is moved at present without making nee
essary any increase in payrolls of oper-
ating forces 1t would seem. then, that
the carriers will undertake the summer
and autumn traffic in position to save
a greater proportion of every dollar Of
their gross income than they were at any
time since 1916.
steel Companies Preparing Cuts.
Practically all steel companies are
making ready for further cuts of wages
and prices. They have seen operations
fall this year from IS to So per cent of
capacity to 20 to 80 per cent of capacity,
which means that production has passed
down to a, stage at which little, II any.
profit is in It. Hence they have deter
mined that the only way to stimulate
sales is to lower prices TO points at
which the public will be interested. and
the only way that can be done is through
further concessions by labor.
The steel trade knows that 30 per
cent mill operations, even allowing for
the increase of facilities which occurred
during the war. is not supplying nor
NAL consumption in domestic markets
alone. The steel trade Is seeing daily
inroads on stocks in warehouses, which
means that sooner or later those aocu-
mulated supplies will be so eaten away
that an expansion OF manufacturing
must be Inevitable. Knowing which, the
industry is preparing to realign prices
ard costs so as to impress consumers
toat steel can profitably be bought and
put to use.
Millions OF dollars still lie frozen In
goods which move slowly. but there has
been a mighty thawing of such credits
since January 1. Otherwise we would
not see the ratio between Federal Re-
serve cash and deposit and note liabili-
ties at the highest point in three years.
There seems to be slight doubt that
money rates will be considerably easier
by July Is. especially for funds for tenn
porary needs. The outlook is for earlier
and more persistent marketing OF crops
this year than there was year ago
which by itself will be powerful force
for easing credit and money. The farm
Gre are not likely to be moved by the
spectacle of a vast drop OF prices OF
wheat cotton, &C. to hold on from the
market as they did last year.
Rritisb Industry Unshackled.
Overseas midyesr sees British indus
try freed from the throttling grip OF
coal strike which reduced manufactur- :
ing 10 a ghost OF its former vigor ana
slowed down foreign trade. A strike OF
three months, shutting off not only fuel
needed by an Industrial nation but also
crippling industries of other countries
entails losses difficult 10 calculate IN
dollars or pounds sterling. The British
coal strike was a calamity at a time
when the full play OF all economic re-
sources was necessary to continue proc
esses of business and commercial read
,ustment. But the trouble Is over. and
| lust as Il ends the great textile industry Z
OF Britain sees differences smoothed out
between employers and EMPLOYEES and
use is found for quantities OF fuel TO
come from newly opened mines.
In glancing back over the last ak
months reference should be made TO the
settlement OF the German reparations
problem and evidence given OF German
/ intention to make good the prescribed
perlodic PAYMENTS. IL Is not plain In
the markets, however. Just how soon
and effectively these constructive mat
,ers are going TO be demonstrated I'm the
markets for goods and securities They
are arranging in Washington new
| A. -ger AaOra.n uftl ahOvu lust