Evening star. [volume] (Washington, D.C.) 1854-1972, 1920-10-02
BY STUART p. WEST.

NEW YORK. October 2.-There are
three distinct and separate phases in
the current security market each of
which has been emphasized with the
course of this weeks business. In
the first place industrial stocks are
seeking out the level at which they
will properly measure the conse-
quences of the price cutting and
slackened demand which characterize
the majority of the principal lines OF
trade. In the second place the invest-
ment portion of the market compris-
ing investment bonds and the better
grade of dividend paying railroad
stocks are rejecting the easing OF
credit conditions and the increase In
the purchasing power Of the dollar
in commodity prices. In the third
place low priced on-dividend-pay
rails having assured new attractive
ness owing to the increase in rates
and the removal of the legal barriers
in the way of railway combinations
are moving with reference to these
considerations and without much re-
gard for the other causes anectlng
the Wall street situation in general.
Extension of Price-CuttinE.
Despite the insistence by various COM
pany heads that their business is nor
concerned with the present wave OF
price cutting, 1t is commonly Ieit that
no industry where there has been any
considerable imitation due to war condl-
tons can in the end escape bearing its
full share of the deflationary process
now under way. The first result of price
reductions, unless they are extremely
drastic, is to unsettle the minds of BUSH
ness men and make them feel that they
must pursue a hand-to-mouth policy in
the purchase of goods. Reports now
coming in indicate that while price con-
cessions have stimulated demand IN
some quarters their main effect so far
has been to curtaii the desire to do BUSH
I'd to the first of September the gen.
eraI volume of business throughout the
country was well sustained, Aug Augu -
previous months. and outside of the
centers of stock and commodity specu-
! lation were fully as large as year ago.
The railroads handled a larger rafhc
that month than in any August on rec.
ord. But the probabilities are that if
| the September data do not show a
change the record for October will very
decidedly.
shortlived, first because except in a
flew instances there has been no serl-
tous oyerproduction; second, because
there is none of the Unemployment
which usually attends bad times, ana.
third, because the crops have turned
| out well. and these are the main feed
1 ers Of the nations buying power 1t
will require, however, several months
| of uncertainty before business people
| gain sufficient confidence in the new
price levels to begin expanding their
activities.
Lower Corporation Profits Seen.
During this time corporation profits
will be much reduced. But this has
| all been foreseen and reckoned upon
in the Wall street market of the last
| six months. Professional spectators
and the rank and file of outside trad
| ers are very bearish on industrial
stocks simply because they have been
| slumping so badly. Yet somebody has
| been taking all these stocks and short
CONTRACTS issuing from speculative
hands, and this buying has not been
| done by lightweights. 1t began when
prices were around their low points
Of August. 1t did not follow the re-
covery of the first fortnight of Sep
TENDER, but within the last week it
has made it's appearance again.
| Accumulation of this sort does not
| necessarily denote the absolute bot