Evening star., 1924-07-20
MONEY IS BIGGEST
FACTOR IN MARKET
Present Easy Rates Expect
ed to Continue for Long
Period in New York.
BOND ADVANCE STEADY
West Facing Much Better Times as
Result of Rise in Corn
and Wheat.
BOND ADVANCE STEADY
BY GEORGE T. HUGHES.

BY GEORGE T. HUGHES.
Special Dispatch TO The Star.
NEW YORK, July l9.-Week by
week it becomes more plain that the
dominating influance in the invest
ment market is the money situation.
There may be doubt about business
Improvement or the status Of trade
There may be differences Of opinion
as to the justification for the advance
IN stocks. No, dispute is possible
about the trend of money. Rates are
lower than at any time in ten years.
TWO or three incidents this week
may be used in illustrations. on
Wednesday prime merchants paper
discounted at 3A per cent, a quota
tlon unheard Of since early in 1914
On Thursday funds for eight months
were loaned on 3I2 per cent basis
slehlHcantly the same figure as that
Ior rediscounts at the New York
reueldi reserve Bank. Funds so
loahed need not be repaid until after
the inauguration of the new Presi-
dent.
Easy Money for Long Time.
These quotations make il evident.
that calculations as to the length Of
time the present ease will continue
must be revised upward. 1t is doubt
tul whether the requirements of the
crop-moving JASON or A reyiyinp
business, which all hope for and most
or all believe is in sight. will bayc
any material effect upon the surplus
oL FUNDS which the steady inports
OF gold regularly augment.
animated discussion continues as
10 the probabilities of further cuts
III Inc FEDERAL reserve rediscount rate
no action was taken by the board If
the New York Bank at its meeting
thls week, but many bankers exp.ct
d reouctlon in the comparatively near
=. me decision in such matters
IS always carefully guarded untiI a.
ton Is definitely taken, and so pre-
ulctlons art unsafe, but no SURPRISE
"oulo be expressed if sooner or later
tne present Y per cent charge were
eut another half per cent. While
tnere mas been no change in the offi-
claI stock exchange rate for call
money, which has held steady AT >
per cent all week, funds have haan
ootalnaole in the outside market 81
u per cent.
Bond Advance Steady.
NO" the one reasonably certain in
ference from this situation is con-
tlhued demand for high-grade invest
fheht securities, whether bonds or
preferred stocks, the status of which
GOES not depend upon trade condi
tlonS. 1t cannot be otherwise Tn,
money must be employed, II is NOT
surprising, then, that the bond mar
het mas been firm all the week Tba
ADVANCE has been very gradual and
ueroio OF spectacular feature. bur
I1ne the less sure. 1t is true that
Liberties and United States Govern
ment securities generally &. emed 70
nave readJusted themselves m +ba
IuIIehL charge for money. but the
tlleh-grade corporation obligations
rs oteh creeping upward
b;eh aEslage now stands at the
hs h!sh 1or the year and well above tbe
.ish .hs ior last year, but still below
the top of 1922. Nor until her is
some sign of higher money is il reae
nonapIe ,, 10 expect any check 10 the
upward movement in jnyestment
bonds. There will. of course ha llileflt en-
actions from time to time due 10
technlcal market conditions and IN
tne competition of new financing. but
as long as gilt edge securities give a
nisner return than may be obtained
elsewhere they will continue 10 at
tract investment capital.
Grain Advance Vital.
ii
forecast can be made with regard TO
speculative bonds or stocks, notwith
standing the active buying, at times
almost enthusiastic, which has been
IN evidence in both these markets all
the week. The normal course, experi-
ence teaches, is that when the very
high-grade investments reach GER
tain level under the stimulus Of easv
money there is turning toward
Il
vetopment extends over consider
able period. And the farther the
movement goes from the very high
grade securities, the greater the in
nuence OF business conditions. AS TO
the latter, the development of the
week which demands the most con-
slderation is the effect upon the agri-
cultural community of the advance in
the grain markets.
West Facing Better Times.
More attention has been paid to
this feature of the news in specula-
tive than investment circles but IL is
of Importance TO both. One has only
to recall the effect upon the south of
the rise in cotton even when that
rise was due to crop shortage 10 ap-
preciate the ultimate benefit to the
West of higher prices for wheat and
corn. All Southern industry was
stimulated. Something of the same
sort might easily happen in the West.
Obviously the Northwestern railroads
need this kind of help. That specula
tive opinion took this view. the stock
market activity of the week testifieS.
Securities of the Northwestern roads
were in demand for both speculative
and investment account
Reason for Advances.
Railroad stocks were also benefited
by the refusal of the Interstate Com
merce Commission to cut grain
rates. This decision in no way alters
the financial condition of the carriers
involved 1t does not increase their
traffic or the revenue therefrom. 1t
does, however, help to overcome the
fear of adverse Government regula-
tion which has been so potent fac
tor in deterring investment in rail
road securities.
AS for the general advance in rail
road stocks and bonds this week 1t
may be said that the assured dlVi-
dend payers were entitled TO sell
higher on the investment return un-