The New York herald., 1921-06-06
FINANCIAL NEWS
AND COMMENT
Markets Reflect Credit and
Foreign Trade Conditions
and Dividend Cuts.
CALL RATE is BOOSTED
Weeks Developments But Sign
Posts on Road to Better
Times.
CALL RATE is BOOSTED


passed or reduced dividends. and the
state OF foreign trade is having more
and more OF reflection in the markets
Several significant events brought last
week those facts into the fore
ground of financial consideration. The
passing of so prominent a dividend as
the one on the Cuba Cane Sugar Cor
poration's preferred stock and the re-
duction of the quarterly cash payment
on the International Harvester Com
pany's common stock betoken n situa-
ton in industry which emphasizes the
slump OF 1891. The call loan rate in
New York indicated an unheraided
stringency OF money and indirectly OF
credit as we'll by rising to s per cent.
the highest level since the second week
Of February And the efforts Of a
group OF business men to conserve their
equity in 500 900 or more of goods
sold to southern countries but not paid
for revealed a side light on the stress
which some export lines are ruffering.
SSyough high money rates the conn
try - again experiencing the result Of
tremendous outstanding loans on goods
and materials in the domestic market
and abroad, which can be liquidated
only slowly Through dividend cuts are
seen the troubles entailed in dormant
surplus products Of American mills. If
South America, the Tar East and Eu-
rope were as we'll able to buy and pay
for our products as they were two years
ago there would not be shrunken In
comes nor would st be necessary :or
manufacturers to seek ways to get rid
of a great amount OF goods turned back
on their hands. Neither would II be
necessary for bank OF such wide
spread interests as the Mercantile Bank
OF the Americas to raise 10000. ooo fresh
funds-nearly twice its previous capital
and surplus--to carry its customers
until more favorable times
Point Way to Better Times.
The last week was made memorable
Oy lHObe CtNclOpIiicHtos hOt OiAy bV-
cause they are likely to stand as proofs
OF much disturbed business. but also
for their probable functions as sign
boards pointing toward better condi-
tions. Money rates should case off
somewhat as offerings are drawn from
centres in which money is plentiful to
others in which it is scarce. But the
recurrence of high quotations when the
Reserve banks are recorded for months
a steady retirement OF loans and
great. growth of reserves is n strong
suggestion Of problems ahead. Just
where liquidation was being discussed
SC freely as seemingly to forecast really
easy credit rates the situation tightens
up again.
The entire credit difficulty harks back
to those hundreds Of millions OF dollars
frozen in immovable goods; rather In
goods which move so slowly that fresh
demands OF production and distribution
make harder and harder the release
of capital tied UP in them. Bankers
with such loans know full we'll that
the only way out is to wait patiently
and painfully until market conditions
1hall improve. Until a vast amount of
such goods and materials be distributed
and paid for In cash, it is certain that
foreign markets for new manufactures
will be sluggish and manufacturing
operations restricted. In that fact lies
the secret of many dividend omissions
and the likelihood that there will be
others.