New-York tribune., 1920-09-27
Trade and Finance
Developments of the Week
and Their Bearing ON
the Outlook

the Outlook
The stock market struggled In vain
last week to escape from the influence
OF the present. Current developments
! proved the nemesis Of those in quest
of higher quotations. The past was
no hindrance, and the future was con-
sidered o helpful factor. But the events
of the moment dominated the course
OF industrial stocks at the market
place.
Those optlmists who ventured the
view that security quotations had
touched the bottom for the year were
not completely taken by surprise by
the convergence Of series Of basic
reductions Of commodity prices. All
but the delightfully."- ignorant had
reason to believe chat The wave of re-
adjustment in industry had not yet
spent itself. The movement toward
what Is commonly called normal in
industry has been long 9oreseen and
is now going on at rapid pace. The
Wall Street bulls, capitalizing the past,
assert that what Is now happening in
the mills, in the wholesale districts,
| and even in the retail stores, has been
discounted In the downward trend of
stocks FOR nearly q year. They argue
that the barometric stock market looks
ahead and adjusts itself to new con-
ditions long before they materialize.
Going one step further, they suggest
to discount the improvement in in
dustry that they foresee in the future.
The foregoing logic is unshakable,
provided the premises are correct.
However, It will be debatable whether
the recession in industry has been dis
counted fully until it Ia known pre-
cisely how Ear the let-down in business
will proceed. At present even the
best informed men are cautious in
making predictions about their own
particular industry, and this uncer-
tainty, aggravated by the spectacle Of
important reductions in commodity
prices, caused some further liquidation
Of industrial stocks last week. Opinion
around the marketplace, which had
been greatly cheered by the recovery
from the low levels Of August, became
more divided as result Of the re-
dictionary tendency OF the industrial
stocks last week. Those who remained
-, ob %
placed most emphasis on the ow-priced
rails, the oils and the tobacco shares,
because they thought they would be
less adversely affected by the changes
in industry.
Students Of the situation would err
il they tried to read too much eco
nomics into the fluctuations that COM
prised last weeks market. Technically,
securities seemed ready for o reaction,
after the upward spurt Of the previous
week. And no small part Of the set
back was caused by the short sales Of
professional operators, who took tenn
porarily bearish position on the basis
trial world. Internally the market
has been helped by last weeks fiuctua-
tions.
OF course, the sooner American
business attains a price level that ap-
proaches stability the better it will be
for all factors. The cuts Of recent
days have been in part an expression
Of the desire Of wholesalers and manu-
facturers to hasten the movement to
basis which will dissipate the exist
ing uncertainty. II in lowering prices
! business men are able to stimulate
buying and break existing trade block
AIDES the favorable aspect of what is
happening will become apparent.
AS is its custom, the speculative COM
munity leaps quickly from one pole of
most overnight. A revolution in SEN
| timent Is often more q result than a
cause Of what is printed on the ever
unwinding ticker tape. A few days
ago, when bullishness was more fash
ionable, traders greatly emphasized the
prospect Of conspicuously easier money
toward the first Of the year. Many we'll
informed bankers grant that there may
be a substantial improvement in the
credit situation as the new year is
born. But the question arises, How
far can security prices discount easier
money while money remains tight?
The statement Of condition made
public Saturday by the Federal Reserve
Bank Of New York gave fresh con-
fdence to those observers who had
sensed an improvement In the credit
situation. The local regional banks
reserve position was the best it has
been thus FAR in 1920. The gain was
made largely through the movement
Of funds here from other districts, but
was partly owing to sharp reduction
OF Treasury borrowings. Rediscounts
for member banks expanded during the
/ week.
Bankers attribute the improvement