San Antonio light. [volume] (San Antonio, Tex.) 1911-1993, 1924-03-23
Too Much Optimism in
Business Community
Is Main Reason.
MONEY RATES HELP
Falling Off in Wheat Prices
Most Unfavorable
Factor.
Nv STUART =. WEST

New York, March 22.-For the de-
cline in the stock market during the
past week number of eXplana-
tons have been impractical. No
body has sold his investment Sc
curities because of the passage of the
soldier bonus bill, and yet this has
been the conventional reason for the
downward turn in stocks. Two and
three years ago the financial COM
munity was afraid of bonus legisla-
ton because it implied increased taxes
on market transaction and new govern
ment bond issues. But in the present
form of insurance certificates running
over a period of 20 years, the bonus
measure from the investment stand
point, is innocuous. 1t will, if it be-
comes law, retard tax reduction, but
that is the worst.
What then, have been the real causes
back of the declining market?
To answer this question, one has to
return to the state of mind in which
Wall Street stood at the outset OF the
year. Two points were at that time
emphasized, first that it was to be q
generally profitable year in business
and, second, that there was nothing to
fear in regard to the presidential cam
paign. Upon these two assumptions
was based the upward movement of
January. What has happened since
in the market has been altogether
due 10 the discovery that business
men were too optimistic along these
lines.
Business Expected Too Much.
1t cannot be said that the trade
position has taken an unfavorable
turn. Rather it is that the business
community had expected too much. 1t
had looked for a partial repetition of
last years boom when the truth was
that the underlying conditions with
reference to demand and supply were
entirely different A year ago mer-
chants had let their stocks run down
abnormally low and starting in to
replenish all at the same time bid
prices up excessively. This year there
was no such under-supply. Buyers
have not been afreid of being unable
10 fill future requirements and have
only purchased for immediate needs.
1t is a safer situation in the sense
that it will not call for the correc-
tives which were applied to the mar
kets Of March and April 1923. But
there il little to provide an incen-
tive for a sustained upward move
ment. SWall street dealings have been
trying to pick out stocks represent
ing industrials in a favored position
at the same time discriminating
against stocks representing industries
where the outlook il uncertain or
poor.
Decline Of Money Helped.
The decline in money rates TO the
lowest since the spring of 1918 has
had stimulating effect upon strictly
investment securities but has had no
effect upon speculative issues. There
is no warrant for the charge that
money has gone down because Of a
letup in business activity. All the
data, such as bank clearings and
freight car loadings point quite the
other way. But the country continued
TO be flooded with gold imports. At
the same time new security flOtations
have suddenly and sharply fallen off.
The result is condition where money
for ordinary lending purposes Is lit.
orally going begging and where there
is keen demand for the investment
of these funds in mercantile paper,
in Liberty bonds and in other securi-
ties OF such high grade as to not be
affected by fluctuations.
Political Situation Pulling.
1t is too early TO judge the ef.
feet of the investigations at Washing.
ton upon political conditions. The
difference so far as Wall street is
concerned. is that whereas at the be-
ginning Of the year there was a gen
eral feeling of confidence there is
now feeling of uncertainty. In
January the market took for granted
the election of a president who would
be acceptable from a conservative
viewpoint. Now, with all the muck
raking which has been going on. Their,
is not the same degree of gertrude
1t is admitted that the nominating con
ventions and the election must be taker
more into consideration as marke
factors.
Wheat an Unfavorable Factor.
The most unfavorable feature in tn,
development of the past week has beer
the continued fall in wheat prices AM
along with this further depdession il
other lines of agriculture. Wheat i
now selling some Is cents a bushe
under what it was year ago, an
last year was one of the most unprofit
able that the wheat growers of tn
United States ever went through.