Great Falls tribune. [volume] (Great Falls, Mont.) 1921-current, 1922-07-16
6y STUART p. WEST
Special Correspondent Of The Great Falls Tribune.
Copyright. 1922. BY The Great Falls Tribune.

Special Correspondent Of The Great Falls Tribune.
Copyright. 1922. BY Ths Great Falls Tribune.
New York. July 1.-THE most i'm
portant event of the past week in the
financial situation has been the re-
| sumption of the downward tendency in
money rates and of the coincident up
ward tendency in the investment mar
ket. For the fourth time this year
the Bank of England reduced its dis
count rate and the money market here
has been following the English lead in
the assumption that it means another
cut in our own federal reserve rate.
The chief objection of the reserve
board to lowering rediscounts has all
along been the fear of encouraging
speculation. This was not. however,
the effect produced when rates were
reduced from Az to 4 per cent. Re
discounts stood at the lowest in the
early part of June. The increase since
then, eve on bills secured by United
States obligations, which take account
Street, has been small. The total
stands now at S157,675,OOO against
$40, $3.50, 900 in the week of June IA,
and the high record of S1,573.0O0,0 900
in February. 1920. On the other hand,
on government paper, that is on purely
commercial operations, the rediscount
increase has been smaller still. The
present total is S272,3SO,WO against
$271 ,305 900, the low record on June
Z, and the maximum of 81 1918, 100000,
in December, 1920.
Rate Reduction Discounted
Whether or not the fact that last
months reduction had no inflationary
result that influences the federal re-
serve attitude now, remains to be seen.
The investment community is mani
testify reckoning that rates will come
down, probably to 81 per cent from
the 4 per cent. It has been tentative
ly di%scounting such action during the
last week with a buying movement
which has swept Liberty bonds for
ward to new high records and has car
ried the high grade railway mortgages
up close to their high April and May.
The German financial crisis has been
tided over for another month by pay
ments which the Germans made in
goods. turned into cash, and thereby
the July installment Of S50.O0O.OOO gold
was reduced to SO 1000, 900. This
smaller sum the German government
was able to pay. The latest bank
statement shows. however, at what A
terrific cost in paper note expansion
ever this comparatively moderate sum
of gold was gathered together. Within
a single month German bank note cir
culation has risen from $4,000 900, 900
to nearly 10000, 100000. Similar in
stalonents are unthinkable. The Ger
mark would sink to the legel Of
the Austrian kroner and Germany
would make a formal confession Of
bankruptcy.
A Loan or a Moratorium
The solution of the German problem
lies along one or the other OF
lines-either an international loan
or the sort of moratorium which Ger
many has applied for. during which
claims will be met in kind
Of money.
That Germany sincerely wishes to
meet her obligations cannot he denied.
there Is considered the great
risk the Berlin government is
in trying to put through the
huge forced loan.
There is reason to believe that the
French will agree to a modified repar-
atoms program of which the form Of
payment would be goods and labor
Of cash. Already the French
minister of public works has proposed
that Germany be allowed to construct
public works in France to the extent
Of IS billion francs. This scheme may (
defeated through the opposition Of
labor. But even so, France is
not interested for the mex two years
In the question of cash as compared
good payments. because for that
the Belgian prioroty claim would
oIIou pe1pium IN yet most nf the Ger
man gold.
Gold transfers from London to New
York for meeting the interest on Eng
.and's war debt to the United States
ire likely to be a feature for the next
month or more The aggregate is not
expected to be large, for Great Britain