San Antonio light. [volume] (San Antonio, Tex.) 1911-1993, 1923-01-21
STOCKS STEADY
THROUGHOUT 1
CRITICAL WEEK
Market Demonstrates That
European Situation Is
Secondary.
OUTLOOK IS FAVORABLE
EngIand's Confidence Shown
by Course Of Sterling
and Securities.
OUTLOOK IS FAVORABLE
Ry STuART p. NEST.

BY STUART p. WEST.
Conyright, 1928, by The San Antonio Light.
New York, Jan. 20-The home secur-
ity market has effectually demonstrated
this week that domestic business condi-
tons are the supreme consideration and
that even the serious possibilities sug-
gested by the French occupation of the
Ruhr are a matter Of secondary i'm
portance. The purely technical eX-
PLANTATION for the steadiness of the stock
market, that is, the explanation which
appeals TO the professional mind, Is that
there had been no chance during the
upward movement which started around
the first of December to distribute
stock on large scale.
Confident OF Americas Position.
There is, however, the broader view
OF the situation-that it must be proved
that the European troubles might event
ually affect home business conditions
before these become a major factor in
the price movement. Wall Street has
been expressing its judgment that the
worst that may happen to Germany, or
even the complete failure of the French
efforts to collect reparations, will not
impair the favorable outlook for trade
in this country,
The London security market and the
course of sterling exchange have shown
that Great Britain feels the same con-
fidence in its position regardless of de-
yelopments on the continent.
Recovery Rests on Home Demand
The one way in which a breakdown
in Germany and France could possibly
affect our situation would be through
curtailing the demand for American
goods. But, as has been pointed out
repeatedly, our business conditions for
the last year and a half have accomm0-
dated themselves 10 a minimum export
movement.
The recovery Of the past twelve
months has rested almost entirely upon
the home demand. A decided increase.
TO be sure, has occurred in the last few
months in the export totals, mainly due
TO larger purchases by South America
and the Far East, but we have prob
ably seen European buying power at
the lowest it can COnceivably be, and
American business has adjusted itself
TO this condition.
New Capital Issues Absorbed.
Regarding the investment market, il
is well to remember that in January 4
year ago, bond prices made a consider
able advance. This was followed by a
sharp reaction in February and March
and the secondary upward movement
did not start until well along in the
spring. There were two reasons for the
intervening recession. The first was
the exhaustion of the January reinvest-
ment demand and the second was the
uncommonly large output of new Sc
curities. Both these factors may quite
easily recur in the situation this year.
As yet there are no signs that the
supply of new capital issues has over
taken the demand. On the contrary.
nothing in the whole experience of bond
syndicates during the last two years
has been more remarkable than the out
come of the Anaconda Copper financ.
ing, where, with a combined issue of
S15O,OOO,0O0, the larger subscribers re.
celyed only 20 per cent of what they
had applied for.
But it has been the uniform experi.
ence Of the past that new flotations
keeping on at the rate they have since
the first of the year, in the end afford
such competition for the older estah
lished securities that they either CHECK
any tendency to advance or bring about
a lowering of prices.
Easy Money and Better Trade.
The speculative market is in a QuitI
different position from the investment
market. Values of investments of thu
higher rank are determined chiefly by
lation of demand and supply, as in
fluenced by new flotations. Speculativ,
values depend upon the relative abund
ance or scarcity of credit and upon tn,
earning power, present and prospective
of the corporations which they repre-
sent. The rise in the stock market dur
ing the last six weeks has been base
partly upon the easy side Of the none,
and partly upon the favorable trade sit
uatiOn with indications that it will con
tinue through the new year.
AT no time so far have reports from
the steel trade been so optimistic. Il
the Pittsburg district come plants ar
operating as high as So per cent n
capacity, while less than six month
ago they were operating at 80 per cent
More important still is the rising tend
ency of steel prices.
What this has meant for the CON
panies was strikingly disclosed by tn
statement of the Republic Iron an
Steel chairman this week. He sal
that, after two years of continuous los,
the earnings of his company during tn
last quarter of 1922 were sufficient t
recover preferred dividends twice ovel
Favorable Retail Buying.
In other directions the trade report
are equally cheerful. December wa
the largest month on record for retn
sales and for building activity. 1t ais
was the largest December ever know
in railway car loadings which are ii
most reliable measures of the generi
volume of trade. Under these circun
stanc' the strength displayed in Wa
Street despite the disturbing news frOl
.sroad is ineligible enough. The or
ger of the present situation in IL
market is that speculation will overd
shings, will 60 beyond the facts of Ii
business situation. as it did last sprin
nnd again in midsummer. As We
however. the customary signs Of exces
have not appeared.