New-York tribune., 1920-04-19

a short supply of money. To the i'm
partial observer 1t looked as If a good
deal Of distribution were taking place
under cover Of pronounced strength
in certain Of the fast-moving, volatile
lndustrials. Still, In view Of the un-
favorable factors confronting the mar
ket, it gave good account of itself
and led many followers to believe that
even higher prices will be established
before the movement has run its
course.
Sustained strength Of the market in
the face Of the rail strike was not at
all surprising, although 1t was a mat
ter Of much favorable comment. It ap-
pears again to have been a case Of the
old tradition that it never pays to sell
STOCKS on strike news working out in
accordance with precedent. Early in
the week some degree Of nervousness
was evident as a result Of the drift of
events in tho strike, but by the mid
die Of the week the financial COM
munlty had arrived at the conclusion
that the worst had been seen. AS q
matter OF fact the day-to day swings
in stock prices we're controlled more
by the movements in money rates than
by any other single factor. Public par
ticipation In the market is still of COM
paratively small proportions. The
professional trading element continues
to dominate tho dealings, so much so
that 1t tends to give the market a more
or less artificial appearance, particu-
larly in special issues which are con-
trolled by powerful speculative groups.
Stock dividend possibilities fur.
n1sh speculative cliques with a power
full lever in marking up individual
stocks. A number of important cor
porations declared disbursements in
stock last week. Since the Supreme
Court of the United States ruled earlv
in March that stock dividends are not
income, and are therefore not taxable
as such, there has been a steady stream
of declarations in STOCK The total
value of such disbursements to date
probably runs we'll over S150,OOO, 900
and the end is not yet in sight, for
there remain numerous corporations
whose assets would make possible
bonuses in stock. Possibilities of this
sort undoubtedly supply the most pow
erful bull argument in the market at
the present time, a fact which is not
being overlooked by interests working
upon the constructive side Of values.
although it is generally conceded that
stock dividends in themselves add lit
tie or nothing to the sum total of
wealth of the country.
Banking opinion seems agreed thai
the stock market money position is
sound. For despite the recent expan-
sion in speculative activity in stocks,
the total Of outstanding call loans has
not risen greatly. A competent au-
shority estimates the total stock mar
ket loan account at not in excess Of
$1,260, 100000, which includes loans
made by institutions which submit req
ular reports Of their credit operations
to the Federal Reserve authorities. as
we'll as loans made by individuals and
corporations which are not officially
recorded. This Is a low figure when
one considers the length and breadth
OF the stock market list. It Is the in
tention of the banks to keep the ae-
gregate of such loans at this compara-
lively low figure in Difference to the
wishes OF the Federal Reserve Board
Such limitation upon the stock mar
ket mohey supply naturally makes it
extremely sensitive. Last week. for.
example, call rates jumped to Is per
cent, call loans renewing on Fridav at
the high level Of 10 per cent as re-
suit mainly Of heavy Withdrawals from
the banks on account Of tho middle of
month payments. With such payments
out OF the way it Is reasonable to ex-
pect easier money next week. Tho
rail- strike has been an important factor
IN the money market. for by demoral-
lzlng transportation and delaying de-
livery Of goods, 1t has necessitated in
creased commercial borrowings to tide
over the emergency.
The long range view on monev ia
that we have entered upon a period
OF high rates. This condition Is world
wide. In recognition Of the changed
order OF things the Bank of England
last week marked up it's discount rate
to per cent. Here new capital issues
are bearing interest rates Of z per cent
and higher. Time money secured by
Stock Exchange collateral costs per
cent when 1t can be obtained. Bankers
express the belief that in the case of
call money we are in period in which
Z per cent rate will be accented as
indicating comparative ease and that
the stock market must become accus.
toned to an average of rates above
that level
Ordinarily, a decline In bond values
reflects either a deterioration in tho
credit Of the institution which issued
them or a fluctuation in interest rates
or both The drastic fall in the market
price OF Liberty bonds and Victory
notes, which has been accelerated dur
| ing the last week, signifies onlv an ad