The Washington herald., 1920-01-28
zsE zzsE NATIONAL MARKETS 7ss;s55s
BUSINESS
FINANCE
FORECASTNC THE
CURRENT YEAR

|
price levels of commodities should
shortly stop. II 1t has not already
done SO. Before late spring we
should begin to see very clear evil
dences of a lower price level in
many directions. accompanied by a
more conservative attitude on the
part of merchants; a more careful
handling of inventories.
Business - While business in
many lines will not Immediately
fall off in volume. because of de-
ferred demand, yet the rapid ex-
pansion of the past six months at
advancing prices should not be evil
Il dent. With lower prices, certain
Industries. like building construc-
tion. should increase rather than
contract.
Labor-Acute labor disturbances
will tend to cease as the. year
goes on. although the position of
organized labor will remain strong
as compared with the years be-
fore the war. But as the declin-
| ing tendency of commodity prices
becomes evident and demand Is
| less urgent, many producers will
/ be in d position to curtail opera
tions rather than concede further
increased wage demands.
Speculative Extravagance-
little possibility of continued infia-
tion, wastefulness and extrava-
gance will tend to cease, and men
will begin o economiZe and save.
| This will tend to further reduce
consumption and force efficiency Of
production in all lines OF industry.
Foreign Trade-While exports to
Europe will tend to be further cur
tailed during the winter, the vol
ume will still be heavy. but i'm
ports will slowly but surely grow,
thus ultimately having pro-
nounced effect on our own COM
modify prices. This will tend in
/ time to stabilize exchange rates.
10 improve European credits and
| to inaugurate a broader demand
I for foreign Investments among
! American buyers OF securities.
The Money Market-The natural
tendency of ID curtaIlment OF specula-
| tive expansion is to ease the stIaIn
on credit. and while money rates dur
ing 1870 cannot be expected 10 return
to low or normal levels, yet, relatively.
the money rate should be lower than
in the closing months of 1913. With
real fall in commodity prices, even
though general business remains very
active lower average rates can be en-
pected for money.
Industrial Securities-Industrial Sc
curities have, as a class, FULLY shared
in the speculative mania of 1913. Both
old and new issues have been mani
puiated to higher levels than ever
before, and while the rises in the
prices OF many OF these issues have
been Justified. many others have not.
1t cannot be claimed, In many cases,
that the prevailing quotations repre-
sent permanent values, but rather
speculative or temporary values.
Where speculative Industrial stocks
have moved up in response TO recent
large rises in commodity prices aud
not as a result of increased and per-
manent new business. they will surely
recede as commodity prices decline.
Many industries are reporting Il dou-
bling of their earnings in the past
few years as "A direct result of Il
doubling of the prices of their pl ID
ucts. When these prices drop and
demand falls of. the prices of the
stocks Will decline also. The great
est caution should be exercised IN
purchasing Industrial stocks. and wise
investors will contine themselves in
this field largely TO seasoned pre-
ferred issues and well secured bonds.
Holders of all speculative issues will
make no mistake in switching into
more seasoned Investments this year.
Railroad Securities-Not only be-
cause of the present abnormally
low level of standard railroad
bond and stock investments, but
because any crumbling of the spccu-
lative boom will mean a gradual cur
tailment of operating expenses, Sc
curities in this field should prove eX-
tremely attractive investments in
1870. The return of the roads to
private operation will mean climi-
nation of wastefuI war operation and
methods. and if we are justfied in
assuming that the pending railroad
bill will be reasonably fair. the fu-
ture of railroad investors should be
secure. 1t will be a year in which
changes from uncertain industrial
securities to well protected railroad
issues will prove wise. far-seeing
policy.
Public Utilities-There is promise OF
distinct Improvement in the public
utility field during 1870. Operating
costs on public utilities have reached
their zenith and where the companies
trying period and franchise limita-
tions are not deadly, Investors 4,
many issues should feel reassured.
This is not universally true. and
great discrimination should be exer-
cised, but the obligations OF well
established power companies, light
ing concerns and telephone COM
panies should be benefited by cur
tailment in operating costs and re-
newed efficiency. Careful attention
however, should be given to fare
and rate regulation and limitation,
which has caused the downfall of
some of the strongest companies in
the country during the past few
years of rising costs and restricted
incomes. Many traction companies
have been crucified on the altar OF
political stupidity.
Government Securitics-Cnited States
government bonds are of course in a
class by themselves, and the premier
Investments for the American. Blu: the
yield is comparatively small, and while
there are moderate possibilities of
appreciation in price during the
coming few years, not many sub
stantial investors care to place all
their capital in them. For the in
vestor, however. who wishes to
place capital where it will undoubt-
edly improve with the trend of the
times, there is a wide field for
choice in the obligations of other
countries. It Is a mistaken notion
to assume that only United States
obligations are secure" that those
of foreign nations are today merely
speculations. If we are to assume
that Great Britain, France and Italy
are to go to pieces and relapse into
q condition of barbarism. with no