Great Falls tribune., 1922-03-05
BY STUART p. WEST.
'eeial Correspondent Of Great FaIls Tribune
,uyrfRht 1922 hs Tha Great Falls Tribune

Special Correspendent Of Great FANS Tribune
Copyright 1922. BY Ths Great Falls Tribune
New York, March 4.-The most i'm
portant incidents of the past week for
their bearing upon the financial stu
alton were the neY highs for the sea-
son in foreign exchange rates, the con-
tinued recovery in farm prices, the
lowering Of money rates and the re-
ports Of increased activity at the
steel mills.
1t Is well known that the rise in ser
ling exchange in it's jump within less
than two months from SALT to $4.44
with ar. accompanying advance In
French francs from S to 9A has at
is not surprising therefore, that there
should be moments when the specula-
tive foreigner was tempted to draw
down his profits and one of these
waves Of profit taking made itself felt
at the close of the week. But these
reactions do not obscure the leading
facts back Of the upward movement Of
the last two months-namely, that it
marks the beginning of real eco
nomic recovery In Europe and at the
same time such an adjustment of in
ternational balances that western Eu-
rope has ceased to be debtor in cur
tCII lfdHodGIiOAS Will fAHcIlCd.
American Loans EquaIixe
In the case of France and Italy the
equation has been brought about
through the lending OF American cap
ital to meet the comparatively mod
crate indebtedness now arising from
the trade with this country. In the
ports over exports has been SO cut
down that it is offset, and probabaly
more than offset, by the invisible or
non commercial credits which England
holds against us. For the year 1921
the trade balance in favor OF this coun-
try was $1,976,O0OO0O but the greater
part of this total was piled up during
the early months of the year.
The real detcrminant in the sterling
movement was the export excess as it
has been running more recently. II
the average for December and January
were kept up for q full II months
our favorable trade balance would
amount to $732 100000. Leaving all
invisible credits and gold transfers
out of the question-and our net gold
this is sum only a third more than
the foreign securities which the Amer
lean market has taken in the past
year.
Absorb European Securities
1t is estimated that we absorbed
some $5O0,00O,O0O of these securities
in 1921, mostly in the shape of Eu-
ropean and South American govern
ment and municipal sloans. As fac
tor il righting the exchanges this has
scarcely been Of less Importance than
the enormous gold shipments.
May wheat virtually touched the
81 80 mark. a recovery of almost 80
per cent from last autoumn's low. For
the time being the upward swing seems
to have been too rapid. 1t has count |
Of prospective crop shortage in the |
southeast. The grain trade may find
1t necessary, as it has in years past,
to revise considerably its calculations
of the winter wheat crop.
Even a crop like the present which |
has gone through a very poor winter. /
is capable of surprising recovery with /
the coming Of better weather. But the
rise in wheat and in other farm COM
modities has been too strongly !
grounded to admit of fear that the
major part of it will not hold.
Argentine Overestimated
In the first place looking back at
what happened last November, the
prices reached were panic prices, for !
they were the result Of panicky rush /
from farms to market, brought about |
by the pressure for the return of bank
ing credit Secondly, Europe com |
pletely overestimated the size of the |
new Argentine and Australian har-
vests, and this with the very low con-
dition of the new American crop, rad
ically changed the foreign attitude as
to the relation of wheat in the supply |
and demand in 1922. Increase in the
export buying has been quite as much /
Of an influence all through the recent
upward movement as the forecasts of |
crop yields.
The most interesting part of the
weeks decline In money rates is it's
relation to the question of investment
values. The best Judgment has been
that bonds of the first rank were high |
enough unless money were to be per-
manently lower. 1t has been very
noticeable for several weeks that the
rise in the bond market has been
pretty much confined to the high in
terest bearing foreign loans and the I
more speculative railway issues. II
the money market. however, were to
stay down lastingly upon per cent
basis it would undoubtedly mean the
alignment of bond values generally |
upon a higher level.
Improvement in Steel
But. az against this possibility, ID
the fact that every time so far that the
Wall street money rate has got down
10 4 per cent, out Of town banks have
drawn down their balances and SO
reduced the supply that. the market
has quickly hardened again: This Sc
,uel on the present occnsion, is the
likely to fGow reorements in rrw fer fer
.redit incident to reviving trade.
The testimony of the iron trade re-
views that the active capacity of the
,teel mills had risen on the average