Evening star., 1920-03-06
STOCKS DOWNWARD MOVE
HAD TWO ESSENTIAL MOTIVES
Scarcity of Credit, lmpossibility of Loan
Expansion and Expected Business Re-
action Throughout Country Cited.

fresh credit extension to Europe a
quite out of the question. This mat
ter has been widely discus~ed aHd
sions Of tho last few months, the deci.
sion being that the United States,
with Its own credit structure 40 az.
panded. is in no shape to increase ifs
loans to other countries. We have
to be chosen to improve the exchange
situation is a transfer OF gold from
England and from Canada TO the
New York market. The Canadian
shipments have already materiaiixed
ana promise to. reach q total durine
good the latest draft from south
America What the London shipments
Will amount to Is still a matter 'ef
conjecture. The great central insti-
tutions OF Europe are in no shape to
part with gold directly, but n ia Ses.
sible to divert to this country the
greater part Of the South African
weekly. '''s'SV'
The main question which the stock
these prospective gold sl,ipments from
London plus the movement from Can.
ada Will counteract the loss 10 South
America and whether there VIII be An
excess of income over QUITO sufYieient
to make itself felt In raising bank re-
liquid capital for use in bank creAfts
SO far dealers in stocks have mot ai-
lowed themselves to become a. All
enthusiastfc over the possibilities Of
reIief. The advance in prices In tho
cIosing days OF the week was not
upward movement. but rather "A the
reoound OF market which hxd been
pressed down too far by extreme pea-
sImism ana which was ready to re-
spond quickly to the first encourae-
lng news from the outside Gold i'm
enough total to ease the money mar.
ket In way that will admit Of fresh
expansion in Wall street ACTIVITIES
hut they do relieve the fear that the
banking position will become vorSe
cmu cnnntne ,ne credit scarcity throughout the
tney were bound to produce 2 more
cneerful feeling in the financial com
munity. and this feeling has been duiv
renected In the market movement.
Second Great Consilerst3en.
AS Tor the second great considers.
tion back OF, the decline In January
ana F'eoruary-namely. the expecta.
tion OF q commercial reaction du~ "a
,i ,ne curtailment Of credlt-it Seems
iikeiy that 1t was pretty well meas-
ureo IN the stock market at the iAv
ievei OF prices reached q week seo.
Aeain 1t 10 well to point out that n
heavy inventories and where there hss
peen a capacity production that VIII
De nurt at all by q general loverinr
OF prices and slackening Of activity.
an many OF the leading lines. notably
S ron ana steel, demand IL 30 far ahead
OF supply that II would take q. Greet
deal OF slowing down in new orders
70 anect the profits Of these comDa-
MES. Looking ahead the general buei-
ness prospect seems very much mix
ed. The chances are that the steel
companies will make more nionev IN
1920 than they did in 1918. tor nv
VIII have higher prices and no labor
troubles and altogether . larger yoI,ssSe
OF business. The car building, AHd,je-
comotive concerns can also look atAe-
Waro to z prosperous year beeauso ef
the great shortage in the supply. Of
their particular product. On the cfhSr
hand. the textile industries. the Soe4
ana shoe concernS and the IeO3hNr
companies are cases where there has
been extraordinary activity IN the
past. where there has been an "a
tories and where consequently q re-.
duction In profits, As compared with
last year. may be looked for. But the
main point seems to be that the stock
market. moving. as IL always does.
discounted whatever commercial re-
action may occur in certain lines.
whereas IN the other lines where the
outlook Is for greater money making
than there was last year-and the
transportation industry may be placed
in this category along with the steel
and equipment producers -s stock
prices were altogether too low As
they stood . week to q fortnight ago
and are still low as they stand now.
Copyright. 1s2D. b. 8. r. west)