Evening star., 1923-10-13
BY STUART p. WEST.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, October 13.-There are
two reasons for the slackness OF buy
ing power which has repeatedly ex-
aggerated downward swings on the
stock exchange. The first Is the alb
sorption of an unusual amount OF in
vestment capital by new security Of
ferings. The second is the paralyz-
ing effect of high surtaxes upon the
market activities of people of wealth.
During the first half year nearly
$1,000. 100000 of new stocks and bonds
were listed in the New York market,
an increase Of s320,0o0,000 over the
same period in 1922 and OF 2o,00o,-
600 over the first half of 1921. Under
the urge of competing bankers and
banking syndicates local governments
and private business enterprises
rushed to sell new securities to a
then eager public.
Too Many New Offerings
The outpour 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
beyond the ordinary, investment
funds which normally would have
market. AS for the wealthy income
taxpayer. his policy Is to hold onto
the securities he owns. but to be slow
about engaging in fresh buying oper-
ationS in which he must take all the
risk and receive only half the profit.
The weakening of these two ele-
ments of support, although not af-
fecting the final adjustment of mar
ket prices to values, does explain the
tendency of speculative movements
to be carried too far temporarily.
Current 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
activity of last winter and spring.
there has been a considerable reac-
tion in many lines. But If the COM
parison is made with normal situa-
tions the current voulme of produc-
tion and consumption is not only
satisfactory, but is unusually large.
This. together with the caution
against loading up with surplus goods
and the unprecedented credit reserve
or the country, are the points dwelt
upon by those who express confidence
in the future.
Those who see things the other way
maintain that production will slump
as soon as old orders are used up
and that consumers will continue re-
luctant to pay the higher prices de-
manded on new contracts. Finally,
they maintain that, unable to pass the
increased cost of labor and materials
on to the public, business will have
to be content with slim profit.
on this latter point the third quar-
ter earnings statements of the big
industrial companies should throw a
good deal of light The steel pro-
ducers were at work all through the
period on low-priced old contracts
while paying Is per cent more in
wages Their reports ought to es-
tablish just how much there is so
far in the argument of the "dwind-
ling profit margin"
Railroads Carrying New Business.
The contention that the record
breaking railway car loadings are a
measure of business booked siS
months ago, rather than of present
activity, is getting all the time harder
! to SubStantiate. This might be true
| If the bulk of the country's business