The Birmingham age-herald. [volume] (Birmingham, Ala.) 1902-1950, 1923-05-26
DECLINE IN STOCK
MARKT HAS n D "
run ITS COURSE
Drop In Prices Not Justified
BY Business, Observers
Think
BY WALTER II. BROWN,
Editor New York Commercial
Especial Dispatch to The Age-Herald)


NEW YORK, May 25.-For the
present, at least, the decline in the
stock market seems to have run its
course, and what Wall street is try
Ing to decide is whether the decline
was in fact justified. Undoubtedly
Wall street has suffered from the
agitations of the alarmists so that
temporarily confidence has in some
degree been impaired. Such stu
alton could not be more than mo-
mentary however, because the facts
themselves would allay such appre-
hension. Judge Gary in his address
to the American Iron and Steel in
stitute Friday said there has of late
apparently been a deliberate and in
sistent attempt to create the impress
sion that there will be in the near
future a substantial recession in bus
mess activities. Business men gen.
orally understand that this propa-
ganda is inspired by a few short
Sighted persons who do not seem
to understand that If they could sue
coed in wrecking the/business struc-
ture they would themselves be bur-
led in the ruins"
Change In Conditions.
So far as it relates to stock mar
ket operations, these propagandists
atoms in business activity as indicat-
ing complete change in business
conditions. This is simply foolish
exageration. Those who delight to
go back over financial history call
attention to the tendency of the stock
market to show reaction months be-
fore the volume of business recedes.
On this theory there should be de-
cided slump in business activity about
next October. If we are merely to
90 -,
take this for granted but If we get
down to basic facts and examine them
we are likely to come to different
conclusion.
To begin with, we must allow for
some natural reaction. The stock
market, for example, has anticipated
business expansion probably to its
fullest degree, which is measured by
the labor supply. Labor is to all in
tents and purposes 100 per cent EN-
ployed and in many departments, no
'tably building, there is a shortage
that has resulted in forcing wages up
all along the line. so that it has also
had it on materials.
O o o
Steel Business Good.
o. When labor and materials advance,
the increased production costs must
of necessity eat into profits, and the
prospect of these decreased profits is
bound to be reflected in the stock
market. Up to this point declines in
the more speculative stocks might be
accounted for. But when steel COM
mon drops from about los down to
96ta there is something more to be
looked for. The Steel corporation is
earning more money than it has at
any time since the war.
. Even though there should be no
more new contracts for such struc-
tural steel for the next six months,
the steel business taken as a whole
and that of the corporation in par
ticular would be considered highly
satisfactory. The organization is in
fine financial condition. 1t has am
pie working capital, and for it's stock
to sell below par can only mean that
the investing public has had it's faith
in the future shaken. One of the
recent developments that has had an
exaggerated effect is what may be
called the equivalent of buyers
strike in the building trades. The
cost of labor and materials have be-
come prohibitive, in consequence of
which every possible project which
could be postponed has been laid
aside temporarily.
Declines in commodity prices have
to be considered, individually. and
not as whole, because they are due
to entirely different causes