Evening star., 1920-02-07
NEW WALL STREET COLLAPSE
DIFFERENT FROM NOVEMBER S
One Explanation Relates to Effort to
Undo Evils of Imitation; Another
to Foreign Trade.

continental rates were reached this
| week. and that. while as yet there is
not apt to be much of a recovery, these
low levels will not be exceeded.
! In the meantime the damage has
been done. The hope that was felt up
to a week ago that a way might
have been found to correct the ex-
change situation before it had seri-
ously interfered with European pur-
/ chases in the Am nrican market must
now he abandoned.
We know already that Europe has be-
gun cutting down heavily its orders for
4 American cotton and other staples. that
cancellations have occurred and that in
some instances American goods shipped
Ito the other side have been sent back be-
cause it has been more advantageous to
pay the extra cost of transportation and
insurance than to complete the purchase
of dollar commodities with deprecated
pounds and francs.
The January trade figures will not
reveal this falling off to any great ex-
February returns. The question then
becomes how serious the backing-up of
the export surplus will be for the home
II arkets. AS has been pointed out here
before. the most encouraging thing in
| this connection is that in so many of
| our staple lines demand is far behind
! supply.
/ There can be no great industrial
depression without overproduction
and it will take lot of falling off in
| the foreign trade to convert the pres
ent deficit in the home industrial
plus.
No doubt prices will come down
and this is not by any means unde-
| sirable.
I No doubt, too. there will be more OF
less hesitation, increasing caution
10, oh
eral business volume.
Less Prosperous Condition.
| AS against all this prices on the
nous fall from where they stood
three months ago. They have GER.
tainly measured a less prosperous
condition in business affairs. ant
always there remains the fact that
no matter what the Gaining power
may be. the accumulated profits Of
past years have not been distributed
! in the case of our standard indus
trials and of themselves are suf.
| fcient to warrant prices for theil
| stocks, which make the present leve
seem conservative.
| One Of the most disturbing features
in the market of the week has beer
the extreme weakness in the railwa,
shares. in which there had been nc
speculation and against which the
charge of imitation could certainly moi
! lie. People have asked themselves
| whether there was anything - the
pending railway bill to cause this
fresh outburst of selling. The reply
has been that. while the compromise
measure to be reported from the con-
ference committee is by no means
satisfactory according to old-lint
standards. it does contain sufficient
safeguards to investors in railwa!
securities not to warrant these being
sacrificed at present levels
The more reasonable explanation
for the liquidation in the rails is tha
the selling has been due to two othel
causes.
First, banking syndicates. Some Of
them are tied up with lot of stuff
which they cannot get rid Of. and thu
only way they can get into mor'
liquid shape is by throwing over. ever
at a sacrifice. stocks like the rails
which have a ready market.
I The other is that the tremendou
premium on the American dollar IL
Europe makes even current prices TO
the remaining American securities
held abroad seem attractive. Conse
quently. Europe is selling. and thi'
| selling bears with special force upoI
the market for railway stocks.
Copyright. 192O)