Evening star., 1923-09-23
HREEBIG ISSUES
: GOVERN MARKETS
loney Rates, Business Trend
q and Politics Puzzling In
vesting Public.
FUNDS IN ABUNDANCE
Trade Outlook. Torn by Varied
Factors-Politics Still Worrying
Railroad Stockholders.
FUNDS IN ABUNDANCE
BY GEORGE J. HUGHES.

Special Dispatch to The Star.
NEW YORK, September 22.-With
speculative sentiment pessimistic and
investors timid and hesitating 1t was
not surprising that the trend of the
security markets this week should
have been. for the most part, down
ward. Whether or not this movement
is justified by actual conditions is
more than doubtful
In a general way there are three
factors which govern markets in a
condition like the present. These
are, first, the money supply and
money rates; second, the outlook for
business, and third, politics, includ-
ing in the latter conditions both at
home and abroad
Money Rates Much Easier.
Now, as to money. quotations have
been progressively toward lower fig
ures. On the first two days of the
week over-the-year funds command
ed 81 per cent, and were not in
free supply at that. This was an ad-
vance over the prevailing rate for the
past two months. The midweek,
however saw a sharp break, and on
Friday short-dated loans were made
at 5A per cent, while the longer
maturities commanded n. At about
the same time call money went down
TO the lowest since the middle of
January. Brokers professed to be
surprised at this development, al
though 1t was amply justified by the
federal reserve midweek statement.
This showed that the reserve ratio
of the system was up to the highest
of the month, and with the autumn
requirements mostly cared for, only
i per cent below the. highest of the
year,
Only L. $. Bonds Advance.
Now with a definite easing in
money rates the logical result would
be an advance in high-grade seCuri-
ties, So far there has been ne such
development except in the case OF
United States government bonds.
Liberties tnrned definitely strong
later in the week, and while traders
had the ready explanation of buylsg
by the Treasury for account of the
sinking fund it is just as plausible
to say the movement was in response
to the turn in the money market.
The failure of the high grade rail-
road and industrial obligations TO fol-
low the government bonds may be
due to the present preference of in
dividual investors for safety with
out regard to yield. Bond statesmen
complain that their customers prefer
liberty bonds to everything else.
Probably this is the psychological ef-
feet of the decline in speculative Sc
curities. a decline which must be ar
rested before cautious investors will
accumulate anything but the most
unquestionable holdings.
Business Outlook Mixed.
The second factor of Importance is
the outlook for business, and here
che situation is more involved Up
!, he nnly tnA1 ST heAn
placed upon nthe overproductton: In
the oil trade. Dust now itris the, steel
industry that is attracting attention.
There are spms .discouraging fea-
lures about the steel outlook Con-
sumers appear TO have pretty well
anticipated their requirements Tor
some time. and--some falling on In
buying and possibly some weaken
ing in price would not be surprising.
But when psF6entage hgures as 70
steel operation ! iare quoted It should
be remembefeds that capacity has
been enormously. enlarged. The out
put would look much larger on
pre-war basis.
Wall street analysts are full of
gloom about the automobile business.
They find IL easy TO see oYerproduc-
tion and disastrous competition
They are also alarmed over so much
buying of automobiles by people VINO
alarmists say, cannot. afford such a
luxury" Automobile stocks have
been heavily sold all the week by
spectators impressed with TINS sort
of reasoning. Meanwhile the leading
automobile ! companies are in the
strongest position financially.
Much Political Uncertainty.
Coming to the third factor. poll
tics, there is certainly nothing of
discouraging nature anywhere on the
horizon On the other side France
20 q
distinct progress toward q working
agreement and Germany gives every
indication Of anxiety: to make terms
with France. The one strong group
in the bond market, aside from I'D
critics, has been French government
Al home IL is the railroads which
are most subject to political influence
There is still uncertainty as TO Wha'
Congress win do with regard 10 the
ever. there are encouraging Signs
Confidence is expressed that Presi-
dent Coolidge will insist on the rail-
roads receiving fair treatment and II
has been evident all the week that
railroad stocks and railroad specula-
tive bonds have been bought and sold
on their merits represented by earn
ing power more than with the CORE
spending industrials.
South Appears Better OF.
In the commodity markets the most
interesting happening has been the
rise in sugar prices. Coming at the
same time as the resumption OF
dividends by a prominent sugar pro-
ducing company, it has served to
temper the assurance of those
prophets who see nothing but lower
quotatfons for commodities and Sc
curities alike. Sugar and cotton have
shown ability to move Independently
Incidentally business conditions are
not uniform the country over The
south seems to be in a more favorable
position relatively than other Sec
tions