The Washington herald., 1920-10-03
Wall Street Regards Firm
ness as Indicating Higher
Prices in Few Months.
OILS ARE HAMMERED
Pronounced Losses Sus-
tanned in Automobile and
Tire Issues Past Week.

Notwithstanding the pronounced
losses which have been sustained in
automobile and tire issues during
the past week, there has been
firmness in railroad stocks which is
interpreted in Wall Street as indi-
eating that this class of issues Is
being picked up by strong interests
firm in the belief that generally
higher prices will be recorded for
this group over a period of the next
few months. There has never been
a time when the outlook for the
railroads of the country was more
favorable than at the moment, and
in view Of the complete and thor
ough liquidation which has taken
place in the rails for a period OF
four or Ave years past it is apparent
that their technical position market
wise is all that could be asked and
that the possibilities as to price ap-
probation are more favorable than
in any other group Of securities that
might be classified for comparison
St Paul preferred, Southern Rail-
way, New York Central. Baltimore
and Ohio. Union Pacific, Southern
Pacific and the Hill stocks, accord
ing to Wall Street reports, have
been well bought for several weeks
past. and this statement would ap-
pear to be borne out by the strength
manifested in those issues when the
market elsewhere was breaking
badly during the past week.
Oils.
Although some of the oil stocks
were subject to considerable ham
mering by the bear element. there
was sufficient absorption of these
stocks to bring about resumption
Of the upward movement in them
which has been under way for some
time past. and at the close of busi-
ness on Friday most of the losses
that had been sustained were nearly
recovered. with a better feeling OBJ
tanning as to the outlook for this
class of issues. There was a feel
ing that the Mexican stock. Royal
Dutch and some Of the minor oil
stocks would do much better in the
future. particularly as there were
evidences Of a favorable character
relative to the oils as a whole. 1t
was stated in well-informed circles
that the likelihood of a reduction in
crude oil prices was remote, par
ticularly as the demand continues
in large volume which is absorbing
a gOOdly part Of the present pro-
duction and preventing the accumu-
latiOn Of large stocks. 1t was said
that drilling operations will have to
assume larger proportion il produc-
tion is to keep apace with con-
sumption: and the fact that large
amounts Of oil have been contracted
for during the past week at a pre-
MUM above the posted price Is
looked upon as a development OF
much significance.
Tire and Motors.
Unque stionably there has been a
substantial amount OF short selling
OF the tire and motor stocks for
some time past and it is believed
that a big short interest now OBJ
tains in those securities. When it
became known that practically all
OF the automobile manufacturing
concerns had made drastic cuts in
prices, there was quick and sharp
reaction in the stocks of those COM
panies and the tire issues also re-
ceded from their previously prevail
ing levels partly in sympathy with
the movement in the motor issues.
II is we'll known. however. that the
tire business is at a standstul and
probably in a less favorable position
than the motor industry. The large
cars has been a hard blow to the
tire manufacturing concerns whose
orders have fallen off to an ap-
preciabIe extent. The situation rela-
tive to some Of the large tire pro-
ducers has been such as to give
considerable concern to the financial
community. although the announce
ment that one of the large corpora
tions engaged in this line has been
successfully financed by Chicago
had a somewhat reassuring influence
in the trade as well as in financial
circles.
Steels.
Indication OF cut in steel prices
was not without its influence on
the stocks Of corporations engaged
in that line of business. Even
United States Steel common receded
rather sharply from its previous
quotation and sold down to close to
the low levels established a few
weeks ago. Some of the stocks of
the independent steel corporations
sustained proportionately larger
losses than those suffered in Steel
common. The opinion was ex-
pressed that the Independents would
be compelled to shade their prices
materially if they are to compete
with the steel corporations in the
steel business. 1t is a matter of
common knowledge that the in
dependent steel producers have
charged much higher prices for
their product than the steel cor
poration and while this proved
profitable to them during the period
Of the war, II is now acting as
boomerang when competition Is be-
coming keener from day to day.
No doubt a great deal Of the
present commercial unrest has been
discounted by the prevailing quota
tions for securities. particularly
stocks. Therefore. many are in
clined to believe that the worst has
been seen and that so far as prices
Of securities are concerned there
will be a period Of construction
from now on.
1t should be remembered that
Studebaker at 50 is quite a differ
ent quotation from that of above
40 about a year ago; that General
Motors at l6. or the equivalent of
$50 OF the old basis. is quite diff
fsrent from 400, the price Of a year
ago. Similar comparisons may be
made of numerous other issues, in
dicating that probably 90 or more
per cent Of the depression now OBJ
tanning has been discounted by
present stock market prices. There
fore, those who follow stock mar
ket affairs closely, say that it would