New Britain herald., 1919-11-15
MARKET AND REAL ESTATE REVIEW
Henry Clews
 Weekly Letter
Especial to the Herald)

New \ ork. Nov. 15.-The events of the past week have undoubtedly been more notable in the market for Se- cuflllcS than those of any corresDond- ing period for a long while past. Ad- Nances in the discount rate at Fed eral Reserve banks, which had been ordered on November 4. did not be- gin to exert their full influence be- fore the end of the week. because if was only then that the weakened con- dltOn of the reserves of the Federal Reserve system became known through publication on the Sth of the condition of the system as at close of business November :. Weak market conditions on Monday, were followed by liquidation of increasing violence which reached it's culmination late on Wednesday, when extreme reductions. running in few cases as high as 65 to 70 points, were noted. This was followed by recovery on the follow ing day and the apparent restoration of more normal conditions. The di- rectly influential factor throughout this whole market situation was tbe high rate for call money, growing out of the policy of the Federal Reserve system and the knowledge on the part Of bankers that they must con- serve their resources if they would avoid being brought face to face with an ina bility to obtan more redis- counts at Federal Reserve banks. .
 Cause of Shrinkaec.
 What has occurred during the past week has Frequently been the subject of comment in this circular and the causes of it are evident. An ad- vance of market prices in some favor ite securities considerably above in- vestment values naturally left them in d precarious position, while the rapid shrinkage of the free resources of the Federal Reserve system com pelled bankers to look to their own safety by cutting down the volume of their market loans. Their method of attaining this result has been that of fixing money rates at high points and holding them there in the effort to discourage undue borrowings. Main tenance of large margins has been consistently favored and those who have followed the suggestion thus afforded have found the protection especially serViceable during the de- cline of the past week. The question remains whether a further recovery may now be expected to set in, as is so frequently the case after a period of unusual weakness. In this con- nectiOn predictions are as usual haz- ardous The apparent buoyancy of the market exhibited Whenever mon eN rates will permit, indicates that traders are strongly confident in the industrial future of many shares. On the other hand, the point already re- ferred to deserves to be -.cespe peciaHy emphasized-~-the fact that quoted prices have in many cases exceeded lnvestm cnt values. Decline of net earning power, due to high costs of production and to continued burden some taxation, naturally depresses the imm ediate investment valuation ot shares which are affected by these conditions. Taken altogether the factors in the case once more empha- size the need for caution and suggest the necessity of careful protection of all commitments for some time to come. The warnings issued by the banking authorities of the country. with reference to the Overloaning of funds upon lands commodities and securities. indicate a disposition to curtail the volume of banking accom- modation which, if adhered to, will necessarily limit the scope of trading
 The Railroad Situation.
 During the past week the appear ancG of a new form Of the bill known as the Esch measure indicates the probability that the Cummins bill, heretofore considered the leading railroad proposal before the country, may be superseded. Both measures are long and complex and involve many highly technical questions. Either one would give the railroad investor a much better assurance of protection than he could have with out them, and they have accordingly been favorably received by owners of securities. Neither measure would give the investor more than a very moderate amount of return and ef- fort will undoubtedly be made to re-