New-York tribune., 1920-07-12

tacticS OF the professional element
only short while before, they ad-
vanced easily and rapidly once the
right kind Of buying appeared.
It was bad week for the skeptics.
The gullible ones, on the other hand,
cashed in on the rise in stocks. One
Of the unexpected things about the
movement on the board was that they
followed schedule. In these days of
bad transportation service it seems
strange that anything should adhere to
schedule, and the market above all
things is normally the least likely to
fulfill the predictions of prophets. And
yet ten days ago commission houses
and independent observers were
letting it be known that they expected
spurt in the market, and they were
right. If the so-called experts con-
tinue to be correct in their prognosti-
cations, they will have to change their
title, for the public has come to look
upon market experts" as persons who
are usually logical but wrong.
AS result of the weeks development.
the complexion of the market has un-
dergone marked change. Professional
traders continue to be an active factor
in shaping the course of prices, having
lately switched from the bear to the bull
side, but the most interesting aspect of
the market just now is to be seen in the
first public participation in several
months. The public came in last week
and bought stocks in fairly large vol
ume. The sight Of rising prices proved
too enticing for the outside element to
resist. Commission houses reported q
large expansion in buying orders from
out of town, particularly from the West.
Sustained buying of this character is
needed to keep the market moving ahead
for any considerable period. But if the
rise goes on steady expansion in public
participation may be looked for. The
public has way Of holding out for the
market until stocks have begun to move
up. The public seldom does much in a
declining market, excepting to sell at a
loss stocks bought at higher levels.
There are many competent financial
observers who will tell you that the re-
covery now taking place in stocks is in
anticipation of impending Improvement
in business. The stock market, as every
one knows, has a way of discounting
things that are below the horizon. It is
argued that the business adjustment
forced By an overextended credit posi-
ton is proceeding satisfactorily, and
that before many months have passed
the country will find that the measures
taken to further the process of defla-
tion have proved beneficial to industry
in general, even though they may have
hurt in spots. There is something to
be said in favor Of this view, but one
should not overlook the facts that the
credit situation remains critical. Com
mercial borrowers continue to pay 71a
to per cent for bank loans, even where
their credit is Of the highest. While
such condition continues to exist it is
difficult<to see how business can get back
into the stride Of a few months ago.
The more reasonable explanation fol
the better tone displayed by securitie;
seems to be that in the recent declin.
they had discounted about the worst tina
could happen at this time and, havin,
been completely iquidated and sold t,
a standstill. were in q position to re
spond to temporary relaxation il
money at this center. Stock, Exchang
borrowers paid z per cent 4or call LOAF
renewals last week, low rate in thes
days Of high money costs. The easie
position came with the completion of tn
heavy semi-annual settlements.
It is hoped that those who have tn
welfare Of the market at heart will dis
courage speculative excesses. Will
acrobatics such as occurred in Housto
Oil last week are out Of order and
persisted in will only work harm t
the rest of the market.
Searching around in an effort to fin
a suitable explanation for the turn fo
the better one Wall Street man OF
| served: "If speculator could loo
into the confidential ledgers Of som
I Of the great banks and their securit
adjuncts. he might perhaps uncove
interesting records Of accumulation q
both stocks and bonds during the ps
riod in which the part Of the publ
which makes up so large portion {
the trading community has been almos
/ exclusively engaged in the perplexin
problems Of financing its regular bus
I ness engagements. At least in the cas-
II of some Of the trust companies thei
has been strong presumptive evidene
II of recent substantial buying Of secur
1 ties on q fairly large SCALE
II One fact that has proved helpf,
H has>been the clarifying Of the polite,
II situation. Both of the great polite,
i parties have selected their tickets an
the Presidential campaign is about /
II be launched. Both Presidential nom
nations are acceptable to Wall Stree
l although the financial community lear
: heavily to the Republican, side. No
that the nOnvention4 ara nYt ~ III