Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-12-13
PREsSI|QUDAT|0N,
RAILS HARDEST HIT.
lndustriaIs Also Slump
Coalers Raided-Good
Bank Showing.

special Dispatch 10 Inc star.
NEW YORK. December 13.-Un-
questionably there was reason to feel
encouraged by some Of the develop
ments over Sunday, but the stock
market rs it opened swept every con-
sideration away except the fact that
there was a lot more forced liQuida-
ton to accomplish and that this must
be carried through:
The formation of the $100, 900, 600
corporation under the Edge act to ex :
tend credit to the foreign trade was
obviously most important. 1t was the
first, big step toward a, solution of the
entire problem created by the tremen-
dous shrinkage in the. foreign ex-
changes and by the inability of foreign
countries to continue buying Amer
lean goods in a large way because
they had reached the end of their
ability TO borrow from American
banks
In the grain markets this was a
visible influence on the side of i'm
provement. but in the stock market
it was disregarded.
So. too, it was matter of great
disappointment that no attention
should have been paid to the results
In the Saturday bank statements.
This was altogether the most hope
full showing that has been made SO
far. Not only did the federal reserve
bank in the New York district re-
cover the better part of the ground
lost the previous week. but this re-
coVery was accomplished without any
loss to the rest of the country.
ignore Eank Showing.
The twelve regional banks in their
combined statement were able to show
a ratio of reserve to deposit and note
liabilities higher than it was before
the crop moving started. and almost
back to that of year ago.
This was accomplished. moreover.
while partly by an addition of gold
reserves. more largely by reduction
OF rediscounts.
Bills secured by trade collateral
that is commercial bills. were down
'}early $10.000.000 on the week-the
largest shrinkage of any week this
season Here was tbs most conclu-
sive testimony that could well be
offered, first to the fact that the fed
eral reserve system is successfully
standing the strain. and second. to
the fact that the liquidation in trade
has finally begun to show in bank
loans.
The Third Week in December.
Charts showing the course of av-
erage price levels have all along
developed striking similarity of
movement between the stock market
of 1920 and that of 1907. The SINH
larity is so remarkable in the se~
quence of declines and occasional
rallies that good many people have
been making their calculations for
the turn of the market by what hap
pened in the famous panic year.
In 1907 the first real bottom was
touched in the third week of No
H. f,,1
recovery. followed by a renewed
break, and this second break-pr as
it is often referred to. "the second
Observation-Disclosures in the third
week of December.
That is why in professional specu-
lative circles SO much interest at
tacffes to this, weeks happenings.
The chart men were still insisting
this morning-although, to be sure,
their letters were compiled before
the opening-that the double bottom
was right at hand. Despite the in
tense pessimism prevailing and the
numerous trouble rumors that were
in the air, the predictions of a sub
stantial recovery before the first of
the year were renewed.
Position I'm Rails.
To the reasons already discussed
for the weaknesses in the railway
shares, there is now added another.
namely, that a great many traders
who have been playing the short side
of the industrials for the last month
and a half have simultaneously been
long of the rails. 1t has taken most
if not all their profits secured on the
short side to mark down their losses
on the longs. What happened toward
the end of last week apparently was
that many of the traders in this posi-
ton decided to clear the decks alto
gether, and when covering In their
profits on the short side of the indus
trials took their losses att the same
time on the rails. Such liquidat ton
plus great amount of distress SELL
ing"AselIing which had absolutely no
consideration for values, but of the
necessitous sort which had to go on
regardless of selling prices-anords
the most logical explanation for the