The New York herald., 1920-01-05
WALL STREET EYES
AGAIN ARE TURNED
To WASHINGTON
Developments of a Construct
i've Character Are Ex-
pected This Week.

o.
After prolonged period Of restraint the
stock market is having an entirely natural
rebound because certain repressive in
fluenccs have been mitigated or entirely
removed. Money, while not easy in the
former acceptance of that word, is no
longer tight. Year-end requirements of
corporations have been met and funds are
finding their way back into normal chan
nels. TAX selling" which for weeks
exerted relentless pressure on the market,
necessarily ceased with the passing of
the year 1919. Not only is the burden
of this liquidation lifted, but tremendous
potential buying power has been created
by reason of the fact that the tax sellers,
so-called, are persons who normally carry
large lines of securities. Therefore it is
a moral certainty that sooner or later
they will replace their liquidated stocks.
Some replacement of that character has
taken place the last few days.
Aside from the technical conditions
which favor an upward reaction, how
ever. there are, it is contended, other
reasons for the rally ia the stock market
in the form of expected Developments of
constructive character this week. With
the reassemblipg of Congress today atten-
ton will turn to Washington. Congress
leaders have been busy during the hoi-
days trying TO whip into definite form
pending matters of transcendent impor-
tance. One of these is the peace treaty.
Another group of Representatives has
been working indefatigaby on the railroad
bill. 1t is regarded as likely that the CON
ferrees will be ready to report to Congress
shortly after it reconvenes. Agreement on
conference report is nearly tautamount
10 adoption by both branches Of Congress.
1t is within the possibilities therefore that
this week will see an end to the suspense
which has existed so long regarding the
future disposition of the roads. Today
moreover, the Supreme Court will recon
Nene. a development which suggests the
Possibility Of the stock dividend decision
upon which hang plans of many wealthy
corporations for distributing their assets.
Tomorrow n nationwide conference of
bankers will be held in Washington on in
yitation of the Federal Reserve Board to
study the problem of credit initiation from
a new angle. This conference does not
disturb the stock market because it Gl-
ready has done its share toward debating
credits. Whatever further is done by the
Federal Reserve authorities should he con
structive from stock market point 90
view.
The Street is impressed with the visible
evidences of preparations by important
bankers for a new era of greater foreign
trade as seen in the announcement last
week Of formation of foreign finance and
foreign trade corporations. These bankers
are laying their plans in anticipation Of
early ratification of peace. With the ma
chincry for larger foreign trade ready
when the opportune moment arrives it
will be possible for American industries
to perform a more important part than
they have in supplying European deficien-
cies of materials and finished products.
All OF which in turn will mean that the
peace.ime prosperity which the country
has been looking forward 10 ever since
the armistice was signed will be nearer
realization.
These are some Of the expected con-
structive Developments which the stock
market has been dscountinc the last few
days. IL has left a period of depression
behind it and looks ahead to a new con-
that big activity on the bull side Of the
market will continue this month. but that
impression is based Oh expectations that
the public will come back into the market
Public interest Is increasing. but no large
outside buying has developed as yet. On
the other hand we'll defined movement
70 mark up values Of certain industrial
stocks for purposes of distribution Is in
progress II Is probable that powerful
pools will carry out this purpose without
further delay unless money should become
tight again Speculative operators may
attempt 20 take advantage of these plans
20 advance other stocks for which no such
schemes have born devised. But conserva-
tive interests believe that any concerted
attempt TO create n bull market would
quickly bring down the displeasure Of the
banks upon the beads Of the speculative
community. They look forward rather to
creeping market with prospects of
genuine advance further along in the
year.