New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1920-05-24
Developments of the Week
and Their Bearing on
the Outlook

day plunged five points in the average.
United States Liberty bonds, ranked
as the premier investment securities in
the world. dropped in spectacular
fashion. For time in the middle of
the week 1t seemed as If the whole
country were bent upon liquidating its
holdings. The smash came after sew
eral days Of extremely dull markets
in speculative issues, but the trend
was reflected previous to the break of
Wednesday in the steadily declining
prices for the government issues. At
the end of the week values showed
some recovery from the lows. but the
markets were still in highly nervous
condition.
The obvious conclusion to be drawn
from the action Of security prices is
that the more intelligent element in
the financial community has taken full
cognizance of the evidences of impend-
ing business reaction. The course of
speculative stock values since last
November, whom the peak Of the great
rising bull market Of 1919 was reached,
is OF particular interest at this time.
for 1t indicates plainly that over
period Of six months far-siRhted mon
OF finance have been preparing for the
turn in business which now appesrs In
be at hand,
Liquidation has been taking place IN
the stock market throughout this
period There have been slight inter
ruptions duo to temporary REVEALS of
bullish speculation, but the broad cur
rent OF prices has been downward. Be-
fore the break of last week it looked
to many competent observers as if the
stock market had fully discounted
about tho worst that could happen to
business and industry at this time.
However, the cumulative effect of all
the propaganda for commodity price
reduction and the emphasis of the Fed
erai reserve authorities upon the ur
gent necessity Of check upon the
dangerous over-expansion of credit in
many lines, proved too much. This.
with the added troubles Of one of the
worst transportation breakdowns in
recent years and its strangling effect
upon business, forcing liquidation of
Liberty bonds by commercial interests
unable to obtain their usual bankinp
accommodations, produced a state of
mind on the part Of owners Of e.
curities already worried by the slow
decline which did not need much to
cause a stampede to sell.
The market must be we'll liouidat.d
as result Of It's experience DURING
the last six months and its drastic
cleaning out Of last week. That will,
not, however, prevent further selling
by nervous investors, although there
are many seasoned stocks which. on
the basis of earnings for several wears
and the present outlook, are undoubted-
~ selling below real values. Brt
there are times when real values don't
count. Just as many stocks wer.
ballooned last year to prices far above
reasonable levels, 80 in a market like
the present the decline may 20 fur
Their than warranted. Those who take
the more cheerful view of the genera,
outlook insist that untitled domestic
business is Of huge proportions and
that unified orders should serve TO
lessen the shock of any reaction that
may take place. The security markets
are in way paying for the specula-
tive excuses Of last year. The hug.
mass of stocks foated on the wave of
speculation that swept the country has
not been assimilated. The market ia
still full Of unseasoned, poorly dis
tributed issues, many of which are
worth great deal less than the pub
Tic paid for them. while MANY more
have little or no value at all.
On the decline Of Wednesday of last
week tho average price Of the thirtv
industrial stocks used in The Trib-
une's daily tables fell from o2.9s to
S7.eS. This established a new low for
the year, the previous low having been
1910, made on tho break Of last Feb.
rusry. Compared with tho high Of this
year, the industrial average uric.
showed at the low q decline Of approx
imately 20 points. The high record for
the average was made last November
at 1898, the thirty industrial stocks
having risen to that level from q 1919
low Of 1920. Therefore, at last weeks
low the average was back within less
than 10 points Of tho level from which
tho bull market Of last year started.
Wall Street has not given much
thought to the call money market in
recent days. For one thing supplies
have been fairly liberal at 6 per cent.
Besides. tho stock market has been so
dull that tho demands must have been
much reduced. In this connection 1t
is worth noting that the stock market
loan account is in a we'll liquidated
position. The total Of loans for stock
market purposes are said to be not
much in excess of $1,000, 100000. At
one time last year they were estimated
at $1,750, 100000. The reflection of the