The Birmingham age-herald., 1921-07-04
By THEODORE H. PRICE. Editor Commerce and Finance, New
 York

l Fly JHEODOHE H. PRICE,
 Editor Commerce and Finance, New
 York
 Copyright, Theodore H. Price Pulp
 fishing Corp, 16 Exchange Place, New York
 New York, July Especial )-The passage of the Borah resolution by a vote that was unanimous in the House and almost unanimous In the Senate Is easily the most important news of the week in its economic as well az its social aspect. The resolution in- vltes Great Britain and Japan to con fer with the United States upon an agreement to mutually limit their such an agreement can be arrived at the world will be immensely benefited and the mere discussion of the subject will have a tonic effect.
 Next in importance to the Borah
 resolution comes the weekly state ment of the federal reserve banks not so much because of the slight gain | in the reserve ratio, which has risen lToih uVsa tO oV.o' hS pecAuSe OL tne
 continued inflow of gold recorded The gold reserve of the New York bank has increased during the week by s23, 3,OO0,Ooo. and that of the entire system by s11,oOo,0o
 This golden flood" to which have repeatedly called attention Is com mencing to attract general notice. The 1 comptroller of the currency. MT. Crls- singer, now alludes to 1t as threaten ing us with gold inflation.'s and sev- eral others who have the public ear are commencing to talk in the same | strain. Inasmuch as insistence that a specified condition Is certain to fol- l low another already In existence may hasten the result predicated it is pos sible that the threatened Initiation may become O fact sooner than many expect.
 | The Money Market
 The money market, where It's ad- advent would first be presaged, is 1 distinctly easier. The best commer- cial paper can now be sold in New York at 6 per cent. Bankers who were husbanding their resources A few weeks ago are becoming rather 1 iiOtc cd5ci to icliu anu hhO AaSi thttt | $S,000.000 Illinois Central bonds of- fered on a 6.s0 basis were eagerly snapped up Is highly significant. Gold imports for the first six months of the year will Joe nearly | S350, ,000,0 900. The federal reserve banks now hold s2.461, 100000 of the yellow metal. The supply hold else- where In the country is approximat to- ly $1,6o0, 100000. We have therefore nearly $4.O00. 900, 900 of monetary gold 1 in the United States. As interest on this sum at per cent per annum is | 200,000,000, 1t may be taken for | granted that 1t will not long remain | In idleness, and the only way in which 1t can be made to pay for its keep Is to use 1t as the basis for an expan- sion of our domestic credit. We can not ship 1t abroad as long as we re- fuse to lend there or fail to import more than we export, which will be almost impossible If the Fordney bill | becomes & law.
 These facts are stressed because. AS I have repeatedly pointed out they | imply possibilities that have become probabilities now that their signifi- canoe Is generally recognized. 1t Is indeed likely that the firmer tone which has been latterly manifest in the speculative markets is mainly due | to Q subconscious realization of. the relation between advancing prices and more abundant credit. As is gen orally the case, the disposition Is to attribute the better feeling to devel- ments that are rather more imminent or concrete.
 | DUE TO STRIKE SETTLEMENT 1 Thus the advance in cotton Is re- lated to the settlement of the British | coal strike, and 1t Is said that wheat Is higher because the crop outlook Is less propitious. In neither case. how ever. is there the slightest prospect of scarcity during the coming year and the truth Is that people, feeling more | cheerful bekluse they can borrow more easily, have become more sus- ceptihle to those influences which seem to make for better prices. In the stock market the same ac- oession of confidence Is to be noticed. | for despite the gyrations of Mexican | Petroleum, most of the speculatively active securities are higher and tabu- | lations which purport to show that the average decline of nearly 46 per cent in certain "barometric" stocks between the high" of November 8. 1919, and the ''low" of June 20. 1921, has never been exceeded in any pre- vious market movement, have been accepted as presaging the higher prices in which no one was willing | to believe on December 20, 1920. al- l though the same average was then only l% points above that of two weeks ago. These facts are cited not by way of speculative prohecy, for which I have no gift, but simply to emphasize the change in sentiment and the slight impression that has | been made upon standard values by the rampant pessimism of the last six months. Underneath it all tho rising bank reserves have been silently at work exerting their steadying influ- ence and the time appears to be at hand when that influence may bs more positively felt.
 Other Develepments
 The developments of the week otherwise have not been specially striking. Tho Fordney tariff bill as reported will probably be much changed in its passage through Con- gress. Specifically the duties im- posed seem no higher than under the Payne Aldrich schedules, but the "joker" in the pack is the clause which declares that "it is the legis- lative intention that duties ad val orem shall be assessed upon the fair market value of the imported mer- chandise in the United States" in stead of upon invoice value as for merly. As the New York Sun points out pen knives that are worth S4 dozen here can now be bought in Ger many for the equivalent of $l per dozen at the present rate of exchange. One does not have to be very skill full in arithmetic to gee that under ths Fordney bill 75 per cent duty on pen knives means great deal