The New York herald., 1922-01-30
FINANCIAL NEWS
AND COMMENT
Rise in London Exchange and
U. s. Debt Funding Will
Have Big Effect.
SOME CREDIT SIGNS FAIL
Indications Of Improved Stu
alton in England and
Other Countries.

were related In no way, yet each was
Of considerable significance as far as
the future trend Of exchange and money
rates was concerned. IL is probable
that many persons. IN their study of the
monetary outlook. had paid too little
attention to the stupendous task facing
the Treasury in meeting the maturities
Of this year and next.
That an adequate return will be nee
essary to gain investment support Is
proved by all the experience Of the
bond market since the beginning OF the
war. Hence II is becoming clearer In
the light of the Secretary Of the Treas
ury's plans that expectations about de-
clIning money rates must be tempered
by the fact that $500. 100000. possibly
$500, 100000, new Treasury notes are
available at a price to yield 4% per
cent.
There are several angles from which
these figures may be examined. The
possessors of idle cash balances. whether
banks, corporations. insurance COM
panies or individuals, are able under
this Offering to get Az per cent or
their funds for three years after Febru'
ary 1 and to possess at the same time
a highly liquid asset.
Fresh Funds for Treasury.
If they have Victory notes to turn II
for the new three year notes they may
do SO. but it is reasonable to believe
that a great amount Of fresh funds vii
flow into tho Treasury IN this operation
in addition to paper for conversion. The
Offering Is certain to have considerable
effect in determining rates on collateral
call and time loans In New York. besides
restricting the amount Of money avail.
able for such loans, especially as there
will be other Treasury note sales to fol-
low the first one Of this year.
Furthermore. rate of AZ per cent
for Treasury notes. while fully in keep
ing with current rates Of interest on IN
vestrnents Of much the Same class, re-
pectation Of a persistent recession ir
the cost OF credit represented by bond
1t Is known that more than one con
templated bond issue. especially OF for
eign countries. has been delayed be
cause of differences OF opinion between
prospective borrowers and their Ameri
can bankers about tho cost OF sucf
loans. Borrowers. impressed by tht
rapid fall of credit rates from Septem
Der to the end OF December. arc striving
to have the charges reduced to point!
lower than those to which bankers vii
consent. A deadlock of this sort is no
likely to last long. The needs Of man,
worthy borrowers are too pressing 4
permit of protracted haggling over costs
and investment bankers believe that &
great deal Of money is ready to go int
bonds, provided tho return is satisfac
tory. But II Is probable that the era o.
relatively high coupons will be with u.
for some time.
Cause of Reaction I'm Stocks.
Quite possibly, the realization OF {
check In the decline Of caN and tim'
loan rates had something to do with
the reaction OF stocks last week. i
was seen that too much dependence
should not be placed upon signs OF ar
easing credit situation. as displayed II
tho rapid retirement OF rediscounts a
Reserve banks. However. II was plair
In the record Of the ticker that none,
rates were not tho only forces behint
the price decline.
Speculation suffered from the excessee
OF the preceding week. professional
operations failed 20 entice a public fol-
lowing. and so when pools found tina!
outsiders were not willing to take Their
wares Off their hands on q rising scale
OF prices they halted their endeavors
and quotations sagged back. II may be
said that the moro far sighted and pa
tient holders OF rail and Industrial
stocks, who were convinced some time
ago that industry had begun to rise
from the bottom OF depression. found
nothing in last weeks reverse to make
them change their position toward the
longer future.
In the rise OF sterling to G25A for sigh,
drafts was found some Of the evidence
of an improving fiscal situation IN
Great Britain and @ gradual progress
I'm the efforts of several other countries
to balance their budgets. These factors
were not found slons In the brisk up
turn OF a single day. but in the growing
firmncss of sterling's undertono since
the moderate reaction from 4.23ss. which
occurred subsequent to the fall of the
BRAND Ministry In Franoa. Much has
been done to strenbthen the British,
financial situation since sterling touched
s1o4 two years ago. There is the pos
sibility OF European nations coming 10
such an understanding at Genoa about
mutual monetary problems as 70 speed
tho fiscal Improvement OF countries
which suffered most in the war. But
Mt the present moment the fate OF the
conferences hangs on decisions to be
made by France. The financial markets
OH this side have been content TO wait
for positive developments In Europe,
hinged upon the Genoa meeting and the
German reparations. before taking O
position on probabilities of European
happenings IN the first half Of this
vaov