The New York herald., 1921-05-16
FINANCIAL NEWS
AND COMMENT
Germany's Acceptance Will
Have Real Effect on Trade
When Payments Begin.
HOPE IN EXCHANGES RISE
Railroads Make Better Show
inc With Indications Of
Increased Traffic.
HOPE IN EXCHANGES RISE

As the markets all through the read
justment period have been directed more
hy considerations OF the future than by
things Of the present. II Is natural that
they should now be seeking to discount
the results OF the German reparations
agreement rather than the arrangement
itself Germanys consent 10 pay SOM,
&c., 900 10000 is already old news: 1t is
more interesting TO estimate what the
acceptance means in terms of American
cotton. grain and copper.
The uncertainty OF the outlook In re-
spect to raw materials and foodstuffs
may perhaps be described completely
in recounting what happened last week.
After the agreement was reached cotton
developed more weakness than had been
seen in several weeks. while wheat prices
advanced with less vigor than they did
per clung rather closely to the old es-
tablished figure OF 13 cents a pound.
1t is evident that the reparations are
going to mean most to France. Belgium.
England and the United States when
initial payments are begun There can
not be Immediately a cash realization
for holders on the bonds which Ger
many is requned to give. and in the
meantime the shadow instead of the
substance of actual reimbursement for
war expense and damage must suffice.
When the time arrives for converting
these bonds into money or loans. then,
\ and probably not until then. will the
concrete value of the reparations de
cision be discernible
The financial and business signs point
toward a turn of thought to domestic
problems soon in this country. leaving
the reparations as something to be taken
up later What of the railroads and in
dustrial conditions in which evidence OF
unsatisfactory results have again ap-
peared in reduced or eliminated diH-
dends?
The last week in the stock market was
noteworthy for what seemed to be re-
version OF sentiment to the pessimistic
condition of last February. Industrial
shares fell with considerable violence
at times, accompanied by comment to
the effect that the rise OF April had been
built on a false bottom. With the rail-
road issues the movement OF the week
while less pronounced than with the
producing company stocks. was down.
ward The market process was in the
i
six weeks or more.
But the question may be raised
whether one looking for a signboard
toward future occurrences did better in
examining the foreign exchanges than
the stock market. Exchange quotations
were undoubtedly directed forward by
the reparations agreement itself and
also by expectation OF better trade to
grow later out of the reparatons.
The foreign exchanges seemingly dis
counted the future in the rise OF sterling
to 81 to the pound. while stocks were
concerned with internal effects OF the
recent speculative advance. Cotton and
grain probably were retarded by the
sheer weight OF supplies, present and
prospective. but the exchanges acted as
though freed Of shacklcs which had been
holding the rates back for virtually
full year. The virility Of European rates
suggested that under the known condi-
tions OF trade. which showed a theoretf-
cal debit balance OF more than ss,ooo,0o0
for the United States on merchandise
and gold movements in April, the ex-
changes were paving the way for an In
crease of foreign purchases In this coun-
try As exchange rises foreign curren-
cles will buy more and more In our mar
kets. While the advance OF exchange
has unquestionably been partly the re-
suit of a declining merchandise fow from
our shores. the upturn makes easier
purchases here later.