The news scimitar. (Memphis, Tenn.) 1907-1926, 1920-12-31
STOCKS DROP TO
NEW LOW LEVELS
DURING THE YEAR
Strike Against High Cost OF
Living CompeIS Decline in
Commodities Rails and In
duStriaIS Hard Hit.
(5y international News serviee.)

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NEW YORK. Dec. 3l.--The stock
market passed through an eventful
pcriod-through period Of read
Justment following the war during
which values were driven up to dizzy
heights far beyond their true levels.
Just as sharp as had been the advance
earlier I'm the year, just so sharp were
the declines which followed when
stocks were driven down to their
true levels. In fact, SO preciPkate
did the decline become that toward
the latter part Of the year--in No
vcmber-many issues were forced
down far below their intrinsic
values.
The. advance in prices can easily
he traced to the natural effect of
money was plentiful. Speculation
was rampant. Everybody seemed
imbued with the fever TO invest
money into something that would
bring immediate and hig returns. The
people had TO have some outlet for
their excess funds and the stock
market furnished the medium. An
era of luxury buying set in. Every
thing shot up to unheard of prices,
Gambling and specializing in food
stuffs and other necessities began,
with the public being forced to foot
the bill. Such inflated conditions,
however. could not long exist The
country had to get back on a peace
basis, The public went on n silent
strike" against the high cost of
living. II was not an organized eff
fort. but simply an expression of
protest against the exhorbitant
prices. The foleral reserve banks
came to the relief of the public by
increasing its discount rates, This
materially checked the wild specu-
lation and tended to throw on the
market much Of the necessities that
had been boarded,
High Prices Drop.
The outpouring of the boarded
GOODS as well as a falling off in the
demand OF the public, quickly COM
strike" of the public caused slump
In the business world. Industrial
plants by the score began reducing
their production, cutting down their
number OF employees and violently
slashing wages. This was particu-
larry true in the textile, automobile,
tire, independent steel and copper in
dustries. Concerns were caught load
ed up with commoditios at the high
levels and as a result annual inven-
tories were effected at enormous
losses. Extra financing was needed
by many and a number of corpora
lions had to pay big rates of interest
to secure accommodation Money
was at n premium with banks de-
handing the most gilt-edged secur-
ity. There was heavy enlargement
in bankruptcies and approximately
NNs4th a
estimated at over three hundred mil
lion dollars, are estimated to have
gone to the wall during 1920. Scores
of corporations were forced to either
cut or entirely suspend their divi-
dends
Naturally, this period of transition
in the industrial world was reflected
on the stock market in sharp
downward movement in values from
the heights to which they had been
driven by the public's fevered imag-
ination. Industrial issues led the
violent declines. ...
The railroad stocks were helped in
the early part of the year by the in
creased freight and passenger rates
granted by the government and by
the passage of the Cummins- Esch
bill prohibiting strikes of the rail-
road workers. Talk of segregation
by many railroads OF their oil, coal
and timber holdings contributed to
the upturn in this group. However,
the stagnation in the business world
was soon reflected in a marked de-
crease in railroad earnings and this
class of stocks shared in the late
year decline
The following table of thirty five
leading Industrial and railroad issues,
showing their high and low prices
in 1920. illustrates how violent the
readiustment in the stock market has
been. High prices for the year are
given with low prices reached late
| in December.