The New York herald. [volume] (New York, N.Y.) 1920-1924, 1920-12-09
FINANCIAL NEWS
AND COMMENT
Stocks Affected by Current Re-
action in General Business
Drop Sharply.

The outstanding feature of yesterdays
financial markets was the sharp fall OF
dozen stocks of companies whose ex-
perience in the current business re-
action is well known. The preferred
and common shares Issues of automo-
bile, food manufacturing and steel pro-
ducing concerns were under severe pres
sure. bringing reactions which ran from
2 to more than 10 points. Quite likely
considerable forced selling occurred, dis
closing the clearing away OF speculative
accounts whose margins had become
impaired, but the precipitate shrinkage
of some prominent issues reflected also
the def hand of the professional trader.
The days news and developments sup
Piled plenty of material for the short
seller.
The decision of the United States
Food Products Company's management
to postpone dividend action. the reduc-
ton OF the Stromberg Carburetor Com
pany's dividend and the continued in
dication of contraction in the steel and
| iron trade were enough to cause great
deal Of unsettlenent over the industrial
outlook. These events. however were
not altogether astonishing in the light
of facts previously brought out. That
some dividends would be reduced OF
passed because of public disincllnation
to buy goods has been foregone con-
clusion for three months. The question
| to be considered now Is whether or not
the liquidation of stocks may be carried
further than actual conditions warrant.
The complexlty of this problem. which
has been demonstrated amply in recent
markets. lies in the many factors that
have promoted selling. not the least be-
ing the need OF numerous individuals
and corporations for ready money at a
time when the banks are scrutinizing
loans in rigid fashion. A clearer con-
ception of the major underlying forces
in the stock market may appear after
the midmonth credit demands have been
met
| The steel trade reports showed further
slowing down OF operations and the inde-
pendent plants evidently are feeling as
! yet no stimulus from their reduction of
The situation in the industry Is run
ming parallel to that of the merchandise
field in that lowering of quotations Is
making buyers cautious and hopeful for
Ia x~l.x
iron output of 1880 tons daily, re-
ported by the Iron Age, contrasts with
106,212 tons a day in October. and In
those figures is presented the funda-
mental record OF the trade situa ton.
Since October l sixty-seven blast fur
naces have been closed down and. rough
ly. production is now proceeding at a
rate 20 per cent less than in the active
month of March. But II is worth noting
that the levelling of prices to the basis
prescribed by the leading unit In March
Of last year has tended to check can
cellations of orders, and 1t is possible
that the industry Is reaching downward
to minimum Of activity. from which a
new growth upward will occur in the
early months OF next year.
The grain markets declined, carrying
Tuesdays reaction further, but vigor-
Gus recovery of wheat options In Chi
cago told of latent resiiency Of prices
when an incentive is supplied. II came
yesterday from reports that export pur-
chases had been attracted by the pre-
vious days fall. Cotton did very little,
moderate decline being the only re-
Fiction of the December ginning
figures. On the assumption that yester-
days report. as the average of pre-
ceding years shows. indicated the prep
aration of about SIS per cent. Of the
crop for market. the yield would be In
the neishborhood of 12,5oo,000 bales.
The last Government estimate called for
t1n mn 49,