The Washington herald., 1920-07-18
MARKET FAILS
TO RECOVER
Curtailment Of Credit Is
Necessary to Avert
Critical Situation.
MONEY A BIG FACTOR
Congestion Of Railway
Transportation Further
Complicates Situation.

Tho course of events in Wall
uStreet last week brought again
foTcibly into remembrance the in
|tormittent warnings OF the Federal
Reserve Board at Washington that
p serious curtailment of credit ac-
|co commodations must be made to
fvert a critical situation. Com
paratively slight attention was paid
10 these warnings for a long while
|hnd they were regarded as merely
precautionary. Last week bank
FER who is one OF the most promi-
nent in the country along strictly
commercial lines privately express
|ed the view that unless there is in
|tke interval before October a gen.
al and voluntary deflation by cor
rations and business interests,
n economies by individuals a very
tical situation will develop. The
avorable crop indications added to
he congestion of railway transpor-
lion and the high prices of COM
'e community at large reduces Its
urchases further complicates the
ituation.
Bankers are keenly alive to the
utlook. having in view the enor-
hous amount of money that will be
equired to move the crops and to
eRbilitate the railroads. On Tues
ay of next week the United States
Sabor Board will announce it's de-
ision relative to the wages de-
banded by about 1000. 900 railway
rorkers which will involve an es-
mated additional burden upon the
business interests of not less than
billion of dollars a year.
Even some of the most active
bears on stocks were surprised
his week over the failure of the
narket to recover considering
he hopeful sentiment until
bear the end of the previous
week on the promises of at least a
temporary relaxation in the money
fnarket. Accordingly, rates of TO
fl per cent discouraged the efforts
bf the advocates of higher prices.
at the end of this week the mar
Pzet had more than lost all of the
gains on the recent rise. 1t is not
altogether consoling to find that
of a later relaxation in
fnoney are based upon the reports
Ef a slackening in various lines of
industry, including the automobile
hnd tire business and affiliated in
terests. AS a matter of fact, Sec
betary Of State Hugo furnished the
Information that there will be more
than 100000 automobiles in New
York State before the end of the
year and that there are now 1887
r~0re machines in the State than
tAcre were last year. Earnings Of
some of the automobile manufac-
luring concerns are said to be Show
fng larger increases than ever. The
|Willys-Overland Company's earn
| HSs are said to be running at the
rate OF s12,O0O,00O annually, and
This has led to expectations of in
creased dividends.
The declining tendency in the
market, generally speaking. was
considered due more to technical
than anything else.
Ln other words. stocks of a number
bf companies that have been promi-
hent in advances, including the OF:
shares, principally Mexican Petro-
leum, Pan-American, Royal Dutch
and others, the steel stocks, includ-
ing Crucible, Lackawanna Steel,
Bethlehem Steel b. and others, the
locomotive issues and others on
large earnings and a most encour-
ly "overbulled." At the present
levels. with any reasonable facili-
ties in the money market. there Is
expected to be repurchase of spec
ulative investment stocks. There
has been no impairment of the pros
poets and present strong earning
conditions of the tobacco stocks,
Paper, American Car
and Foundry the steel industrials
and the locomotive shares, which
6re governed at the present time
ehiefy by inability to fill orders.
L Regarding the Mexican Oils, the
Greatest interest attaches to the
on Saturday between the
Mexican president and the repre-
sentatives of International Oil in
terests.
Even during the drives against
the Industrial stocks during the
week, the railway shares demon
strated an increasing bullish feel
ing on these properties. Canadian
Pacific. Southern Railway. Reading
and others showed good buying at
intervals. Canadian Pacific enjoys
the advantage that it is not subject
to the restrictive measures of the
United States government. In this
stock and in others that were pop
uIar abroad previous to the war,
there have been repurchases for
the strong-boxes Of securities that
were forced out by the great inter-
conflict.
Regarding the steel shares, the
feeling was surprise over the IA
vorable showing for the last quar-
ter by the Lackawanna Steel Com
pany, which disclosed an increase
in surplus of about $500, 900, com
pared with q substantial deficit in
the previous quarter and in the
quarter last year.