New-York tribune., 1920-08-09
Trade and Finance
Developments Of the Week
and Their Bearing ON
the Outlook


| slender Wall Street wing of the New
York Stock Exchange. Brick by brick,
the old walls are disappearing. In
side the exchange, where stocks are
bought and sold. professional oper-
ators have been emulating the work
ingmen outside, and with the help of
outsiders who felt impelled to sell
have been tearing down the structure
OF security prices. The wrecking crew
outside is destroying the constructive
work Of previous years Within the
exchange market traders have been
operating Of late in such a way as to
cut away the superstructure of stock
prices which was built during the ex-
cesses of tho bull market Of 1919. In
place Of the physical walls which are
now crumbling, a finer, larger building
will be erected. Here the analogy
with the events on the board becomes
less clear. To what extent, if any,
the market will eventually swing back
III tho direction Of the extravagant
heights Of year ago raises exceeding
ly controversial questions. Wall Street
has been in the midst of an all-pervad-
ing gloom and the financial community
has habit of OVERRIDING moods There
have been many unfavorable develop
ments In the domestic business situa-
tion and the foreign political tanglc
to discount, but in the course Of time
during perhaps the darkest moment of
recession IN industry the market which
tries to peep into the future may be
expected to begin to discount better
conditions in the world of commerce.
1t will be the main job Of the specu-
iatlve element to know when the time
is propitious for a reversal Of market
trend.
For the time being the consensus of
opinion around brokerage offices seems
to be that, if the market is going to
have any substantial rise in the near
future, it will be in the rails. MANY
observers anticipate further irregu-
larity and weakness in the industrials,
and yet each series of severe declines
Aside from the favorable implications
of the EschCummins act and the re-
cent rate decision of the Interstate
Commerce Commission, which have not
yet apparently had their full effect on
the course of security prices, there is
cne substantial advantage in the tech
nical position Of the railroad stocks
over the industrials. The former have
sins of post-armistice bull market days
from which to be purged, and a large
part Of the decline Of the industrials is
merely correction Of the upward
movement last year which was based
on the puerile assumption that the CO.
lossal earnings Of the moment would
continue through eternity. On the
other hand, the rail stocks are sub
stantially lower than they were prior
to 1914.
News as q market influence depends
on the general financial setting. Ordi- |
narily the rate decision would have
caused a really sizable squirt in stocks,
particularly since it went beyond the
expectations of most traders and was
not to any adequate degree discounted. |
For ten minutes sharp spurts charac-
terlzed the stock list at the opening
Monday, but then sharp breaks carried
the stocks to new low levels for the
year. The bullish energy was too quickly
expended and the professional oper-
stors took full advantage Of the stu
auon. The favorable news came when
the market was in the midst of dras.
tic downward swing and was not DOW
crful enough to check the movement
international politics, az has been
so often remarked, is thing not we'll
understood in this country Because
of this American unfamiliarity with
the vagaries of European ways the
complications arising from the Rus
sian advance into Poland have been |
all the more alarming here, and the |
specter of perhaps new general war
in the Old World threw currents of
fear into the financial community.
Spectators were less worried over
the domestic business and credit out
look, which, though not bright, was
better understood than the European
tangle, which bore heavily on the mar /
ket all week as a depressing influence. |