Atlanta tri-weekly journal. [volume] (Atlanta, Ga.) 1920-19??, 1920-06-01
FINANCIAL
OUTLOOK
By STUART p. wEGT

Copyright 1920. by the Atlanta
Journal)
WALL STREET, NEW YORK,
May 29.-The turn for the better in
the speculative market this week has
been very definite and convincing,
but it is of far less consequence than
change which has come over the in
vestment market. All competent
judges have predicted that when
money conditions eased, when there
came a let-up in the credit strain,
it was to be accepted as the signal
for a great revival in bonds and in
all other securities the yield on
which is fixed. We have begun to
see during the course of the week
these predictions verified. The
drastic measures put into force by
the fedral reserve authorities to cur
tail loans to non-essential enter
prises have started the credit de-
flation which could not be accom-
plished by the raising of official dis
count rates. The Improvement in
the traffic situation and the belief
that it will be carried further has
counted heavily along the same lines,
Frozen bank credits are in rapid
process of liquidation and the prac-
t1cal result has been seen already in
the increased offerings at reduced
rates for time money, the first break
in the time money market deadlock
In over a year.
forded that the credit position is
on the mend and with the appearance
Of an increasing supply of time
funds t15at -, sh 1re Investors sg realized
ferred stocks had reached bottom
and that much better times lay
ahead. One. would have to go back
to the autumn of 1914, to find a
such gain as they have. this week.
Liberty bonds have led the way. In
few days they have regained the
entire ground lost in more than a
month. Corporation bonds are UP
two, three and five points, and at
only no indications Of a let up, but
on the contrary, the buying move
ment seems to be acquiring. mo-
mentum. But the resumption of gold
importations will expand until they
reach a total possibly as high as
$500, 100000 before the end Of the
summer, has ben an almost equally
powerful influence.
Federal Banks Power
Now. this fear has been pretty
well dissipated. People have begun
to recognize the essential difference
between tn present situation and
that Of thirteen years ago, namely,
trolling agency in the banking sys-
tenn of the country and that now
there is. The federal reserve board,
despite all former shortcomings, is
proving its great utility. It has the
R p aso h 5ad It he's now shown that
crisis that might have come with
in the next few months had there
not been a rigorous cutting down of
loans in order to provide a fresh
financing the new harvests. The
criticism against the present meas.
IRE comes from purely interested
quarters. The common sense view
is that, the federal reserve heads
have chosen by. far the lesser Of
industrial production has to be re-
creased. But it is of far more i'm
portance that the credit strain be
relieved. 1t IS better by far to have
would take years for the business
community to recover from.
=. The best judgment Of bankers and
financial authorities as it has been
given the public on numerous oc-
casions during the last week is that
the credit difficulties have reached
the peak, that the tension is SUBJ
siding and that the relief measures
Plus the gold importations will put
the banks of the country in a strong
enough position to meet the crop re-
qulrements of the summer and au-
tumn without any serious results.
1t is upon this conviction that the
whole financial situation has turned,
that new buying power has been de-
veloped, that liquidation of securities
has ceased, and that Wall street men
have come to take a brighter view of
the outlook than they have felt like
taking for over six months. The in
vestment section Of the market is
undoubtedly upward. Old line rail-
were unpopular, have come especially
into favor. They are the ones. which
stand to benefit particularly by the
easing Of money on the one hand and
the prospect of much higher freight
rates on the other. It is reasonably
felt that there are Immediate and
very promising possibilities for spec
ulation in the low-priced non-divi-
dend paying rails, this because of
the very forceful case that has been
made out at the Interstate commerce
commission hearings on the side of
higher freight rates.
Stock Dividends
The financial community has been
particularly impressed with the fig
ures submitted by which the repre-
sentatives Of the railroads proved
that in most instances where there
had been valuation on the basis of
costs this was shown by
the commissions experts themselves
to be considerably higher than the
valuation represented by property
and investment account.
With the industrials the coming
market is likely to be a much more
discriminating one. Stocks which
have distributed stock dividends have
for the most part shot their bolt. So
have stocks of companies whose in
ventories will have to be whitfield
down as part of the commerce re-
that is in store, and there
is little speculative incentive in the
case of stocks of concerns producing
On the other hand,
the equipments have a very bright
outlook and so have most of the high
grade oils.
didate" is only a premonitory symp-