Evening star., 1923-06-17
INFLUX OF GOLD
STILL ON INCREASE
Treasury Reports Total
Stock in u. S. Has Reached
! New High Record.
DUE TO TRADE BALANCE
First Time Any Nation Ever Had
So Much-Economists Would
Reduce Supply.
RY GEORGE +. HUGHES.

Rl GEORGE +. HUGHES.
Special Dispatch TO The Star.
NEW YORK, June 16.-In the midst
OF much that has been confusing anC
contradictory in the, commercial ant
financial situation the outstanding
phenomenon is the continued inflow
of gold The June circulation state.
ment of the Treasury Department
shows that on the 1st of the month
the total gold stock in the United
States, exclusive of foreign coins anC
gold bullion outside of the Treasury
and the federal reserve banks. wa:
S4,O23. .250,195. a new high record.
This is an increase of $43,470,77;
for May and of $S9. 9.774.5S0 since Janu.
airy l. II is the first time any coun.
try has ever held as much as $4,000,
100000 in gold. The increase in oul
gold stock in May was the largeS
increase of one month in more than
Year and a half.
Gold Holdings Increase.
The weekly statement of the fed
eraI reserve system shows an increaS,
OF S24.50n.o0O in gold holdings ovel
q week ago. Since May 81 the golt
III the reserve banks has increased
$50 0.0o0. This figure would un
doubtedly have been considerabl,
larger had it not been for the con
ttnued paying out into general circu
lation by the banks of gold certifi
Gates as mean of keeping down The
= Increase in their own gold reserves.
This continued inflow of gold come!
IN the face of official predictions o.
gold exports as Il result of the trad,
balance against the United States fol
g Of
amounting to Sl37,5S2,1o9. The ex.
rlanation. of course. is that othel
items, notably the payment of inter
tSt on its debt to America by Grea,
britain. have more than balanced tn,
LIT import surplus.
Problem for Economists.
The result is that the economist:
nave still with them the problem Ot
" hat to do and how to get rid of this
unnecessary and. as they view it
even dangerous excess OF yellow
metal
However that problem may be
solved. If ii is solved at all the i'm
portant thing to investor speculator
and business man alike is what will
be the lonG-rause effect of this sit
uation. The orthodox opinion is that
th1S nuge gold surplus is a standing
nNitatiOn to credit expansion.
SO far. that danger. if il be a dan
ger. has been averted. Some authori-
ties claim to believe that it has been
permanently averted Business. with
the lesson Of 1921 well learned and
with the official and semi official
warnings against going ahead too
fast dinGing in their ears, they say
Will not tempt disaster again But
If this happens. Self-reStraint is Der
nanently achieved: it viii be the first
tim" in history and contrary to all
human nature.
Hearing on Money Rutc~
The gold surplus is important from
another standpoint. namely. the flu
ture OF money rates. The money
market has been easy all the week.
and the drift seems to be toward
lower levels This. of course NAV La
an enormous increase in the demand
for credit, the necessary effect { f
these large gold holdings must be to
Keep interest rates down. In addI- :
tion TO these purely financial fac-
tors. there is also just now a small
tr demand unon banking resources
for commercial purposes.
Meanwhile. both Investment and
speculative interest in securti IS lags.
High grade investment bonds are
firm. but very dull 1t is evident
that nowaday accepted opinion pre-
walls as to the future of the mariiet
II VIII be interesting to observe the
course of quotations for United
buy ing for account of the British
treasury is no longer a supporting
1ntiuenCe. The market for liberties
ais" has to reckon with the approach
ing expiration of the exemption On
any large holdings.
Nam Bonds Neglected.
The dullneSGS in the investment list
is paralleled by hesitancy in specu-
latfon. Bonds. the status of which
might be expected to improve with
,'1he business of the debtor corpora
tons. are almost as much neglected
~ those dependent for their rating
only on fluctuations in money rates.
This is particularly true of the
second grade and speculative rail-
road bonds. Here, of course, the fear
of more governmental interference
may enter in or doubt as to the bust
mess outlook for the fall may be a
factor Neither of these explanations
is adequate. hut the fact remains that
maturity yields of { to per cent on
taiIroad bonds reasonably we'll Sc
cured are obtainable at present
market quotations.
An interesting development of the
week along this line was the raising
of the New York Central division to
y Eer cent basis. Apparently
in the minds of the directors it was
more important to make railroad
stock attractive to investors than it
was to avoid arousing the antago-
niSm of the element bent upon the re-
duction of railroad rates.
Leadership Is Needed.
And vet with the New York Cen
trail stock. as with the Semi-Specula-
tive railroad bonds already referred
to- the market response was diSap-
pointingly small. 1t may be that
other railroads in d position to do so
will follow the example Of the New
York Central. but it would be very
unsafe to count upon this from a
speculative point of view. In their
present mood spectators are as timid
as business men are cautious.
What seems to be needed is Cour-
ageouS leadership When that is in
evidence. as was the case with the
Austrian loan, both investors and
SPECTATORS are ready to respond.
Perhaps business needs more of this
kind of leadership rather than so
much counsel or caution as has been
emanating for the past six months
from our official and unofficial finan-
cial guardians.