New-York tribune., 1922-06-13
Stock Prices
React Under
Heavy Selling
Closing Shows Effacement
of Gains in Average Price
Of Indusirials During
May: Rails Also Down

nNIIIIE INW'l 'i I'NHioNi'Nf """ ~ "
time Of a swift movement, such as yes
torday's reaction. there Is usually n
quest for n single cause upon which
few Observers can agree. The severe
selling yesterday. which carried the
average price OF thirty industrial
shares down TO s12o. compared with
s9.7i on Saturday. and that Of twenty
rails down 70 7l1o, against 72.2o at th'
close Of trading last week, was con
tinustion Of new pWse OF the market
which began late last Thursday, after a
week Of dullness with a moderately
lower price tendency. following the
substantial May rise. Al the close Of
trading yesterday tho gains Of May in
industrial shares were efaccd. and
rails were at the lowest cbb since the
middle Of April.
In order to understand the sensi-
tvity with which the market rc-
sponded to sustained selling pressure
one must remember that since last
August the trend Of speculative quota
tion has been broadly upward TO such
sn extent that one half Of the losses
sustained since the peak Of the bull
market Of 1919 had been recovered
Against this background the current
news with a stock market significance
must be assessed. Each new stratum OF
additions 90 the price structure left
new speculative groups with incen'
tves 10 take proht.and gave speeula'
tive pools opportunities 20 unload Sc
curities purchased by them at lower
prices. Even in a bull market there
come periods when caution invites
profit taking, and unwillingness fur
ther to capitalize substantial further
credit easement induces speculative
selling for quick profits on the short
side.
The event which transformed the
market last Thursday from q phase
Of irregular, slow reaction into three
days thus far Of tremendously sc-
CELEBRATED decline was the announcement
by J. p. Morgan and other banker;
meeting in Paris that the proposed IN
ternational loan TO Germany had beer
called Of at least for the present, as
result of the unwillingness Of France
20 discuss notifications Of the repara'
ton claims.
Even though il was by no means
certain 70 the interested bankers
themselves that a large financial oper-
alton Of that character could immedl-
ately be contaminated, spectators ap-
parentlv were more optimistic. Inc
disappointment has been clearly re,
aected I'm the weakness Of sterling ana
the continental exchanges, which again
reacted yesterday.
Even the most provincial American
would not doubt that a formula that
would help restore the economic ball
ance Of Europe would be helpful 10
world conditions and would be reflected
favorably in speculative prices. Ana
vet the immediate effect Of the success
or failure Of such discussions on the
New York Stock Exchange would have
been relatively slight II technical con-
Gitions had been different. The cause
Of the broad reaction in the market
is primarily internal, but those opera
tors who arc seeking 10 extract proht
from this temporary phase are but
tressed By these news Developments
which have tended 10 check the en-
thusiasm which has given motive
power 70 the recent upturn: the col
lapse Of the German loan, threats of
railroad strike, the ordering of an
investigation last week by tho Federal
Trade Commission Of the Bethlehem
Lackawanna merger. and the exhibition
before the Lockwood committee OF the
anatomy OF manipulative speculation.
The reported death Of Lcnine was con
sdered by some disturbing, on the
theory that Il might mean utter chaos
in Russia.
Sales yesterday were on an increased
scale. reaching l736,50O shares. Eyi-
IDENTIFY some of the days selling was
result a. tho previous declines, which
weakened margin accounts. The rcac-
fion is tending 20 correct eXcCSscs
caused by recent overspcculation FOR
/ the rise. which in the last eight months
has been based mainly on the great
ease in credit and business improve
mert, actual and prospective.
Wheat and cotton shared tho de-
clincs n stocks and the exchanges
f Cotton quotations, affected by develop
ments I'm the other markets. reacted
Sc 90 81 points. and wheat prices were
u 20 5 cents bushel lower.