The Washington herald., 1920-09-26
Best Banking Quarters En-
tertain Little Apprehen-
sion as to Outlook.
RAILSLOOK VERY GOOD
Many Traders, Idle Since
Government Ownership,
Ready to Enter Field.

While there were many Included
in the professional element who en-
stertained bearish convictions near
the close of the week the opinion
IN the best banking quarters was
that little apprehension need be en-
tertained with respect to the out
look, particularly as II relates 10
railroad shafes. Railroad stocks
have been so thoroughly llquldateo
over a period of four or hve years
past as to place them in position
where a moderate amount OF ouy-
ing stimulates an upward trend IN
Z rhis dapartment. Aside from that
however, II is well known that the
railroad situation has undergone
dacidad Improvement ever since the
carriers were turned back to pri-
yate ownership and thousands OF
investors as well as spectators
who have not traded in railroad
stocks for four years are now sald
TO be in the market for this class
Of securities in preference TO many
- Of the industrials in which large
amounts have been made during the
period of the war by reason OF the
unusually substantial advances
which have taken place in them
When Industrial stocks were on the
-,,nsrada the business of the cor
porations represented by them was
in large volume and big dividends
were paid, but this il now appears
was a temporary development and
cannot possibly be expected TO con-
tinue in the future We are now
in a period Of defatiOn as is being
more prominently reflected eacn
day in announcements from various
sections Of reductions in prices for
! commodities the latest being that
by certain automobile manufactur-
'ers as well as some Of the large
wholesale and retail mercantile
concerns who have taken the initia-
tive in this respect for the purpose
of stimulating greater activity in
sales which have been at a low ebo
for some time past principally. be-
cause Of the unpreCedentedly high
prices exaCted from the public
-. Automobile stocks.
Naturally the announcements OF
price reductions by some of the
Automobile companies had an unset
tIing influence over the automobile
and tire stocks which exerted a
sentimental influence esewhere
throughout the list and prices as a
whole at the end of the week
showed a downward tendency. II
the automobile industry is suffer-
ing from want OF orders it is only
fair to assume that the automobile
tire business will experience sim
liar adversities, particularly as the
two are so closely related. The tire
companies are known to have on
hand excessively large inventories
and il is apparent that some steps
, will have to be taken to remedy
this situation, most well informed
j. interests entertaining the belief
. that it will have to be accomplished
: through the medium of a reduction
IN prices II this Is done il should
mean a freer movement of a COM
modify which at the moment is at a
standstin. During periods Of read
justment in any line there natural
Iy is certain amount of unsettle-
sment in security values, but event
ually it is felt the stocks of both
the automobile companies and the
tire producing concerns will again
assume an upward tendency.
Railroad shares.
=. Those who studied the railroad
situation closely maintain that the
unsettlement in various lines of
business which has neCessitated
price reductions is a factor favor
: able to the carrier as it will mean
Stimulation of sales which in turn
s will result in increasing railroad
tonnage. The carriers are now
operating on a basis OF rates con-
siderably higher than those obtain
ing a few months ago and an in
!, crease in the volume of business
will mean much higher revenue.
Z These are factors which are being
p advanced by those who are bUllishly
Inclined toward railroad stocks.
, Present prices of railroad shares,
although higher than those obtain
ing a few months ago, are the low
est that have been recorded in
twenty years. According to reports
the Federal Reserve authorities at
=, Washington are not inclined to per-
NIT member banks to loan on crops
of last year and the year before,
this applying particularly to the
cotton crop. At the moment south
ern planters are holding a very
large amount of last years crop of
cotton of the second grade in the
expectation that they will be able
: to maintain high prices for that
product. II the banks will not f.
: nance the holding of the crop, how
ever. it will be necessary for them
Z TO send il to market at such prices
= as are obtainable which will be
: beneficial for business generally and
q at the same time afford necessary
: relief to the money market situa-
. tion.
The low priced railroad shares
are most pODular at the moment it
being reported that good buying of
: Pittsburg and West Virginia, New
{, Haven, etc, has been going on for
some time past. Union Pacific,
Southern Pacific. New York Central,
St. Paul preferred, Pennsylvania
and others of this class also are
understood to have been absorbed
by strong interests in recent weeks.
This has been done in the belief
that the carriers Of the country are
q now coming into their own and will
: be placed on a stronger operating
, basis than ever before with liberal
, earnings.
p Oil stocks have been active and
firm recently particularly the low
priced issues of this group. Mex
lean Petroleum has been a feature
of the higher priced oils easily ad-
-vancing many points above the low
Quotations of fortnight ago. Sin
-clsir Consolidated was active and
in fairly good demand at times dur
ling the week but later reacted two
or three points. Because of the
unusually large declines which took