South Bend news-times. (South Bend, Ind.) 1913-1938, 1919-06-01

vancesat a rapid rate. and the much
sought for reaction has not as yet
| arrived. The average price of 90
! stocks. equally distributed between
I the rails and industrials, shows at
Z present a new high record In the
past two years. owing largely OF
7 course 20 the new high points for
the indIstrials. New markets have
/ been controlled by the public 10 the
I degree That this one is. and the
7 speculative fervor has gotten
B them" Values in many cases are
+ lost sightsof in the scramble 10 buy
stocks.
The public is jumping from one
4 section OF the list TO the other. IN
4 I'll quite recently the market was
/ distinctly one of specialties, but of
! late the activity has turned 10 the
more standard issues. The steels
! have been scoring good advances.
\ Motor stocks are keeping pace with
4 the steels: equipments are not far
: behind and the oils and tobaccos are
I being groOmed up for further ad-
I vances.
End of Advance Not Visible.
No definite signs in the reversed
( o. the trend are as yet descernible.
I The two chief causes Of stopping
! bull markets liquidation bv large
/ interests and the advancing of the
\ call money rate, can under these
/ conditions no LONGER operate to their
| full extent. The wealthy are rot
anxious to take profits with income
taxation so high for they will have
TO share them literally with the
government. The call money rate
cannot be expected to advance ap-
I probably as the discount rate of the
federal reserve banks is now the
real lever of the money market and
( IL IS undesirable TO raise this rate at
present because If the very large
amount of government paper in
Guided in the rediscouEts. Brokers
loans are now estimated at more
than $1,000. 100000 which compare
with a level of about $500. 1000. 900
during the latter half of the war
period when restrictions were in
7 force.
A possible, but improbable. cure
for this excessive speculation would
loans on the ground OF public neces-
sity. The tendency of stock prices
in the future then should be gen.
! orally upward, the scope and dura-
ton Of the advance depending up
I on developments IN the business
/ and international. situation and up
| on other factors which cannot now
/ be discerned IN the situation. Still
! the present is a time for caution. A
very wise course would be 10 grad
ually shift from the speculative
( issues into substantially secured
I preferred stocks and bonds
! Preferred stocks generally have
scored good advances but there are
still a number TO be had which are
| cheap. Bonds continue the slow
upward movement started at the
close of April. We believe that this
I is the beginning of a gradual up
ward movement and that the pres
/ ent is the time TO buy bargains. IL
discriminatory chosen all classes of
\ bonds offer a number Of attractive
| purchases. The second class rails
are an especially interesting gro6b.
Railroad Stocks.
| A late conner in the broad advance
/ Of stock prices has been the rails.
! A few weeks ago the average
| started slowly upward but this was
due largely TO speculative buying. A
/ number OF roads in the southwest
were reported to have found oil on
/ the lands they own, control or
serve and spurred on by the en-
thusiasm for oil issues generally.
! the stocks of these roads were rap
idly hid up.
More recently a gradual advanc-
/ ing tendency has started, which III
I our opinion is the inception Of a
pretty steady upward movement in
\ the better grade railway issues, and
\ is based largely on investment buy
ms. The average of % rails is now
at the high point for 1919, though
/ of course very materially below the
high points Of previous years.
The diagram herewith presents
the more important swings in rail-
road stocks since 1909. The high
record during the period came in
August OF that year when the aver
age reached about 14O. a point never
touched again. Then started a prac-
. ticaly steady declining tendency
which continued until May 1910.
land brought the average down TO
I05. Following this the trend turned
quickly upward and advanced until
3 MAY, 1911. but the top was about II
points below the 1909 high After
sharp decline prices again turned
upward untiu the record figure Of
1911 was again touched in August,
1919
From that month the average be-
gan virtually unbroken decline 20
the low Of $3.50 in November, 1914.
The decline during the late part OF
the period was undoubtedly due IL