New-York tribune., 1920-12-13
Trade and Finance
Developments of the Week
and Their Bearing ON
the Outlook

and Their Bearing ON
the Outlook
Financial needs of the moment stood
out in bold relief last week and to some
extent interfered with the expression
OF opinion of the speculative mind re-
gardng the outlook for business
through security fluctuations. The
weeks swing of railroad and industrial
stock quotations was toward lower lev
els. Much OF the real selling, as dis
tinguished from bear operations, repre-
sented an effort to get cash to meet
current needs. Individuals and or
CARNATIONS in quest of funds with
which to meet their December Is Fed
eral tax instalments and to take care
of other pressing demands tossed Sc
curities into the marketplace, having
already borrowed at the banks up to
the hilt. The urgency Of such selling
should disappear after the first of the
year, when the seasonal requirements
will have been met.
Although q shrinkage in corporate
earnings and occasionally the passing
or reduction of dividends are natural
consequences Of serious depression in
industry, the realization of such ex-
pected events last week tended to de-
press market values. Declines in the
stock market earlier in the year were
to discount these very occurrences, yet
when the actual jolts come to pass they
further upset the market Toward the
close of the week the volume of trans
actions increased notably, after
period of dullness and price equlib-
rum on the exchange.
Traders have not yet gained conf
dence in current grain quotations, and
operators for the decline encountered
little resistance in attaining their OBJ
jectives. Cotton prices, on the other
hand, revealed a steady tone. For most
Of the week prices for the two groups
fuctuated in opposite directions, adding
to the general spirit Of irregularity
which has prevailed in the speculative
marts since the cessation some three
weeks ago of the spectacular liquidat-
ing movement which threw the specula-
tive community into paroxysms of fear.
Dedation in the steel industry is
special process. The Steel Corporation
since March, 1919, adhering to the rates
established by the War Industries
Board, has had lower price scale than
its competitors on many products. But
as long as the demand for this baromet-
ric metal outstripped the supply many
buyers we're willing to pay premium
prices to the independent companies in
order to get deliveries. Since the gen
eral recession in industry the immed-
ate requests for steel correspond
roughly to the potential output Of the
Steel Corporation alone. On November
80, according to figures just made pub
lie, the tonnage Of untitled orders of
the latter organization were at the
lowest ebb Of the year. This fuctua-
tion in supply and demand explains the
recent wave Of price cutting by inde-
pendent companies recently toward the
Steel Corporatio quotations.
AS commodity prices recedc It be-
comes clearer that the position of pub
lie utility bonds on which interest has
been paid since 1914 will become meas
urably improved by the rising purchas-
ing power of the dollar. Gross earn
ings of such corporations may be re-
lied upon to remain reasonably stable,
and lower costs should mean higher
net earnings. If this development oc-
ours the margin of safety which re-
moves public utility bonds from the
danger Of a default will be widened
and the intrinsic worth OF such securi-
ties enhanced.
The fuctuating dollar probably will
not resuscitate the almost BANKRUPT
corporations in this field, which require
special attention. But the we'll man
aged institution which during the pc
riod of mounting costs and fixed rates
succeeded in satisfying its indebtedness
to bondholders, though unable to pay
dividends to speculative capital as rep
resented in the common stock, ought to
gain in the forthcoming months in pro-
portion as it suffered in war years,
when economic tendencies were moving
in the reverse direction. Another fac
tor helpful to the finances Of such cor
| porations is the fact that regulatory
bodies proverbially lag behind events
Just as they delayed in raising rates
to meet the diminished purchasing