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Show MONEY MARKET AND THE TREATY. Commenting on the financial conditions condi-tions in Wall street and throughout the country, Hayden, Stone A Co.'h weekly market letter says: "It is coming to be more generul jly realized that the strained bonking situation which was the direct cause i of the drastic decline, is not something , that can be remedied ovei nifiht by the mere expedient of raising call money rates and liquidating some of the jover extended accounts. For 'he flrsi .time in its five years', history, iho federal fed-eral reserve system is being put to a serious test. The federal reserve law materially reduced the reserve requirements require-ments below those of the previous banking system, and several chanrr-since chanrr-since its original passage have made a Still further reduction, as well "? lowered low-ered the proteetion behind 'he federal reserve notes. Under the old law, ihe expansion in credits woiill hnvc been halted long ugo. There is, however, a limit to the inflation, which can safely take place under any banking system, no matter how liberal and eiartlc It may be, and this limit now seems to have been reached. Sine the inflation 'is not confined to tho stock market 'alone, but prevails all over the country, coun-try, there Is no reservoir of funds which can be called upon lo relic, e the situation in New York through an advance in interest rates, so that a general curtailment of credit ah along the line becomes the only solution. This curtailment has now been tnaugu rated, perhaps a little forcibly, and while there has already oeen a considerable con-siderable deflation in the valutions of somo of the higher priced stocks, the restoration of sound and satisfactory credit conditions Is lTkelv 10 be p grad ual and lone drawn-out nroees. ev- fending at the best over a period of weeks and possibly momhs." Though strongly attached to tlv" sen-oral sen-oral policies advocated by Senator Lodge, the author of the letter r f1 r ring to the rejecting of the peace treaty, says: "The demoralization in foreign ox-Changes ox-Changes during the past week has he come acute, the pound sterling dropping drop-ping below the four dollar level pre. dieted some time ago by one of the leading British economists o doubt) jthe rejection of the peace treaty by i the senate has accentuated this weakness, weak-ness, as well as the unsettlement in the securities markets. It Is not our province to discuss the merits or d: merits of the peace treaty. Itfr rari jfication by the United States would undoubtedly, contribute something towards to-wards the peace of mind of our allies and towards the resumption of nion satisfactory internatiun.l relations, both political and economic. It would ilso permit congress to devote its undivided un-divided attention to some of th: pre?-s ng domestic questions, such, as the railroad problem But it would hardly I seem as though the expectations, ap-jparently ap-jparently held by many people, that if only the treaty were ratified the way would immediately be open to the stabilization sta-bilization of exchange rales, with consequent con-sequent Increase in American export.; Icould be immediately fulfilled. Tho artificial ar-tificial stimulation of exchange would Involve the flotation of bi tore.cn loans in this country an 1 the rather J qualified success of the recent united j kingdom offering, together with a pol i Icy of credit curtailment would cis 'some doubt upon the possibility of doing do-ing this at present." nn |