The New York herald., 1922-01-23
FINANCIAL NEWS
AND COMMENT
Speculation and Rises in
Stocks Reflect Merger Plans
and Pool Efforts.
PUBLIC BUYING AROUSED
Most Old Line Industrials Neg
lected in Movement Laid
to Special Forces.
PUBLIC BUYING AROUSED

The explanation for last weeks ex-
cited speculation for the rise Of indus
| trial stocks must be sought for outside
OF current Developments in business and
trade There was excellent reason 10
believe that it was no. urged by the I'M
mediate situation OF money and credit,
for as dealings expanded and prices
| advanced rates for call and time loans
on collateral. which are the sinews OF
speculative endeavor In securities, also
moved upward until 6 per. cent. for the
former class of accommodation brought.
ou. adequate offerings. The upturn of
share quote t.ons, furthermore, war
hardly aided by new and constructive
developments in European political and
commercial prospects, inasrluch as the
presentation or the new Trench Pro-
raier's principles for handling the Ger
man reparations and his attitude
toward pressing economic problems af-
fecting France caused some doubt TO be
cast upon the complete efficacy of the
pending financial conference in Genoa.
The stock market, it might be said.
was pretty well self contained, both az
to the influences that sent prices for
ward and in respect TO the method used
to arouse public interest in the rise.
The hand of the professional spccula-
tor, supported BY large amounts OF
money. was seen in many parts OF the
stock list. The way in whic!. such
stocks as Gulf States Steel and Re-
plogie Steel. issues OF not much conse-
quence from the broad industrial Wow
/ point, were driven upward suggested
strongly. that the market powers were
anxious 70 acquire public following
through advertising OF the spectacular
variety.
| sales Cain; Market Broadens.
That the uproarious fashion OF ad.
vances among steel stocks and special
ties had a result in arousing public
buying was apparent in the way the
market hroadered and in the swelling OF
daily transactions. But evidence was
lacking that the public was likely TO
receive any permanent benefit from, the
weeks rise. The greatest strength was
in stocks which frequently have lent
themselves to extravagant pool opera
tions. The railroad shares, with the ex-
cep,ion Of a few which enjoy investment
qualities. were largely left out OF the
| picture. Nor did a long list of old line
industriais carrying good dividends have
anything more than the shadowy edge
of the linleiight.
The market reflected the play OF spe-
cial forces and the fact that these con-
verged pretty largely In steel stocks
gives basis for the thought that specu-
Iatiye enthusiasm, ably assisted by the
practical work OF pool managers. was
seeking to discount in advance the mer-
ger plans now in the making. The pro-
gram for sugar company consolidation
plainly had much to do with the up
bidding OF sugar shares near the end OF
the week.
The question which probably will re-
ccive much attention from the more
thoughtful sepculators and investors OF
the public q little later 10 this: Does the
rise of share values. which always pre-
cedes slzable mergers. truly forecast
GOOD profits and dividends for consoli-
dated corporations? The answer Is that
results hinge directly upon tho state OF
general business when a large corpora
tion gets under way after 1t has been
made out OF several units.
Motivc. Behind Mergerx.
The force behind present merger
plans Is not derived altogether from the
expectation of ind strial arrangements
that they can make q lot OF money
By combining forces. On the Goa. sry,
one influence which has promoted iner-
ger plans Is the fear that unless big
uu,ts are evolved Individual colrpan'' =
will have hard going for some time
even when business begins to expand.
The purpose os combining. reducing
overhead costs and unifyins selling
canpaixns this year Is iess In tie way
OF an aggressive movement fer larger
returns taaa the hope FOR se;f picteS.
tion against the day when international
corpeti.ion will make salesmen quote
the lowest possible prices to land their
! orders.
] While money rates hardened thore
vas no apparent reason in tho outlook
Why this should have affected specu-
latIon. Money was quite scarce in the
New Yori. market at times, but the
Federal Reserve statement for the wcek
continued tho familiar tale OF dwin-
ding loans and growing reserves. which
suggested TO tension anywhere. and
In fact. denoted that rates the country
over would continue 70 relax, whatever
might be temporary situation in any
one locality. The slowing down Of the
bond market may have reflected some
! disappointment over tho retention OF q
3 iis per cent rediscount rate at Now
York, but II was caused. more lilsely.
q A