San Antonio light. [volume] (San Antonio, Tex.) 1911-1993, 1923-04-08
COLD FLOWS
To AMERICA
E:R0MEUR0PE
Natural Effect of Yellow
Tide Is to Raise
Prices.
CAN'T GET RID OF IT
No Reversal in Movement
Likely Until Europe
Revives.
CAN'T GET RID OF IT
By BYRON SELLER.

BY BYRON SELLER.
Copyright, by The San Antonio Light.
New York. April I'm one respect
the financial situation is without a
parallel. That respect is in the
amount of gold accumulated in the
United States, the total of which I'M
ported from abroad since 1920 is esti-
mated at a billion dollars.
Attention was called to this situa-
ton by the Federal Reserve board
this week in a statement explaining
why the credit expansion necessitated
BY the business revival has made no
impression on the resources of the
Federal Reserve banks. The board
pointed out that, during the past
year. there had been 100000 ex-
pansion in member bank loans, but
that this demand had been met by
the member banks without recourse to
the Federal Reserve banks because
of these unprecedented gold imports.
board, that "the volume of reserve
bank credit is not an adequate in
dicator Of credit trend"
No Predictions Made.
How long it will be before member
bankers will find it necessary to Dor
row from the reserve bank the board
does not attempt to predict, nor does
it attempt to sav when there will be
a reversal Of the international gold
movement. -.
That the present situation is abnor-
NAL and probably undesirable, every
one agrees. Secretary Hoover's COM
mittee on unemployment, in its report
Just made public. suggests that a part
of this enormous gold surplus be set
aside as special reserve against
probable future gold exports. But
gold exports must await revival in
Europe, both commercial and finan-
cial. and. while progress is being
made along both lines. there is as
yet no sign of any turn in the yell
low tide.
The gold is here and must be reck-
oned with. The natural effect is to
raise prices or at least maintain them
at the present level. 1t also obscures
the whole price situation and rem
ders it more difficult than ever to
recognize approach Of dangerous in
flation. ....
Reaction Not Imminent.
1t is plain then that. whether prices
are too high or not cannot be deter
mined by reference to the reserve
ratio of the Federal Reserve system.
It seems equally evident that. except
for the momentary psychological eff
feet, the raising of the re-discount
rate would not of itself check raising
prices.
If. then. we are forced to abandon
the fluctuations in the reserve ration
as danger signal, what shall be sub
stitute? How can it be known when
nrices have gone too high. Probably
the best answer is that prices are too
high when they. check the movement
pf goods from producer to consumer.
And on that basis there is as yet no
sign that reaction is imminent, for.
despite oil the recent advances in
there is as yet no let
up in consumptive demand. FL
Sugar Price Probe.
Take the case of sugar. There has
been an cutlery against the advance in
sugar prices and the government has
an investigation. The
President wants TO find out IL the
tariff is responsible. and. if not. why
prices have gone up. Undoubtedly
this is a praiseworthy Investigation.
but the only effective restraint on
sugar prices is either an increase in
sugar, production or drop in sugar
Until one or the other
If these factors begin to operate. it
is nonsense to point to rising sugar
prices as evidence of a dangerous in
flation.
The automobile manufacturers real
ze lust where the limit to the price
If their products will be found. Costs
in the automobile industry. both for
abor and material. are steadily ris-
ing. but the leaders hesitate at the
ogical solution il their profits are to
be preserved. namely. an advance in
The retail price for the finished prod
net.
Would Test Buyers Endurance.
How much the ultimate consumer
will stand for is the question they
would like for someone TO answer be-
lore they put him to the test.
II is by study of the outcome in
Just such trade problems as these
hat the most light will be thrown on
he future OF the commodity prices,
Automobiles are peculiarly good
Few people realize the
cading part which the. motor car. in;
lustry has come to play. The auto
mobile is at once luxury and a
necessity, and the OUTPUT is on con
SANITY increasing scale; During
March more than 100000 cars and
rucks were turned out. a new record.
What better test could be asked than
he possibility of marketing prod
let like this in increasing quantity
It advancing prices?
Turning to the investment market,
he week has been notable for the re-
rival OF interest in hich-grade securi-
les. For "A long time. under the
menace of higher costs for money and
advancing commodity prices. bond
have been. slowly declining.
Apparently the point has now been
reached where many of the unfavor-
lble factors have been discounted.
Sound Securities Demanded.
At anv rate there has been good
inquiry for sound securities. both from
and private investors. 1t
must not be forgotten that savings
md profits are continually accumulat-
ng and eventually look for invest
nent.
The amount Of savings seeking en-