The sun., 1916-10-09
FINANCIAL NEWS
And COMMENT
Peace Rumor, Although 1t De-
pressed Prices, Was a Ben
eft to the Market.
LESSON FOR THE UNWARY
Technical Positions Strength
Is Shown During Sell
ing Wave.

At least two facts were demonstrates
by tho peace rumor circulated on Fri
day afternoon. One was that specula-
tors. IL they wish to avoid loss. must
take into account the possibility Of n
sudden termination OF hostilitlcs. The
second was that technically and funda-
mentally the market was in strong pc-
sition to Withstand a sudden wave Of
selling.
Every one has known that peace ru-
'nors migh; be heard At any time. though
1t was and still is generally believed
that there Is little chance Of peace for
many months. Nevertheless 80 conf
dent had traders become tina; maiiy
were inclined TO postpone serious con-
sidcration of peace possibilities.
Tho story that Kaiser Wilhelm had
scut a request to PRECEDENT Wilson to
star. peace Negotiations WAS vl,lel,
known ~ tho street Within , npa
lively i,w minut". after tho statement
wa made Icy a bankcr. bat though inc'.
ages were scui out over the wires -
hundreds of customers of commission
houses n small percentage of holders Of
stocks heard nothing about tho rumor
until long after tho market closed.
Market Acted We'll.
rrice, having declined on Friday
afternoon outside selling in volume nat
urally was expected on Saturday morn
Ing. The effect Of such selling was aug.
mentcd by the activities OF bears. but
though In many instances lower prices
were recorded in tho short session than
on Friday afternoon there was a fairly
vigorous rally before the close. and the
great majority Of issucs closed with net
gains for the day. Had the technical
position been weak or had the previous
advances been based OH other than
sound arguments the story Of Satur-
quite different.
Few Of the bankers who were willing
nh Saturday TO express an opinion be
licNcd there was much actual basis for
the warning issued on the previous day.
Even those who said there probably was
technical warrant for the statement that
Ambassador Gerard would breach the
subject to President Wilson added that
the Allies would not be apt TO look with
favor on any terms which Germany at
this time would suggest. In support OF
this theory they cited the recent state
ments as to the attitude of tho allied
Governments
International Developments Of real
consequence usually arc reflected first in
The foreign exchange markets. Move
n,cnts of foreign exchange rates are not
always interpreted properly. but In the
past the important exchanges have in
varlably moved prior 10 any public an
noupceinont Of such events as war or
peace declarations.
There has been little change in the
rates OF exchange ON European coun-
tries recently. Sterling has remained
practically stationary and the move
men, OF franc and marks have been
fractional. There IL ample basis. there.
fore, for the assertion that bankers deal
Ing In foreign exchange did not up to
the close Of business Saturday believe
there was any change IN the peace out
look. n II may be remarked that bank.
crs dealing In foreign exchange probably
would so any sign Of such change
quicker than other bankers.
II has been pointed out on moro than
ono occasion that the managers OF Amer
i"an corporations have followed con-
sentative policies in most instances.
recognizing tho uncertainty as TO how
long the war Won last. and that the
majority Of buyers and sellers OF stocks
and bonds have been guided by similar
considerations. Prices of many active
Issues In consequence appear low when
compared with the present earnings OF
the several corporations.