The circle banner. [volume] (Circle, Mont.) 1914-1939, 1919-12-05
Reckless Investment Followed BY
Heavy Losses When Market
Goes to Pieces.
Government SECURITIES
REMAIN SAFE AND SOUND
Uncle Sans Bonds "Good ~ Gold"
While General Slump Wipes
Out Fortunes.

New York-Semt-panicky declines
in the stock market and subsequent
relapses from the partial recovery,
with heavy forced liquidation OF light
ly margined holdings of the popular
market favorites on the New York
stock exchange have demonstrated
cleary the dangers of speculation.
For six months the stock market adj
vanced, slowly at first and with the
usual "profit-taking reactions" and in
recent weeks going up by leaps and
bounds In some departments of the
market, notably oil. motor and other
Industrial shares. Then in few
days there has been a decline wiping
out much of the advance of months
In some stocks practically all of the
advance.
There was reason behind the ad-
vance, but a speculative craze carried
It beyond reason. Eastern market
reports for months have carried men,
ton Of buying by "the public" High
wages. war profits, the prosperity of
industry and agriculture have given
many the fever to speculate.
Investments Prove Disappointing.
Financing of new and old corpora
lions by stock, bond and note issues
called for hundreds of millions of dol
lars. Issues of preferred stock alone
since January 1 have totaled more
than $600,000,000 and common stock
= billion more. Foreign loans with
more in prospect to finance Europe's
buying added to the burden. The
immense buying power of the coun-
try shouldered the load, but specu-
lation In listed shares was getting
out of bounds. Money rates began
to show the strain. Three weeks
ago call money in New York rose
to 1879. the next week to 20TS and last
week to 800. the highest point since
the panic OF 1907. Renewals touched
14%, the highest In years, and time
money hit 80. The advance was a
warning from the banks to go slow.
-Pools" and "tipsters" began to draw
In their horns.
The decline was orderly until in
Sufficiently margined accounts were
liQuidated. Then came a smash
General Motors new common stock,
which had scared to 4061a dropped
to $50, Mexican Petroleum from
255X to 1876, Texas company from
1913 to 286, Studebaker from 143M to
1O8N, American Tobacco from 3O7A
to 240, Crucible Steel from 235
to 2o9 and SO on down the list. |
Even U. s. Steel, the porverbial mar
ket barometer, declined from 112N |
to 103.
The break extended throughout |
the list, less marked of course in
lower priced stocks. The bond mar
ket also suffered.
PerIIs OF Speculation Shown.
Since the eliminating slump there has
been recovery ranging from or points
to around 20 to IS points in stocks which
suffered most on the decline but down
swings followed the recoveries and the
marked atmosphere Is not yet considered
cleared.
In nutshell a speculative craze set
the banking interests and the Federal
Reserve Board against overspeculat ton
and the crash came.
No better illustration of the permanent
and fixed value of government securities
can be found than In the present unset
tied market. War Savings Stamps and
Treasury Savings Certificates and
Liberty Bonds continue their interest
career unaffected by the storms
Of financial stress that overtake less
n vorable securities.