The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-08-05
FINANCIAL NEWS
AND COMMENT
Real Liquidation of Stocks
Accompanies Violent De-
cline in Values.
CLOSE rs NEAR LOWEST
Labor Unions Force Issue of
Rail Naturalization as
Market Breaks.

Real liquidation that mad been ex-
pected in the event Of unfavorable fun
damental changes. broke out yesterday
In the stock and all other markets fol-
lowing the publication Of the ultimatum
Of the railway brotherhood. which de-
handed Government purchase of the
railroads and their administration for
the sole benefit of employees. This
liquidation was supplemented and aided
by professional short selling and the re-
suit was n break Of more than 8 points
In a. standard q stock az Atchison, 8
points in United States Steel common
and even wider net losses in stocks.
which possessed, at best. only a thin
market. II was the worst day Wall
Street has seen this year. and brokerage
advice turned from buy on the reac-
ton" TO sell wherever there is an APP
pearance of strength" What would
have happened had there not been
week of moderate recessions and had
there been no large short interest In
existence can only be conjectured. AS
things were the word violent must be
used to characterize the extent of the
recessions. So far as the stocks which
enjoy a broad market were concerned,
II was possible to get out with a mini
mum Of loss as the prices faded away
In fractions. These issues were helped
by scale buying on the decline But
the holders Of stocks. for which demand
was extremely thin. found It difficult to
sell even a part Of their holdings and
many q paper profit melted away before
the stocks could get cashed.
A greater contrast to the investment
and speculative attitude at the close
Of the last week could. scarcely be
imagined. Then the market was In
waiting attitude, investors and specu-
r.A f-l-
situation. Professionals were quick to
see the weight and far reaching effect
Of the unexpected and unpleasant news.
which brings squarely before the
American people the issue OF nation
alization OF railroads taking In at once a
similar step In street railways. and which
will test the question OF public senti-
ment. The opening was two to five points
lower in many Active issues and around
midday there were some brief recov-
cries. but the liquidation could not be
denied. the bears also making the most
OF their sudden opportunity. The days
declines were practically continuous and
the market closed either at or near the
lowest point. with the tone distinctly
weak. 1t made no difference whether q
stock was classed as good or poor, all
suffered the destructive influence Of un-
favorable Developments
A feature of the price movements was
the fact that high grade railroad issues
broke further than the cheap ones. due
probably to the fact that the former
have been inactive for many weeks. with
no short position to steady the decline.
In some quarters 1t was asserted that
the entire speculative position was vul-
rerable and that that explained the big
declines In industrfals as well as rails
The possibility of q railroad strike. pro-
vided Congress does not heed at once
the defiant demands of the brotherhoods.
Is speculative contingency that shocks
Wall Street and affords no time or
opportunity for discrimination as to it's
potention effects Selling. therefore.
was general. Bankers, who were inter-
viewed yesterday, found only one balm in
the position taken 30 defiantly by union
labor and this was the belief that II the
demands for naturalization had to be
made by the unions 1t were better to
have them clearly announced before the
roads were returned to private owner.
ship. The labor leaders had intended
to wait until after January /. when the
roads would be In private hands and when
a refusal OF their demands would precipi-
tate a strike and might swing public
sentiment in the direction of a complete
return to Government ownership. But
the unions have made the first move and
II remains to be seen whether they have
overplayed their hand. The point Is
clear that railroad labor proposes to
get 100 per cent. of any increase in
railroad operating revenue and this
policy and attitude may extend easily
to labor in other industries The issue
between the labor unions. a minority of
the people of the United States, and the
majority. which seems to be opposed to
Government ownership. Ii a clear cut
one. The effect on the market Of its
precipitation cannot be measured with
certainty as yet.
While there was 20 time money to be
had. one bank refusing to make time
loan even at 71s per cent. there was an
easier tone to the call money market,
the rate getting as low as per cent.
This temporary easing of money was
not due to an increased supply, be-
cause there wasn't any. but the liqui-
dalton and short selling greatly dimin-
he