Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1920-07-17
STOCK Market RISE.
ABRUPTLY CHECKED
Ground Gained Since Turn at
Mid-Year Virtually
Lost

dismal end in the current WEEK. Whcn
practically all the ground gained since
the turn Of the midyear was lost, and
In some cases more. IL the action OF
AZ AZ, stocl market has shown anything.
~ .he ,s that thr public is In no mood to
n,aorb industrial stocks at advancing
aaVototions. Despite the output OF n
large volume Of bullish market litera-
.,rc nv Wall street commission houses.
.so obsence of concrete developments |
nf n disturbing nature and the rela-
t;roIv low prices at which many secur-
;ties arc selling, 1t has been 'impos-
a;h,o to mre n substantial outside fol-
1a1.;re into the market. This was n |
I;.,;nct disappointment to the spec
Native clioues which have been count
inc on better public appetite for spec
Native issues, but apparently the pub
liz, which suffered severely In the col.
iapse of the spring boonL Is pretty well
loaded with stocks Dought at high |
nrices, or has taken such large losses
tbat II has become suspicious and has |
nn taste for extending commitments |
Al n time when economy IL becoming
Increasingly popular. For those who |
do wish to indulge, the bond market,
where Yields are in many cases as high |
ss nm stocks and better fortified, offers
many attractions, but even the old line
nntstanding bonds with an established
renutation are not in conspicuous de-
mand. ,.,.
NTH n money market that failed
to show the symtoms of declin-
ING rates, which had been antici-
mated. At least temporary relaxation
IN money had been counted on as add
ing to the chances Of q rising market
during the midsummer, although there
have been no fundamental signs on
which to base such hopes. Call funds
ruled at per cent all week and got
as high as IL per cent at one time.
This. despite the fact that trading was
IN moderate yoluc, with the prepon-
derance of activity on the selling side.
While an s per cent call money rate
In not excessive under existing con-
ditions. IL goes to show that there has
NOT been sufficient liquidation in COM
mercia lines to permit Of an active
resumption Of speculation and the de-
mnnds it would entail on the banks.
The deplorable railroad transportation
situation is in no small way to blame
for the painfully slow improvement Of
credit conditions. As to what these
conditions will be in the fall during the
harvesting period bankers find 1t dit
fcult to forecast. As q general propo-
sition they take a hopeful view, but
hold out little promise Of better things.
Next to money, perhaps the mos,
disturbing market factor has been the
Iecrudescence Of reports of impending
price reductions in certain lines, notably
In the rubber and motor industries.
There also have been rumOrs ntoat that
various commercial firms were in an
embarrassed financial position, but
whether true or not they served to
weaken the none too confident spirits of
security owners.
It would appear that the market is
passing through period when impOr-
tant buyers are exercising fine discrimi-
nation in selecting purchases, realizing
as they do that the whole industrial
fabric is in process of slow readjust-
menr and in the stock market as IL.
no other place the change from abnor-
mai to normal is bound to have far.
reaching effects. While many industrial
stocks are selling at sufficiently low
levels to make them look attractive
because current earnings are running
high it must be remembered that the
stock market is not being guided by
present conditions as much as it is by
the outlook six months or year ahead.
''VNho hic tNIutHllS tOO well
10 warrant fears of further drastic de-
clines at this stage unless the unex-
pected happens.
While railroad stocks have been
working lower they have not lost as
much of their recent Improvement as
nave the industrials. They have Of
Tered much better resistance to the sell
Ing this week and have shown a more
pronounced disposition to break AWAY
from the industrial issues and NOV,
independently than has been noted in n
long time. To the minds of some mar
ket students this is the beginning of n
complete change in the complexion Of
the securities market which will moan
that railroad stocks. which have bee.
superseded as speculative favorites by
the industrials in the last few wears.
VIII again gradually take their place as
market leaders. In the first half of this
year trading in railroad stocks consti-
tuted only IL per cent of the total bust.
ne ness on the fioor Of the stock exchange.
ms percentage figure has been rising
in the last few weeks.
1t is illogical that the stool. ard
bonds of American railroads should rsr~
manently be classed as inferior to &C.
curities representing other fndustries
when all industry is dependent for its
prosperity on the well being of the
transportation systems. The costly les
non Is at last being forced home that
II the railroads are not efficiently main
lalned ana allowed to expand. which
neahs that they must earn enough To
"ttract capital, then no other industry
'uh expect to be permanently prosper-
Jus fallure to recognize this fact In
.inle accounts for the decentralization at
present threatening many industries be-
cause OF the great shortage of trans
portation facilities.
II the new transportation act does
n1t prove the cure for railroad ills
MMnich IL Is expected 1t will then fur
.nep legislation will be necessary. for.
% unuer all circumstances, the railroads
80 a oe restored to their former state
Uo,n;aty. emn;Giehry. That this cannot be ac-
oro p.iSheu W TINS year is pointed out by
wbioI the large banking institutions
problem. THE millions borroweS fron,
'ne government and from the pubIic -
;nys ;nuys the bank, "cannot be transformers
n ,n.o new cars, locomotives and track
tn su III time materially to reduce the
Trhsusp9rtation rh shortage before 1921 :"
tL "hole dithculty is summed IN in
these words: up ~
hoa Inc demand for freight movement
mas increased 81 per cent and nassen.
SinoI SIr business ,anIess has increased 80 per cent
o,nTe iplo, or about the same increase
ts, ts IN the previous ten year period, To
Sse tSs care care of this increase Of business
has,a ias roads os should have spent Ton the
81 sSfs oS OF ooo the Investment of former yearsS
t0oo00io00i 100 00N 0OH quo. They spent only ST,
ieesJ;Uo,Hoo, less ~ t and, of course, they got
and ~ troULa the way of cars. motive power
formerlU lHase Ni Tor this sum than they