Evening star., 1923-02-17
Rise in Stock and Commodity
Prices Are Market Features
Reserve Loans Decrease-Ruhr Problem,
Still UnsettIed-Germa,, Marks Highest
Of Year-Gold Export Moue Needed.

may be accepted as a fairly reliable
measure Of the extent to which the
present speculation has imposed
strain upon: bank resources compared
with what it did in 191s-20.
Rediscounts Also On.
There is the same contrast when It
comes to comparing the loan account
originating with commercial transac-
tions. This is represented principally
by rediscounts supported by. other
than government collateral. At the
extreme Of the infiationary era of
1920, just after the start of the COL
600. The latest statement fixes 1t at
only $224.700,000. These figures speak
for themselves in their answer to the
question whether the present move
ment i'm general business and in the
security markets has SO far involved
any serious pull upon the credit facili-
ties of the country.
But it was an incident. not without
its warning, that the reserve ratio
in the, week ending February IA
that the principal cause was an in
crease of $73,200.000 In discounted
bills held by the New York bank.
This, of course, was reflection
or Wall street operations and, coin
Gliding as it did with q slight ad-
that the speculative expansion of the
last few weeks was beginning to
have at least some effect upon the
money market.
Possible Checks TO Campaign.
1t IS not easy to set limits upon
a stock exchange campaign such as
Is now under way. The check usually
something bad may happen in the
outside situation that will turn the
prevalent confidence into a sudden
desire to sell. Second, the money
market might shut down by making
1t more difficult to obtain extension
or credit in speculative operations.
Third, as happened last autumn, the
authorities may get together and
force houses that are deemed to be
carrying too many stocks to reduce
their commitments. Fourth the
purely technical side Of things-an
upward movement often eliminates
Tor no other reason than that the
wall street syndicates and what are
known as the INSIDE interests" have
succeeded in distributing their hold
ihss TO the speculative public.
Outside News Not Menacing.
So far as can now be seen, nothing
Nnfavorable ~ impending in the OUT
SIDE news, nor is there much 1ikeIi-
mood Of the money market tightening
10 an extent that would discourage
speculative enterprise. The end of the
advancing movement is much more
ias apt 70 c come in one or other Of the
either through the decision by the
banks and stock exchange heads that
certain loan accounts have become
too large, or else because the pools
have got rid Of enough stocks to
make II an object to withdraw sup
port and bring about good sized
reaction.
Gold Export Movement Needed.
The essential influence in the direc-
tion of imitation both Of stock ex-
change values and commodity prices
is the huge gold stock accumulated
within the last six years. These gold
reserves in the federal reserve sys-
tenn have risen from s250.000.000 in
the early part of 1915 to over $1,000
100000. They are s1.0oo,o0o,oo0 more
than they were in 1920 when the ad-
vance in prices was at its height.
Under these circumstances the best
thing that could happen would be
gold export movement OF sufficient
imepsions ito do away with what is
an unhealthy surplus. a. constant
temptation to overextension OF cred
it. But gold exports in any large
way are out of the question with
exchange rates the way they are now.
ing to the gold supply each month.
In January, imports of gold exceeded
exports by s24 100000 and for the
seven months ended January 81 the
import excess was nearly Sl50.000.000
Ruhr Outcome Still Unsettled.
Another week brings the outcome
Of the economic struggle in the Ruhr
no nearer or no easier to predict.
one OF the remarkable features mas
been the recovery in the German
mark TO the highest of the year, de-
spite the continued huge output Of pa
per notes. -
This has. commonly been attributed
to artificial measures of support on
the part OF the German Reichsbank.
But 1t also may easily reflect a real
feeling in financial circles that Ger
many's position has been improved
by her refusal. since the French ad-
vance, to attempt anything further
along the line OF reparations.
If there is any difference as COM
pared with a week ago, 1t Is that the
probabilities seem greater for the
ultimate adoption OF the plan favored
by the American State Department
and supported by the two wings of
the liberal party in England-namely
the appointment of an outside COM
mission to determine exactly what
Germany can afford to pay. This,
after all. has always appeared the
only logical way out of the dilemma