Evening star. [volume] (Washington, D.C.) 1854-1972, 1923-05-20
FINANCIAL OUTLOOK
PROVES PUzzL|NG
Bonds Stronger-Commodity
Prices Uneven-Freight
b Shipments Slump.
TURN IN TRADE BALANCE
Railroad Mergers and Possible
Rate Reductions Are Still
Far in Future.
TURN IN TRADE BALANCE
BY GEORGE T.. HUGHES.

Special Dispatch 10 The Star.
NEW YORK, May 19.-Study of the
financial and commercial develop
ments OF the week throws no new
light on the future, either of business
or of the securities markets. Bust
nessmen are very confident today.
Investors are reasonably confident.
Spectators are doubtful
Taking up conditions in detail. the
money market is still easy. CONNER
cial paper rates are steady at to 5A
per cent with the bulk of the bust
ness at the lower rate. Demand for
speculative purposes is small and de-
mand for business expansion has not
materially increased.
Stronger Tone In Bonds.
The weekly statement of the federal
reserve system shows an advance of
S2,300.000 in the total discounted bills,
but this is a very moderate amount
and the New York city bank shows a
decrease in discounted paper of $40
100000. For the system. there is a
decrease in gold reserve of s1,o0o.00o,
trivial amount in total of $685.
$4,000.
Perhaps the most interesting thing
about this weeks federal reserve
statement is the large increase
throughout the system as whole and
in the New York bank of bills pur-
chased in the open market. This Is
in accord with the announced policy
OF the Federal Reserve Board. Incl
dentally, talk about higher redis-
count rate has almost entirely sub
sided.
High-Grade Rails Active.
In the bond market, the strength in
high grade rails and induStrialS has
been very notable. In the past month
securities of this class have advanced
somewhere between IS cents and a 81
on the 500. 1t is doubtful whether
count of investors.
II is more probable that dealers and
traders have been accommodating these
securities on the theory that lower
speculation in stocks, coupled with the
continued ease in money, would
eventually mean higher prices for
prime bonds. There is nothing in the
market to show that the theory is
incorrect.
The Treasury's offering of new Az
per cent notes was very heavily over
subscribed. Some authorities have
drawn the inference from the fact
that allotments against cash subscrip-
tions were limited. that Secretary
Mellon expects easier money in the
future. New offerings by investment
bankers have been very small. More
activity is looked for next week.
Commodity Prices Uneven.
Commodity prices have shown ir-
have been advances in wheat and
corn, while -four DIS lower. Copper is
substantially lower and so is tin.
Steel and iron are unchanged. Cotton
is higher. Sugar is a little lower. As
to the sugar situation the Department
of Justice is said to regard its efforts
as SuCce SSful Notwithstanding the
setback in court. The sugar brokers
regard themselves as exonerated.
however, and so everybody is happy
The news of the week which has
attracted the most attention has been
the announcement by the Department
of Commerce that for the first time
since 1914 the balance of trade in
March last turned against the United
States. In that month there was an
excess of imports of over $50. 600, 900.
This was the largest excess for any
one month in the history of the coun-
try.
Better Trade Indicated.
While the real significance Of these
figures cannot be known until the
details as to the commodities and the
countries of origin are available, II
seems to be the general opinion that
this import excess was largely made
UP of raw materials brought into the
United States for manufacture, re-
f1ecting trade activity.
The deduction drawn in some quar-
ters that gold exports are near, looks
foolish in the face of the exchange
quotations. When the turn in the
il must some day, 1t will be looked
upon by the well informed with sat
isfaction.
1t is a question how such move
n.ent will affect the speculative mind
and perhaps even the minds of our
bankers. We have been taught to
characterize an excess of imports as
"unfavorable" for so long a time that
it is not at all certain the psychologist
cal effect of gold exports would be
the same as it's economic effect. Also
IL must be remembered that a large
share of the prevailing ease in credit
is due to the enormous excess of gold.
Less Freight Loaded.
Carloadings show slight decrease.
They are still at record figures for
this time of year, but the total for
the week ending May ), the latest for
under that Of the previous week
Freight traffic for the first quarter of
The year was the heaviest in history
for that period. 1t would seem that
the carriers of the United States were
reveling in prosperity; No confirma-
quotations for railroad securities,
however.
The Interstate Commerce Commits
SION continues its hearings on the
railroad consolidation program. 1t is
hard to regard the proposed mergers
as of more than academic Importance
Under the law, no railroad can be
forced to acquire another road against
IT'S wish and the strong lines have
Inade it very evident that they will
rot voluntarily burden themselves
with the weaker roads.
Action Far in Future.
Even II Congress should attempt to
make consultations compulsory,
years must elapse before the mergers
Could be put into effect And, mean
while, the agitation for lower freight
lates goes on. Some roads doubtless
would still make money at lower
freight rates. but for others such
action would mean ruin. The big
question is who is going to furnish
the capital for the railroad improve
ment program.