Evening star., 1932-06-19
SECURITY MARKETS
REFLECT IMPROVED
STATUS OF DOLLAR
Steadier Tone Also Attributed
to Better Outlook at lau-
same ParIey.
RECENT GAINS SUGGEST
Definite PRICE UPTURN
Recovery in Markets Now Appears
Much Nearer Than It Does
in Business.
BY CHAS. F. SPEARE.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, June 18.-The impor-
tant events this week had to do with
international credit policies rather than
with domestic politics. The former have
been positive and influential in their
effects; the latter indefinite and likely
to be the subject of controversy for the
next four months.
The net gain has been substantial
one on the constructive side OF the Situ-
alton, as it includes the check to the
foreign raid on our gold supplies and
an agreement between the major powers
assembled at Lausanne not to enforce
reparationS PAYNE is due in July and
to seek an early solution Of the entire
war debt question.
Markets a week ago had begun to re-
feet the improving status Of the dollar.
but it was not until announcement was
made on Wednesday that the last of
the dollar balances Of the Bank of
France had been withdraw from this
country that the financial and business
world realized crisis had been passed
and that there was no longer occasion
for fear over the gold standard Since
the middle of September. 1881, over
81 ,00O 100000 gold had been exported.
of which nearly half had gone out in
the past two months. In less than three
years .30O,000,000 Of the short-term
funds credited to foreigners had been
liQuidated.
Gold Reserve High.
In an admirable paper presented by
DR.. Benjamin M. Anderson, the ecOno-
mist, on Friday, he referred to the gold
recently shipped abroad as nervous
money" 1t represented the same effort
on the part Of its owners to seek place
Of safety as the gold, amounting to
$3.50, ,000, 900, that came into the United
States from June, 1923, to June, 1881.
With gold liquidated, SO to speak. this
authority estimates the present gold
ratio in the Federal Reserve banks and
eulation, at rs per cent, compared with
ASH per cent In June, 1920. when we
were approaching financial and COM
mercial crisis instead Of having expert
enced one for nearly three years.
This incident synchroniZes in time
with the growing conservatism in Con-
gress toward measures that would have
unsettled the credit Of the Government
and accounts for the strength this week
in all Treasury obligations. A certain
amount of it is due also to the steady
accumulation of Government obligations
by the Federal Reserve Board. which
has taken over $3.50 900 900 Of Govern
ment paper into its portfolios since 1t
first began to consider, as a practical
measure, a policy Of moderate imitation
through the creation of excess bank re-
serves.
The Developments at Lausanne have
been prompt and generous on the part
of Germanys creditors. They have
realized that they were dealing with a
crisis greater than any that ever af-
ficted the world in tim, of peace" and
that they must at once consider the
realities of the situation rather than how
much more each nation could get from
it than its neighbor. So the conference
Immediately arrived at a decision to
suspend payments due from Germany
in July, and with this emergency meas
ure taken. to attempt soberly to draft
program that would avoid the threat
ened economic collapse in Central
Europe.
This first step in what may eventually
be the most important constructive de-
velopment of the year is in line with
intimationS from the AmeriC n Govern
ment that European nations must settle
the reparations question among them
selves before taking up the subject OF
war debts with the United States. 1t
must now be obvious. however. that with
the sacrifices the foreign creditors of
Germany have offered to make. 1t Will
not be expedient or wise for this coun-
try to refuse to consider relative con-
cessions and by such refusal extend the
area and intensity of chaos in Europe.
Increasing Price Stability.
The defeat of the bonus bill, follow
ing the passage last week Of the tax
measure, has brought a sense OF relief
to Wall Street that it has not felt over
Washington affairs since March. AS
with other favorable happenings this
month, it has not SO far had positive
effect on security prices. though their
increasing stability reflects an improve
ment in sentiment as well as the with
drawing Of offerings by individuals and
institutions that were unsettled by de-
lays in balancing the budget, by the
fear of payments to veterans and by
the possible effect of continued drain
on our gold supplies. Markets have
been Indifferent to the Republican con-
vention in Chicago and have not indi-
Gated their approval or disapproval of
the main features in the party plat
form.
It is impossible to view the series Of
favoring incidents of the last four
months without coming to the conclu-
sion that we are approaching the turn
ing point in the depression. There are
some who believe that the turn has
come, but that it is not yet generally
sensed. This is truer perhaps Of Sc
curity markets and of certain commodi-
ties than of business.
The forces that have been created to
combat def1ation are steadily becoming
more aggressive and more effective.
The inertia that characterized most Of
1881 is being replaced by the elements
of cooperation and initiative. The
defeatist mood of the public IS passing
It is recognized that prices of both Sc
curities and commodities have been
forced down to levels that are out of all
proportion to the cost of production and
to intrinsic values.
Copyright, 1922