New-York tribune., 1920-05-20
Heavy Selling
Forces Violent
Break i'm Stocks
Credit Crisis Brings Sudden
Liquidation That Carries
Prices to Low Level for
Year--U. s. Issues Weak

Liquidation swept the Wall Street
market In speculative securities yes
terday in n wave of selling that car
ried prices down to low lcvels for the
yewr. Disturbed by growing concern in
financial and business circles over the
drastic measures that are being taken
/ to curtail credit expansion and bring
| about dehation. holders of stocks be-
gan active selling early in the session
at the exchange. and as prices rccede1
before the rising tide Of offerings,
WHICH came from all over the country,
! the pressure increased until in the
/ hnal hour the whole market gave way
! in one of the most violent declines Of
The year. The commodity markets were
also affected, especially corn and oats.
/ While the downward movement in
! stocks was orderly. with no sign Of
Generalization. nevertheless sentiment
was greatly unsettled. Dealings, which
had fallen to 1000 shares on Tues
day, rose to close to 100000 shares.
Curiously enough, little developed in
the news of which the Street was not
already fully cognizant. 1t has been
known for days that the credit stu
alton left much to be desired and that
the Federal Reserve authorities were
bent upon forcing a contraction in
! loans to non-cssential industries. AS
TOR the Washington conferences be-
tween bankers and Reserve Board
members, they have resulted more in
focusing attention upon the acute
credit situation than in bringing out
anything new so far as the financial
community is concerned. Unfortunate-
~, however, the great mass of holders
of securities are not so close to what
is happening in the financial world.
1T was quite apparent yesterday that
the sudden outpouring of stocks was
due more than anything else to the
effect on sentiment of the emphasis
that is being laid upon the credit crisis
through the headining of strenuous
banking efforts to curtail loans and the
playing up of the slashing of prices
in mercantile establishments. On top
OF 1t all the persistent weakness of
! United States government war bonds,
, which declined again yesterday to new
low records. has helped to cause dis
quiet and nervousness. In such a mar
ket session as that Of yesterday pys-
chology plays an important role, ard
the failure of stocks to offer resistance
to the selling produced mental con-
dition that increased the momentum Of
the downward movement. Further sell
ing is to be expected. Impairment of
margin accounts by yesterdays set
back is likely to bring fresh offerings
to-day.
Stocks started out with an Irregular
/ price range and offerings were not
/ especially heavy. However, toward
/ the end of the first hour the profess
/ slonal element which had taken to the
I bear side began to offer stocks freely.
This selling was not we'll taken and
prices gave way easily. At this point
!lquldatlon made its appearance. and
from then on 10 the close the selling
increased III volume. Just before the
close stocks came out in great haste,
suggesting forced selling due to lack
| OF margin. Although the Street talked
great deal about what were essential
| and what were non essential indus
tries, little discrimination was shown
in the hurried dumping Of stocks.
Steels, oils, sugar shares and metal is
sues slumpcd, as we'll as motors and
photograph stocks. In the oil group
Mexican shares were among the weak
est. One of the worst features of the
market outside Of the sharp fall in
standard railway shares was the pro-
nounced weakness Of United States
Steel common. That issue at its low
price for the day was off more than 4
points net, and it closed 37s points off.
Steel common at 90M was at new
low for the year, points under the
low reached on the February break
Reports from the steel trade testi-
fled to the unfavorable state of affairs
existing in that basic industry as a re-
suit of the transportation tie-up. In
Pittsburgh alone 100000 tons of fin
lshed steel products are said to be in
yards and warehouses awaiting move
ment, while the total for the whole
country is put at 100000 tons. "With
the immediate cessation of the strike"
SAID steel trade authority yesterday.
1T would take six to eight weeks IL
approach the operating pace of
| March"
The Street had other things to worry
about than money and there was a
plentiful supply of call funds at per
cent after renewals had been arranged
at per cent. The foreign exchanges
were steady.