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Show INTEREST RATES ON MONET i BECOfllNGJIOtST IMPORTANT Stock Markets Are Narrow and Very Profes-.i sional; American Exporters May Now . Form an Extensive Combine. By W. S. COUSINS, Editor the American Banker. NEW TORK, March 5. Perhaps the i most sensitive point in tlie whole I financial mechanism of the coun- j try today is that which concerns ihe rate of interest on money. Anxietv on this a. ore is to he f'-en in ev-.-ry division of business operation, and sniiii-ifiu discussion of the 'juesiion of interest rare on the third liberty loan ban taken place to impress e.v;ri the man in iho siieet. Ist week a member of the federal re-sf-rve hoard took occasion to adre:s to tlie banking institutions of the country a few words of ca u tin nary criticism of the policy of bidding higher and higher rat.-s for tin: surplus funds of their depositors. de-positors. It was feared that unrestricted i om petition by the exercise of the inducement in-ducement of higher interest rates would t-vent'-Ki-lly force up the level of Interest at a time when it is most essential that rates be held down as low as possible. Thus It is obvious that if a commercial j b;inks Htarts under the handicap of pay- j lug out from :J to 4 or even 4'. per cent; for funds which it can loan only in part. , t he burden of interest payment by the borrower is of necessity enhanced. .Money 1 h;is its price and "money prices" change in t he same way ay the prices for any nci-essa ry commodity, but artificial stimulants stim-ulants should be avoided as much as possj hie. Tliis week the money situation ha? been decidedly more favorable, and rates for (.all money, a5 well as those for tlie longer mat uri ties, have been the lowest which the New York market has recorder! for some time. This may be due in part to t he action ta ken by the New York Clearing Mouse association, limiting the in teres t payments on depositors' ac-counLs ac-counLs to a rate, of "2 per cent less than the rate for ninety days' rediscounts at the federal reserve bank," and in no case more than :i per cent. Thus, If the federal reserve bank's ninety-day rediscount redis-count rate is -i1 per cent, the maximum allowance to deposi tors will be 2 per cent; when the rediscount rate is 4 per cent, the depositors' maximum will be 2 per cent. Of course there is no restriction restric-tion as to the minimum. Industrial Progress. Much interest has centered during the past few weeks in tlie continued progress prog-ress of the largo industrial organizations of the country as exhibited in the official offi-cial reports recently made public. In a ruimher of instances initial or increased dividends make these reports still more interest ing to stockholders. A few of the recent reports attracting particular attention are those of the A rnerican Woolen company, U. S. Rubber Rub-ber company, Republic Iron & Steel company, com-pany, T, S. Industrial Alcohol company, Baldwin Locomotive and Pennsylvania Railroad. The American Wo ol en company reported re-ported net earnings of $20.22 a share, as compared with 315.31 In 1916. Since March 1 government orders of over $100,-0Cni,000 $100,-0Cni,000 have been booked. The current report of the Pennsylvania Pennsyl-vania railroad shows how financial problems prob-lems are affecting1 the roads. Ourim? the past year the company increased its gross business by more than 525,000,000, but had at the end of the year $l;l,P00,-000 $l;l,P00,-000 less for dividends than during 1016. A similar story will probably be told of many other railroad properties. Pennsylvania Pennsyl-vania paid out 6 per cent in dividends and earned 7.S7 per cent before sinking fund requirements. In January, lfllS, according- to reports, the Pennsylvania did not earn sufficient to pay its taxes. On Slock Markets. "Wall street has again got back to the condition of pure professional operations in stock transactions, with the public on the ouLslde looking In. True to general form, tiie effect produced by another period of uncertainty In big international movements has again raised the danger Ficnal for the investing public (the lamb), and he is therefore rather timid about his approaches to the place where lie is apt to be shorn. The' predictions made in Germany's peace movements have been more than rerified by the subsequent sub-sequent invasion of helpless Russia and the conclusion of a peace treaty with her "representations" at the point of a pistol. Germany has, in fact, extracted from Russia a signature on a blank check good for ail that is not otherwise tied down. Secretary McAdoo's announcement of the date on which the drive for the third Liberty loan is to open is another reminder re-minder of the financial obligations of the United States in the conduct of the war. Mr. McAdoo is not yet prepared to announce an-nounce the amount, terms and conditions of the loan, for the reason that the consent con-sent of congress must be secured to certain cer-tain necessary changes. Since the changing chang-ing of tbe Interest rate is practicallv the only fc I ire requiring congressional oversight, over-sight, it may be assumed that the treasury treas-ury deems it essential that such a change be made, and tlie per cent ra te on treasury certificates Is taken as a fair indicator of the same rate for the long-term long-term bonds. England is now paying fi per cent on treasury bills, and her government gov-ernment bonds are issued below par. Treasury Estimates. Revision of treasury department esti-matcs esti-matcs make it probable that the $S.00h-000. $S.00h-000. 000 estimated offering will not be necessary at this time, and the third Liberty loan may not exceed $(1,000,000,000. At the recent rate of demands upon the treasury the total expenditures for the.! year endinc June 30 next will be nearer1 $lo,000,000,000 than the $20. 000,000,000 appropriated ap-propriated by congress, and thus Mr. McAdoo's Mc-Adoo's estimate, made three months ago, that it would be necessary to raise another an-other $10,00"i. 000,000 through bond sales, will doubtless admit of revision downward. down-ward. "Whether the third Liberty issue should be put out for the period of five years or less depends, first, on the best opinion as to the probable duration of the war, and, second, upon the expectations regarding Interest rates when the war is over. Many shrewd bond dealers are advocating ad-vocating a maturity date of twenty-five or thirty years, for the reason tha t the bonds thus issued might attract permanent perma-nent capital and fine! lodgment in the hands of those confident of a material appreciation ap-preciation within a few years a fter tlie war. Of necessity so many huge financial finan-cial operations must be taken up with the coming of peace that it might be worth while to issue a long term bond carrying what lias seemed until lately an unduly hih rate of interest tor an obligation of the United Spates government to lessen the amount of refunding which will have to he provided for in the midst of the post-war period. Effect of Webb Law. "With the passage by congress of the Webb hill, which enables American exporters ex-porters to form combinations among themselves them-selves for the purpose of pushing the foreign trade of the United States, it will heron ft er be possible for American merchants and manufacturers to extend tlu-ir trade fa r be yond what would otherwise oth-erwise be possible If they were prevented by the antitrust laws from entering into combinations. This restriction ought to have been removed long ago. but unfortunately unfortu-nately it has heretofore been impossible to obtain from concuss a repeal of the former crippling restrictions. Americans have become so prejudiced pg.thist th1 very iden of combinations that they ha instinctively revolted against the more stiiicestion of such a policy. Words and names, however, mean no'hintr. and it is easily possible that a much used term wbb-b dsr-rihed some tiling universally ! odious ma y iater lie applied to wba t Is i hichiy brne filial in iis results and commendable com-mendable in its purposes. American exporters who heretofore have bpn compelled to art individually when -they attempted tu enter a foreign market, wr-r-3 met by tlie competition of syndicates which had an Immen.-e advantage advan-tage over them in reaching out for trade opportunities. Adopting racing pnrlance, American exporters ex-porters were obliged to enter the commercial com-mercial rare with a heavy handicap, which, however, the enactment of the W;bb bill has entirely removed. From this time forward, instead of the battle for commercial openings abroad being a contest between American exporters acting act-ing singly, and comparatively .nip antic foreign rivals, it will be the Americans and not t he European shippers who will bi the big fellows and who will possess the advantage of superior magnitude and weight in the conflicts of trade. When it comes to combinations of any kind, it is the United States and not any European country which can do things on a large scale and make the world see the d I f f e re nee be c wee n wha t, to use a tc-rm in geography, is a continent conti-nent in extent compared with a province or some other unimportant subdivision on the map. |
