San Antonio light. [volume] (San Antonio, Tex.) 1911-1993, 1923-09-09
Demand for Materials to
Reconstruct Japan May
Stimulate Trade.
A PESSIMISTIC VIEW
Heavy Drafts on Money
Market May Disturb Fl
nancial Equilibrium.
BY BYRON SELLER.

New York, Sept. S.-Discussion as
to the future of the security markets
this week has conferred around the
probable. effect of the Japanese dis
aSter upon trade and finance.
There are two widely varying opin-
ions. One is that the demand for ma
terials to reconstruct the devastated
areas will stimulate trade. Emphasis
is placed especially upon the large re-
| qulrements for steel. In line with this
argument there was moderate specu-
lation for the rise in steel stocks.
The sther view is that the enor-
nous destruction of capital will make
such extensive drafts upon the money
market as greatly to disturb the fl
nancial equilibrium. The effect upon
| the market of the San Francisco dis
aster is recalled by those who hold
| this opinion.
Doubtless there is merit in both Of
these viewpoints. Japan will certainly
require large amounts of material for
reconstruction purposes. Some buying
along this line has already been re-
ported, but it is largely speculative.
! 1t must certainly be six months or
more before much actual work can DO
| done. Nor is there any certainty that
| the bulk of this material will be
bought in America. Japan will GER
tainly turn to the market where she
can buy the cheapest. --.-
Financial Result Different.
| As to the financial result on Sc
curities, the case is somewhat differ
ent from that of San Francisco. Then
American insurance companies suf-
! fered heavy losses. Now il is the
British that will probably be most
| affected and as to the British COM
panies their losses will depend upon
what restrictions as to damages by
earthquakes were written into the
| policies. II the insurance companies
either in England or America are
! forced to market large amounts of Sc
curities it will necessarily cause some
| depression.
| 1t also seems probable that thea
japanese also will be forced to float
a loan either in New York or London.
That such a loan would be readily
| taken, no one doubts. The Japanese
credit stands very high. The best
| proof of this is the way the Japa-
nese government bonds stood up undes
the selling which followed the first
news of the disaster.
| All Markets Hesitate.
Prices of the two sterling 4 IL per
cent loans traded in on this market
| today. for instance. are only about z
points below the high of the year.
That. Of course, is a good deal in the
| case of bonds with such short NATURE
| ties, both issues falling due in 1923.
| The sterling is of 1881. the other is.
sue listed on the New York stock ex-
change. suffered a greater loss and
naturally the obligations of the City
of Toxic. which was the center of the
region affected, had a very sharp de-
cline. Still the important point is the
demonstration of confidence in Japa-
nese financial stability.
Under the uncertainties bred of the
japanese horror, the Italian contrib
versy with Greece, and the doubt about
the anthracite coal situation. all the
markets have hesitated. Spectators
have not cared to take position UNI
til the situation became little mors
clear. Investment buying has been at
a standstlI. but that has been the case
for long time. There is a large
amount of new financing scheduled
! for the autumn months. the reception
of which will be better demonstra-
ton of investment sentiment than the
day to day fluctuations in stocks or
bonds. Most of this financing has been
held back until after the vacation sea
son. "a
Railroad Credit a Problem.
1t looks now as though a good deal
would be delayed still further. The
new Union Pacific refunding Us were
vel, received. but 4 bond of this grads.
appeals only to institutions and
trustees. The real test will come when
securities yielding 51-2 to Gle per
cent are offered in any large volume.
Another. very important considera-
ton is the attitude of the investing
public toward railroad securities. The
| ideal railroad financing from the
standpoint of the roads would be the |
sale of common stock. but this looks |
like an impossible achievement under |
present conditions. Very few roads |
could even market preferred stock. !
The problem of restoring railroad |
credit is one of the most difficult that |
faces either the executives or the
bankers.
Sentiment Toward Rails Better.
That the record breaking car load. |
ings will not suffice is evident from |
the action of the market for railroad
stocks. Sentiment toward these secur,. |
ties is little more favorable this |
week than for sometime. but still
leaves much to be desired. When the |
shares of such prosperous roads as
the New York Central and the Union
Pacific are selling TO return perl
cent and more, while those of road
like the Pere Marquette Yields . per
cent on the investment. it is quite evil
dent that railroad stocks have fallen
from the high state they held before
excessive government regulation De-
came a standing menace.
The case of the roads not financial |
~ strong is even more difficult. NewI
! Haven junior bonds. for instance. sell
on a 10 per cent higher basis. st. Paul
issues. except for the general mort-
gage bonds, return from per cent?
up. Neither of these roads is typical
of the general situation and acts as q
deterrent to investment interest irI
roads more fortunately situated.
incidentally. it is interesting 10 note
THAI the New Haven carried a smaEert
number of tons OF revenue freight inI
1922 than it did in 1912. Traffic in
1928 showed up much better. but mo-
tor truck competition has been veryI
severe.