Evening star., 1920-02-01
i.A STt ART y. WEST.
tfupvriEht. 1870

tcopyri,it. 1927
This week very confused Wall
street movement has represented an
effort of real values ia assert them
selves in the face OF very unpropl-
t.ous conditions. The money strie
Seacy which had begun to develop To-
ward the end of last week has stead =
lily Grown worse. The generalization
in the foreign exchanges. which has
occas4oned solicitude on account of
its possible effects upon the forei gn
jradc. has become more acute. Yet
these developments have produced no
important liquidation and on the con-
trlry many of the industrial shares
have risen considerably.
1t is impossible to explain such a
/ stock market according to old time
rules. ordinarily 50 severe = tension
in credit would have involved "A gem
erai unloading Of stocks and a Violen
decline. ordinarily. too. speculative
pools do not choose 20 per cent
money market as the time for bidding
up prices The whole situation ,s OBJ
viously extraordinary and calls for
eNtraordinary reasons to account
for it.
NJ Hurry to sell.
Ia the first place the most skeptical
critic must admit that no market
could have stood up the way this one
I has had stocks been in weak hands.
! 1T was faVorite saying last autumn
that the rich men could not afford TO
sell BECAUSE of the income tax with
its heavy penalties upon profits. and
this Of course was true. But it was
maintained at the time and may be
expected again now that these
wealthy holders We're in no hurry to
get out because they realized that
! heir stocks We're worth more than
they We're selling for and that when
, l1a 4 fptl tlr,f
, ing the accumulated earnings of the
war period either in the form Of stock
dividends or in the form Of new cap
ital this truth would be generally ap-
preciated.
Tha credit pinch of November and
December caused a temporary break
I in prices, but did not in the least alter
the main position. The distributive
campaign was simply held up. Again
it has been delayed by the insiStence
of the banking authorities that credits
be Debated and that no fresh loans for
unesscntial purposes like stock specu-
lation be entered into.
Add TO Their Holdings.
But no amount of credit stringency
could force the insiders and others
well informed to sell stocks for 500
4 share which they knew were worth
$3.50. Rather the money tension of
the past fortnight has given the op-
portunity for fresh accumulation, and.
according to all reliable Indications.
this opportunity has been seized upon
by people Of wealth to add to their
holdings.
We are speaking now, Of course.
only Of the stocks of those industrial
companies which made huge profits
out of the war. distributed very little
comparatively to shareholders, and
have fully provided out of surplus
for the losses and depreciation Incl
dent TO he ere-eStablishment of indus
try upon, a peace basis. This class of
stocks, however, are the real leaders
OF the market and Will continue so.
Among them are the steels, the equip
mentS. the better class of oils The
motors and others which were COM
monty described as the war indus
trials. The development of a real dis
tributive market viii naturally have
10 await the passing of The money
troubles.
Situation 10 Clear.
1t may also be postponed until the
| foreign exchanges have sounded the
utternOst depths and have turned per-
manentT for the better. How soon
of guesswork. But the best judgment
IS that the financial situation will be-
gin to clear before the end of an
other month and that during the
spring and summer we may expect to
see market much more free than it
is now to respond to the stock divi-
dend announcements and the recapi-
talizationS which will constitute The
program for converting the big paper
profits into cash.
The market has been steadied dur
ing the trials of the week by the evil
denceS of prosperity in various an
nual reports as well as in the latest
advices from the indust rial centers
Nearly everybody was surprised to
see how little damage the steel -rike
and the coal strike had done COM