The New York herald., 1922-07-17
FINANCIAL NEWS
AND COMMENT
Commodities and Securities Do
Well Despite Unfavorable
Factors.
NO NEED FOR PESSIMISM
Stock Market Has Displayed
That Attitude Thus Far
This Year.
NO NEED FOR PEssIMIsM

SAoSiNo pSSduse tHey comprise 50 many
Developments that are far from COM
pletion. That is particularly true OF the
railroad and coal strikes, of the Ger
man reparations situation and the un-
settled condition of the foreign ex-
changes. The strikes. which unques-
tionably are doing harm to business,
seemed at times last week to be
approaching tho stage where the con-
testing parties would discuss their diff
ferences face to face. but little that was
constructive came to pass.
The Preparations Commission plainly
indicated that it would have to be shown
cause why the peace treaty terms
should not be carried out and Germanys
plea for moratorium apparently was
put aside until the political aspects of
the request could be weighed thorough
ly in Paris and London. The foreign
exchanges recorded a cessation of pre-
vious insistent selling, without display
Ing any inclination to recover much OF
the market loss since the middle of
June.
Briefly put. the grave questions In.
volved In the great strikes and the solu-
tion of German finances and repara-
| tions were practically as far from solu.
ton last week as they were the week
before. But one would hardly have
known this was the case from an ex.
animation Of the stock market and the
! firm course of commodity quotations
Nor was there anything In the action OF
bonds suggestive of concern over the
business outlook.
1t has long been conventional, in fact
traditional. for speculators to refrain
from selling securities because O,
strikes. In the present situation, how
ever. the lost production of coal since
April entails 80 important an eco.
nomic handicap upon industry that the
usual injunctions In tho stock market
seem to be overrrled. The possibilities
of an extension Of the railroad strike
until a real traffic tie up occurs in many
parts of the country we're sufficiently
numerous at the end of last week tc
cause apprehension in transportation
quarters. Yet It could not be said thai
securities were concerned over tn,
principal influences threatening trouble
~ Money Continues Easy.
Tho explanation for the calmness o.
the markets evidently lay In the lsnowr
position OF industry ana in the paten,
fact that money rates were continuing
tho great ease Of May and most of June
The reverse movement Of funds from
the public to the banks. represented by
the fall OF moro than sss.ooo.ooo in Fed
eral Reserve rediscounts. showed that
the moderate tightening OF rates and
supplies around July had been tempo
| rary. substantial contraction of out
standing currency suggested that holi-
day needs more than the requirements
of payrolls had caused tho recent ex-
pansion OF Federal Reserve notes.
The relaxed situation OF money and
credit had its chief reflection IN bonds;
the rise Of three Liberty issues to& full
per cent. above par was quite en-
tightening demonstration OF the relation
between money rates and bond prices.
The stock market was not unaffected
by the weeks labor developments, for
occasional periods of depression oc-
CURED. but 1t looked as though specu-
lation was paying more attention to
fundamental factors than to surface ef-
fects which might change for the bet
ter practically over night, as even tho
most bitter strikes have done. In tho
steel market It was plain that only tho
forced contraction of operations in some
districts. the result Of inadequate fuel
supplies and rail- facilities, was holding
back business. Consumers were urging
early delivery; mills were reported to
be working at IS per cent. of capacity
on the average. percentage of normal
which Is stimulating in contrast with
the rate OF a year ago. In July OF last
year the industry was at this date cIose
to Its lowest depression. when the Steel
Corporations plants were down to 2s per
cent of capacity and competing mills
in some instances were lower or closed
entirely.
Heavy Tranc Ahead.
In seeking 70 measure Fundamentally
tho markets evidently took tho view
that once the railroad outlook 10 clear
again there will be an accumulation Of
traffic great enough to test existing fa-
cilities. That bought Is based on the be-
lief that the promise Of good harvests-
not the best. as a whole. but above the
average OF years--will bring large nor
NAL traffic In the early autumn to be
superimposed upon the goods which
should have moved during to strike
Iron, steel, lumber. &C. The strike has
not progressed sufficiently far 20 dam
up the flow of merchandise. but tho stock
market, which counts all possible con-
tingcncies, is prepared for more difficult
ties than are now seen. hoping at tho
same time that Government influence or
direct negotiations between employ 90,
and employer Will settle the contc IL
soon.
Business plans thus far this year pre.
sumably have bsen made without taking
into account mach export trade, consid-
cred from the standards OF 1918 and
1919, and ven of 1918. This being the
case, II might be thought remarkable
that such industrial iuproyement oycr