San Antonio light. [volume] (San Antonio, Tex.) 1911-1993, 1923-02-25
Advance Of Discount r
May Be Warning Again
Misrepresentation.
HAS SOLDERING EFFE|
So Far, However, Has \
Been Interpreted as
Command to Halt.
By STUART P. WEST.

Copyright. by The San Antoni5'T'
New York, Feb. 24.--The most
cussed question in financial circle
the close Of the week was the &C
of the federal reserve banks at
York and Boston in raising their
counts from 4 to 4 IL per cent.
view was that it was simply the
adjustment of rates in these sect
to the level prevailing in other n
of the country, and that beside
was putting official rates in a
ment with the higher rates in
open market. The other view is
it is a warning, however, 81
against what has seemed to be
dency toward overspeculation in
stock and commodity markets.
doubtedly, the true explanation
along both lines. There is, of COT
no parallel between present condit
and those in November, 1919, "
the reserve banks began their
of discount increases which, star
from the 4 per cent level culmin
in the z per cent of May, 1920.
Speculation Lively at Advance
1t is a fact that stock exchi
loans are again pretty well exten
that some of the recent performal
in the stock market have been pr
excessive and that along with the
pansion in Wall street business
gone live speculation as rising pr
in cotton, sugar and in parts of
metal trade. The rise in commodi
whether influenced or not by sp
lation, has been general and al
rapid. All this calls for a larger
of funds and what the federal
serve action takes cognizance of
the concomitant rise in the valude
money.
Advance in Investments Halted
As the money value goes up
value OF bonds and other investing
comes down. The bond market of
week has certainly borne out
statement repeatedly made that
main advance in investment prJ
ceased last September and was
likely to be resumed. 1888.
The stock market has not ind
preted the federal reserve action
command for an immediate halt. 81
the raising of the discount rate
had SOLDERING effect in specula
quarters, especially in view of
prolonged advance since the first
December. There is a threat u
speculation canont go on at the nj
it has been without the banking
thorities interfering. In the old ID
before the federal reserve it was
custom not to adopt repressive md
ures until reserves had iGllen bet
tn legal limit. Then would como
violent rise in money rates, accy
panied by a sudden and drastic q
tailment of the loan account.
The federal reserve system was A
ated to obviate this evil. It's fue
ton was to prevent ugly credit sit.
tons arising and not simply TO q
rect. The federal reserve vas sevS
ly criticized for letting the inflatii
airy movement Of 1910 20 rs it 4
1t may be presumed that this les'
has been learned.
The rise in sterling exchange CID
TO prewar parity than at any Il
in the last four Tears has been 4
Of the most significant incidents :
the week. 1t does not, however, !,
nrise students of the situation u
have maintained all along that CIR
Britain had fulfilled all the requisi
necessary for her currencv to he
stored to the old time parity with
dollar. and that the attainment of Il
end was only n question of time.
European influences Secondary,
1t has been clear that the Brit
pound was not influenced in an
portant way by developments on
continent of Europe. but was merl
reflecting the improvement in
home and foreign trade in success
handling of the budget and ths.Ss'' !
ing of the American debt.
The continental exchanges stand
most exactly where tley did n wt
ago. There has been no further
probation, but neither has there be
improvement. This exactly sums
financial Judgment of the course
events in the Ruhr. Things are g
ting neither better nor worse. but
the meantime both France and O.
many are beginning to feel more 6
more the pinch.
Latest reports on business con
tions in France are unfavorable. 7
decline in the franc has been an |
settling influence and so las the
ficiency in he coal supply. The g
Of living continues to rise. BeyO
the fact that an agreement has b.
reached for $j0.000,0O0 inter-
German loan. the exact financial
sition in that country remains
Scure. Each week seems to see
flation of the paper currency carr
TO more extravagant lengths. yet
mark has ceased going down. 1t
hard to explain this except on
supposition that German financi,
feel that the measures now apnare-
" begun will he successful in $
bilizing the market. dcspite the en-,
=