The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1930-05-15
Editorial Comment
Stock Market Vicissitudes
(NeW York TimeS)

The recent violent fall in prices on Stock Exchange,
carrying even the selected averages" down about Is per
cent from the high point Of April, caused the usual out.
burst of dismay in speculative circles. But it was notice
able that nobody interpreted the break as necessarily
3VI1i' street it 8 sg merely po latetI 3 out !, Dui by way OF ex-
PLANTATION, that prices as measured by the averages
had been advanced 81 per cent in the years earlier weeks,
although the course Of business activities had been dis
appointing during all that period, and although a great
part Of the autumn break in stock market prices had
been recovered before the present year began.
It is impossible, however, that such incidents should
not somewhat impair the public's faith In the old tradi-
ton that the stock markets variations indicate accur-
ately the future course of trade and industry. There
were good reasons for that tradition. The rise or fall
in shares Of companies engaged in transportation or
manufacture was assumed to reflect the actual pur-
chases or sales Of investors closely in touch with a bust
ness situation, and aware by personal observation and
experience Of the trend of trade. It is true that. even
then, the stock market was surrounded by a host of
haphazard SPECTATORS and tipsters, who concerned them
selves little with the larger economic currents but bought
only because the market seemed likely to 20 up" and
sold on the opposite idea. But it used to be only occa-
sonally, and at reasonably long intervals. that this sort
Of random speculation would SO far overtop the genuine
investment operations as to drive Stock Exchange prices
in a direction opposite to what visible trade conditions
indicated.
That certainly happened in 1902. It happened even in
the early months of 1920; but it resulted almost invari-
ably, as it apparently resulted in the early part Of the
present year. from the fact that money rates were very
low and that facilities for promoting speculation could be
obtained on easy terms. It was apt. on such occasions
and under such influences. to present the singular para
dox Of money rates failing because Of reactionary trade
while the stock market, which ostensibly reflects trade
conditions. was rising enthusiastically because Of the
easy money which had been caused by trade reaction.
In recent years it has become something of a Wall
Street formula to insist that, even II a booming stock
market was not accurately foreshadowing the next sea-
sons business situation. 1t was at ali events anticipating
the sure prosperity Of the distant future. But that kind
Of "discounting" has always been recognized as hazard
Gus. Applied in the longer past, it would have put up the
price Of railway shares in 1885 to measure the railway
situation Of 1900 and 1901, though the long list Of rail-
| way insolvencies Of 1893 and 1894 lay between. AS for
the present business outlook, it is likely for the present
to be judged by other indices than a seasons violent
alterations of rising and falling prices on the Stock
Exchange. Perhaps, when the present feverish turmoil
has died down. the stock market itself will begin once
more to indicate soberly the immediate industrial future.