Great Falls tribune. [volume] (Great Falls, Mont.) 1921-current, 1922-05-21
BY STUART p. WEST
Special corrsspsndsnt Of Great Falls rrlbune
Copyright. 1872. BY Tbs Great Falls Tribune.

SCUtAxup 4SsA. az ~ StSAs AIS Atluuu0L
New York, May 20.-The new driving
force which the markets a week ago
had seemed to be awaiting was found
this last week in the further rather ex-
traordinary decline in money rates.
| Wall street loans for fixed periods, al
distinguished from demand or call
loans, can now be negotiated under four
per cent for the first time since the
summer of 1917.
Stocks Responded Quicker Than Bonds
So far the main responses to those
changes in money rates has occurred in
the speculative stock market. Invest
ment securities, after lying almost sta
tionary for q month, have moved ahead
somewhat, but the gain has been
slight Ordinarily it might be expect
ed that a decline in the interest rate
from Az to 3& per cent would bring
a corresponding upward revision in
bond values. This has not happened
as yet, perhaps because the investment
community has not digested the huge
load of new capital issues thrust upon
it during the last IL months. Failure
to respond also may indicate some
doubt as to whether the lower money
range is to continue.
Debt Payment Offset Trade Demands
Eventually as trade recovery keeps
on, there will be a diversion of funds
from financial to commercial channels
sufficient to make itself felt in money
rates. But at present the increased
trade demands are being offset by the
repayment of the old, so called frozen
loans in the agricultural sections. All
this is clearly shown in the detailed
federal reserve statements. In the
more representative manufacturing Sec
tons ~rediscounts are on the increase,
as a rule. In the great wheat and cot
ton raising sections where the rise in
staple prices has put the farmers in a
comfortable position again, rediscounts
are coming down and reserve ratios
are going up.
Danger Of Excessive Advances
The danger in the stock market sit
uation is just what it was a month
before the rather sharp check which
came at the close of April and the be-
ginning of May. 1t is the danger that
speculative operations will take their
cue from the abundance of the credit
supply and the low cost Of money,
rather than from the actual fact OF the
business situation. If this occurs a
price level will be reached which will
not be warranted by earnings and divi-
bends and cannot be more than tenn
porarily sustained.
Mergers Cannot Increase Values
The tendency to speculative excess
has, of course, been prompted by the
various merger deals which have been
put through or are known to be under
way. These combinations, no matter
what an excited Wall street magma
ton may picture, annot add heavily
to intrinsic values over night. The eco
nomic effect will take long to show.
In the end they will reduce producing
costs but they cannot alter the fact that
whether it is steel or copper. or any
other of the leading industries. this is
a time when moderate prices and mod
crate profits are to be &c rule.
Trade News Improves
The trade news has been the best
of any week so far in 1922. Along
with the return of cotton prices to the
highest of last autumn has come the
long delayed improvement in the cop
per metal. April broke all records in
the building trade. In the 81 northern
and eastern states the total building
contracts awarded was 1858, 900. 900
as against the previous high of S317,-
100000 in July, 1919. This huge ex-
pansion in construction enterprises and
the railway buying consequent upon the
ability of the railroads to again put
through new financing are the two
principal sources from which new or
ders have poured into the steel mills.
But the foreign business has also
played a part. Exports Of iron and
steel from the United States during
March were 30 per cent greater than
in January and So per cent greater than
in February.
Germany's Action Awaited
The failure of the Genoa economic
conference has had little effect even in
the foreign markets, nor can this be
attributed TO any real hope that the
new gathering summoned at The Hague
IN June will meet with more success.
Rather, it demonstrates that financial
opinion. discounting heavily the PLAY Of
the politicians, never looked very seri-