New-York tribune., 1920-11-02
Security Prices Up
As Shorts Cover
Before Election
Southern Pacific Reaches
New High Level for Year:
Directors Announce Pla,,
10 Segregagc Oil Lands

Despite the continuance of adverse
factors, security prices held up well
Yesterday, and in the sharp upturn in
the last hour of trading there was a
suggestion of the widely predicted pre-
election rally. The impulse to rise
originated largely from covering oper-
atlons by short sellers, who desired to
avoid the risk of facing an upward
movement for securities after the
great. process of marking ballots has
been completed.
In the present century the four days
Following Pres sidcntial elections have
usually marked sessions of mounting
stock prices After President McKn-
lcy's reelection in 1900 prices gained
an average of 5 points by. the end of
the week. In 1904, after President
Roosevelts striking victory, despite
enormous realizing sales, prices moved
to new high levels for the year. Presl
dent Tafts success at the polls in 1908
was followed by advances ranging from
to points, and in 1912 stock prices
gained from l to points after Presi-
dent Wilson'S election on the expressed
theory that business was destined to
improve regardless of political policies
After gains varying from to 5 points,
quotations siumpcd toward TIE end Of
the week and showed net losses. partly
as a result of heavy foreign liquidation.
Following the reelection of Mr.. Wilson,
security prices, with few exceptions,
revealed net losses.
The myth that striking stock market
rallies follow Immediately after elec-
tions is fairly we'll grounded in his
torical precedent and for this reason
professional traders were anxious to
cover their commitments. The Repub-
ican victory is so generally conceded
that il has caused little excitement in
speculative quarters. Yet, if the sue
cess of the party exceeds antclpauons,
the result is likely to stimulate Sc
curity fluctuations for the rest of the
week. In view of non-fulhllment of
the predictions Of q striking pre-
election rally, observers will watch the
post election fluctuations with more
,han usual interest. The market yes
terday was Irregular in the forenoon.
hut underlying strength marked the
session.
Call money again cost borrowers 9
per cent for renewals, and this rate
sisted longer than on any day last
week. Tht rise TO 10 per cent did not
come until fifteen minutes before the
close of the market and this was in
terpreted by traders as an indication
,hat perhaps the end of the temporary
stringency was in sight.
Inc most important development or
the day IN connection with speculative
matters occurred three hours after
trading was over, when the directors OF
the Southern Pacific Company an
nounccd their decision to separate the
California oil property of the COM
rany and its holdings in the Asso-
ciatcd Oil Companies from the rail
road properties. and the official an
nouncement carried this extremely
significant explanation, "the board in
tends that the benefits from this ar
rangement shall inure to the stock
holder, and this advance notice is for
his protection" The oil properties are
extremely Valuable, and the segrcga-
tion plan evidently will involve the
cutting Of a melon. Unlike the segre-
cation of the coal properties of the
Reading Company, this action was un-
expected. The Southern Pacific stock,
WI lch has been strong for days,
reached 105 Is, new high for the
yea yesterday, end closed at 1O5N,
up 219 points for the day In Feb
ruary, the stock sold as low as SSM.
In the case Of United Fruit, whose
directors declared q stock dividend of
100 per cent, the stock sold off, having
apparently discounted the development.
he plan adds $50 900 900 to the capi
tsal'zatlon, and the company will pay
&S a year on each of tie new sharos
compared with SIP on the smaller CAPT
talization