Evening star., 1927-09-17
BIG MONEY SUPPLY |
AIDS STOCKS RISE.
Business Is Poor, Though
Power Output Figures Show.
Commodities Higher.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, September IA
group of economists met here few
days ago to confer on the outlook for
business and the trend of securities.
These men judge conditions in the
modern scientific manner and are
devoid of sentiment and not given to
hysteria. One of them has national
reputation for good judgment in OBJ
serving and interpreting the economic
trend of the times.
The composite opinion Of this gather
ing was that stocks even at the pres
ent high average were not abnormal
from the investment standpoint or in
their relation to the excessive supply
of capital release from business and
having an outlet solely in the market
for securities. Their argument ran
to this effect-that so long as the
surplus of funds continued to be as
great as it is at present, it would be
employed in the purchase of both in
vestment and speculative shares re-
gardless of their yield and after prices
of them had discounted all probable
measurements of worth.
If these premises are accurate one
might reasonably expect to witness
within the next year range of quo
tations that would make existing ones
look relatively cheap. Certainly the
market possesses a vitality greater
than it has exhibited at any time
within this generation. Memories are
brief. One quickly forgets even the
high spots of other speculative
periods However. familiarity with
major price fluctuations over period
of 80 years does not recall to the
writer any conditions similar to those
now existing or a market that at the
end of a three-year advance showed
such an ability to go forward at a
quickening pace.
Commodity Prices Up.
For a long time this country has
been taking in gold and receiving
huge balances from the rest of the
world. Until recently it has avoided
the inflationary results of these
credits. 1t is now experiencing the
effects of imitation which are centered
on the securities market. Commodity
prices have been declining since 1925.
They are now beginning to advance.
though they will probably be affected
from week to week by the daily wild
fluctuations in agricultural products.
In a comparatively short time corn
has declined % cents bushel. wheat
Is cents and cotton has dropped 10
per cent from it's market value since
the end of August. The general trend
of commodities, however, is upward.
Evidence of the excess of money
over commercial requirements is to
be found in the active participation
of the public in the stock market
This is greater today than i. has been
since the early part of 1926. The
testimony Of brokers is that clients
have a larger supply of funds with
which to speculate than ever before.
At the same time the volume of in
vestment purchases exceeds all other
years. Stock exchange houses tell of
weekly shipments of odd lots of stocks
amounting to from S2.000,O00 to
S3,O00,O00 continuing without inter
ruption for several years. This has
obviously taken an enormous amount
of shares out Of the market and re-
duced the floating supply so that
those outstanding are readily marked
up on small transactions. The opera
ton of the law of supply and demand
on securities today furnishes one of
the most reasonable explanations of
it's strength.
This week has witnessed an aver
age price for stocks nearly so points
over that in January, almost IS points
above that ruling during the March
decline last year and nearly 100 points
higher than in 1924, when the present
bull movement began. A certain
amount of eXaggeration is given to
these figures by the extraordinary
gains in a limited number of high
priced shares that have been market
leaders during the last half of the life
of the bull market. The picture is
oil hvy hn
shares have gone down while others
have been going up. The process of
selection and rejection of securities has
been more actively carried out than in
other speculative campaigns.
No doubt many persons have been
taking advantage of market conditions
to capitalize their profits. The trans
fer books of corporations clearly sug-
gest liquidation of large blocks of
stocks held intact for many years.
These have been broken up into small
er units representing the publlc's par
ticipation in the market. At the same
time the sellers of one set of stocks
have concentrated their attention on
few issues with the result that
large proportion of each days trans
actions has taken place in few wide
ly exploited issues. There is every in
dication that the interests that have
made such a wonderful manufactur-
ing record for the General Motors Cor
poration have allied themselves with 1
the United States Steel Corporation
and that management notable in the
past for building up equities may IN
the future be more generously inclined
toward it's shareholders.
When the stock market broke with
such violence in March, 1926, there
followed period of several months OF
depression pending the recuperation
of it's patrons. The immediate sequel
to the 10-point average decline was an
equivalent advance, with funds pour
ing into Wall Street from all quar-
ters to take advantage of what were !
regarded as bargain prices. 1t is with
in reason to expect another severe |
slump in the market some time this |
Autumn. When it comes there will |
again be thousands of 'soldout bulls"
eager to take up the good industrial |
and railroad shares then offered.
The most important question now
Is whether the advance in securities |
will produce recovery in trade. The |
are that combined with |
an improved agricultural position, the |
definite program stabilizing oil and !
iron and steel prices and better rail-
road returns in the final quarter Of the |
year. some recovery will take place |
and will continue we'll into 1923.
Trade Reaction Pictured.
Certainly business today is poor. In |
DIx,rs Il