Evening star., 1927-05-14
PRESENT BULL SESSION IN STOCK
MARKET BASED ON CHEAP MONEY

count rates as rapidly as expedient in
| the interests of trade. Business had
stagnated under the weight of high
! borrowing rates. The same condl-
| tions have not obtained here, where
money has been in greater supply
than required to finance trade.
There is no occasion then for the
| Federal Reserve Board to assist busi-
ness with lower discount rates. The
only value of reduction in the rate
would be to the security markets
which already are high and week by
| week are drawing generously on this
| market, as the steady expansion In
brokers loans proves.
1t would be of advantage undoubt
edly to Secretary Mellon in his refund
| ing operations to have rediscount
rate of 3i5 per cent rather than 4
per cent. but not vital to the success
Of his undertaking. On the other
| hand, encoura cement to greater specu-
lation In stocks would eventually lead
| to disturbances affecting not only in
yestment and speculative markets,
| but general business as well.
So. while the disposition abroad is
to further lower rates of interest, it
f, is becoming more and more apparent
that the Federal Reserve Board is
resisting not only the pressure from
Washington, but from Wall Street
interests, to reduce it's loaning rate.
Commodity Prices Declining.
Tn the basic trades the tendencies
are in the direction Of lower prices.
Cuts have been made in pig iron and
in steel scrap as result of a dimin-
ishing demand for steel products.
Operations in some of the great
iron and steel districts are down to
rs per cent of capacity. The untitled
orders of the United States Steel Cor
poration at the end of April were
smaller than they have been since
August, 1925.
In the automobile trade a large in
crease in output this Spring by some
of the strong manufacturers compares
with a seriously reduced production
by others, whose earnings statements
and balance sheets this year will make
very poor reading for shareholders.
The metal industry is unsatisfac-
tory. though textiles, silks and leather
trades have been improving after sew
eral years of bitter experience. Pack
ers and manufacturers OF fertilizers
are both facing a period OF falling
earnings. The building industry is
slowing down. Rents are falling.
The Oil Situation.
The most serious conditions. are, of
course, in the oil trade. Whether
these can be corrected by the meas
ures that have been recommended this
week remains to be seen. 1t is doubt
full il production can be sufficiently
checked to stabilize prices where they
will yield much of a profit to pro-
ducers in the first nine months of
1927.
1t is well to bear in mind, however,
that no country has ever been per-
manentIy injured by an excess of pro-
duction In any form. In the end 1T
has all been absorbed. The astonish-
ing flow of oil in the recently open
ed Seminole area is another illustra-
ton of the untapped resources of the
United States and of its ability for
, generations to come to supply the
rest of the world from it's surplus
commodities.
While we are worrying because we
have so much of SO many things and
are trying to regulate prices and
distribution through governmental
agencies other nations are employing
every means for increasing the out.
put OF their factories. farms and
mines.