The Current Situation

The money situation still holds the centre of the stage in American business. Yet, although it seems each week as if something important were just about to happen, nothing really does.

On Oct. 1 many millions of dollars have to be paid out by New York banks in cashing bond coupons due on that date, and also dividend checks issued on stocks. Very often this sudden though temporary demand for funds by New York banks, coupled with the need of sending funds west to move the crops, creates a temporary money shortage on and just before Oct. 1. So it turned out this year, and call money on the Stock Exchange--;-the most sensitive part of the American money market--rose to 6% quite suddenly.

But just as this development induced the speculative crowd to fear an advance in Federal Reserve rates, news from London announced a cut in the Bank of England rate from 4%% to 4%. The rates of the Reserve Bank of New York and the Bank of England are made cooperatively in order that the British rate may always be slightly higher and thus avoid heavy gold exports to this country. New York Reserve rate is now 3%%, and a rise to 4% would consequently threaten the British gold supply and the sterling gold standard.

Hence, after all these alarums and excursions, the money outlook in America is still for stable and relatively low rates. This in turn facilitates stable security prices and commercial prosperity.