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Show POSSIBILITIES OF NEW WORLD MARKETS STIMULATE STOCKS Wide Fluctuations in Money, Commodities, Securities Se-curities and Foreign Exchange Noted in Week's Review of Financial Conditions. By W. S. COUSINS, Edl tor The American Banker. NEW YORK, July 20. Fluctuations not only in money rates, but in foreign for-eign exchange, securities, cotton and commodities of every description, descrip-tion, have been demanding a great deal of attention from financial leaders, and the program that Is being carried out this year Ls far removed from the "midsummer "mid-summer dullness" of former years. There Is, nevertheless, a startling contrast con-trast from last year, when all markets were depressed under the influence of a powerful German drive toward Paris. Since that time momentous changes have taken place, completely revolutionizing revolution-izing the status of European nations, and ushering in one of the greatest periods of sLock speculation in the history of this country. No need to look further than Wall street to find the reason for these fluctuations in money and securities, but worldwide conditions must be pondered over in order to establish a basis for calculation cal-culation In other matters. As for the stock market, present ten-dences ten-dences seem to completely ignore fundamental funda-mental conditions which should naturally have a contrary effect upon prices. Last week, for example, despite the presence of news factors which ordinarily would have operated to depress the stock market and cause serious recessions in prices, the strength in buying orders was such that continuous gains were registered in every department of the market. The industrials base their power of revival re-vival upon the broadening possibilities for the capture of the world markets, while railroad shares have been, responding respond-ing to the increasing signs of settlement settle-ment of that important problem which . have been coming from Washington in re- i cent weeks. Prices Are Advancing. To the question: "How far and how long can the stock market keep moving mov-ing upward?" there is now a multiplicity of answers and comments, most enthusiasts enthu-siasts taking the ground that securities have hardly begun to discount the rapid pace at which industrial and commercial progress has been taking place since the opening of the year 1919. American finished fin-ished products and raw materials are being be-ing called for at advancing prices in every corner of the civilized .world, while home industry lacks only the wholehearted cooperation co-operation of labor to convert present prospects pros-pects Into a boom time unprecedented in the annals of American business. There has apparently been no heed taken of the repeated warnings of the Federal Reserve board against the undue speculation which has been going on at all financial centers. In its latest' statement state-ment the board said: "Regrettable as they may be, flurries In the rates for call money on stock Collateral Col-lateral are inevitable as long as the present pres-ent methods of Mnancing and settling speculative transactions in stocks are per-sited per-sited in. As things are now they can be guarded against only by such methods as were adopted during the war, providing a reasonable supply of credit for carrying stocks, but, contrariwise, taking effective measures to prevent undue speculation. It is not the function of the treasury or the federal reserve banks or the banking institutions of the country to provide cheap money for speculation. The true function of the banking institutions is, subject to the temporary requirements of the government, to finance commerce and industry." T.his is exactly the position taken by the banking institutions at this center, which work on the principle that their commercial borrowers are entitled to first consideration, and stock exchange loans are secondary. Settlement Plan Suggested. In order to relieve the strain on the money market, the officials of the New York Stock exchange are trying to devise some improvement in the form of settlement settle-ment for stock sales. Under the present system, stock purchases must be taken up and settled for from day to day, and this has necessitated the use of a great deal of money. 1 1 has been proposed to adopt the system of "fortnightly set- , tlements" used with success in London. ' In that city brokers are required to settle for stock only every few weeks, many transactions balancing, thus relieving the money market and keeping down loaning rates. It is felt that such a plan would be adaptable and welcome here because of the wide speculation in securities and the increasing interest in investments. It will be logical to look for at least a modification of this plan in the near future. AcLive preparations are being made for the resumption of trade between ttee countries recently at war, and, as a preparatory step, exchange transactions have already been made between Anier-, Anier-, ica and the German cities not occupied I by allied forces. The first dealings in i German marks were at 8 cents, or about one-third the normal quotation. The En-i En-i glish and French exchanges have also been exceptionally weak, sterling at $4.38 being the lowest record ever made, while ; French francs, at more than seven to the dollai, have also descended to the lowest level ever recorded. To Resume Foreign Trade. Actual resumption of trade between all the European countries will be the first step in the process of international re-I re-I habitation, and should be hailed as an j ovent of momentous importance. The pre-I pre-I war trade between the central powers and the allies aggregated nearly $3,000,000,-j $3,000,000,-j 0K0 a year. j Our own trade with Germany, Austria-Hungary Austria-Hungary and Tuikey aggregated nearly $000,000,000 in the fiscal year 1914, all of I which preceded the war, and more than $500,000,000 of this was with Germany alone, about $50,000,000 with Austna-Hun-gary and $25,000,000 with Turkey. Our exports to Germany in the year preceding preced-ing the war amounted to $330,000,000, to Austria-Hungary $23,000,000, and to Turkey about $5,000,000, while from Germany Ger-many our imports were $190,000,000, Austria-Hungary $20,000,000, and Turkey j more than $20,000,000. The allies and their associates, Great Britain, Franco, Italy, Belgium, the United States, Japan, Canada, Australia and British India, bought from Germany in 1913 more than $1,000,000,000 of mer-chand.se mer-chand.se and sold to her nearly $1,500.-000,000 $1,500.-000,000 worth, while from Austria they bought about $150,000,000 worth and sold her $200,000,000 worth, making the total of pre-war trade between the two great groups of nations recently at war fully $3,000,000,000 per annum. Germany Seeks Credits. It is understood that feelers have been put out by Germany, presumably through neutral agents, for credits in this country. coun-try. Their reception is by no means uniform, uni-form, and nothing definite can be done concerning them until the formal lifting of the bars by the state department. The largest amount which. Germany can expect ex-pect to obtain here immediately is estimated esti-mated at $50,000,000. Germany could probably float a loan of this size in this country successfully, the market for bonds being chiefly among German-Americans, paying not more than 6 to 6 per cent. Bankers believe that the only credits cred-its which Germany can obtain at the outset will take the form of bank loans in which participation will be necessary. In the pre-war days it was generally held that a pound of copper would exchange ex-change evenly for a pound of cotton, but as prices stand today the cotton haa a 66 per cent advantage. The cotton market has been the scene of the most exciting speculative activity, and wide fluctuations have occurred both in spot and in futures. Primarily this is due to the decision of southern farmers , and business men to dispense with the I "one-crop" policy and to devote considerable consid-erable of their acrtage to food production, instead of importing foodstuffs from other states. Combined with the world-wide demand for the staple, this has been responsible re-sponsible for the high price of from 33 to 36 cents a pound for cotton which now prevails. Current prices for copper are from 20 to 21 cents, with strong tendencies toward to-ward higher figures. Domestic buyers are now snapping up all available surplus in the belief that price stimulation will foL-low foL-low the increase in foreign demand which is looked for as the result of the removal of restrictions on German trade. |