The New York herald., 1921-05-23
Lessons of the Week.

Stocks acted as though many influ-
ences which promoted an optimistic at
t'tude in April had been dissipated The
movement of prices showed that specu-
lation. ceasing to look ahead as It did
month ago. had turned gloomy eve
or the present. 1t will be recalled that
subsequent to the reduction of the Penn
sylvania Railroads dividend. rail and
industrial shares gained ground. The
urge then was to consider dividend cuts
partially, IL not entirely. discounted by
the great decline OF prices during the
winter. But last week series OF divi-
dend eliminations had almost as drastic
an effect on quotations as though ac-
ton had come Unexpectedly In fact.
postponement of the Chesapeake and
did not make sure that II would not
be paid. had the same dampening in
fluence on railroad stocks as the pass
ing OF dividend more seasoned than
this in other periods of poor earnings.
A lesson to be drawn from the weeks
market activities was that public buy
ing power is not what 1t was In the
boom days of 1919. What occurred In
April. with its gradually rising prices.
was the attraction of enough OF public
participation to carry the movement a
little further than professional hands
were able, to do. The public however.
proved fearful OF the future once the
professional speculator elected to stand
aside for time. and as soon az the
ever ready short seller began to work
for reaction the weakly held stocks
began to come out and came faster with
the reduction OF dividends
Uneven business Expected.
II Is likely that the retreat OF stock
market prices will cause a fresh vaIua-
Sion Of the influences behind quota
tions. Dividend reductions In Industry
are bound to be made or dividends will
be eliminated altogether in lines In
which deflation and readjustment have
not been completed. Possibly there will
be additional dividend cuts by railroads
because the low rate OF traffic and
high costs make inevitable hard going
for certain properties until business
shall revive But the fact that last
weeks stock market went down on ac-
count OF passed and postponed divi-
dends did not operate against the In
fluence Of powerful factors working
under the surface for better business
later on.
In the opinion OF conservative leaders
/ OF Industry business is bound TO be
decidedly uneven for considerable time
| The suggestion Is that stock market
| fluctuations also may disclose uneven
tendencies, but the time is certain TO
come some time in advance OF general
betterment of business conditions when
securities will register IN steadfast
fashion the long range view or pros
perity. A present effort to appraise
matters Of immediate import, whilo
/ tinged at the moment by unfavorable
events. in the light OF past experience
should be converted after a while into a
movement to anticipate developments
several months ahead.
II II looks as though the tendency OF
the latter sort went astray last month
/ because . rosy appearance OF a few
/ branches o. industry had been deccp-
tive. a new start may be based on
data affecting Industry = . a whole and
In that connection Il Is essential that
attention be paid TO Europe besides the
interest now shown IN the dispute over
Upper Sllesla The reduction of $500.
0o0.0o0 In six months OF the foreign
obligations Of France, the Improvement
I rf rrtfpfvyfg foralut4 roptrvcrco n nd
the evident willingness or Germany q
begin payments on the roparations stand
out AZ matters cf Significance "a the
future trade Of the United states.