Evening star., 1921-10-02
ny SrU ART r. WESY.

NEW YORK. October IA brief
summary of the business and anan-
cial situation at the close of the pres
ent week would show that a decided,
turn came toward the end of August.
and has been slowly unfolding dur
ing the succeeding months. that this
change has been duly recognized by
a rise of five, ten and fifteen points in
stocks and an advance in bonds to
the highest level of the year. but
that the markets have shown them
selves satisfied to hold the ground
gained and to await developments at
the trade centerS before attempting
any important new move.
Wall street fluctuations, taking the
week as a whole. have been small and
net price variations slight. Fhe al
vancing tendency in. bonds has, oeen
checked by the heavy euepour OF new
securities. competing with. the old.
and helping to take the sharp edge
off the Investment demand.
1t does not appear that bond prices
have fully adjusted themselves to the
prospect of permanently lowered IN
terest rates. The return on many
good investment issues is high. de-
spite the rise of the last few months.
in comparison with the return on
money loaned out in the market. SUI
digest the new capital offerings and
clear the way for further upward
movement.
July Saw Turn Upward.
REGARDING business conditions gen
erally, It was pretty we'll agreed that
the downward movement reached it's
end in July. that this was the month
when prices and production in most
lines got down to rock bottom. The
turn which has come since then is.
it is believed. a. last turn in the sense
that the July situation will not be
seen again. But on the question as
to the extent of the present recovery
there is much difference of opinion.
The collapse of a year ago came so
suddenly that production could not
be cut down in keeping with the
paralysis which came over the buying
movement. A state of overproduc-
tion was the inevitable result. and it
was an excess of goods in merchants
hands that was the. main cause of
depression through the first half of
1921.
=. Repleni.hment Of Stocks
What has happened since June is
that one industry after another has
reached the stage where this surplus
had been worked off and where con-
sumerS had to look to repleniShlnS
their supplies. 1t is this replenish-
ment demand. now in progress. which
is responsible for most of the price
advances and other signs of a quick
ening of business life. which have
been noted during the last few weeks.
The point of doubt is what will hap
pen when merchants have got
through restocking. Will the general
buying power have then expanded
sufficiently to keep production ana
distribution at the higher ratio. or
will it not? On the answer to this
question depends the sequel to the
current increase in commercial ac-
tivity. whether. it will be sustained
and slowly continued. or whether 1t
will be followed by a partial relapse
and a period of StaSnatlOn.
Farmers Buying Power Curtailed.
Ordinarily the main source of. the
countrv's buying power is derived
from .the crops. The farmers sell
their wheat and cotton and live stock
and spend the proceeds at the manu-
featuring and distributing centefs-
This year. however, they will be get
tins, outside of cotton. very low
prices. for their products. especially
for corn. which is selling at the low
est in ten years. and for cattle, WhIch
it is claimed cannot be shipped TO
market at present freight rates ana
yield any profit at aIL
Moreover, most of the money Whlch
the farmers receive will be used to
nav off debts That this is putting the
economic position in much better
shape goes without saying. But 1t IS
not leaving room for the normal buy
ing demand to develop.
Moderate Gains PrObabbe.
This is a fact of the first imper-
tance to remember in calculating the
business outlook. 1t is not consistent
with any idea of great activity in the
near future, or. indeed. until we'll
along into next year. On the other
hand, it is not inconsistent with the
view that the business situation Will
at least hold it's present status ana
show some moderate gain in the clos
ing months of the year.
tn hn