Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-06-12
|SOLD-OUT CONDITION IN MARKET,
POLITICAL UNCERTA FELT
Stocks Do Very Well Under Unfavorable
Outside Surroundings-Bank State
,ments Held to Be Factor.

fortnight Sterling exchange. which had
got down around S.S7 rallied to 3.95.
This was the same sort of combination
of incidents which last February pre-
ceeded the transfer of some s60.000,000
gold from England to this country. The
new scale of federal reserve discounts
should prove effective In inducing the
liquidation of loans secured by war pa
per. because while the rate on liberty
bonds Is 4A per cent. the rediscount
charge Is fixed at s. but in
the case of commercial credits
the new per cent rate Of re-
discount is still well below the open
market rate and. consequently. there
Is still a profit for the member banks
to discount this sort of loan and then
make use of the rediscount privilege
at the federal reserve institutions 1t
may be that we shall have to come to
the English practice and mark up the
official rates above the outside rates,
thereby substituting the threat of a loss
LOT the 1nducement of moderate profit.
Adjustment Nearly Over.
1t looks as If the bond market, In
Guiding the government loans as well as
corporation issues, has completed Its adj
Justment to the new credit level The
OLD established securities are selling on
to per cent basis, and this basis
4
tlnue their present willingness to sub
scribe to the new equipment notes and
other short-ternA obligations of high
class when offered at figures to yield
from TO per cent. The one hopeful
| feature of the investment situation is
the prompt swapping up of such offer
lngs as the Union Pacific. Southern Pa
enc and Chicago and Northwestern
equipment trust certificates and the Bel
gan loan, and the fact that the success
OF these rotations is real success-that
is, that they are for the most part i'm.
mediately taken by the ultimate investo,
ana not simply by the intermediary deal.
ei' as mas been the case in former pc
rlods when the market for new invest.
menus has become congested.
Loans Reduced to Minimum,
me STOCK market having reduced Its
loans to minimum and having pu1
, itself at price level where the slack.
enea business volume and reduced
pronts or many of the Industrial com.
pan1es have been fully taken into &C.
! count. has started in to exploit the
possibilities of individual stocks ane
individual groups of stocks which are
mole fortunately situated than the
! rest The new buying s expected has
I favored the better placed oil shares
the equipm ents. some Of the steels, the
! tobaccos. the alcohol issues and va.
rlouS other Independent specfalties
which have the stimulus of undtmin.
ished earnings. and, in fact. increased
earnings. ahead Of them. Much interes,
attaches to the action of the Great
Northern and Northern Pacific direc-
tors II they meet as scheduled next
week. If they follow the example OF
the Chicago and Northwestern board
and cut dividends it will be further
blow at all the stocks Of those roads
which have been earning much less
hn he r1I
they keep dividends unchanged 1t wi
demonstrate that the Chicago and
Northwestern was a special case.
Copyright. 1920. by s. P. West)