Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1920-04-23
MAKING MYSTERY
OUT OF SLUMP
Real Reason for Collapse De.
veIoped Ahead Of
Schedule

oCItCuutc
The mystery of the cause for the
slump in the stock market was the up
pormost topic under discussion in the
financial district yesterday. And OF ali
the many reasons suggested none seemed
satisfactory.
A young banker who keeps. close
touch with such matters said in ms
opinion the real reason was that the
collapse had arrived ahead Of schedule,
and that IL did so because of the Japa-
nese situation. It was generally con
sidered. he said, for some time past that
the present period Of imitation aud spec
ulation would necessarily come to an
end. but the end seemed by general con
sent to be placed in October: Tnc pos
sibilitics of what would happen in
Japnn did not enter the argument, he
said. But il is notorious that the same
conditions obtain in both japan hnd
the United States. that IS. an enormous
initiation and unbridled speculation.
japan saw tke light first and put on
the brakes in way that may nave
ioltrd her whole financial and economic
system too roughly, for all we can tln1
out up 10 the present. The effect has
ncon to call attention to our condition
and the correction will be applied less
abruptly, and he continued. what we
have seen happening in the stock mar
kct during the past few days is part
Of the plan.
When asked yesterday if he looked
for much lower prices for stocks he
said that he had just had telephone
communication with one of New Iork's
leading financiers, one who is in po-
sition to form a correct opinion ns 10
conditions. and he said that the bottom
had been touched.
The local representative of financial
concern which deals largely IN foreign
securities. among others Argentine
notes. was asked what was the cxplana
lion for the heavy importations of gold
be largely for Argentine account.
He said that few days ago the
president Of the Argentine republic in
a message TO his senate had stated that
the Argentine government had arranged
with the British government to pro-
vide funds to liquidatc the $50. 10000
Argentine loan. due here on May 10.
Great Britain. he said. owes Argentine
800. .0O0. 900 which is debt contracted
in 1918 for wheat. Tho transaction,
he said. is n sort Of three. .cornercd
one which enables Great Britain to pay
of one half Of her 500. .OOO.OOO debt
TO Argentine. the remaining SJO,oOo
400 is to remain in this country as n
British loan to the United States ut .
per cent until January. 1921, when
Great Britain will liquidate her debt by
charging off the sum to Argentina.
A discussion on local transit affairs
brought out a statement from banker
that a Federal District Court decision
in Texas recently was of particular
bearing on all public utility corpora
tions that we're seeking to increase their
rates.
This decision. he said declared city
ordinance of Houston permitting Tive
cont fare only was cOnfScatory. Ind
issued an injunction prohibiting its
enforcement. An increase to seven
cents was not opposed, either by the
city authorities or the public. After
few days operation it was found
that the gross earnings had increased
20 pcr cent. which. if sustained
| throughout the year. should add $50. =
900 TO tho companies revenue. The
report of tho master. he said. was
| approved by the court. and permitted
the company to earn SlOO. 600 more
than it earned in 1919.
This decision. he said. establishes the
right of a public utility company to
earn reasonable return on its in J.
vestmcnt and should be of value in
establishing the credit of such COM
panics.
A broker called attention to a re-
cent ruling of the Tennessee public
service commission which granted ten.
20. gh,.n Ia
Railway aud Light Co.. with the
provSo That the company should
suspend dividend payments on it. stock
pCndng the fixing of permanent rates.
The commission Snid that this SuS-
pcnsion should hold till it has n chance
10 fix final rates on the basis of money
invested in the C0npany's property.
upos which ii said it was entitled to a
fair return.
In the afternoon yesterday, some OF
the most conservative houses were ad
vising clients to buy selected stocks at
the low levels reached in the forenoon
but not to commit themselves too far
There was no feeling of pcssimism
noticeable in the brokers offices, and
while few believed the turn had
come" permanently. there were many
who expected repetition of yesterday
to take place today, aS they claimed
they had never known it TO fail. The
decline in Liberty Bonds was regarded
seriously in some quarters, especially
the ii4s.
4 prominent bank official when asked
to what he attributed the decline
answered: What could one expect
when the Pennsylvania Railroad is
offering ten year notes to yield 7L
per cent and the boud market full of
good securities, with more being manu-
facturcd all the time, yielding to s
per CCnt?'
That condition is II big temptation,
he SAID, for men whose invt StmCntS in
Liberty Bonds are not affected by the
income taX-mcn with $4,000 or SIP. e
600 invested in thcm-to sell out ana
buy the new stuff which yields so much
more. Without going into the merits
or dcmcritS of the case. but looking at
it from II cold business proposition. it
is natural thing for such men to do.
When asked il he agreed with the
popular opinion as to whether affairs
in Japan had ANYTHING to do with the
uuScttling of our stock market. nr
said his observations in connection
with the Japan scare, if it can 50 he
called. one that the effect here is
purely psychological, as very few are
at all acquainted with japanese
matters.
John II. Mason. president of the
| Commercial Trust Co, leaves for New