The New York herald. [volume] (New York, N.Y.) 1920-1924, 1920-12-14
FINANCIAL NEWS
AND COMMENT
Stocks Decline Violently as
Day for Final Payment of
u. s. Taxes Draws Near.

In seeking reasons for yesterdays
really violent decline of stocks. one
needs to examine the immediate neces-
stiles OF many holders of securities as
well as to pay attention to the cumula-
tive effect of prolonged liquidation and
short selling. Tomorrow the final In
staIlment of income taxes from earnings
and profits of 1919 falls due. The Treas
ury Department has resisted appeals
coming from many quarters for extern
sion of the payment. but II was not until
the last FIVE days that taxpayers, who
were low in cash, saw in the emphasis
laid on the matter by Secretary Houston
the anal disappearance of hope that pay
ment could be put off. For those who
were unable to raise funds in any other
way, the last recourse was to the market
place and declines OF Q to 8. z, and even
points OF prominent Industrial and
railroad shares disclosed fully the urg-
ency of great deal of yesterdays sell
ing. At other tax payment dates the
banks have been able and willing to lend
their depositors and customers funds
on collateral with which to meet bills
at the Treasury Department. But the
necessity of aiding great many cor
porations caught with swollen inven-
tories when the public went on buyers
strike last summer and autumn has
caused the banks. perforce, to turn
deaf ear to borrowers who could help
themselves on December Is.
However. it was not alone the CONVEX
sion of stocks into money for tax pay
ment which brought such weakness as
in yesterdays and Saturdays markets
It Is now a matter of weeks since any
really constructive development APP
peared in industry. and much bearish
import has been attached to the rather
low net income of the railroads during
the first two months of increased rates.
The plain tale OF diffident buying Of
merchandise has been heard persistently
and the evident growth of business re-
action has been disclosed almost daily
in reduced or passed dividends. the
ton Of part time schedules at centers
which few months ago nummed with
the pressure of rush orders. News yes
terday that 16, 600 employees in textile
mills in and about Lawrence, Mass, had
had their wages cut impaired no element
of cheer to the security markets. If the
stock market could be judged against
the background of previous periods of
stress, it would seem as though the
sharp price reactions of the last few days
forecast the approach to condition of
stability. Certainly. there has been a
tremendous reimbursement Of values; the
ahead OF the fail of wholesale prices.
There are scores of stocks which are
admittedly low when viewed in terms
of the assets back of them, laying aside
the possibility OF reduced dividends for
a time or no dividends at all The very
fact chat IN yesterdays transactions.
running up TO a total close to 1,375000
shares. sellers Of such seasoned issues
as Great Northern preferred, Baldwin
Locomotive, Lac<awanna Steel, Read
ing and Northern Pacific had more re-
gard for the sales themselves than for
the values received may point to better
market conditions after the tax date.
The Governments disbursement of
Liberty bond interest and the net re-
duction Of about S2OO,oOO.OOO in Treas
ury Certificates tomorrow should have
some effect upon the state of money
and credit.
The Governments estimate of 49,
$4,000 bales OF cotton in this year $
crop. an Indicated yield of $4,000 bales
larger than in the preceding months
forecast and the largest for any year
since the 100000 bale crop Of 1914,
naturally was Interpreted bearishly and
brought about decline of future prices
in the afternoon. several active options
again going through the 10 cent. level.
Grain prices advanced In a market con-
tanning rather light offerings.
Sterling exchange was firm and call
money reHldlheu at per cent the
stable position of the call loan rate
showed that liquidation Of securities
and commodities had been beneficial as
the settlement day approached, while the
action of the Reserve Bank in distri-
buting the burden Of Treasury Certifi-
cate holdingsy had aided the banks to
strengthen their position.