The Current Situation

The financial markets have come to another halt. The stock market, digesting recent price-advances, has proved irregular and less active, while sterling exchange has also lingered on its way back to par. The wheat market has experienced a severe but apparently speculative break below $2.00. Iron and steel production has mounted rapidly to what is already being called its peak for 1925 by business forecasters.

Money still remains easy and interest rates low. Business is not yet making very serious inroads on the bank's loanable funds and, as a result, there is little need of rediscounting. This leaves the Federal Reserve Banks with comparatively few bills and little paper in their portfolios; and, in order to show even light earnings, the Banks have been purchasing bills in the open market--a practice which, of course, tends to maintain ease in bank credit and low interest rates.

Gold exports continue heavy, yet the country's large trade balance in recent months leads many financial writers here and abroad to predict that the out ward flow of gold from the U. S. will shortly halt and that we may even see some of the recently exported yellow metal come back to us again later in the year.