New-York tribune., 1921-02-28

In view of the decreased buying
capacity of wealthy individuals be-
cause of the operation Of the tax laws,
the precious thing that an improved
] demand for bonds is usually is killed
! by excessive attempts to take advan.
tage of conditions. The remedy for an
overworked bond market, which causes
state of undigested securities, is rest
Tor the marketplace, made feasible by
abstinence for time by borrowers.
The dullness Of the investment mar
ket offers striking contrast to the
feverish activity of few weeks ago.
Plans for much new financing are be-
ing generally held in allegiance be-
cause market conditions are not favor
able. The principal development last
week was the undertaking Of a new
foreign commitment by American
banking houses, involving a tripartite
underwriting of $16,oOo,ooo loan to the
Brazilian state of San Paulo, s1o,O0O,-
900 of which will be offered this week
! to American investors, with the ball
ance being placed in London and Am
sterdam. This is the second South
American transaction in fortnight,
the other being q Chilean commitment
for s24,oo0,ooo.
Credit in normal times is the great
accelerator Of industry. In the pres
ent abnormal period. however, it is the
motive force which squeezes water out
Of prices. 1t has gradually been bring
ing quotations of all commodities tow
ard new normal away from the peaks
of imitation. Cotton prices moved
toward lower levels last week, and spot
cotton slumped to the lowest level at
tanned since November, 1915. Behind
the decline evidently is the determine
tion Of the banks to make cotton plant
ers and warehouse folk liquidate at
least part of their present holdings in
order to pay off bank borrowings be-
fore they will continue lending funds
for the new crop. Usually around
March l demands are made on the
Southern banks FIR loans. The decline
represented both the selling from the
South and operations of spectators
based on the knowledge Of what was
taking place below the Mason and
Dixon line.
The stock market remained profes-
sional last week, and the fluctuations
were irregular, prophetic Of no imme-
diate change in the business world.
Floor traders ut the Stock Exchange,
finding dullness improbable, sought to
heghten activity by seeking centers of,
weakness among the speciality stocks,
and often particular issues broke pre-
ci itately, regardless Of the general
trend.
In the face Of blue predictions re-
garding the complete wasting away Of
Americas European trade because of
the disorganization Of the exchanges
and the lack of credit, trade figures,
announced each month by the Depart
menS Of Commerce, have been exceed
ingly large. Of course, the present
method OF trade. with ever growing
open book accounts, has its limitations,
and, as the Jsnuary trade figures
showed, is already causing slowing
up Of European purchases. A view Of
why the depreciation Of European ex-
changes did not cause more complete
cessation of trade with the Old World
is interestingly set forth by DR.. B. M.
Anderson jr. in q new Chase Economic
Bulletin.
Referring to the doctrine that de-
preciated exchanges halt trade, the
economist says:
"The limitations on the doctrine.
however, are very serious. To the ex-
tent that exchange rates go down solely
because Of trade balances, the doctrine
is sound. When, however, exchange
rates ara falling because Of decline
IN the value Of irredeemabls paper
money, decline which Is due to in
creasing financial difficulties of govern