Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1920-10-02
Spirited RISE IN
RAILROAD STOCKS
Conspicuous Cleavage in Weeks
Trading Between Rail and
I Industrial Divisions

New York. Oct. 2.-The buoyancy OF
the railroad shares in today's closing
stock market furnished a fitting climax
to the remarkable forward movement in
that group during the last week.
Despite the material advance already
scored, the demand for both the high
grade and junior issues was more Wig
0rous than ever. The movement was
made the more significant because OF
the prominence Of the seasoned dlvi-
dend payers, which were DID up with
spirit under the lead of the so-called
Hill and Hartman stocks. The upward
swing, however. extended to oil classes
Of the rails, resulting In further ad-
vances Of to 3 points. There was fur
ther irregularity and reactionary symp-
toms in the industrial list at the outset
with pronounced weakness in scattering
quarters. The formidable character,
however, of the upward movement In
the rails naturally produced increasing
uneasiness among the shorts, and be.
fore the end Of the first hour general
covering movement set in, giving the
trading a buoyant and broadening as
pect. Although some profit taking was
met the higher level Of prices was well
sustained up to the closing.
The outstanding feature Of the weeks
market was the conspicuous line OF
cleavage drawn between the railroad
and industrial divisions. the former dis
playing persistent and consistent
strength while the latter were distinctly
weak, declining to the lowest prices OF
the year. From this one conclusion only
could be drawn, and that, despite al
most a year of falling quotations. the
! Inevitable business readjustment had not
been fully measured BY the yardstick
market valuations. From a high point
(. Of 1902, reached on November 3 last
year, the average price Of twenty active
7 Industrial stocks this week dropped to
7 low level OF SO. .o5. On the other hand.
! the twenty active rails which fell from
high level of SO. As. last October, to n
}, low level of 80.05 on May "a of this
sS7e. 'e"t"e' III A
These figures not only furnish a most
: Interesting comparison. but also strik =
y ing commentary Of the shifting OF senti
I, ment among the market community az
regards these two classes OF securities.
/. There is no doubt but that the improved
status of the railroad situation. produced
By the return of the carriers to their
owners. and the more generous attitude
of the Interstate Commerce COmmis
T. sion, put an entirely different aspect
ON the market position of all the rail-
: road securities. The possibilities Of de
yelopment under the provisions OF the
new railroad law are almost immeasur
able. Then. again, II was widely recog
mixed many OF these issues had peer
) selling far under their intrinsic value
j. On the industrial side, while quit
a different picture Is painted, by reh
son of the wide spread Of the price cut
ting movement, which is likely to extcnt
70 almost every branch of the country
J Industries, the fact must not be over
looked that bear movement in stool
or group Of stocks. or may it be di
vision. is just as likely to go too loN
as q bull market Is to go too high. Ihi
IL suggested, at least. In the CROWN,
size Of the short interest as q resul
Of the widening aggressiveness OF tn
bearish operations in repeated drive
against the industrial division.
Although the downward revision o
commodity and other prices of CONNER
a cial products was long since regarded u
inevitable, yet the suddenness OF tn
radical change Of policy respecting tn
automobile industry and other indus
tries gave professional Wall street. whicl
II proverbially besrish. pOwerfr
leverage to depress the market value
Of not long ago popular industriG
issues. Assuming that the transitio
viii be accompanied by a general low
ering Of prices and possible divden
4. reductions, there is a favorable side
be found, in that such n revision wi
p induce benefits in clearing up the mud
died general situation. the econom
. and fundamental side producing decid
4 edly constructive arguments, whiC
: should tend to strengthen, rather tina
8 weaken, investment values.
In the first place it is almost equal
certain to hasten the progress of cred
defiation, particularly the thawing OF
of the so o-called frozen credits. Thi
: In turn, means material easing u
of money market conditions. with aC
companying cheaper money rate
Z thereby increasing the purchasir
power of the American dollar, whicl
after all, is essential to the continut
ton of the country's prosperity.
After the year of almost unintei
rupted liquidation, checked occasion
ally by technical rallies, the weak
speculative superstructure of the ma
ket must surely have been eliminate
There are good reasons for supposing
has been accomplished. Under the
circumstances there would seem to
little room for any great amount
pessimism. or reasons for bearishne
on the market. On the contrary &
market outlook is brighter and SAT
than 1t has been in over five years.
~ TR RADTNC RRD1DEP