New-York tribune., 1918-05-30

A feature of trading on the Stock
Exchange yesterday was the weak
ness Of motor shares in a market in
which the industrial list, as a whole,
was quite strong. The explanation
for this divergence was to be found
in the introduction in Congress of
bill under which heavy tax would
be levied on automobiles. This was
only an incident in the many diff
culties which the motor car industry
has encountered, and the effect on
prices was not important; but it was
nevertheless interesting because it
was typical of what may be expert
enced in other groups of stocks until
the new tax programme has been
completed and the business world
knows just what it must face in the
way Of additional imposts on profits
and levies tending to restrict con-
sumption. The market demonstrated
yesterday that, as had been stated,
uncertainty as to taxation, rather
than worry over the outcome Of the
German drive, was chiefly respon-
sible for the decline in prices earlier
in the week. Progress of the Ger
man offensive was watched closely
but the tension which marked the
opening days of the attack launched
last March was wholly lacking.
There was no liquidation of conse
quence yesterday. which was not
surprising in view of the fact that
the market has sustained a severe
decline in the last fortnight and has.
perhaps, partly discounted this
weeks developments. Apparently,
there is not much prospect for an
other series of million share days in
the near future, which is just as
we'll Under the circumstances, out
side participation in the market, if
there were any Of Importance, would
probably be in the form of liquida-
tion, since there is nothing in the
situation at present which tends to
induce buying of stocks on large
scale Many observers believe that
the market will soon "dry up" again,
and that the volume of transactions
will fall to a level comparable with
the turn over in the Liberty Loan
campaign.
1t is absurd, but the New York
Cotton Exchange is to be investi-
gated; not because it is suspected of
evil doing by any one capable Of
passing an opinion on the matter,
but simply because the price Of cot
ton declined when the South wanted
it to 60 higher. Other things are to
be covered in the investigation, but
that is really what is back of the
movement. A few weeks ago the
staple was selling at the highest
price attained since Civil War days,
with prospects that it might go even
higher. The South was talking of
Accent cotton, and apparently act
ually believed in it's own talk. So
fantastic had the price movement of
this commodity become that the de-
mand for price fixing was beginning
to assume serious proportions The
South protested, through her repre-
Sc tatives in Congress and the Sen
ate, against such action. There must
be no interference. Cotton must be
allowed to take it's own course, iy
order that the land of cotton might
remain prosperous. But all at once
the market assumed different
aspect. Instead of rising to 40 cents,
as the South had fondly hoped, cot
ton perversely and precipitately fell
until 1t was approximately 10 cents
a pound below the top price of the
year. At once there was an outcry
against the gamblers" on the New
York Cotton Exchange, who had, so
Southern papers said, entered into a
conspiracy against the South's pros
perity by selling cotton short in &:
way to depress the price, and so re-
duce the measure of the South's
prosperity. If there were any foun-
dation for these charges the investi
cation announced yesterday would
be warranted, but there isn't. The
decline is nothing more than a nat
ural reaction from an overdone spec
ulation. When it became apparent
that there would be big carry-over
into the new crop year, with pros
poets that the growing crop will be
very large and with exports limited
by lack of shipping, a collapse was
inevitable. Short selling undoubted-
y played part in the decline. but
i, was relatively small part. HEAVY
liquidation was mainly responsible