Evening star., 1920-10-23
OF PRESSURE IS
CHIEF FEATURE IN TRADING
Trying Week for Stock Market in With
standing Disquieting Foreign Influences.
DeAation Is an Unsettline Factor.

sum of money. forces down the in
terest rate, raises the purchasing
power Of the dollar and gradually but
surely adds to the value of all Sc
curities the return on which is fixed.
Bonds have already had very con-
siderable advance. but even now they
are some fifteen points. on the av-
erage, under what they were in De-
cember. 1914, when the stock ex-
change was reopening after four
rife shock Of war. >As this 1914 low
level was by all normal standards it
self extremely low, the possibilities of
further recovery in the present bond
list are forcibly illustrated by the
comparison. Another class of securi-
ties which so far have moved very
little. but which are bound to feel the
effect Of lower interest rates. is the
preferred stocks of standard indus
trials--those which have sufficient
asset value and earning power back
of them that they have a thoroughly
pany earnings at their worst These
preferred industrials are undoubted-
ly cheap as they now stand and would
be selling higher If it were not for
the competition with the constant
stream OF new Investment issues that
are being brought out on terms to
yield 71a and s per cent.
Money Rate Situation.
The decline in money rates cannot
be expected before the crop-moving
demands are out of the way. It viii
| be retarded. too, by the efforts of the
, cotton growers and the wheat ana
corn farmers of the west to get ex-
tensions of bank credit and hold back
their products from markets in the
hope of q rally in prices Likewise,
the unwillingness of the retail trade
to take their losses as the manufac-
turers and wholesalers have been do
ing is powerful element of obStruc-
tion. 1t is question in many minds
whether this problem will not have to
be dealt with drastically before long
through pressure from the banks.
Stil, these are circumstances which
delay, but will not in the end inter-
fere with the operation of the natural
economic law, and this law is that a
trade reaction bringing with it a re-
duced business volume and reduced
prices will also bring about a much
curtailed demand in the money mar
| kets with a consequent drop in the
price OF money.
The time before November is get
ting pretty short and yet there is no
sign Of the ante-election boom which
has been so often predicted for the
last two months. Even those who
are most sanguine and insistent upon
the prospect of a change in parties
and the stimulus this would afford
business and the stock market, are
! beginning to feel some misgiyings
and to admit that they have overes-
timated the Importance of the ipoliti-
| cal campaign as a factor in the situa-
t1on. Having seen that the election
was not counting. that even the i'm.
provement in credit conditions was
not eliciting much response, the finan.
cial community seized upon the Brit
| ish labor crisis as an explanation fol-
the market inertia, and according to
the prevailing view, it is the out.
come of the coal strike in England
which Wall street is now awaiting
The prediction may be ventured thai
the coal strike will come and go like
! the election and be only passing in :
huence. The real and Fundamental,