Evening star. [volume] (Washington, D.C.) 1854-1972, 1926-01-16
BY STUART p. WEST.
Sps6ia DISPATCH to The Star.

Speoia; Dispatch to The Star.
NEW YORK. January 16.-StrenCth
in the investment market during the
past week conceded with weakness
in the speculative market. This has
been enough to show that the two
are moving under separate influences
Easy money and the prospect of its
continuing have led to a more active
demand for high grade investment
bonds. but have not stimulated spec
ulative operations on the Stock Ex-
change.
The principal consideration in
stocks Is that good news" Of one
sort or another, the anticipation or
which lay behind the big rise last
Autumn and during the early Winter,
has fallen fiat. once it has come out.
Capital split-ups are not of themselves
an argument for higher prices. but
the intent of such REIMBURSEMENT Is
that they pave the way for higher
dividends. Consequently. they are
regarded as legitimate material in any
campaign for the advance. But these
split-ups. along with increased divi-
dends and with new stock issues car
rying valuable rights TO share own
ers, have not done the present mar
ket any good as they were made
known.
Good News Discounted.
The conclusion was therefore drawn
by many that the market had dis
counted all that it was looking for
ward to during the big speculation of
October November. and that it had
gone too far in responding to optimis
tic predictions of what was going to
occur In the business field during the
first quarter OF 1926. This has been
the main reason for the selling of the
last week.
Nearly all the mercantile reviews
continue their hopeful note. Corpora
ton earnings are good. Production
keeps on at n high rate. Apart from
the anthracite strike there are no labor
troubles. Employment Is on the in
crease. But as against this there was
the wild trading of three and four
months ago in the stock market. and
there was the partial renewal OF this
big speculation over the holiday period.
The problem which the stock market
is now working out is whether the
most favorable points in the present
situation were not measured by this
great speculative boom. Even those
who take a cheerful stand regarding
the outlook admit the necessity of
temporary correction Of speculative
excuses. The principal ground for
any upward movement after the re-
action has run its course lies in pro-
speCtive mergers.
Doubt About Rail Mergers.
4 good deal OF doubt exists AS To
by railroad combinations. Some think
these will add value to stocks repre-
senting the so-called junior rails
stocks which are not a present pay
ing dividend Others think that if
this class of carriers is taken into
stronger systems IL will have to he
on basis Of actual earning power.
and that any increase in values will
have To depend upon a better traffic
distribution and a saving under joint
opera ton. The result Of such an ex-
pertinent is regarded as problematical.
Other Mergers Likely.
Outside the railway field there are
the public utilities. and one of the
features OF 1926 promises to he a
series OF combina tons and reaching
ont for new properties. the outcome
of which will be larger units. Then
there are the combina tions in the
oil trade and the possibilities. much
discussed, of similar mergers among
industrial corporations.
ne "Doie principe is easy 10 I'M
darsta nd. Wages are high. and are
not likely to he reduced Continental
Europe is getting on its feet. and
with n lower standard of living Is
constantly threatening increa sed com
petition for hish-cost American prod
uct:'. The only way to meet this is
through reducing overhead charges.
which can best he done through con.
solida atoms.
The French Parliament has reas-