Omaha daily bee., 1921-08-08
financial
Ebe Nem pork 6imes.
BY ALEXANDER DANA MOVES.



New York, Aug. $50 many dis
appointments have been encountered
by people who were looking for the
long deferred trade revival that dis
couragement naturally prevails
again at frequent intervals. Perhaps
it is only by watching the landmarks
of depression which, one after
another are now being left behind
on the return tide, that a true idea
of our actual present position can be
obtained.
We are evidently still surrounded
by such unpleasant indications as the
long list of unemployed labor, the
abnormal decrease in production and
sale of steel and iron, the hesitancy
of consumers in every industry, the
inadequate railway earnings, and the
paralysed export trade.
But we passed out of the hope
lessly high cost of production long
ago; the abnormally high money
rates are three months behind us;
apparently the last of the crippled
financiers who "had to be taken
over" has been cared for and in July
the unremtting downward sweep of
prices came to definite pause.
These are the signs for which the
trained financial eye watches anxious
ly when the country is being carried
along on the tide OF financial re-
action. We may pretty closely judge
how far the return flow has brought
Us when we can look back at them
in the rapidly increasing distance.
Irregular Movement.
Last weeks irregular movement Of
prices for investment stocks and bonds oc-
CURED in connection with sngularly
conflicting series of incidents in the larger
field of industry During many months
financial watchers have kept their eye on
the course OF commodity prices, arguing
that improvement in general trade was not
likely to begin in earnest until the down.
ward movement Of those markets was re-
vised. The past weeks compilations Of
the mercantile agencies agreed in report
July, ranging from 2h to per cent, and
in one Of the estimates marking the second
month of an upward reaction which had
been in evidence at no previous time since
the fall in prices began in the early
Bue when the action of the separate
commodity markets was observed more
closely 1t was easy to find a common
trend. In steel and iron, for Instance, last
weeks production figures showed such an
extraordinary absence Of demand from
regular consumers that. the country's out
est figure of any month since the close OF
1908.
Big Grain Movement.
With wheat on the contrary, although
prices have declined again since the clos
ing weeks OF July, the prospect Of a good
sized harvest has broken the deadlock in
the movement OF farm supplies to market
and the wheat held back so long with
borrowed money by the western and north
western producers has been pouring into
the terminal markets in wholly unprece-
dented quantity, with foreign consumers
buying freely
Cotton, on the other hand, has recovered
moderately in price on a surprisingly posi-
tive confirmation of the reduced produc-
ton estimate in the governments August
report--the forecast cutting down by near
ly s250,O00 balance and the July indca-
ton of YIELD which was below any actual
harvest in quarter Of century, and the
cotton market has risen 2Ac per. pound
from the low June price to the highest
since February 90; yet the dead weight Of
the 500. 900 bales carried over from former
crops has repeatedly checked the move
ment
Money rates have drifted slowly lower,
the federal reserve ratio had advanced
again, and another huge mass OF foreign
gold has poured into our market. yet tho
larger facilities of credit have not yet
found reflection in any increase OF the
loan account and the lower cost of money
on the open market has caused only slow
recovery in the price OF investment securi-
ties. The cost Of capital for high grade
Investment issues still ranges between
and per cent. while six months loans
on stock exchange collateral are going at
~ per cent.
Obstacles Removed.
Despite all these conflicting circum-
stances, 1t is possible to draw one COM
mon and not unfavorable inference from
all of them. which is that the trying
process of reaction. liquidation and re-
adjustment has been very complete and
has already removed the great part of
those obstacles which, for more than a
year. have stood in the way of return
to anything like normal business.
Output OF steel and Iron at the pres
ent Is so far below the country's actual
requirements that nothing except such
a blockade of credit facilities as pre-
mate resumption of purchases. and. in
fact. the buying movement can hardly
fail to be resumed the instant II Is be-
lieved that prices have reached their
low point.
If the release OF frozen credits in the
south has been slower than IN the west,
the machinery for effecting sale of accu-
mulated cotton and the consequent dis
unmlstakably at work. Behind all these
considerations stands the astonishingly
strong banking position. AS whole the
credit organism of the country bids fair
to enter the autumn on a sounder po-
sition and with higher percentage of
banking reserve to banking liability than
at any time since the United States
came into the war in 1917.