New-York tribune., 1920-03-15
Finance and Trade
Developments of the Week
and Their Bearing ON
the Outlook

and Their Bearing ON
I the Outlook
+ At the close Saturday the average
price Of twenty representative rail-
road stocks stood at the highest
point reached this year.
] Perhaps because spring, being the
season of good cheer, implants bit
Of optimism in the minds of even the
Unconditional Wall Street speculators,
stock prices often rise with the sap
in the trees. The spring rise, in
deed, has become almost a tradition
in finance. And so traders and
brokers, forgetting the gloom which
so recently enshrouded the Street,
are becoming very bullish, not only
in thought but in action. The change
in market sentiment in the last fort
night has been complete. Instead
Of seeing only lower prices ahead,
the speculative element now cher
ishes hopes of another boom in Sc
curities. True, it is generally admit
ted that dehation must come sooner
or later, but instead Of being
"sooner," as was so freely predicted
not long ago, the emphasis is placed
on later" which is conveniently
vague. The spectre of depression
has been laid-for the time being. 1t
will return again sometime, prob
ably when least expected, but mean
while the important thing is that
Wall Street may be right A fair
advance in stock prices is not an inn
possibility, although there is good
reason for doubling that long sus-
tanned upward movement will take
place.
The key to the situation lies in
the money market Recent develop
ments have seemed constructive.
The stock dividend tax and railway
valuation decisions were both favor
able; foreign exchange rates have
exhibited remarkable strength; pro-
duction in the steel trade is expand
ing rapidly; the movement of goods
has been facilitated by improving
weather conditions; the slump in
commodity prices which was go
widely expected has failed to ma
terialize and does not, at the mo-
ment, seem imminent; and, finally,
the conviction that the Democratic
Administration, with its many pa
ternalistic projects, will have been
replaced by the Republicans a year
hence is gaining ground.
The fly in the ointment is money.
Speculation feeds on credit and to
conduct bull market without an
ample supply Of credit is simply i'm
possible. What, then, are the pros
poets for obtaining such a supply?
The possible influx of gold from Eu-
rope would help. SO would the more
rapid movement Of freight, for enor-
nous sums are tied up by reason Of
the congestion Of traffic. The strain
incident to tax payments made to-day
will he over within short time.
The demand for crop purposes is
some distance ahead, and there is
not much prospect OF any substantial
increase in commercial requirements,
especially in view Of the falling off
in foreign trade. All things consid-
cred, therefore, it must be admitted
that there is some chance for easier
money for time. But it is never
theless highly improbable that such
ease will be great enough to war
rant an extensive speculation in
stocks. Moreover, it is reasonably
sure that if speculation did develop
on large scale, the Federal Reserve
oOeAAN - WOoiu SCcp III anu pQL q SCOD
to it. The board has given no indi-
cation whatever of any change in its
attitude toward speculation, and un-
til it does So or until its member
ship becomes somewhat less pa
ternalistic, the prospects for real
bull market will be none too bright.
Save for some investment buying
of railroad stocks, the public has not
been attracted by rising prices.
Speculation from outside sources
was negligible last week, the market
being almost wholly under the in
fluence of professional operations.
But the speculative element bought
r.