New-York tribune., 1921-01-24

credit declines.
| The tremendous worldwide need for
capital for reconstruction and for
meeting accumulated needs will slow
up the speed with which money rates
return to levels that used to be con-
sidered normal, but the drift away from
the SUBMITS which prevailed during
the post-armistice boom is clearly dis
cernable.
Perhaps the most canny judges of
bond values are the institutions-the
great insurance companies and savings
banks. They buy Discriminatory and
on the basis of expert advice. The in
surance companies have recently been
accumulating bonds Of long term and
middle maturities at what they consid-
cred attractive prices. Moreover, saw
ings banks have been purchasing mu-
nicipal and long-term railroad bonds.
Until recently the institutions were 50
absorbed with completing payments on
Liberty bonds subscriptions and then in
accumulating government issues OF
various maturities at reduced prices
in the open market that they were
scarcely interested inc other invest
ments. The bond market a year ago
was inactive and weak and depended
for an outlet almost entirely on indi-
vidual purchasers Of moderate income.
The millionaires, harassed by high
super taxes, found it improbable to
buy taxable bonds and placed their
funds instead in tax exempt bonds or
in speculative ventures where the re-
turn was likely to be deferred until a
day when the revenue collector would
relax In his demands on income.
The recent activity of the institu-
tions as bonI buyers accounts in part
for the upward sweep Of bond prices
since the recovery from the low levels
Of December began.
The stock market, as an interpreter
of future business conditions, was in
articulate last week, except in so far
as it tended to indicate uncertainty
The rise early in the week was plainly
largely pulmotored by poor operations,
and the reaction which followed was
the expression of the belief of specu-
lators that the rebound from the de-
preston of the previous month had
gone too far. During the week dull
ness in the market prevailed and the
continuity of the market depended on
the give and take Of professional trad
ers. The main fountain and springs
Of strength in the market during the
recovery were the repurchases Of
stocks by those who had sold during
the panicky days of December to es-
tablish tax losses and short covering
After these two sources Of buying dried
up the market seemed ready for a tenn
porary setback, and the reaction was
no surprise to Wall Street.
Reports of idle cars and statistics
Of reduced movements of freight t.nd
to paralyze the impulses Of specula-
tors for the rise in railroad securities.
During the last week enthusiasm for
the rails was at very low ebb, and
quotations for this group of securities
receded with greater ease than those
CT industrial stocks. The speculative
mind has grasped the fact that the
Esch-Cummins act is an experiment,
rather than a tested solution of the
railroad problem. AS whole, the
railroads have not been earning thus
far the proportionate share Of the 51A
to 6 per cent suggested in the act as
fair return. Whether net earnings
will reach this level depends on the
speed with which operating costs are
reduced and also on the volume of
freight and passenger travel that in
dustry contributes to the carriers. The
key to the railroad outlook is the trend
in business