Great Falls tribune. [volume] (Great Falls, Mont.) 1921-current, 1922-09-17
By STUART p. WEST
Special CORRESPONDENT Of Great Falls Tribune
Copyright, 1922, by The Great Falls Tribune

Copyright. 1922. by The Great Falls Tribune
New York, Sept. 16.-The favora-
BILE features in the financial situation
at the end of the week are the settle
ment of the various strikes when nave
harassed the business of the country
for the past five months; the signs OF
expanding production in industrial
lines. the certainty of a record breaking
railway traffic and the assurance OF
an abundant money supply at this
season, when in past times credit has
been very light. The unfavorable fea-
lures are the German reparatlons
crisis and the sIackness Of the export
demand. which has brought down grain
prices to a level that from the farmers
standpoint is disappoiftingly low.
Security Prices High.
The markets have had no hesitation
in deciding as between these two sets
of forces. which is the more powerful.
Security prices in the last II months
have had a very great increase. To
many they seem pretty high where
they stand at present. Yet 1t has to
be remembered that the market OF a
year ago was a panic market, one
where values did not count, but where
stocks and bonds were thrown over a
year ago for what they would bring
because of necessity and their holders
kept unloading regardless of the prices
obtained.
Few who sold liberty bonds at SIS
could have doubted their eventual re-
turn to par. But it was q case of hard
pressed condition and sacrifices all
along the line.
Trade Improvement Discounted.
To a large extent, therefore, the ad-
vance from the low points of 1927
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
branches out into an upward movement
that was partly discounting improve
ment in general trade and partly regis
tering the effect of gold initiation and
the fall in the rate of interest.
For some time part of it has looked
ms if the upward adjustment of invest
ment bonds was pretty well completed.
Bonds of the highest grade, like United
States governments. and the munich
pals, have been brought to a 3R to 4
per cent basis. and first-class railway
mortgages, which a year ago returned
SD to 6 per cent, are selling to yield
only 4 to Az per cent. Now that
trade NAV be looked for to absorb in
creasing sums, and with a cessation of
the gold movement to this country, 1t
Is reasonable to conclude that the de-
cline in interest rates has reached its
limit, and that the advance in invest
ment issues. based upon the fall IN
money rates. must be somewhat near
elimination.
Investment Diverted to Stocks.
But. with bonds selling where they
no longer appeal strongly to the aver
age investor, there has come the
familiar descent of investment capital
into securities of inferior rank. This
is one of the explanations for the sus-
tanned upward tendency in dividend
paving railway shares and the better
sort of industrials.
The other phase of the advancing
movement is, of course, the specu-
lative phase. Pools and industrial
plies. They also know that they will
be able to borrow none indefinitely
on very comfortable terms. They are
not reckoning upon any great trade
boom because this cannot well occur
without other r~evivals and this seems
some distance off.
Speculative interests, however, do
look forward to q period in home in
dustry which will be one of good bust
ness volume ana lar, II mOuerdte,
profits.
The upshot is 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 liesurely
manner 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 continental
Europe. They have ignored the talk
of tendency heard in Wall street and
outside, that the German crisis and
its possible qualifications must ulti-
mately have a serious reaction on this
side. The rebuttal argument has
simply been that we have no longer
anything to fear from Europe bump
ing our securities since we are the
creditor nation. Furthermore, Wall
street asserts that our business has
got used to the shrinkage in the ex-
port trade and this shrinkage, due to
deficient foreign buying power, is not
likely to be any worse than we have
seen it for the last IL months.
German Complications ignored
1t is not surprising, consequently,
that the bond and stock markets
should have ignored the latest compli-