Evening star., 1925-01-03
TRADE ADVANCES
WELL DISCOUNTED
Real Values Lost Sight of in
Orgy of Buying-Break
Sure to Come.
BY STUART u. WEST.
Special D;rpatcI, to Tho sta,

Special Dispatch to The star
NEW YORK, January 3-The new
year OF 1925 opened with another
outhurst of speculation. the most
violent of any since the period fol-
lowing the armistice IN November and
December, 1918.
Nobody with a remembrance OF the
past can look upon such advances
us have occurred during the last week
on the stock exchange without mis-
giNinEs. They have represented the
speculative movement at an extreme
stage. Wall Stareet, accepting the
prophecies of the business leaders
is looking forward to a prosperous
time in the next IL months
But even with full allowance for
this, 1t has done tremendous amount
or discountlng. 1t has lost sight of
real values. The impellinG force has
been derived from profits easily made,
which have been taken out of one
group OF stocks and put into others
pushing these upward as fast and as
far as they could possibly be made
70 go. On the one hand is the CON
hdence derived from money quickly
made in a very large way. on the
other hand, there is the knowledge
that the big holders of stocks can
not afford to sell, no matter what
the rise, for income tax reasons.
stock Market Riding to Fail.
Under these circumstances predic-
tons as to how far the upward
movement will carry would be futile.
But II Is safe to say that if prcce-
dents are of any use, stocks are be-
Ing forced ahead too fast, that the
rise is getting beyond outside bust.
ness conditions, and that in the end
this will demand its penalty
In the meantime the trade news is
favorable. The steel mills last Au-
gust had sunk to 45 per cent of op-
erations, as compared with full ca
pacity. They are now up to from
so to So per cent. The copper metal
at 10 cents holds out a promise for
the copper and smelling companies
very different from that of a year
ago. when the price VISA below 13
cents. Quotations for other metals,
like zinc and brass. are higher than
they have been in the last two years.
The position of rubber and tire man
ufacturers has been greatly improved
by the recovery in crude rubber,
which has meant a large increase in
the inventory values of these COM
panies. There has been a pronounced
change for the better in hide and
leather.
Along with all this. there is the
extra ordinary fact OF the increase in
farm prices. an advance of between
so and 20 cents a bushel on wheat
from the low of last Spring, a corre-
spending rise in corn. in other grains
and in live stock. What this will in
volve for the buying power of the
agricultural communities in the COM
ing year is a big consideration both
for manufacturing and distributive
industries and for railway traffic.
par
Sterling exchange, above $4.t5.
where II was at one time during the
last week, was within little more than
II cents of old-time parity. 1t was
well above anything reached since
the British government pulled the
peg out of the market, which had
been maintained during the greater
part of the war. Those who have be-
lieved ali along that the British
pound was on its way back to parf
were not at all surprised. The essen
tials for Great Britain returning TO a
gold basis have, indeed, been present
for a long time. The only deterring
influence was the experiment with
the Labor government. Fear of what
might happen, yet which dtd not
happen. drove capital away from
England. and it was this which II
months ago put sterling down from
aDONe $4.4U TO aTOuTQ Nf.-U
The return of this capital has been
the principal factor in the 3o-cent
advance which has occurred since the
British elections. The second infiu
ence has been the fiotation Of the
various foreign loans in the United
States. The investment of American
funds in these European government
and private securities has more than
offset the credit balance in the mer-
- 60 H.
since 1918 has brought about a con-
siderable excess of gold shipments, as
compared with imports. We are now
witnessing the beginning of the
counter gold movement, which was
phophesied from high quarters two
and three years ago, but which was
not realized at that time.
Gold Outflow Checks Easy Money.
The result upon the investment
markets of a gold outflow such as
is now indicated, is one of the most
interesting questions before the mar
kets of 1925. Already, along with
other causes, it has put q period upon
the exceedingly low money rates
quarters of 1924. Therefore, it has
set a limit upon any further rising
tendency in investment bonds and in
investment stocks. This is the sea
son Of the year when ordinarily in
yestment securities go up, In conse
quence- OF the January reinve stment
demand and the return flow of sur
plus money from the crop sections to
the reserve centers But there has
been no sign during the last week of
these customary processes working
out
Foreign Bond Investors Face Loss.
One of the striking features of the
moment is that investors who have
subscribed to some of the recent is
sues OF foreign government securities
and of home corporations as well, find
| themselves confronted with a. loss.
French government bonds have been
going down. first because of the un-
pleasant impression made by the ut
terances Of the French finance min
lister regarding the war debt, and
second because OF the persistent in
! flation in the franc. But il is not only a
question of European government
loans The shelves are getting stock
| ed up with domestic offerings, which.
on tho face of things, seem to have
been sold, but which really have not
! been sold.
Copyright, 1921
L