The New York herald., 1922-01-02
FINANCIAL NEWS
AND COMMENT
Stability in Sentiment Here
and Abroad Results From
Deflation Processes.
MARKET STANDS SHOCKS
Old Year Ended With Outlook
Greatly Improved for
Busip css in 1922.
MARKET STANDS SHOCKS

tries. among others. will pass into .he
broad scale the needs of international
trade when expansion comes. Whereas
the Bank of England In the last full
week of 1920 found it necessary to ex-
pand its loans to other banks by more
than 1000 900 in process of the year end
settlements, this year loans declined to
ELS, 100000 The Federal Reserve system
signalized the relaxation of December
demands through decline of close to
s45, ,000. 900 in its loans to member insti-
tutions. compared with the week be-
fore; in the corresponding week OF
last year, when the business reaction
was just gathering headway. the final
week of the year saw decline of nc
more than SIS, 500, 600 in loans.
The outstanding reflection of a stable
situation in finance last week was in
sentiment to a degree greater than in
concrete business events. Thus. the
failure of one OF the four or five larges,
commercial banks of Italy, the Banca
Italiana di Sconto, in Rome, caused
only brief furry in lire exchange anG
had no application whatever to thoughts
of the banking situation in the United
States. A casualty of this caliber siS
months ago, when number OF Amerl'
can institutions were extricating them
selves from difficult foreign trade ad.
<,x.1 I1t,a go nd ~ l.
irgs. would have had very real points o.
contact with matters here.
Failure Not Farreachfng.
1t is likely that one influence which
minimized the possible effect of the
Italian suspension was the belief. inn
parted through cable dispatches, that
peculiar to the banks own business nnd
would not spread further. But the
more potent factor was the thought that
deflation, having run far on it's course,
had carried the Italian financial sirua-
ton far enough away from me tension
of midyear to insure protection ID other
banks by joint action of bankers or
through Government aid
On minor scale the stock market po-
sition in New York was proved to be
well protected against internal shocks
by the complete indifference OF prices
TO the failure of large brokerage firm.
In fact. the coupse of quotations was
rather generally upward throughout the
day the insolvency became known. The
security market also suggested ain op-
timistic outlook upon the first weeks
Of 1922 by holding up sturdily in the
face Of extensive liquidation, partly for
the purpose of making records satissac-
tory to the taxpayer in the income tax
statements for the year. December
proved to be no exception to the rule
which had been followed for three years,
in spite OF the fact that stock values
were considerably higher than in May
and June. The broadening OF the active
stock list day after day indicated, just
as in years when there were large paper
losses on speculative undertakings. that
holders desired to let go and start the
new year afresh.
slackening in steel Mills.
Last week brought no really signifl-
cant developments TO light other than
those named. A further sagging Of steel
mill operations was In keeping with
the slowing down OF manufacturing in
this season OF other years. The trade
reports that pig iron prices were some
what lower than in earlier weeks of
the month were nullined to a degree by
the notation that. as they sagged. busi-
ness became more active. The evidence
from many cities pointed toward an un-
usually vigorous holiday trade as far
as volume was concerned. and the opin-
ions of merchants forecast a lively
period OF clearance sales OF merchandise
in January. To interpret this situation
IL would be permissible to believe that
despite much unemployment. the people
have money with which TO buy goods
when prices suit them.
AS far as statistics go, the grain
producers outlook is much better than
IL was a year ago. considering prices
alone. In December. 1920, the wheat
grower was disheartened by the proba-
bility that a large carryover. which had
been produced at abnormal wage costs.
would come in collision with big world
production in 1921 and diminished buy
ing power in every consuming country
Of the world. IL looks now az though
American stocks would be pretty well
distributed before the harvesting period
arrives and the December condition OF
winter grain indicates. ss far as figures
may be trusted at this early date. a
subnormal yield. A crop condition OF
rs per cent, which Is 10 per cent. less
than the ten year average for the sea
son. together with acreage about equal
to that OF last year---a little smaller. In
fact--suggests that starvation prices for
the grower will not accompany the sal,
OF this years production. But the pros
peot must be qualified by the unknown
extent OF the planting OF sbring whea
! and by the condition end scope Of th'
/ years harvest in other countries A
the least, the farmers chances for
year OF reasonable prices and profit
! oro pot darL AZ tbia time