Evening star., 1924-07-13
MARKETS IN GRIP
Of UNCERTAINTY
Investors Find Trade Statis-
tics Disappointing in Spite
OF Stock Advances.
LITTLE POLITICAL WORRY
Merger Talk Now Greater Factor
With Railroad Shares Than
Earnings Reports.
LITTLE POLITICAL WORRY
BY GEORGE r. HUGHES.

HoiAiuSS heportS.
BY GEORGE r. HUGHES.
Special Dispatch to The Star
NEW YORK, July le-The week
has been one Of confused movements
In the investment markets Uncer-
tainty as to the future was almost
universal Judging from the specu-
lative current in stocks, a turn for
the better ought to be near in the
business situation, but the trade sta
tistics are still disappointing. The
unified orders of the United States
Steel Corporation showed another de-
>cline in the statement made public
j on Thursday. bringing the total down
to figure lower than at any time in
thirteen years. The buying move
ment in pig iron seems to have fat
tened out and prices remain around
the low.
Nor is encouragement to be found
in car loadings or other indicia OF
business conditions. Well Informed
financiers express confidence, but the
basis therefor is not yet apparent.
Bond Trading Slows Up.
Even the market for high-grade
investment securities such as liberty
bonds and railroad mortgages, legal
for savings banks and trustees, halt
ed and suffered a moderate reaction
without any apparent reason. This
was all the more mystifying in that
securities of this grade are ordinar-
lily responsive only to changes in the
money market. And there has been
no change in money conditions ex-
cept to emphasize further the enor-
nous surplus surplus wlthout
precedent in the financial history OF
the United States In fact, 1t Is the
one consistent performer. There was
a slight stiffening in rates consequent
upon the 1St of July REQUIREMENTS
but that is a usual thing at this time
of year, and the hardening was very
slight.
BY the middle Of the week quota
tions had got back to their former
low and time funds were in supply
greater than demand. 1t all brings
up again the problem of how this sur
plus of gold will affect prices. not
only of securities, but of commod-
tiles.
Europe Needs United States Gold.
1t NAV be that the extension OF
credits to foreign nations Will be tn
gold of which We have such an en-
barrassing abundance. There is stliI
the German loan to come. if the re
port of the DAVIS commission is nnal-
ly put into effect. But there are
grave difficulties to be overcome anC
no one is yet sure as to the security
which can be promised American buy
ers Of German bonds. The success OF
the Hungarian offering is hardly to
nd
as can be learned on this side, France
and Great Britain have not found
common meeting point as to the pro
cedure in case of German default.
The result is to increase the timidity
of American investors as far as Tor
eign securities are concerned
Turning to South America, the ma
tions of which are chronic borrowers
investment sentiment has been dls-
turbed this week by the reported rev
olutionary outbreak in Brazil and mi
nor disorders in Bolivia. Accurate
information as to the extent of the
disturbances in Brazil was lacking,
but Brazilian bonds broke sharply.
Speculative Accounts Closed Out.
The decline probably represented
more the throwing over Of speculative
accounts than any real liquidation,
but it did not serve to improve senti-
ment toward foreign securities. This
Brazilian situation may be all cleared
up in another week, but the effect
upon the market may last longer. The
only compensating influence is the
return on the investment which these
South American bonds, as well as the
obligations of continental European
nations, bring at the market. Seven
to per cent make up for a good deal
of risk.
In railroad securities bonds have
enjoyed only a small part of the spec
ulative interest shown IN stocks,
There are still to be had attractive
returns on second grade and specula-
tive railroad bonds, returns which
seem out of line with the prices for
the same grade of stocks. Probably
the bond buyer is harder to please
than the purchaser of stocks, even
when both are speculating. The bono
buyer has higher standards. This Is
abundantly proved when comparison
is made of the quotations for the
bonds of some public utility holding
companies with the prices at which
the stocks, both common and pre-
ferred, sell.
Bonds Have Prior Claims.
Both are dependent upon earnings
and the bondholder has the prior
claim, but there is more hesitation
stocks. The same condition prevails
in the railroad security market. The
feeling seems to be that if one is GO
ing to take any risk at all he may as
we'll take a larger one expecting
larger profits This ought to be the
opportunity for those temperately
minded investors who want reason
able security and fair return.
1t is interesting to observe how
the attitude toward railroad securi-
ties has shifted in the past few
months. At first it was political con
siderations which were dominant
Little is heard of that now. Then il
was a matter of earnings. Now the
emphasis is no longer placed on op-
Grating income. In their present
mood, both investors and spectators
seemed to be concerned about railroad
consultations present and prospec.
tive.
That the Interstate Commerce Com.
mission is yet to be reckoned with ir
all these matters is something tc
which little attention is paid.