Evening star., 1920-02-01
EFFORT OF REAL VALUES SEEN
IN CONFUSED STOCK MARKET
Some Contributing Factors to an Extraor-
dinary Situation In Wall Street Indus
trial Reports Stead dying Influences.

, panies like United States Stee, and
Bethlehem Steel.
Great Showing by steel
The Steel Corporate in the last
quarter of 1919. while the great labor
tests were on. was able to show its
common share dividend earned twice
over The Bethlehem Steel was able
to report for the twelve-month Pc
riod a balance for its junior shares
almost equal to the $50 earned in
1918. What WAS equally pleasing.
moreover. were the figures for orders
on hand. In the case of the Steel
Corporation these were the largess
since the armistice brought its whole
sale cancellation of war contracts In
the case of Bethlehem Steel. business
on the books as of January list was
enough to keep the company's mills
busy at full capacity for a year ahead.
With all this steel production is far
! from having caught up with demand.
II is hard to note business conditions
of this sort and get seriously alarmed
over what the abnormal foreign ex
change condition may do to the for
eign trade.
stop Playing Politics.
We do not need to say what s. imu
lus would be given if the politicians
at Washington stopped playing poli-
: tics and put tn trough the peace treaty.
! But we do say that ever since the eX-
change began to break badly. early
last autumn. Europe has been cutting
down its purchases of American
goods. 1t has been restricting these
purchases almost exclusively to tho
essentials. like food and raw mate
rials. yet the foreign trade figures
have not shown any important de-
, cline. The Inference is that until
Europe is able to get more on self
supporting basis as regards food. and
has brought enough raw materials TO
establish its manufacturing industries
on their pre-war footing of production.
it will have to keep on buying in this
market. regardless of exchange rates
This necessitous buying Will not be
completed probably for another six
months, and IN the meantime II is
quite likely that relief measures for
the exchange situation will have be-
gun to function.
Rinse in Money Rates.
In raising its money rates to 20 per
cent Wall street has outbid other
markets ami thereby forced upon them
the onus for meeting the demand that
credit be curtailed. The public is be-
ginning to wake up to the fact that
the imitation # credits is by no means
the exclusive work of spectators in
stocks. in cotton. in foodStuffs and the
like. The authorities who have been
laying so much stress upon the over
speculation that mas occurred are
themselves not free from blame. Had
/ the war financing been properly ham
died the credit problem would have
been far less serious and even there
might have been no credit problems
at all. The trouble has arisen from
! the fact that the liberty and victory
loans We're brought out on too low an
interest basis for them to find oerma-
nent lodgment as they should have
among investors. The savings of the
country were adequate 10 have abb
sorbed the entire amount. but the rate
of interest was not made high enough
to compete with other securities or TO
compete with rising money rates and
the demand consequent upon the in
crease in living costs, that the return
on invested capital be correspond
! ingly raised.
! Level for Liberty Bonds.
Had the liberty BONDS been floated
on a ) to 51@ per cent basis the pub
lie would have taken a much larger
proportion and would not have resold.
in this case there would have been a
much smaller proportion constituting
the floating supply in federal bank
loans, and il is this floating supply
which is responsible for most of the
credit imitation that has occurred.
While then a certain amount of excess
borrowing was inevitable as a con-
sequence of the war conditions it
would never have been as great or as
serious had the war loans been prop
erly handled.
AS it is the natural law has asserted
I itself and liberty bonds are seeking
the level at which they must sell in
order to yield the adequate return re-
quired by present economic condi-
tions. The public meanwhile sees an
enormous depreciation as a reward for
: its patriotic war investment. and
those who have to sell for one reason
or another are under the necessity of
i'doing SO at A heavy loss.