New-York tribune., 1920-04-12
Finance and Trade
Developments is of the Week
:, and Their Bearing on
the Outlook

tions. Stock speculators have been in
sistent all along through the recent Pc
riod Of dullness that with the first posi-
tive development in the way of an cas-
ing in the credit situation, the
advancing movement in prices would
be resumed. The thing happened
last week. Bank reserves, sweet
ened by the accession of approx
imately $60,ooo,o00 in gold from
England, combined with less important
factors to make possible a much more
liberal policy on the part of the banks
with regard to loans for stock market
purposes. Offerings of money as re-
suit became so much larger last week as
to meet practically all the needs incl
dental to an expanding market in spec
ulative securities at an average rate of
per cent, whereas in recently pre-
ceding weeks the call money rates have
ranged between and Is per cent. Here,
then, was just the opportunity the ele-
ment in favor of higher prices had been
waiting for. After momentary hesitation \
following the Lenten holidays the mar
ket, freed from it's restraints, burst into
an aggressive and sustained display Of
strength. Outside interest expanded,
prices rose sensationally in many Of the
special issues, while the standard, better
seasoned industrials also underwent pro-
nounced improvement. At the end of
tine week those working for higher prices
plainly held the advantage, although the
outlook was somewhat clouded by the
rapid spread of the strike Of insurgent
railroad workers and tho situation in
Europe, arising out Of the. Ruhr devel-
opments.
Wall Street sentiment is won't to fol-
low tho tape. Whom the market is
strong and rising it generates optimism.
Likewise, falling market makes for
pessimism. So for the moment the
financial community, disregarding de-
velopments outside of the market place.
such as the railroad labor situation, the
trend Of events in Europe, and an un-
favorable crop outlook, is in happy
frame Of mind. Whether rightly or not
the stock market following is apparently
convinced that the advance in prices re-
sumed last week will carry further.
Speculative imagination has been great
1y excited by the long string of stock
dividends declared since the Supreme
Court rendered its important decision
of few weeks ago, holding dividends
in stock non-taxable. The prospect that
many other industrial corporations with
assets swollen largely by several years
of unprecedented prosperity will capt.
talize their improved financial standing
and distribute new stock to their share
holders is a market factor of no mean
week. And it will likely be continu-
ing market influence for some time yet
to come.
The extent to which the current rise
in the market is likely to go depends
upon the attitude Of the public. Last
year it was a comparatively easy mat
ter to obtain large outside following.
The broad market that began in Feb
ruary and ran with scarcely an inter-
ruption until early summer, was made
possible by public participation on
great scale. So far this year the pub
lie has not shown any marked eager
ness to resnter the market, largely be-
cause Of the character of many of the
new promotions offered for sale in 1919.
Buying power of the speculative and
investment public is much less than it
was year ago for obvious reasons. The
conservative view of the immediate mar
ket outlook is that prices are likely to
go higher in response to clique manipu-
lation in particular issues, but that any
important forward movement in prices
will be seized upon as an opportunity
for distribution by speculative syndi-
Gates. Promoters in many cases arc said
to be still loaded up with their own
wares and have been waiting patiently
for an opportunity to unload. 1t would
not be surprising if certain amount of
distribution were under way at present,
although the market has hardly reached
stage where this would be possible on
any extensive scale.
In dealing with corners the Stock
Exchange authorities will do we'll to re-
member that prevention is better than
cure in the ratio Of about sixteen to
one. The Stutz incident has revealed
that the danger still exists, and the Of
ficials of the board would be serving
their cause we'll to prevent a recur-
renee Of similar interference with tho
free play Of economic forces which are
supposed to determine prices. At times
in recent months it has been patent thai
speculative groups were operating in
the market for tho purpose Of infiuenc-
ing price movements without respect TO
intrinsic values. Tho market was hon.
eycombed with pools and at times re-
sponded to manipulatiye efforts. This
Is not new phenomenon, but the Stock
Exchange will gain in countrywide re-
spect in proportion as it frees itself
from such artificialities. Tho move of
the board of governors late last week to
investigate another stock in which it
was feared the germs Of a corner might