Evening star., 1922-09-16
BY STEWART p. WEST.

NEW YORK, September 16.-The
favorable features in the financial
situation at the end of the week are
the settlement OF the various strikes
| which have harassed the business
of the country for the past five
| months. the signs of expanding pro-.
duction in Industrial lines. the GER
tainty Of a record breaking railway
traffic, and the assurance Of an abun-
dant money supply at the season
when in past times credit has been
very tight.
The unfavcrable features are the
German reparations crisis and the
slackness of the export demand,
which has brought down grain prices
to a level that. from the farmers
standpoint. is disappointingly low.
Security Prices High.
The markets have had no hesita-
tion in deciding. as between these
two sets of forces, which is the more
twelve months have had very great
rise. To many they seem pretty
high where they stand at present.
Yet it has to be remembered that
that market of a year ago was a
panic market-one where values did
bonds were thrown over for anything
they would bring, because the neces-
sities of their holders compelled their
| unloading regardless of the prices
obtained.
Few who sold liberty bonds at SIS
could have doubted their eventual re-
turn to par. But 1t was case OF
hard-pressed corporations and 1ndl-
| viduals sacrificing their liberty bond
| holdings to provide tax money or to
raise the cash needed to cover losses
and working capital requirements in
| their business.
| Trade Improvement Discounted.
| To a large extent, therefore. the ad-
vance from the low points Of 1921 was
| in the nature Of a recovery from prices
| that were abnormally low to prices
| that were more in accord with actual
| values. But this recovery branched
! out in its subsequent stages into an up
! ward. movement that was partly dis
counting improvement in general trade
| and partly registering the effect of
| gold imitation and the accompanying
fall in the rate Of interest.
| For some time past 1t has looked
as If the upward adjustment of in
vestment bonds was pretty well COM
| pleted Bonds of the highest grade
like United States governments, and
the Municipals have been brought to
a 31a to 4 per cent basis. and first
1 y
ago returning to 512 to per cent are
| seeming to yield only to Az. Now
| that trade may be looked for to absorb
| increasing sums. and with a cessation
| of the gold movement to this country,
/ it is reasonable to conclude that the
decline in interest rates has reached
| its limit. and that the advance in in
| vestment issues based upon the fall
! in money rates must be somewhere near
a elimination.
Investment Diverted to Stocks.
| But, with bonds selling where they
4 no longer appeal very strongly to the
; average investor, there has come the
| familiar descent of investment capital
| into securities of inferior rank. This
| is one of the explanations for the
| sustained upward tendency to dividend
paying railway shares and the better
sort OF industrials.
/ The other phase of the advancing
! movement Is. of course, the speculative
phase. Pools and individual operators
| feel secure Of their credit supplies. They
| also know that they will be able to
| borrow money Indefinitely on very
comfortable terms. They are not reck.
| oning upon any great trade boom be-
| cause this cannot well occur without
| revival in foreign commerce and such
revival still seems some distance of.
| These speculative interests how
| ever. do look forward to a period in
home industry which will be one of
good business volume and fair, if
; moderate, profits. The upshot is that
they are in no hurry to distribute
the stocks which they are carrying,
are ready to give prompt support
whenever the market slips off. and to
offer their stocks in a leisurely man
ner when prices advance.
Not Upset Over Europe.
The American security markets at
no time have been in the least upset
by the financial troubles of conti-
mental Europe. They have ignored
the talk often heard in Wall street
and outside that the German crisis
and it's possible ramifications must
ultimately have a serious reaction on
| this side.
The rebuttal argument has simply
been that We have no longer anything
to fear from European dumping of
our securities, since We are the cred
itor nation.
Furthermore, Wall street asserts
that our business has got used to