The New York herald., 1921-02-21
FINANCIAL NEWS
AND COMMENT
Constructive Basis of Business
Awaits Correction of Nu-
merOus Factors.
NEW SIGNS OF STABILITY
Money Market and Demand
for Investments Reflect
Better Feeling.
NEW SIGNS OF STABILITY
BY WILLIAM w. CRAIG.

The markets last week showed that
really constructive basis for business. II
Is not alone in reduction of loans. nor
In liquidation OF goods. nor in the
marking down of prices for new CON
tracts. nor in the reestablishment OF
normal commerce and the free Interchange
of credits All these forces are in need
OF correction Jointly; the markets have
been showing more and more of late
that without a general strengthening of
the factors mentioned there hardly can
be genuine betterment OF any single
market
Last week the markets all experienced
plenty of action. but 1t was action of the
sort which disclosed an absence of a
common influence. Stocks advanced for
time and the foreign exchanges as
well grain prices had their days OF
strength and other days OF marked
weakness. The same was true of cot
ton, which In the end recsded so far that
one future option recorded new low
record. II any of the markets reflected
the easing tendency OF call and time
record of prices.
A survey at the week end of what
happened showed, more than anything
else. uncertainty OF mind over the future.
More than that, events in the stock
market indicated that attention directed
back to 1920 through income accounts
of industrial companies aroused anew
dubious Impressions of what lay ahead
In the current year. The professional
speculative element. always ready TO
make use of such material as comes to
hand, sold certain stocks heavily when
they sensed the effect of information
long ago anticipated but made moro i'm
pressive when presented in dollars and
cents. They forced stocks down.
Prices Fail to Rally Much
When this pressure iessened prices
failed to rally with any sort of vigor.
That showed an absence of public buy
Ing. which. in itself, was evidence that
the public was not yet ready to believe
that conditions of industry were shap-
ing for better things.
In the foreign exchanges, taking ster-
ling as the example. speculative pur-
chases lifted the rate to the highest
level OF the year, and then when profits
were taken the demand for real bills
was too small to prevent a sharp reac-
ton. Half the advance OF ten days was
lost IN the selling of two days.
Speculation for the rise, irnpeled by
crop scare somewhat earlier in the
season than usual carried gram quota
lions forward until wheat futures re-
corded Il gain Of more than 23 cents n
bushel in fortnight. Realizing sales
found a thin market and prices melted
rather easily toward the end of the
week. The experience OF cotton was
much the same as that of grain.
But with all the confused and erratic
movement of prices. II was not necessary
for one 10 become pesslmistic- In an
economic sense the depression OF many
industrial company shares found It's
cause IN ancient history. Everybody
knew when the industrial boom curled
up last autumn that the days OF extraor-
binary earnings and fat dividends were
over for a myriad OF producing con-
Germs. IL was patent when orders de-
ciined and prices began to recede that
the results would show later in the an
nual summary OF net incomes. 1t was
clear to any one who studied the in
ventory accounts OF corporations which
had been influenced by inflated busi-
ness to carry large stocks that past
profits and reserves would be consumed
on a tremendous scale when a deflated
market caused these stocks to be writ
ten down.