Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-05-15
MARKET SENTIMENT HAS
SHOWN NO IMPROVEMENT
Urge of Liquidation and Conservation of
Credit Still Dominant In Stocks, Despite
Four Weeks of Declining Values. :

NEW YORK. May 15-This week
has been a repetition OF the last four
weeks in the action OF the New York
Stock Market, with the exception Of
a little rally at the opening Of the
week and another one yesterday.
The same influences have been ex-
erted to keep the markt within mar
row confines. restricting new opera
tions. and. wherever possible. aiding
further liquidation in speculative &C
counts.
One has heard nothing all week but
the urge of conservatism. the strain
on the credit foundations Of the ma
ton. the need of the railroads for
men, money and higher rates. and the
blockade OF freights to such an ex-
tent that many factories have been
shut down. unable to get In raw ma
Probably the most effective news OF
the week was the entrance of the
United States government as Dor
rover into the money market, adver-
Using a willingness to pay as high as
5h per cent for six-month accommo-
dations. in the form OF Treasury GER
tifcates.
For some time corporations under
the urge OF needed financing nave
been putting and per cent inter-
est and dividend bearing securities
cost in commission to the banking
houses having their securities.
1t has developed in the hotation OF
Southern-Cnion Pacific guaranteed
per cent bonds for fruit car equip
ment. the big sale Of Pennsylvania Z
serial bonds maturing in ten years
Of the Northern Pacific Company. that
money IL available. but 1t takes the
high rates to bring the cash from It's
Judgment.
There are those who predict that
the government with its needs in
creased and it's revenues decreased
through the enormous expenses incl
dent to the handling of the railroads
and the guarantee OF operating IN
come. together with the loss in reve-
nue. in internal revenue. will yet be
forced to bid up to or 61a per cent
for its money.
Working for DeAation.
The Federal Reserve Board contin-
ues its efforts for conservatism and
def1ation. 1t has urged bankers this
week to make loans only when nee
essary. and not for speculation or the
acquisition of goods or merchandise
on the theory that higher prices are
near at hand. 1t has even instituted
q change in the methods extending
credit through member banks to non
member institutions. Fefusing to
make these loans secured by govern
ment collateral save where these
holdings. are as originally purchased
or subscribed for and not with view
of further functioning of liberty
bonds and other government securi-
ties as money
Going rates for money en- the ex-
change has been from to to 10
per cent, being offered rather freely
at 8 per cent on the closing day of
the week.
Brokers' Views.
itself, together with the manage
ment OF branch offices all over the
country. have become thoroughly i'm
bued with the need Of conservatism.
and while they believe that Wall
street has liquidated itself much bet
ter than other sections OF the coun-
try. manufacturing houses and cor
poratfons, and that the stock mar
xet is greatly oversold. they are still
cautious. insisting on higher mar
gins especially on stocks In which
the supervision has not run its
course.
that the market Is oversold. and that
a recovery is overdue, but the feeling
Is axainsi any extended rise ana also
that small advances will meet much
stock coming out.
the ticker was silent frequently for
minutes at time. seemed to con-
firm the belief that liquidation was
nearly over and that the street pre-
ferred a dull and featureless market
until better credit conditions were
esta blished.
watching Legislation.
The ewes of Wall street. of RAILROAD
magnates, bankers and the nnancisl
ington intently. giving heed to the
nrouress of legislation in the mat
ter If the proposed soldiers bonus
and also observing the chances ior an
increase in railroad rates. Which are
believed to be an absolute Necessity
IL the great transportation systems
are to be rehabilitated
THE country has been given an uh-
welcome example of the inaoit!y OF
the roads, in their present conoiti0h
and with the difficulties attending the
manning of their pIo op,na hn =. v
EIock a des in the west and In the sea-
board towns have delayed commerce
for inestimable losses and nave re-
suited in laying on thousands OF mon
from work.
The Soldiers Bonus.
Ierislation for the so-called SOL
diers' bonus is as q RED nag to man
cial interests and to all large puei-
ness concerns, not that there 10 tait-
ure to appreciate sacrifices ana nero
ism, but the feeling that large
bonus at this time would be too great
a strain on the financial system OF
thu nation. that it would block INDUS.
trial development. that the proposed
stock exchanges sales tax would SLOW
up dealings In securities to point
where a free market would be prac-
tically wiped out.
In the latter event, banks would not
care to loan on security for 1t ID nee
essary that they shall be in . pc,
sition to realize on their collateral
instantly. when necessary and q Dig.
broad open market such a. wan
street has ever furnished--at q price
lis essential.
There is a feeling among business
interests that payment OF bonus
would be a further incentive to idle
ness and extravaganza, although
there are many who believe that Q
comparatively small percentage of
the former soldiers would accept the
gratuity. It is further urged that
the crying need Of the world today is
production. and anything that les.
this day will lessen and not increase
production.
Weeks StronE Spots.
There have been some strong spots
in the stock market. amid all the
weakness. Mexican Petroleum is one
of the active leaders and one Of the
strongest 1t will be recalled that 1t
closed last week at 169 and went even
lower in the mid-woek slump. but II