New-York tribune., 1920-04-26
Trade and Finance
Developments of the Week
and Their Bearing on
the Outlook

stochS ING previous week OF lU4.33. Ihe
record high for the average price Of
these issues for the year was 110.30
made in January. The low touched on
the February decline was 88.70. The
average price of twenty railway stocks
dropped from 6545 to 62 last week and
is now less than five points above the
years low record.
The outstanding development in the
domestic financial situation last week
was of course supplied by the drastic
fell in security prices. Beginning on
Monday the investment and speculative
markets encountered heavy selling
VIII cn steadily increased in volume un-
til Wednesday, when the climax came
in a two-million share session in which
stocks were thrown upon the market
in utter disregard of prices. 1t was
quite the worst setback the stock
market has experienced since the break
/ in February; and what made it so un-
settling in it's effects upon sentiment
was the fact that Wall Street was at
a loss to find satisfactory explana-
tion for the sudden outburst of selling
On other occasions in recent months
when stocks have developed sinking
tendencies it has been customary to
hold the credit situation responsible
But in the case of last weeks swift
and altogether unexpected fall in
prices other factors were plainly at
work, for money supplies appeared
adequate to take care Of the needs OF
the speculative element at all time 8.
In fact, toward the end Of the week
time funds we're offered in the market
by out-of-town institutions.
For lack of a better explanation 1t
would seem that the speculative ex-
cesses Of recent weeks, which have
taken form in the brazen manipula-
tlon of Industrial specialties, had
built up topheavy market structure
which only needed slight push to up
set completely its equilibrium. The
news from Japan at the beginning of
the week started things. Advices from
Toxic that stock exchanges in Japan
had closed their doors and that the
banking position had been seriously
strained by an overspeculation in Sc
curltles and comm odities, while mini
mized in some quarters as a direct
market influence here, nevertheless
gave rise to erous consideration of
the credit situation in this country.
And this. combined with the extremely
unfavorable labor situation and a bad
crop outlook, caused general selling of
stocks. Pronounced weakness of Lib
erty bonds added to the unsettlement.
The stock market at the end of the
week was still suffering from the effects
OF the severe slump and it will take
some time to restore confidence in
values even at present levels, which are
considerable below the highs of a
fortnight ago.
1t is doubtful whether the public suf-
fered much from last weeks break.
The market for three weeks previous
to the selling movement had been al
most entirely professional. 1t was
plainly a hand picked market in which
special issues we're being exploited
by professional pools which hoped to
be able to get the public in and then
unload. But. as it happened, the pub
lie did not take kindly to such efforts
Brokers of long years experience in
Wall Street said the public did not
seem to like the looks of things. Any
way, its share IN the market was not
large and apparently the pools were
the hardest hit by the break.
Liberty bonds and Victory notes
yielded to selling pressure again last
week with the seeming lack of resist
ance OF the common stock of closely
held corporation. Selling came from
every quarter, and there was no Longer
any artificial support in the marke,
from the government. Bond men re-
ported the Offering of blocks of bond;
as large as $10,000,00o. and the down
ward movement was accelerated. The
decline penalized the sellers. but con
stltuted real opportunity for buyers
II Victory notes were attractive on .
4A per cent basis, they should be al
the more alluring at a 6A Der cen
yield. The break in the government
issues has placed many Of the othe,
gilt-edgcd bonds, which are less ac
tive, somewhat out Of line. Bond mey
therefore predict further adjustment
OF bond prices. Either Liberty bonds
wMl recover rapidly or bonds of pri
vate enterprises will decline to meet
the competition Of the government sc.
curities selling at the new lowileve
guide post to the new basis of in
terest rates was the Offering on Fri.
day Of $6,800,00O of Province of Onta.
RIO per cent five-ycar bonds at price
to yield 7.20 per cent. For this security
there was no difficulty in immediately
finding subscribers. But it indicates
how much dearer investable capital is
becoming. AS Mr. Rovenskv, Of the
National Bank Of Commerce, points out
In an interview in another column, at
IS apparent that tho worlds primary
need is capital. The world is short
OK capital and the lack of it is elcvat-
Ing interest rates. Whether per cent
on such prime securities, with rela-
lively higher rates on others. is suf-