Evening star., 1923-06-03
GOLD AND IMPORTS
WORRY F|NANC|ERS
Not Enough Goods Arriving
in U. S. to Turn Tide of
Gold Surplus in Payment.
CHANGE MUST COME SOON
Price Movements Confusing.
Bonds Firm-Business Holding
Up-0utlook Puzzling.
CHANGE MUST COME SOON
BY GEORGE T.. HUGHES.

special Djspatch 10 The star.
NEW YORK, June Amy attempt
correctly to read the present financial
and commercial situation or to fore
cast the future must take into as-
count two apparently contradictory
movements. Statistics on the imports
and exports of the month of April
published this week showed another
of approximately s41,000.00O. This
brought the total import surplus for
the first quarter of the calendar year
up to about sS9,OO0,0O0.
Now the economists have long been
predicting just such a sO-calIed "un-
favorable trade balance. With Eu-
rope overwhelmingly in debt to
America, they pointed out, her only
method of payment was in goods or
service. for gold in sufficient amount
was not available. 1t had been ex-
pected that the new tariff would de-
lay this adjustment One of the ar
gumertS advanced against high tariff
rates was that it made the task of
payment by our European debtors
more difficult. The result has shown
that economic law is stronger than
any artificial barrier. This is an al
together salutary deyelopment We
must take the goods and Europe must
uispose or them in our market
Inflow of Gold Continues.
But along with this surplus Of i'm
ports we have to account for the
continued inflow Of gold. Foreign
exchange quotations, notably sterling.
Iestlfy that there is no Immediate
prospect of any turn in the golden
tlde. The conclusion hastily drawn
from the import surplus that outflow
or gold would result has no substan-
tlation of facts. Moreover. the week
~ statement of the federal reserve
pahkS SHOWS an increase in gold re-
system i'
Now it is perfectly obvious that
thls condition cannot continue indefi
| nllelE. 1t is also evident however
that the surplus of imports is NOT
yet sufficient to balance the other
items in the trade account and IL NAV
pc confidently stated that the best
barometer continues to be, not the
export and import figures. but ex-
chanse rates. IF then, this weeks
course of sterling exchange is con
s1dered, 1t will be seen that the huge
gold surplus is likely TO stay with us
Tor some time and must be recognized
Danger in Excess of Gold.
1T is this excess of gold which the
economists regard as the greatest
danger in encouraging imitation. They
advance various schemes to avoid
| the apparent peril One of these is 70
| mentally earmark" whatever that
may be, part of this gold as natu-
raIly and properly belonging to Eu-
rope TO which il must eventually re
turn. BY not regarding this gold as
! a proper basis for credit expansion
II ~ argued that the temptation for
such expansion will be removed.
II any such artificial restraint on
business and speculation can sue
cessfully be set up. ii will be contrary
70 all human experience. Even though
lhe OASIS OF computing the reserve
would know that the excess gold
whether segregated statistically or
mentally is still here and would
shape their affairs accordingly.
II must be admitted that the check
to expansion resulting from the series
of warnings broadcast by the banking
authorities is apparently an example
of this very kind of artificial re-
straint. 1t remains TO be seen. however
| how long these warnings will prove
effective in the face of abundant
credit.
; Price Changes Confusing.
The price movement of the week has
| been confusing and for the mos; p -
meaningless. Speculative stocks and
bonds advanced. then hesi tatru ama
finally reacted. No one seemed to feel
sure about the immediate future ut
l
no one anticipates any serious reac-
ton. The speculative markets have
simply reflected the prevailing eau
ton. The investment market moved
more uniformly.
High grade bonds have been dull
| but firm. So far the buying has been
mostly for the account of dealers and
| traders rather than genuine investors
But the trend is significant just the
same. Continued ease in money must
eventually be reflected in higher
prices for investment securities, and
| it is on this theory that the accumu
lation of high grade bonds has been
! progressing. At the same time the
i buying has not been aggressive and
there has been no attempt to follow
the market up.
Business Holding Up Well.
AS to business itself outside the re-
luctance to undertake new building
construction in New York and a few
, other large eastern centers, there has
been little change. Car loadingS con-
, tinue to make new high records. al
though the figures for general mer
chandise have decreased, and IL is
| general merchandise which is taken
| as the best measure of trade.
Railroad earnings statements have
made very favorable comparisons
! with those of a year ago. Grain
prices are slightly under those for a
week ago. Copper and lead are dis
tinctly weaker. The Federal Reserve
! Board reports the outlook good, de-
spite what they declare to be a sea
sonal slackening of activities. Most
of the self-appointed business doctors
agree with this diagnosis.
Copyright, 1929