Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-07-10
SPECULATIVE CLIQUES PICK UP
STOCKS DURING QUIET PERIOD
Price Level Up Five to Fifteen Points Since
Market Situation Has Become
More Attractive.

this scare. the perception that it was
quite unwarranted. which is being re-
f1ected in the market now.
Credit Expansion Checked.
1t is true that the credit expansion
which had not been checked two
months ago has been checked since
by the drastic raising of discount
rates and by the other measures taken
by the federal reserve authorities 10
get the banks to discriminate against
unnecessary loans. Some slight I'M
provement has been brought about in
the reserve position. but 1t is still very
slight General business conditions
have barely changed. one way or the
other. In some lines demand has rail-
en- off and prices and profits have
come down.
In other lines underproduction stu
exists in the sense that the producers
are not able to turn out goods fast
enough to accommodate their Gus
toners.
But the market knew these things
quite as we'll two months ago as II
knows them now. In the same way
the transportation difficulties are still
hampering industry despite the meas
ures taken to bring about an Improve
ment. This weeks reviews of the
steel trade have emphasized the han
dicaps imposed by the car shortage
quite as much as they have at any
time. The crops are considerably FUR
Their along and. as indicated by the
government report for July. are in
decidedly better shape. There Will
be a good average yield of both wheat
and corn and with the larger carry
over from the previous harvest there
Will be an ample supply for home
consumption and normal surplus for
export. But when all is said by way
OF comparison between the condi-
~ = 80 Y,,lx Sc
little difference. The market is NOV
ing frward now simply because the
pessimism of the spring was unwar-
ranted and because during the severe
decline in Wall street a great many
stocks had been driven down far be-
measured by earnings present and
prospective and by property equities.
Stocks to Be Distributed.
entity against the bear propaganda of
two and three months ago. now that
their stand is shown to have been
justified. can afford to take a pretty
conservative view OF the present out
look. There is no reason for any in
discriminate speculation for the rise
at the present time. 1t Is merely a
case of readjusting prices upward to
accord with true values. which were
lost sight of during the recent de-
preston. Further. than this the
market is not entitled to go and we
may well believe that it will be the
object of the so-called big men to
distribute stocks on the present ad
vance, which they will count upon
getting back lower in the autumn,
when the crop. moving requirements
are pressing upon the money market.
The investment demand is more vigor-
Gus and altogether broader than it has
been at any time. This is demon
strated by the prompt absorption of
new capital issues. even those of con-
siderable magnitude. like the Belgian
and Swiss government loans and the
Armour convertible notes. But it has
to be borne in mind that these f1ota-
tions are a success only because of
the. extremely high investment yield
which they afford. The real encour-
agement for the holder of old-line in
vestments will not come until these
new offerings begin to be made on a
lower. instead of the present alb
normally high interest basis
Copyright. 1920. by s. P. west.)