The New York herald., 1921-07-11
FINANCIAL NEWS
AND COMMENT
Action of Stock Market Indi-
Gates Readjustment Period
Not Over.
MOVEMENTS IRREGULAR
Governments Plan to Help
Railroads Regarded as Step
to Aid Business.
MOVEMENTS IRREGULAR

The Reserve Board makes this COM
ment on events in business and bank
ing in its survey of developments in the
fiscal year just ended: 1.-The spring
months OF 1921 would seem. in the light
OF information now available to be a
period of approach to equilibrium In
certain lines of business and of prepara-
ton for recovery from the depressed
conditions that had developed" II the
stock market Is any guide. pointing
ahead to future occurrences it Is to be
said that the period of readjustment Is
continuing from the spring months into
the months of summer. Stocks have not
yet denoted any material change of
processes of liquidation in trade or of
an irregular tendency of manufacturing
and distribution, which became promi-
nent last winter. In the last week there
occurred on one day a sharp recovery
of prices, reaching from points upward
to 10 points among the more active
shares. That swing, however, was fol-
of values, which comprised railroad and
industrial stocks within the area of
pressure A summary of last weeks
doings could be limited to the statement
that, except for one or two days of
rapid short covering. stocks continued
to reflect factors of uncertainty more
than forces of positive constructive
character.
Nevertheless. there are to be seen
some plain influences, the application
of which to better business will appear
later on. The Government is setting out
definitely to do its duty by the rail-
roads. The railroad union leaders in
a half-hearted fashion have called for
a referendum of members on the pro-
scribed wage reductions, feeling certain
that the cuts will be accepted without
serious strikes.
Governmental Aid to Railroads. !
The Government part in correcting
a. deplorable railroad financial situation
is to be done through advances of $780,
100000 to s5o0,O0O,Oo to the roads,
chiefly to liquidate capital expenditures
made from earnings during Federal con-
troll. The plan provides that there shall
be no delay while endless details of
claim and counter claim are being paired
nf ha de 60 4.
during the next six months and to the
extent that obligations due the Treasury
from the railways exceed obligations
from the Treasury to the carriers, the
latter are to deliver bonds at per cent
to the Government. maturing In ten years
or so.
The value and significance of that
plan goes far beyond its direct applica-
ton to the railroads. The lack of ready
money has crippled the carriers. prevent
ing them for many months from adding
to equipment and making needed repairs.
But the greater damage from a cash
shortage. cash which the roads had
earned but could not get into their
lTedSuIlcs, mas DceH uOHe, perhaps. 10
railroad creditors. those corporations
which sold goods and services to the
roads in the last three years and could
not get paid. Not only has millions of
dollars OF working capital of coal and
equipment companies. lumber companies
and contracting firms been tied UP. but
loans entailed in work done for railroads
have had to be carried along.
With the railroads in position to pay
old bills and able also to get better
net earnings through wage reductions
and operating economies. there seems to
be reason to accept the attitude of the
Secretary of the Treasury that the plan
for advancing funds to the roads will
help general business.
steel buying I'm August Expected.