Evening star., 1923-02-04
Sound Home Trade Conditions
Offset European Uncertair,t,
Markets Again Partly Ignore Ruhr and
Lausanne Situations--Many Rates
Held DO,U1---U. S. Business Booming.

Speculation on the stock exchange in
exploiting these developments has so
far been quite moderate. There has
been no such reckless upbidding of
prices as occurred in the spring and
again in the midsummer OF 1922. Where
stocks have moved forward they have
done so gradually in response to the
legitimate impulse OF good trade news.
Hence the present position in the mar
ket may be looked upon as sound and
not likely to experience any considerable
setback unless things abroad take an
Unexpectedly bad turn.
No January Bond Rise.
In the bond market the situation is
different, because here huge amount
of new securities have had to be alb
sorbed, and this has taken the sur
plus capital which is usually avail
funds are released from the autumn
crop moving. The familiar January
rise" of other years has for this rea-
son not put in an appearance.
Bond prices. by and large, reached
their top last September. They had
then been going upward for over a.
year. and had adequately measured
the fail in interest rates and the inn
provement present and prospective in
the business structure. At no time
since has there been evidence that the
main upward movement would be re-
sumed.
On the other hand the bond list
having come down moderately from
the top is holding its ground in spite
OF the formidable competition result
ing from the output of new issues,
and appears likely to continue as it
is. 1T least until something happens
20 put up money rates.
Money Rates Held Down.
An advance in money rates might
a w a.
expansion as has occurred in COM
merctal demands. But what has stood
against such result is the abnorma
stock of gold piled up in the country
during the last four years. How this
worked TO keep down the rate of
money interest is indicated by the
! fact that with commercial transac-
tlons steadily mounting and whole
sale prices on the increase. the federal
reserve ratio stands now at 16.9 per
cent, whereas little more than a
month ago it stood at 713
Speculation Affects Exchange.
Coming now to the situation abroad
much difference of opinion exists over
the significance of the decline in
change early in the week and their
subsequent recovery Undoubtedly
7, speculation has played an important
role in both markets. accelerating
the scillnS movement. especially in
the case of the government loans So
long as France is. faced with her
present deficit. unless she turns. as
as unlikely. to new internal loans,
imitation of Iote circulation will be
| inevitable
THIS imitation will hardly be avoid
cd unless France meets with full sue
cess in her efforts to collect indemnity
through seizure of the German coal
mines. Partial success would not
| suffice. because in that event the
French budget would not balance
| and the deficiency could not be CON
tihuailY met either by new loans or
! by increased taxation. France would
| have to adopt. even if on a reduced
scale. the desperate expedient Of un-
limited paper currency expansion
which has wrecked the currencies OF
! the old central empires.
Copyright l9S3l