San Antonio light. [volume] (San Antonio, Tex.) 1911-1993, 1923-10-14
STOCK MARKET
!. SOMETIMES A
FALSE PROPHET
Wall Street Not Always a
Business Barometer,
Says West.
TRADE OUTLOOK MIXED
Some Traders Predict
Slump in Business
in Future.
TRADE OUTLOOK MIXED
BY STUART p. WEST.

Copyright. by The San Antonio Light.
New York, Oct. 13.-The question
may well be asked again after what
. has happened not only during the last
week, but for some months past,
whether the stock exchange movement
can any longer be LOOKED upon as a
trustworthy barometer of business
conditions.
There were two occasions n year
ago, one in September and another in
November, when It turned out TO be Il
false prophet. Day after day stocks
fell. In November the losses ran IL
to 20 points. Yet no adequate ex-
planation appeared in the data OF out
side business, or in any other quar-
ter of the news.
Wall street, at a loss hex to ac-
count for the downward movement,
accepted the theory that the advance
in the early part of 1922 had been
basd upon hopes of a trade revival
which were destined to be deceived.
1t set down the autumn decline in
in stocks as an expression OF disap-
pointment and as a preparations for
a dull year in 1923. The sequel was
that in less than three months from
the time when the market was in the
worst of its blues. trade was ex
panding at rapidity never before
known in so short n time.
1t is not suggested that there is to
be a similar outcome now. There are
, many differences between the present
situation and that of last year. And
they are not to the advantage of the
former. Nevertheless. what happen
ed in November, 1922. may properly
be recalled as an instance of how
the modern market, under highly spec
ulative influences, can abandon its
ordinary functions and completely
misrepresent business changes to
come.
High Surtaxes a Factor.
There are two reasons for the slack
ness of buying power which has re-
peatedly exaggerated downward
swings on the stock exchange. The
first is the absorption of an unusual
amount of investment capital by new
security offerings. The second is the
raralyzing effect Of high surtaxes
upon the marlet activities of people
OF wealth. During the first half year
nearly 81, 900. 100000 of new stocks
and bonds were listed in the New
York market, an increase of $500
100000 over the same period in 1922
and of S620,000,000 over the first
Lalf of 1921. Under the urge of COM
peting bankers and banking syndi-
Gates, local governments and private
business enterprises rushed TO sell
new securities to a then eager pub
lie.
The outpor eventually became ex-
cessive. Since the start of the new
fiscal year there has been a notice
able let-up in this new financing. But
in the meantime the practical result
has been to divert, to an extent far
beyoad the ordinary investment funds
which normally would have been at
tracted by falling stock marset. As
for the wealthy income taxpayer, his
policy is to hold to the securities he
owns, but to be slow about engaging
in fresh buying operations in which
he must take all the risk and receive
only half the profit.
The weakening of these elements of
support. although not affecting the
final adjustment of market prices to
values, explains the tendency of specu-
lative movements to be carried too far
temporarily.
Business Unusually Large.
The opposing views of the business
outlook remain at the close of the
week as they have all along. If COM
parison be made with the feverish ac-
tivity of last winter and spring, there
has been considerable reaction in
many lines. But if the comparison
is made with normal situations, the
current volume of production and con-
sumption is not only satisfactory. but
is unusually large. This, together
with the caution against loading up
with surplus goods and the unprece-
dented credit reserve of the eoShtry,
is the point dwelt upon by those who
express confidence in the future.
Those who see things the other way
maintain that production will SLUMP
rs soon as old orders are used VI
and THAT consumers will continue re
luctant to pay the higher prices de
manded on new contracts. Finally
they maintain, that, unable to pas
the increased costs of labor and ma
terials on to the public, business viii
have to be content with a slim profit
On this latter point the third quar-
ter earnings statements of the bi;
industrial companies should throw
good deal of light. The steel produc
erS were dI WORK All tuTOuSH Tue pe
. Rod on low priced old contracts Will
paying 10 per cent more in wages
Their reports ought TO establish jus
how much there-is SO far in the argu
ment of the "dwindling profit mar
( gin."
More Railway Business.
The contention that the record
breaking railway car loadings is
measure of business booked 81!
months ago rather than of presen
activity. is getting all the time hard
-er to substantive. This might b
true il the bulk Of the country's busi
ness were taken on long term con
tracts, but it is not. The mass o
the merchandise traffic passing owe
the railroads calls for comparativel.
quick payments and is therefore o
recent origin. Moreover. according f
the fastest official figures, this elias
Of business is on the increase.
III further eorroboration is needed
u is afforded in the sales of the chair
stores, the mail order concern san,
other agencies of distribution whicl
certainly show no let-up.
The main question consequently,