Evening star., 1921-05-01
REPORTS VARY, BUT GIVE HOPE
II FOR INDUSTRIAL IMPROVEMENT
Position of Great Britain and Europe L
Much Better Sterling Higher-Look
= for Lower Reserve Rates Here.

figures for March of the American
foreign trade.
Britain 10 Have Surplus.
The budget figures estimated that
Great Britain in the twelve months
beginning April l. would have an
eA:ess of receipts over expenditures
suffcient to retire billion dollars
worth of war debt.
The foreign trade-statement showed
that Europe bought from the United
States less than 100000 900 worth of
goods in March. against s242,O0O,00O
In February and $466, 100000 in March.
l92O. AT the same time Europe sold
to us in March goods worth s77.000,-
900, as compared with s55,000.000 in
February. and S125,O0O.OOO in March
a year ago. In March. 1920. our net
bill against Europe was $340. .000. 900.
against Great Britain it was s161. 1.OOo.-
900. In March. 1921, we were owed
on balance only s123.O0O.O0O by Eu-
rope. as whole, and only ISL 100000
by Great Britain.
Why Exchange Rose.
With these proofs of economic saw
ing and recuperation to support it,
the action of the English bank was
no surprise With the So-called in
visible items in the international bal
ance sheet-ocean freights, interest,
tourist eXpenditureS-recko on. it
is very certain that Great Britain had
a credit in it's March dealings with
the United States, while it probably
would be found that Europe generally
came out about even.
Under these circumstances and with
some $225.O0O.000 gold imports into
this country since the first of the year.
there is no mystery about the rise in
the exchanges. The only wonder is
that it has not gone faster and
further. especially in the case of
sterling
1t will be said. of course. that Eu-
rope has improved its credit position
at the expense of our export trade,
and this is true. But it is of infinitely
more importance for. US in the long
run that Europe should save and get
back on its feet financially than that
our exports should have to pass
through the same sort of deflation
that has been going on during the
last six months in industry at home.
Look for Lower Rates.
That the Federal Reserve Board will
be Influenced by the lowering of the
English bank rate is commonly in
TERED. At the same time the reduc-
tion in open market discounts on
commercial bills to per cent in the
New York district. and the advance
in the federal reserves ratio to 55 per
cent-highest since August, 191s-are
two very influential happenings.
undone all the eXcesses of the post
war period 1t is in a stronger po-
sitIon than it was before the armi-
suce. So far as it is concerned def1a-
tion is complete.
Whsther or not official discount
rates are reduced for the country
generally. it seems virtually certain
that they will come down very soon
in New York. and in the other sec
uons where the rise in the ratio of
reserves to deposit and note liabili-
ties has been particularly rapid.
Favorable Railway Statements.
The most important contribution to
the trade news of the week was the
railway statements for March. While
results We're very uneven there was
an astonishing change for the better
as compared with January and
February. The Pennsylvania was
notable example. During the first
two months of the year it failed by
s2,40O.0O0 to earn it's operating ex-
a balance of s6.400,O00 on the credit
side
A similar reversal occurred in the
earnings of representative roads in
the west and south. The figures have
proved first. that March saw the turn
In the traffic movement, and second.
that operating deficits have, as a
rule, been converted into surpluses
by the wholesale cutting down of
working forces. Yet, even these
changes, great as they are. are not
enough unless they are to be fol-
lowed by general wage reduction.
The March results showed the rail-
way industry on the road to recovery,
but to restore a reasonable measure
of prosperity gross traffic must pick
up great deal more than il has. By
common consent this cannot be done
without reduction in freight rates.
and the carriers cannot stand lower
rate scale unless compensated by a
lower wage scale.
The Investment Situation.
1t was generally agreed that the
$3.50. 100000 joint Northern Pacific
Great Northern refunding loan would
be the crucial test of the investment
situation. Syndicate distributions had
been greatly overdone at the start of
the year. 1t was question whether
the market had had time between the
middle of February and the end of
April to work out of its congested
state.
This weeks big transaction has
given the necessary proof that the in
vestment demand has caught up with
the supply Of r"H securities. 1t has
been very salutary influence in the
bond market already and is likely TO
continue its good effects for some
time The only qualification is that
tne cost OF new capital has not dmin-
ished any. II was nearly a year ago
that the Pennsylvania brought out It's
ten-year bonds on Il per cent basis
Northern Pacific and Great Northern
have sold their securities on 6Ts per
cent basis, but they are borrowing
the money for fifteen years. not for
ten. That the market was not pre-
pared for the Hill road refunding plan
on such terms was indicated by the
prompt disappearance of the pre-
at one time ran az
nigh as and per cent-on the new
railway securities brought, out with
In the last twelve months