Evening star., 1924-03-22
BY STUART p. WEST.

Special Dispatch to TAe star.
NEW YORK, March 22.-For the
decline In the stock market during
the past week a number of explana-
tions have been attempted and most
OF them have been quite impractical
Nobody has sold his investment Sc
curities because OF the passage in
the lower house Of Congress Of the
soldier bonus bill, and yet this has
been the conventional reason as
signed by Wall street writer's for the
downward turn In stocks Two and
three years ago the financial COM
munity was very much afraid OF
bonus legislation, because IL implied
increased taxes on market transac-
tions and new government bond
Issues. But in the present form of
insurance certificates. running over
i>eriod of twenty years. the bonus
measure. from the investment stand
point, Is innocuous. 1t will. IL 1t be-
comes law, retard tax reduction, but
that Is the worst 1t will not mean
additional taxes or additional gov
eminent borrowing
Situation Diseased.
What, then, have been the real
causes back of the declining market?
To answer this question one has 20
return to the state of mind in which
Wall street stood at the outset OF
the year. Two points were at that
time emphasized-frst, that II was
to be a generally profitable year In
business, and, second. that there was
nothing to fear in regard TO the pres
idential campaign. Upon these two
assumptions was based the upward
movement Of January. What has
happened since in the market has
that business men were too opti-
mistic along these lines
1t cannot be said that the trade po-
sition has taken an unfavorabie turn
Rather IL is that the business COM
mus.ty had expected too much; II
had looked for a partial repetition
OF last years boom when the truth
was that the underlying conditions
with reference TO demand and supply
sseIe entirely different a year ago
y lmers had let their stocks run
down abnormally low and starting In
to replenish all at the same time, BID
prices up excessively. TINS year
there was no such undersupply. Buy
ers have not been afraid of being un.
able to fill future requirements ana
have only parchased for immediate
needs.
Safer SituA tiop, Ii View.
1t is a safer situation in the sense
that IL will not call for the severe
correctives which were applied TO
the markets Of March and April. 1923
But there Is little to provide an in
centiye for a sustained upward move
ment. What the Wall street dealings
OF the last few weeks have been try
ing to do is to pick out stocks repre-
sentfng Industries in favored posi-
tion, at the same time discr riminatIog
a CT q
where the outlook Is uncertain or
poor This is a logical process. and 1t
seems likely to continue.
Decline of Money Helped Investment
Securities Oniy.
The decline in money rates to the
lowest since the spring of 1918 has
had stimulating effect upon strictly
effect upon speculative issues. There
is no warrant, however, for the charge
that money has gone down because
of let-up in business activity. All
freight car loadings, point quite the
>'ther way. But the country continue
t. be flooded with gold imports at
tn. rate OF s35.800,o00 to $4,000. 600 a
q onth, partly in settlement of the
merchandise trade balance and partly
to pay off British obligations on the
war debt.
Securities Show Falling on.
AT the same time, new security 40
tations, which during January and
February, were taking up the surplus
money supply. have suddenly and
sharply fallen off. The result is a con-
dition where money for ordinary lend
ing purposes is literally going beg
ging, and where there is keen demand
for the investment of these idle funds
in mercantile paper, in liberty bonds
and in other securities of such high
grade to not be affected by trade
fluctuations.
1t is too early to judge the effect Of
the Investigations at Washington
upon political conditions. The differ-
ence, so far as Wall street is concern
ed, is that whereas at the beginning
of the year there was general feel
ing of confidence, there Is now a
feeling of uncertainty. In January the
market took for granted the cleo
tion of a President who would be ac-
ceptable from conservative view
point. Now, with all the undertaking
which has been going on. there is
not the same degree of certitude. The
situation has not reached the stage
where success of radicalism at the
polls is seriously anticipated. but IL is
estimated, as IL would not have been
two months ago, that the nominating
conven tions and the election must be
taken into consideration as market
factors.
Wheat Situation q Facter.
The most unfavorable feature in the
developme of the week has been
the continued fall in wheat prices and
along with this further depression in
other lines Of agriculture. Wheat is
now selling some Is cents a busheI
under what 1t was a year ago, and
last year was one OF the most un-
profitable that the wheat growers of
Banking Trust & Mortgage Co.
We want GOOD Ejrst and Second