Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1919-08-23
NATIONAL PROBLEMS
DISTURB THE MARKET
Street Does Some Covering, but
Is Still Far, Away From
Constructive Buying
FOREIGN EXCHANGE SLUMPS


lively cheerful at the end. What hap
pened in between to bring about this
change illustrates the difference in the
psychology of the professional trader on
the floor of the stock exchange and that
of the investor and business man who
permit themselves a broader range of
vision with respect to cause and effect
Since the securities market was largely
professional, particularly in the first
nslf of the week, the bears were enabled
to exert considerable pressure on the
strength of the collapse in foreign ex-
change, the threatened steel strike. the
British premier's black speech in Com
mons and the disturbing aspect of our
relations with Mexico. This resulted,
of course, in the building up of an cx-
tensive short interest. as well as in q
further wedding out of speculative ac-
counts, and consequently improved the
technical position materially.
But it was to be noted that, through
out, the bears did not have an especially
easy task in getting the price level
down. While resistance was overcome,
it nevertheless made itself felt, and
the confidence of the bears was gravely
impaired by Thursday so much so. in
deed, that the trading position shifted
suddenly in the afternoon of that day.
The list rallied in good form and con-
tnued to advance through Fridays ses-
sion. This movement was accompanied
by reversal in trend of foreign ex-
change, cotton and grain. The fact
seemed to be that the bear element had
overmuch stressed adverse influences,
while the more conservative part of
the street was engaged in searching
for silver Innings. When the stetf
strike failea~tO materialze and our
entrance into Mexico after bandits did
not meet with opposition from the
Carranza forces, it was deemed pru-
cent to start covering operations.
Not Constructive Buying
There are times, however, when it
is far cry from short covering to
constructive buying. There is more
than enough looming on the horizon
to deter the public from re entering the
market in force. The difficulty which
bankers are encountcring in formulat-
ing plan for financing our, foreign
trade at a time when the pound ster-
lig and the franc are tumbling to
hitherto unheard- of low levels is dis
couraging. The Washington govern
ment is preoccupied with the peace
treaty controversy and the campaign
against the high cost of food. The
latter is proceeding apace and gives
promise of results. The former seems
as far from settlement as ever, al
though, needless to say, points of view
diverge widely as to the effect which
the conference between the President
and the senators at the White House
will have.
Meanwhile there is the utmost anx-
iety concerning what is to happen to
our foreign trade should the exchanges
continue to drop and nothing done to
correct the tendency. In this connec-
tion the July report of exports and i'm
ports attracted unusual interest. Ex-
ports last month fell $3.50, 900 900 be-
low those Of June, while imports were
the largest for any month in our his
tory, exceeding the June figure by So,
600, 200 and the May total BY $4,000,
600, the previous high record. 1t is
estimated that not less than 81 900,
000, 600 will be required in extending
credits to Europe in accordance with
the Dawson plan for n debenture cor
poration and allotment of credits where
most needed Mt n given time. Most
Wall street bankers favor the plan.
although some do not. How much
backing the investing public will give
is question. AS one house expressed
it,, Loans to Europe can no longer he
on open account, but on collateral of
merit"
Europes oreoit Siumps
The>longer this important matter is
permitted to drag the harder the task,
it would seem, to convince the investor
Of the merit of Europe's collateral,
particularly if foreign exchange keeps
on going down. This week sterling
went below $4.13 and the value of the
franc declined to the neighborhood of
1914 cents. Both recovered to some
extent, but the recovery was due to
temporary conditions within the market.
that is to say, to short covering and
speculative buying. There is little
hone of permanent imnrovement untiI
something is done in tba woy of or-
tending credits or until ouotations have
reached a level which nrecludos Tho
bpviny of anytbino exoant tbo ,,ost
urSent nocessarios Tn tha 1atto, noso
~ o.u,o;,,n 90 H.. .,,a,,.,J al,
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