Evening star., 1924-12-31

| && railway securities
| E#SM S following the cleo
easzza2ass9azzI 8z&ka624I ton.
| G. T, HUGHES. AS to the money
situation the facts
are well known. Extreme ease pre-
vailed throughout the most of the
year, the lowest rates being reached
| in Midsummer when time funds loan
ed at rates unequaled since before
the World War. Throughout the Sum-
| mer months call money was obtain
| able for weeks at n time at 2 per
cent on the Stock Exchange, while
| In the so-called outside market ac-
| comm odation could often be ar
ranged at u per cent.
| so great was the abundance OF
funds that at times money went, lit
orally, begging for employment. This
| was strikingIy shown when the crop
| moving season brought about no ma
| terial stiffening in rates, contrary to
| all precedentS, and when the Sl10, 0,000,-
QUO German loan operation was car
ried through without causing a ripple
| on the surface of the money market
Not until the excited post election
speculation broke out subsequent to
the election was there any signs OF
a change.
| Excess of Gold Responsible.
For this great abundance of money
| the enormous excess of gold was no
doubt chiefly responsible. The esti-
mated stock of gold in the entire
world is around $4,000, ,000,0 900 and the
excess of imports into the United
| States by the end of September had
| brought the total in this country 10
| over S4.500,000,000. so that at that
| time this country held one-half the
| worlds available supply.
| Perhaps never before in history has
| any one country at any one time held
| SO large proportion of all the gold
in existence. While this great gold
| supply was accommodating Industrial
activity fell off and the lack Of de-
mand from commercial sources was
| accentuated by the hesitation that
| preceded the presidential election.
One effect of all these conditions
| was to enable the Secretary Of the
| Treasury to do Government financing
at the lowest rate paid since before
| the war. In June the Secretary
| offered an issue of certificates of in
| debtedness running six months on a
| "a per cent basis and the offering
| was four times oyersubscribed. In
| september another issue was brought
| out at the same rate, but for a full
years term and this, too, was heaY-
| lily ONerSuDScrlbed.
Liberty Bonds Make Records.
| Meanwhile, the banks were eager
| buyers of Liberty bonds and under
| this consistent demand quotations for
| every Government issue, with one ex-
| ception. were carried up TO the high
| est record for all time. The one ex-
| ception was the entirely tax-exempt
3hs. The issue most in demand was
| the one of the longest term, the
| Treasury 4Hs, which at their peak in
November sold at n price of 1871
| The high point for the Liberty issues
was made during the extreme low
for money in late July and early
| August.
| The outlook seems to be for mod
! erately higher money. 1t is reason
| able to suppose that reviving busi-
| ness will make more extensive de-
| mands for credit, but anything ap-
| preaching stringency seems entirely
| improbable.
| The Secretary of the Treasury was
| criticized by the Investment Bank
| ers in convention at Cleveland for not
| having taken advantage of the mid
| year low rates to float a long-term
| Government bond issue. 1t was
| pointed out that in September, 1925
| there will mature nearly 100000
| 600 in third Liberty ANS and that
| this refunding operation might be
| difficult of accomplishment in q tight
money market.
The Secretary, however. waited
until December and then he did offer
a long-term bond issue, the first since
| 1922. The amount for which cash
subscriptions were accepted was only
100000, 900, but opportunity was Of
| fered holders of the third Az Lib
ertys to exchange their bonds for
| the new As. The response to this
offer was so prompt and gratifyin 6
that it could not fairly be said that
the interests of the Government had
been hurt by the delay.
| Reserve Banks Hard Put.
| The great surplus of money which
| existed during most of the year put
| the Federal Reserve Banks to the
| necessity, in order to earn expense 8,
of going into the open market and
| buying Government securities and ac-
| ceptances. Both these items, in their
weekly statements, showed enormous
| increases at the end of the year over
the figures for such holding IL m on tbs
previous. This had the effect Of &C
centuating the money ease, and to
| this extent the operation of the Fed
| eral Reserve System, instead Of act
| ing as stabiliZer as it's founders
| expected, worked the opposite way.
The policy which led to this open
market buying by the reserve banks
came in for severe criticism by econ
omists The only suggestion offered
as a remedy, however, was that the
| banks draw upon their accumulated
surplus for dividends and current ex-
penses in times such as prevailed
| during 1924, when earnings We're
small because of slackened business
and of lessened demand for reserve
bank credit
Enormous Foreign Loans.
| Second only in Importance to money
conditions was financing for account
| of foreign governments and indus
tries. The aggregate of all such loans
during 1924 was over $1,000, 100000.
Three Individual issues made up more
than a third of this amount. These
were the s150,000,000 Japanese gov
| ernment loan in February, the $780,
| 100000 German loan in October and
the s100,000.000 French loan in No
vember.
| The Japanese loan unfortunately
was brought out just about the time
the Japanese exclusion matter came
up in Congress. Considering this fact
the bonds went remarkably well, and
| at the CiOS6 OF the year were SelliHE 8
| around the Offering price. The Ger
| man loan was offered as a part of
the procedure for putting the Dawes
plan into effect. The oversubscrip-
ton was enormous and the bonds
promptly went to q premium in the
| open market, which was maintained,
The French loan was. also over