San Antonio light. [volume] (San Antonio, Tex.) 1911-1993, 1923-03-25
HEAV|NESS
PREVAILS IN
BOND MARKET
Trade Is Absorbing More
of Available
Funds.
REDISCOUNT RATE UP
Demands Of Expanding
Business Met by
Increase.
REDlSCOUNT RATE UP
BY BYRON SELLER.

BY BYRON SELLER.
Copyright, by The San Antonio Light.
New York, March 24.-The week
closing today has brought multiply
ing evidences of business activity. Con-
sumptive demand persists on an ex-
pectedly large scale, notably in the
case of cotton, cotton goods, pig iron,
lumber, and automobiles. The rail-
roads are hard pressed to care for the
increasing traffic.. The American
Wooden company has raised wages IN
all its plants IL IL per cent and
its example is being followed general
ly in New England.
The demands of expanding business
are being reflected in the increase OF
rediscounts shown in the federal re-
serve boards weekly statement as a
whole, although the New York and
Dallas banks are exceptions to the
general rule. The distinct stiffening
of money rates and the heaviness OF
the boni, market alike testify to the
fact that trade is absorbing more and
more of available funds.
Commodity prices hold strong and
in some cases tend to advance. For
the most part, speculative securities
are. firm. AS to all this there is no
dispute. There is, however, a sharp
difference of opinion as to how long
these conditions will continue, or at
least how long it will be before the
speculative markets begin to forecast
change.
Recall Buyers Strike.
The doubters point to the expert
ences of 1920 and 1921. They re-
call the buyers strike and the con-
sequent collapse in prices. both for
commodities and stock. Sugar is
case in point. 1t is doubtful whether
there ever was such a sudden and
perpendicular decline in any commo-
dity as was the case with sugar some
two years ago. Now sugar prices are
climbing again and prophets are not
lacking who proclaim that history IN
this particular case will repeat it
self. Cotton is another instance. To
the assertion that the statistical posi-
ton justifies the present price. ii is
replied that the price will enormous
ly stimulate production and 30 being
about its own correction. Now this
contention is perfectly sound ana IN
doubtedly affairs will eventually take
the turn predicted.
Generally, however, such a change
comes when it is not expected. Spec
ulative markets do not collapse when
spectators are cautious and business
does not expand to the danger point
when merchants are erring on the side
Of ic IN
about the condition today. Bear OPP
orators who missed the beginning Of
the bar bea: market which followed the
post-armisticc initiation do no. int,nd
to be too late this time. The conse-
quence is that prices advanced
against SO little opposition on the
part Of spectators and BUSINESS men,
who were caught with big inventories
in 1921 are taking no such chances
now. For the most part the consum-
er is setting the pace. Under these
conditions it is hard to see any near
reaction in trade or in securities
which are responsive to trade.
Automobile Industry Prosperous.
Take the automobile industry for
instance. Its prosperity is astound-
ing. Production in January was the
highest on record except for June
last. According to the Department
of Commerce reports, February was
even better. Passenger cars increased
from 223,706 in January to 4,416
in February and truck production in
creased from 1896 in January to
21.354 in February. Comparisons of
sales for the first two months of
1923 with those for the similar period
of 1922 are even more striking. Yet
in the face of all this embarrassing
demand, the automobile manufac-
turers as whole are showing praise
worthy restraint in expanding plant
facilities.
1t is the same way with the equip
ment companies which are almost over
whelmed with business, but are exer-
cising the greatest care in keeping
down inventories. Now, to go back
to the case of sugar again, there are
any large companies now importing
great quantities of sugar ut peak
prices to meet an anticipated shortage
which by the time sugar arrives may
not exist.
Holds Most Of Worlds Gold.
Much attention has been given to
the money situation also. Stock
spectators have not forgotten and do
not allow anyone else to forget who
comes in touch with them, what hap
pened after the federal reserve gov
ernors tardily started to check the
initiation of 1919.
So much for stocks. With bonds,
of course, the case is quite different.
1t is to be expected with money flow
ing into business and with the mar
ket for time funds advancing that the
price of fixed interest rate bearing
securities will readjust itself to the
returns obtainable elsewhere with
equal risk. Such readjustment, how
ever will not 60 beyond the point
justified by the open market rate and