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Show TWO REASONS GIVEN FOR STOCK MARKET WEAKNESS Absence of Investing Public and Fear of Renewed Foreign Liquidation; Steel Corpora- ' tion Report Is Stimulus. By W. S. COUSINS, Editor the American Banker. NE"W YORK, July 30. The weakness weak-ness in the stock market in recent re-cent weeks has been attributable to a multiplicity of causes, not the least of which is the renewed foreign liquidation which has been present pres-ent on a heavy scale. The investment demand continues light, and American investors seem disinclined to purchase railroad and industrial shares when they are convinced that the -English and French holders will sell them on the slightest slim of advance. ' The New York market has been absorbing foreign-owned American securities for nearly two years; but tho capital available for this purpose pur-pose has been reduced by the flotation of new corporations capitalized at nearly 1 two billions of dollars in the first half of the current year, and by the financial requirements of our expanding commerce. Records show that during tho past year more than one billion dollars of American Ameri-can money has been put into foreign loans directly. Add to this the vast amount of money that investors have brought forward for the repurchase of our own securities, and the grand total is almost inconceivable. It has made a tremendous difference in our international interna-tional financial status, but it has required the expert skill and application of America's financial leaders. ', Liquidation Feared. There is a fear, however, that should the liquidation be continued simultaneously simultane-ously with the heavy calls for new capital capi-tal in other directions, there will not be sufficient investment demand to absorb the offerings which will come to the market from foreign sources. Two factors fac-tors may be depended up6n, however, to prevent serious trouble in this direction: First, the British "mobilization," through which the bulk of foreign-owned securities securi-ties are largely controlled; and, second, the comparatively limited quantity of such stocks now held abroad, consider- i ing the continued liquidation of the past two years. After the weakly margined accounts had been shaken out, the bears found it no longer to their advantage to sell out at prices higher than those at which thev could buy them back, and as a consequence con-sequence many stocks on the selling list have been giving good accounts of themselves. them-selves. Even the motor stocks, for which a short lease of life had in some quarters been predicted, showed that they were capable of "coming back" in a way that surprised even their own supporters. Watchful Waiting. The first two days of the current week again emphasized the watchful waiting attitude of investors and speculators, and the market dragged and sagged without any definite policy or programme. Traders Trad-ers were inclined to await the quarterly meeting of the directors of the United States Steel corporation, and, though extremely ex-tremely favorable reports were anticipated, antici-pated, no one quite expected that the record of the second quarter would have been so gratifying as it proved to be. The earnings of the Steel corporation for the second quarter were truly astonishing, aston-ishing, amounting to more than $81,000,-000, $81,000,-000, or between 11 and 12 per rent on the common stock. In the first quarter the earnings were between 7 and 8 per cent. Having earned close to $20 a share on the common stock during the first six months, the Steel corporation is in a fair way to show $40 a share earned on its common, stock for the full year. In 1914 the corporation failed to earn the full amount of its preferred stock 1 dividend. It would be difficult to find a more striking illustration of the wonderful wonder-ful change which has come about In the position of American industry since tiie first year of the European war. Outlook Is Good. While it is not to be expected that this record will continue, the future outlook out-look is extraordinarily good. Mills are still running practically at capacity and prices are still high, despite the concessions conces-sions from the topmost figures which have occurred in some lines. But business busi-ness does not have to run at the peak of production and of profits to be very good over a long period. A falling off from the best that has been attained in this extraordinary time may well happen without causing concern. How cautiously cautious-ly concerns like the Steel corporation are moving in the matter of committing themselves on the basis of this year's extraordinary results Is shown by the fact that the steel directors added but 1 per cent to the dividend, though earning earn-ing at the rate of close to eight times the customary 5 per cent. That, not unfortunately, un-fortunately, puts a damper upon speculation, specu-lation, but it helps to give stability to industrial ventures, for it shows that reserves re-serves are being piled up against future uncertainties. The directors report that unfilled order on hand June 30, 1916. amounted to 9,640,458 tons, which will occupy the mills for several months. New business is coming in at a satisfactory rate, many contracts being entered for delivery of materials throughout 1917. Money and Business. Recent events have shown that money market conditions may change as abruptly abrupt-ly as conditions elsewhere. The wise ones had hardly ceased their predictions of immediate tight money when from far and near new sources1 of money supply seemed to become available. On one ship that arrived from London came $20,000,- 000 in gold; the semi-annual dividend and Interest money has begun fo return rapidly rap-idly to the banks. The result has been that, despite tho heavy disbursements, the New York clearing house members gained $54,000,000 in a fortnight, and this week's statement will show the record largely augmented. On Thursday of last week a foreign loan, amounting to $100,000,000, was brought out, the official announcement stating that subscription books would be open until the following Monday. Such was the heavy oversubscription, however, how-ever, that the books remained open only a few hours. Wall street Is now in condition to dismiss dis-miss its immediate fears with regard to ; money conditions, and to apply Us ge- nius in more profitable directions. Some Relaxation. The easier turn in the time and call money markets and improved bank position posi-tion in the last two weeks have been reflected In some relaxation In prime mercantile mer-cantile paper. When demand money was quoted at 6 per cent, the highest in the last two years and fixed date collateral loans were 4 to 4M per cent, It was very difficult to dispose of even the choicest mercantile notes at 4 per cent, and the market from that figure Is quoted up to 4!2 per cent. Offerings of paper are moderate. mod-erate. Conditions throughout the country are uniform. Much interest has this week been centered cen-tered upon the grain markets. The repeated re-peated reports of black rust and other sources of destruction for the growing crops has been reflected In a sharp advance ad-vance In the price of wheat and corn in the principal exchanges. While reports of black rust reach us from North and South Dakota and Minnesota, it must be remembered that such reports are of yearly year-ly occurrence, and, in fact, the visitation of rust is a yearly phenomenon, and In conservative quarters it is fe!t that the "crop scare" is not warranted by actual conditions. Britain's Blacklist. Commendable progress has been made bv this government in its efforts to modify, mod-ify, or to nullify, the effect of Great Britain's silly blacklisting of American mercantile firms. The British government has already made material modifications In the application of the blacklist of Amer, lean firms accused of trading with Germany. Ger-many. It is ruled that the blacklist was not Intended to be directed against neutral neu-tral trade, and that it will not apply to contracts already in existence. There is thus a hope and feeling that an amic- able adjustment of the whole matter may be found, and that in time the effect of the blacklist will be negligible. Should the British government not be amenable to reason, it must be quite emphatically pointed out that the blacklisting black-listing of Americans exporters Is an unneutral un-neutral act to such an extent that it may be classed as unfriendly. Of necessity, neces-sity, some of tho vessels engaged In the carrying trade are American bottoms, and the refusal by the owners of any cargoes from blacklisted houses will be followed bv prosecution under the federal law. Further than this, the refusal of neutral vessels to carry the cargoes which may , be offered them on the ground that they i will thus make themselves liable to hostile British action will subject such neutral shipowners to the same consequences as will be visited upon recalcitrant British vessels. It is quite needless to lapse into tedious surplusage in recounting what the government will do in pursuing a policy of self-defense. Everything possible in tills line is too obvious to require specification, speci-fication, and it is much more to the purpose pur-pose to point out some of the reasons why this monumental foolishness should be even thought of by a serious government govern-ment carried on by responsible statesmen. |