New-York tribune., 1920-01-19
In Wall Street


.ative market in securities are main.
y OF three sorts-first, those who
sor lack of better term, may be
called the financial powers; second
the professional traders; that is, the
ones who make their living, good or
Dad, out of fluctuations in stock
prices, and, finally, the speculative
public. This last class is by far the
most important, for without it's par
ticipation stock trading would SIM
mer down to pure investment busi-
ness plus the exchange of counters,
on a minor scale, between the pro-
feSsicnal element.
In times of great excitement the
"public" group is motley one. The
big business man may then buy,
trading in thousands of shares, but
his stenographer and bootback trail
long with ten-share transactions,
eager to get their share of the phan-
tom money to be made by buying
stocks which seemingly never will
stop going up and which always do
top about the time the stenogra pher
Ind bootblack get in. But in less
-xcitlng times the public" group
consists, to a very large extent, Of
business men who, having surplus
funds, succumb to the fascination of
speculation.
In the smash which came last No
sember the small fry met the fate
which invariably befalls them, leav-
ng only the more intelligent elemen,
o represent their group. And it
undoubtedly is an intelligent group,
n spite Of it's adventurings into the
byways of speculation-probably the
most intelligent mass opinion to
which expression is given anywhere.
1t represents, when translated into
terms of stock prices, an immensely
broad, composite knowledge Of busi-
ness conditions and prospects. That
why price movements on the New
York Stock Exchange-we refer to
he sustained movements, rather
than to day-to-day f1uctuations-are
widely accepted as having important
barometric qualities. That this be-
lief has substantial foundation is
shown by the fact that the great
swings of business are often forecast
by preceding swings of stock prices.
Is this prophetic quality now at
work? We do not pretend to know,
but it is fact that there are many
shrewd observers who hold that it is
that an impending business reac-
tion is being forecast by the shrink
age of prices for speculative securi-
ties. They point to several relevant
things in support of this contention.
One is that spirit Of hesitation is
to be discerned in some branches Of
business, based chiefly upon the un-
certain outlook for commodity prices
the latter caused by the widespread
conviction that, despite the utmost
efforts of the banking and govern
mental authorities, commodity prices
cannot be stabilized on the level now
obtaining. Another is the prospect
of large decrease in our export
trade. Although the international
conference which it is proposed to
hold next March may solve the prob
lem of providing credits to finance
European purchases here, that is
only a possibility. Very little more
can be financed on open account,
while the chances Of successfully
floating a large foreign loan at this
time are admittedly slender. And,
lacking credits, the trade must in
evitably shrink.
To all this the optimists answer
that the world is short of goods, that
untitled domestic business is of enor
nous proportions, and that in con-
sequence an important reaction in
business activity is impossible. There
is a good deal in this view. Ger
tainly untitled orders will serve to
lessen the shock of any reaction that
may come and help to limit its dura
ton. But untitled orders have an
unfortunate habit of temporarily
disappearing when the business out
look becomes uncertain, especially
when the uncertainty takes the form
Of a possible decline of prices.
One of the difficulties with which