The Birmingham age-herald., 1923-05-07
CHIEF SPECULATIVE MARKETS Ev|NCE
 MUCH WEAKNESS
Production Still Holds At High Level-Cotton And Wheat
 Reaction

NEW YORK, May 6.-(By Asso- ciated Press. With production still holding at high levels, interest in financial and business circles cen tered during the past week in the rather pronounced weakness shown by the chief speculative markets. --
 The average of industrial shares listed on the New York Stock eN- change declined 1 points, cotton lost nearly cents. and wheat reacted ap- prOXimately cents. Among other commodities which show a tendency to decline were copper, lead. rubber and sugar. Meanwhile publications of the price indices compiled by Dun and Bradstreet brought out the point that the movement was continua tion of the heavier tendency in prices which became evident during April. Diverse explanations were offered for the declines and various interpre- tations were placed on their signifi- canoe. In some quarters it was held that the reactions were natural ac- compartment. of-the slaekening of the buying movements which have been so strongly maintained during the early spring. According to this view buying seldom continues in steady stream, but comes rather in waves. One such wave admitted has ended and new one would not be expected to start immediately.
 Those who explain the situation in this fashion also point out that the season of the year is at hand at which buying naturally would slacken. Another group of observers main tain, however, that other forces are at work. They point to what they describe as an epidemic of wage in creases, and claim that the output of labor is diminishing.
 Production costs, they aver. are be- ing inflated. They conclude that in- T on to the consumers or that profits will be impaired. In support of this view. conditions in the cotton indus try are cited. Manufacturers are re- ported to have acquired substantial stocks of cotton at the 30 cents level. In addition. they had since been forced to Increase wages. Jobbers and retailers meanwhile are not con fident of their ability to command higher prices and their buying has fallen off. Under these circumstances the manufacturer are reducing their rate of operation and are buying less cotton. which naturally affects the price of the commodity. With ths latter some 3 or cents below the price at which manufacturers are carrying their inventories. the dues- tion of profits is. of course. very much to the fore.
 As to what will happen next. there
 
 maintain that consumers will not pay the higher prices. Such persons nat urally take a bearish view of tho stock market. Others emphasize tho point that the wage increases will enlarge the purchasing power and ex- pect consumers to make their de- mands felt regardless of the higher prices.
 Hint nt Bonus BiIl.
 This group also hints at the pos sihility of a bonus bill with It's in- flationary implications after the new Congress assemblies. Such a "boom," while strongly disapproved by econ omists and conservative bankers. would. it is claimed. have quite a diff ferent effect on the stock market for the time being, at least.
 As to the stock market itself it has heen apparent that the recent rela- tons were precipitated and forced by active short selling by an aggressive bear party. It is generally admitted. however, that extensive liquidation was induced. Stop loss orders were caught. weak holders were shaken out and tired longs were induced to let go. As the weak closed a steadier tone was. however. apparent.