Omaha daily bee., 1922-01-23
Financial
Chr Nrw Dork Gimrs.
BY ALEXANDER DANA MOVES
Omaha Zee Leased wir-

New York. Jan. 22.-The question
whether the advance on the stock es.
change .last week was in any respect
a valid forecast OF a change for III.
better in general situation did not &c,
much discussion last week in Wal
street. chiefly because OF the alto
pe,her artificial character OF tbs
speculation. In markets OF just tia,
character, where the presence OF pro-
iessional manipulators is not more
evident than the absence OF the real
investing public, judieious people will
usually wait to see what happens 10
the speculation itself before they
draw any larger conclusions.
In any case the early weeks OF the
year, when both industrial and f.
nsncial activity is always at low ebb.
are poor time for framing finan-
cial forecasts. How indifferently the
markets in general serve at such z
time as farecast OF financial and
business conditions later in the year
has been shown by abundant experi-
ence. Nothing whatever OF the halt
10 the decline in commodity prices
or OF the partial trade revival was
indicated in the January or Febru-
AIRY markets in 1921; nothing what
ever OF the sweeping readjustment OF
wholesale prices and cost OF living
which was to mark the last nine
months OF 1920 was visible in the
earlier part OF that year.
Prices Reach Top.
But the first three months average
prices reached their highest point OF the
period. according TO the different index
1919 were equally misleading as fore
cast as to what was to be the years real
character. We had the same two or
three months Of hesitancy after January ].
Wall Street will possibly remember that
whereas 1901 stands out in memory as
the widest period of speculation for the
rise In the present century, there was
general downward movement on the stock
exchange In February, based on the theory
that use OF capital in the huge projected
amalgamations would cripple the invest
ment market.
Decline in money rates IL habitually
looked for in January as consequence of
the relaxing needs of trade with the end
Of the year activities completed, and for
that reason even easy money at this time
does not clearly foreshadow the move
ment Of later months. 1t Ia true that
when. as in 1920 and 1907. the January
money market remains at abnormally high
rates. that fact will usually indicate spe-
cial strain on credit throughout the year.
Yet even in this regard last year pro-
vided an exception: time money and COM
mercial paper ruled at and per cent
up to the middle of February, whereas
falling money rates. were to be the char
acteristic movement OF the remainder OF
the year Similarly. easy money at the
beginning Of 1919 and 1914 was a wholly
misleading forecast.
Decrease in Note Circulation.
The decrease since December Of 3213,-
100000 in the federal reserves note cir
culation is nearly as great as the decrease
in the corresponding period of 1921 and
the decrease Of rediscounts has been con-
sideraby greater. yet the contraction of
a year ago reflected shrinkage of busi-
ness activity which was sensationally
rapid, which followed an abnormal ex-
pansion Of credit and which represented
decline from very high figures. whereas
this months reductions come after a full
year Of reaction and liquidation and with
rediscounted paper already down to the
1917 level.
All this may mean either one or both
Of two thngs-credit contraction which
naturally accompanies trade depression,
after the collapse of any extravagant
was bound in the nature Of the case to
follow the wild initiation of the war. In
the present instance the deflation OF
credit is without question primarily re-
New York bar.ks have gone this year,
$780, 900. 900 or so below the total Of
year ago whereas in our previous after
panic years the New York bank loans at
this period showed no decrease whatever
from the year before or had actually in
creased But the influences In the credit
situation since a year or two ago have
been such as never existed in the past.