Evening star., 1923-06-24
FAILURES FEATURE
!. WEEK IN FINANCE,
High Labor Costs and Low
Wheat Prices Among
Clouds on Horizon.
MONEY REMAINS EASY
=
Ruhr Situation Growing Strain
Upon Markets Both in This 81,
Country and Abroad.
MONEY REMAINS EASY
BY GEORGE II. HUGHES.

BY GEORGE II. HUGHES.
Special Dispatch to The Star
NEW YORK. juno 23.-The securi-
ties markets of the week have been
dominated almost entirely by The
failure OF two large New York houses
with extensive foreign connections.
The difficulties which resulted in
these failures have no connection
whatever with the general business
situation. The only serious phase of
the matter was. and still is, that
business men, taking their cue from
the stock market, should become
alarmed over the domestic industrial
outlook when there ia no occasion for
alarm.
That is not to say that the future
Is entirely clear. There are a number
or clouds on the horizon. For instance,
there is the steady increase in labor
costs. During the thirty days ending
June IA there were greater number
of wage increases than during any
similar previous period, according to
the national Industrial conference
board. Increases were reported for
workers In 287 occupations.
Pay By Hour Increased.
Average hourly earnings rose from
Sl.2 cents to 52.S cents. bringing. the
hourly average UP to lie per cent
above the July, 1914. level At the
same time, according to the index
numbers issued by the Federal Re-
serve Board. wholesale prices in the
United States declined 2 points dur
ing the month of May.
NOW many OF these wage increases
may nave been well deserved. 1t may
De that labor Is entitled to a larger
snare in the profits of industry. It
nras, mase ne ,evident, however. that in
creasing labor costs and. decreasing
wholesale prices cannot go hand and
hand with increasing profits for the =
manufacturer
srss1as somsthiag atag,.ny may be expected Of.
general experience that higher wages
do not mean higher efficiency, and
something may be expected of greater +.
turnover, but where the margin is at
all narrow, the result of this increas-
ing labor cost is bound to be detrf- !,
mental to the interests of the owners
OF the business and so, eventually, to
the market price of the securities.
Position Of Railroads.
;. This matter of increasing costs
bears especially heavily upon the
railroads. The total payroll of the :
American railroads, according to the
latest available returns, is I7.9 per
cent cent greater than year ago. 1t is
business and that present earnings
are very gratifying, but if the agita-
ton for lower rates should be sue
cessful the effect upon net income
probably snbconsciouss reaaizatioTs of
these difficulties that keeps the price Of
railroad securities SO low.
For the present, however, the rail-
roads have no, legitimate. complaint
In the week ending June 9, for the
second time this year, car loadings
crossed the 100000 mark. They are
the heaviest in the history Of the roads
slightly below the record which was
made in October, 1920. There will un-
doubtedly be let UP Of a seasonal
character very soon now, but new
begins to move in the fall.
Wheat Growers Worried.
Another difficulty which has been
dwelt upon SO often that to mention
! 1t again is almost tiresome, relates to
the agricultural situation and par
ticularly to the low price which the
wheat grower receives for his prod
uct. It is not only that the buying
power of the middle west farmer is
lowered, but the danger is that in the
erect to, find a remedy, he will be led
economically astray.
The defeat of the proposal to ask
Congress to fix the price of wheat, a
scheme which was warmly debated in
the National Wheat Conference at Chi
cago this week, is gratifying, but the
belief that the government can, by some
magic, set aside the law of supply and
demand is widespread and if acted upon
would surely bring disaster. This sub.
| ject is attracting a good deal of atten-
ton, not alone from farmers, as is evil
denced by the publicity given to the
proposal of Bernard NJ. Baruch for the
formation by American wheat growers
of a cooperative selling organization.
There is no important change in the
strictly financial situation. Money re-
| mains easy. The federal reserve sys-
| tem'S ratio Is again higher. In fact,
both for the New York bank and the
system as whole 1t is above any pre-
vious percentage this calendar year.
Gold Holdings at Peak. =.
The Treasury's statement on the gen.
! eral stock Of money in the country as
( of June 1 showed the largest holdings
of gold ever reported in monthly
statement. Commodity prices are fairly
we'll established for the moment. Stocks
1 of goods are moderate. Large indus
\ trial corporations are rich in cash re-
! sources. There Is no increase in de-
\ mand for bank credit. Production is
still high.
The latest returns for the automobile
| industry show output at the peak.
| Some seasonal recession is now to be
| expected and here and there there have
been reductions in prices, but the posi-
| ton of the larger units In the industry.
| is very strong.
Turning to affairs abroad, the delay
| in reaching a workable settlement be=
| tween France and Germany. on tfie
reparations problem is becoming quite
| q strain upon the markets most closely
| affected. This is shown more in London
than DIN New York, although even here
the advance in quotations for foreign
| bonds, which was so marked month
or two ago, seems to have come to a
| stop.
| The outstanding exception is the new
Austrian loan, but even in this case the
premium is not so high as for the first