Great Falls tribune. [volume] (Great Falls, Mont.) 1921-current, 1921-07-03
BY STUART P. WEST.
Special Correspondent Of The TribuI

| 6Y SJUAHJ =. WEob.
Special Correspondent of The Tribune.
Copyright 1921, by The Tribune.
New York, July 2.-This weeks
sharp recovery on the stock exchange
| is not SO much the result of any de-
! velopments in the general situation as
it is the recoil from state of excess
sive and unwarranted pessimism. When
the history of the recent experiences
has been written it will probably be
found that Wall street went quite as
far in overestimating the unfavorable
trade conditions in June, 1921, as it
had gone in overestimating the appar-
emily exuberant prosperity in October.
| 1919. As was the case in period OF
| decentralization last December, it has
been proved that there was nothing in
the malicious trouble rumors Of a
fortnight ago. No bank has failed, no
| big institution has confessed embar-
rassment, no corporation Of conse-
| quence has gone into receivers hands.
Companies Generally sound.
At some level prices are bound to
get low enough to reflect the worst of
trade situation except in cases where
this leads to company Insolvency.
There is no question, however. about
| the solvency of corporations which
have surplus of sound collectible
| assets over debts, and this is the
position of the great majority whose
shares are listed on the stock ex-
| change. Several times before, it has
| looked as if such minimum price level
had been reached and the indications
have proved to be deceptive. But in
the present instance there are stronger
reasons than at any stage so far. to
conclude that the market has been
through its worst and that the low
prices of last month were the bottom,
that is, for the general run of stocks.
Resistance To Bad News.
The market during the last few
days has shown increasing resistance
to disturbing news incidents. Steel
shares have advanced in the face of
continued reports of extreme dullness
in the steel trade and of further price
cuts impending. American oil stocks
have more than held their own. des-
pite further reductions in crude and
gasoline quotations. Refined sugar
has been marked down to new low
records without bringing any fresh
liquidation into the sugar stocks. Two
weeks ago the market would have been
swept off its feet by such a smash as
occurred in Mexican Petroleum and
some of the other Mexican and South
fected by the increased Mexican ex-
port tax, and the proposed American
duty on imports of crude and fuel oil
But this week the sensational break
scarcely caused ripple of disturbance
in other parts of the list.
Bond Prices Swing Upward.
Bank reserves continue to pile
up. especially in the eastern part of
the country and while this has not so
far been a stimulus to business it has
begun to make itself felt in the invest
ment market. Bond prices are in the
midst of an upswing more vigorous
than anything seen. since January and
foresee a further lowering of official
discount rates, a decline in the rate
of interest money generally and con-
sequent rise in the prices of all sound
securities Of limited yield.
Foreign Exchanges.
While events in the credit situation
bearing upon investment outlook have
been encouraging, the same cannot be
said for the course of the foreign ex-
changes. 1t is now recognized that
something else lay behind the situation
in sterling silver. The reparations
committee for the second installment
waived the requirement of payment in
dollars and accepted sterling and
francs. This would have brought more
of a response in British and French
exchange had the supporting elements
in the market been the same as they
were in the middle of May. So too,
the prospect of easier money condi-
lions and the plans for funding the
foreign war debts to the United States
must have been expected to have had
some stimulating effect.
international Trade Dubious.
1t has been suggested that the rep
arations commission may be in the
market secretly exchanging foreign
currencies for dollars and conducting
the operation SO that, while it may
keep rates down, it will not reproduce
the generalization that occurred at
the time of the first German payment
a month ago. This is one explanation
which. If true, would partly account
Aot IHC AedVlHeSS Ill rates. But the
action Of the exchange market is a re-
hinder also that Europe cannot keep
on sending us gold in settlement Of
obligations. that ultimately it must
depend upon selling us goods. and that
between the raising of new tariff
barriers and the failure to materialize
of the various projects for extending
long term credits. the whole inter-
national trade problem is quite as du-
biQus as ever.
Cutting Costs.
Without a revival in the export
trade. which seems altogether unlikely
for a long while to come. American
producers must place their reliance
upon home markets This will mean
that when recovery comes the volume |
of production and the margin Of profit ,,
will still be small by comparison with
the Initiation era which came to a close
a year ago. Business men are salts |
fled, however. with this prospect. pro-
vided they can get their costs down.
The most important and hopeful in