New-York tribune., 1920-06-14
Trade and Finance
Developments of the Week
and Their Bearing on
the Outlook

Political considerations have quite
naturally held first place in the mind of
the financial community during the last
week, and, as was to be expected, nave
served to leep the speculative securi-
ties markets in q state of suspended ami
nation. For Wall Street, like the rest
of the country, has been waiting any
iously for the naming of the Republi-
can standard bearer, for the time ign r.
ing all other factors. The stock market
has kept in what the Professional would
call trading area" but all through
the dullness has maintained a surprs-
ing degree oY strength. Industrial
shares in the average ended the week at
price level more than seven points
above the low of a few weeks ago.
/ Buying of stocks by the professional
element, which has continued to domi-
nate the market, has been based appar-
emily on the rather widespread belief
that the outcome of the convention
would supply the foundation for a re-
sumption of constructive operations. BY
the same line of reasoning traders COM
mitted to the selling side have refrained
from pressing bear operations at this
time, in fact, in the closing Sc ssions of
the week this faction showed signs of
Increasing nervousness which was re-
tiected in active covering of short cor,
tracts. The market closed the week
with the majority of STANDARD indus.
trial shares registering substa ltal net
gains and with sentiment cheerful.
The soundness Of the speculative po-
sition in stocks was put to severe test
last week, and the market, much to the
satisfaction of the bullishly Inclined
came through in q manner that in the
opinion Of most observers augured we'll
for the future. In the first place the per-
sistency with which call money rates
kept at abnormaly high levels--on
Thursday high rate Of IL per cent OBJ
I tanned emphasized the short credit ra-
tions upon which the Street is working
and gave the trading element something
to worry about. Yet stocks maintained
a quiet show of strength through the
period of strjngency and the high money
rates induced little if any real selling
The other unfavorabe development
which gave the Street concern was the
unexpected reduction in the preferred
and common stock dividends of the Chi
cago Northwestern Railway, q road
which had maintained its disbursements
to stockholders on the same basis for
nearly forty years. The news came as
shock, and temporarily affected the
market position of other standard divi-
dend paying rails, particularly the shares
of systems operating in territory ad-
jacent to the Chicago & Northwestern
But such selling soon slackened and
stocks afterward gave a good account
of themselves.
Assuming for the sake of argumcn.
that the stock market develops rising
strength as result of the Republican
convention and developments growing
out of the Chicago meeting, the ques
ton that naturally arises is, How far
would such movement go before the
shortage of money would compel a
/ slackening Of speculative effort for the
advance? The best opinion in the
financial district is that it would be
rather foolish for those in control OF
The destinies OF the stock market to at
Foy ~ CT l>,,n ~,
this time. 1t is pointed out that TIE
times are not propitious for an active
rpeculation, and that beyond a modcr-
ate exhibition of strength no great ex-
ranson of activity in the dire cton OF
higher prices can be expected. Certain
ly no one who has frst-hand knowl-
edge of industrial and financial condi.
tions could hope for a repetition of the
great markets of 1919. In all discus
sions of market possibilities the matter
Of money naturally occupies position
of first rank. There is not suffice nj
credit available to take care of legitI-
mate business needs without consider
| ing the needs of big speculative mar
| ket. Shortage of credit, however, OBJ
| viously would not prevent model ate de-
| gree of activity in stocks, and so thas
on the constructive side are hopeful OF
better things in the course Of the mex,
| few weeks.
Among the special groups OF stocks
which have lately been displaying
strength is that comprising the sharo.
of the railway equipment manufacture
| ing companies. All signs point to plc,tl
! of business for the equipment cora
| panics for long time to come. for tht
| reason that the railroads are short o.
| rolling stock and must buy if the tran =
! portation lines are to keep pace wit,
| the needs Of the country. The railroad.
have been falling behind in the matte
| Of equipment supplies for sever
| years. Between 1906 and 1916 approX
mately 10000 new freight cars wer,
pat into service annually on the aver
| age, while $4,000 TO s., 600 were retir,t
\ each year. In the years from 1917 t
II 1919 inclusive the now cars put in..
4 Gervice averaged less than 100000
h year this in IL period when the prcSsur'