Evening star., 1924-02-10
BUSINESS OUTL0OH' !.
REASONABLY GOO. +
Slowing Up During Week CT
Recent Advances Laid to
Higher Money.
GOLD RESERVES DECLINE:
Foreign Competition in Iron Trcde
Called Only Disturbing Ele-
|. ment at Present Time.
GOLD RESERVES DECLINE:
BY GEORGE IT. HUGHES.

Special Dispatch to The Star
NEW YORK, February 9.-For t'ia
reaction which appeared in both Il.
investment and speculative mark.
at the end of the week there W
no explanation in any change ii
fundamental conditions.
The outlook for business continu, /
reasonably good and while there "
some slight firming up in money, it ". !;
not important. Rather it seemed ~
be natural hesitation after the re-
cent advance and the result of IT,.
competition of the large new offa.
ings, both in bonds and preferred
stocks. The effect was first motto =
able in the market for some of L z.
higher-grade bonds, where the retG. 4
is small.
New Issues Sell on.
Issues put out early in the .ye:.r
and which promptly went to a pi
back to the offering price. The lai
oversubscriptions which were point
to as proof of the underlying streng
of the investment demand in ma =
cases We're found to be in a &C.
siderable degree the result of spec
lative buying by dealers and trade 8
who hoped TO scalp few poin ;
profit and. failing, offered their hol,
ings for resale.
There is no way to prevent thi
sort OF thing. An advancing mark,
in bonds. just as well as in stocE ;.
invariably attracts speculation Wi ::
the same result that attends specu,
lation in stocks. The buyers had L
intention of putting away their pu..-
chases to hold indefinitely The
hODed m
Now, there is no blame to be a,
tached to the investment banker fo
this condition. His business is to s.
to 1T that his offerings are SCUM
market conditions, quality considered
Prices Put at High Point
1t is natural. too. that he shou,,
put the price at which he brings OF
new issue just as high as he b.
!ieves the market will permit The .
is always a good deal of differen5 .
or opinion as to just what this pri >.
ievel is under any given set of co.-
ditions. 1t may be that some of the
onering prices recently were too hig;l
or, rather, were out of line with
quotations for bonds of comparab:e
merit already outstanding. Only the
result can show whether this was
the case or not,
AS to the outlook for the invest
ment market,everything depends upon
the view one takes of the future of
money. The vast surplus Of gold ait
the huge potential supply of credi
nave been repeatedly emphasized il
this correspondence. The weekly STATE.
ment of the federal reserve bank.
showed there had been no change il
this condition. The reserve ratio ad
vanced this week to the highest poin
since May, 1917. Gold reserves, it i.
true: fell off. probably the result
further putting of gold certificate
into circulation, but outstanding re
serve notes and rediscounts were bot,
reduced, SO that the reserve rati,
was again raised.
Money supply Vital Factor.
If this surplus cannot find an out
let in the demands OF legitimate bus-
ness or in speculative activities il
securities and commodities, it mus
operate to hold up the quotation
for investment securities of the high =
est grade. The money will certainly
be used in some way. But there is III
assurance that the temptation Il
speculation presented by almost IN
limited credit can be indefinitely re-
sisted. 1t is also possible that eXt
panding business will make sizeabl.
inroads upon the money supply, al,
though it must be admitted that vi
to the present there is no sign of any:
such development. If for any reason.
however, money rates turn definitely
higher, the investor will demand 3
higher return OH his funds, which
means a lower quotation for prime
investments.
Coming down to the business situa-
ton, the availa BILE data gives no indi-
cation of any recession. In steel and
iron, the barometric trade, the pros
pect is particularly promising. The
action of the Steel Corporation di-
rectors on the common dividend last
week doubtless represented confidence
in the quarter best Informed. The pig
iron market is firm, more so in the
south and central west than in the
east.
Foreign Iron Competition.
The only possible unfavorable fea-
ture is the increasing competition
from foreign iron. French producers
are attempting, so far with indifferent
success, to invade the American mar
ket They are handicapped by huctu-
ating exchange rates, which makes
it difficult to negotiate a price over
any considerable period of time. SO
far, however, little attention has been
paid to this phase of the trade situa-
ton. 1t may command more careful
consideration later. Meanwhile, do
mestic producers appear Satlshed with
their bookings, actual and probaole
Copper prices continue depressed ana
no Improvement can be expected un-
iii there is>a recovery in buying pow
err abroad Automobile production
keeps UP at a high rate. Motor car
manufacturers appear entirely conn
dent. The textile industry is operat-
ing with great caution. Car loadlnss
continue high and railroad service
Nowhere does there appear any
justification for declines in market
Valuations of securities, the price OF