OCR Text |
Show 'BIG RISE IN SPECULATIVE MARKETS DUE TO DEMAND New Records Soon Become Old and Higher Prices Seem Inevitable; Better Chances for Railroad Rail-road Issues; U. S. Prestige Grows. By V. S. COUSINS, Editor The American Banker. NLU- YORK. Sept. 23. Wall street mav vf ry nuirkly accommodate iturlf to varying conditions in the investment and speculative markets, mar-kets, ;md most of all to prosperity. prosper-ity. It is now very apparent that the American public hits returned with increasing- vigor to the speculative markets and million-share days have followed in consecutive order without a single break since the opening of the week of September Sep-tember 11. The operation of a bull market mar-ket is nearly always the signal for an upward swine in the stock list, for at such a time the bears are afraid to sell short and as a consequence the amount of stock on the sellin? counter is proportionately propor-tionately reduced. It is the simple operation oper-ation of the old law of supply and demand de-mand emphasized In the case of certain specialties by the big addition to earning capacity. Experienced trailers in Wall street have expressed surprise that the recent upwai.l movement lias been carried car-ried so far without a sizeable reaction for a breathing spell. Had the public participation partici-pation not been genuine, the professional element would have found an opening or a weak spot to enable buyers to buy up their specialties on the downward movement. move-ment. Caution Is Desired. Those who have been closely following the trend of events in the commercial and industrial world must admit t ha t sufficient suf-ficient incentive has been given to purchase pur-chase prime securities as permanent Investments. In-vestments. This incentive has included the extraordinary earnings of the more important industrial organizations. in many instances translated into immediate dividends for their stockholders. Others, however, have not been so fortunate, and many anticipated-profits have never been realized, though hopes for the future are still very bright. The latter deduction is the one which calls for a greater degree de-gree of caution and conservatism than many people seem willing to exercise at this time, for there is no positive method of determining when an upward movement move-ment has reached Its climax. It is always safer to make haste slowly than to be compelled to hasten precipitously in an opposite direction. Steel Is War Stock. People who are entering the stock market mar-ket in the present time of excitement should remember that prices now are based upon two valuations assets and earnings and almost daily assets are being be-ing forgotten while war earnings are being be-ing reported. United States Steel is the big war stock and has both asset value, leadership in earning power and tremendous tremen-dous war earnings. The approach of Bethlehem Steel to its former high record rec-ord price of $600 per share has naturally stirred the emotions of Wall street. Bethlehem Steel heads the war babies in earning power and is rapidly converting convert-ing earnings into asset values. Whatever the stock was wortli a year ago, it is worth between S300 and $500 per share more today, for it adds this year to its assets between $300 and $400 from earnings earn-ings and has a practical gift in the Pennsylvania Steel company, which it bought for very little cash. It is only a question of time when Bethlehem Steel may ibe able to show a much higher percentage per-centage of actual value than it does today. Railroad Stocks Up. A gratifying feature of the Investment market has been the continued demand for railroad stocks, despite the fact that the roads are now confronted with some of the most serious problems in the whole : history of transportation. But all these handicaps are outweighed by the record I earnings of the roads. So long as the I domestic and foreign absorption of Amer-! Amer-! ican products keeps up as at present tiiere I will be plenty of business for the rail-1 rail-1 roads, and earnings will not decline; and. in so far as the effects of the eight-hour law are concerned, not earnings will not be adversely affected until the first of the year. It is believed In certain quarters that between now and that time a number num-ber of remedial measures will be worked out that will either save the roads from these new impositions or provide a method of meeting them without serious loss. Big Increase Noted. Figures have been submitted by reliable re-liable sources showing that since July. 1914. no less than $3.000. 000,000 has been added to the market value of the securl- ties which have been listed on the New York sfvk excha nge. Add to this I he amount of new securities which have been added to :he official trading list, and the total a.grv.-'gat e market value of the Xew York sio.-k exchange securities exceeds by over four billions of dollars the aggregate aggre-gate value on the day that war broke out in Kurope. This represents the capitalized capital-ized improvement in America's commercial commer-cial position in two years, and for many individuals it represents a tremendous increase in-crease in personal fortunes as a result of foriunale manipulating of securities. When we consider that the SIS.OOMOO of common stock of Bethlehem Steel siiowerl an increase of ifM.Ofln.c.fio, and that the market value of United States Steel rose from ?2fi".000,0OO to $549.0"U.0UI), tiie full force of the movement may be more easily appreciated. Comparative Figures. The following figures (taken from the Annalist's computation) present a comparison com-parison of market values on the dates 1 mentioned: (000's omitted) Value Value Sept., ,Iulv, Stock in Mi 1914 Allis Chlmers $ 20.761 $ 6,614 American Can 27,0-6 R,2-!6 Amer. Tel. & Tel P20.610 .192,f28 Anaconda 2."i7,K02 116.F.:!7 Baldwin IS. 600 8,2(10 Beth. Steel Com R6.199 4,458 Can. PacitK- 464,S0il 40S,0ii0 Col. Fuel & Iron 1U$0 7, ISO Frie R. R 43,749 22.745 Inspiration Copper 74.338 10,45 Int. Paper 28,020 7.982 N. Y. Central 269.116 17fl,SS5 Texas Oil Co 76,960 33,1100 Reading ISO. 300 PS, 000 Union Pacific 411.171 230,939 Western Union 102, S41 S3, 366 Woolworth, F. YV &5.000 61,240 The Money Market. Despite the heavy call for funds both for commercial and for speculative purposes, pur-poses, funds remain in good supply and lo-iiing rates are comparatively low for this season of ihe. year. On the other hand, bankers see no reason to fear an embarrassing inflation. The call loan rate has ranged between 2 and 3 per cent. Gold to the amount of $2,500,000 has been arriving daily from Canada, in addition to which occasional shipments are made from London and even South Africa. The tot a 1 of the gold that has arrived since May, when the current movement began, j is now in excess of $300,000. 0'o. a figure that has been very Inadequately reflected by j the weekly official statements of the Bank of England. This shows that the metal is being forwarded by special arrange- I merit outside of TJireadneedle street. Its i actual origin is one 'ht the secrets of war finance. There has been a belief that the Canadian accumulation has represented rep-resented as a general proposition South African production. The present Instance of actual importations from South A f-ricg, f-ricg, lends color to the view of the importance im-portance of the latter source in the Canadian Ca-nadian supply. Bond Men Gratified. Bond men express gratification over what appears to be- a general revival of activity In the bond market, presumably as a result of the reported withdrawal from the market of certain lines of bonds which had been offered at prices sufficiently suf-ficiently near tiie current levels to prevent much activity marketwise. There has been a tendency to purchase. various issues is-sues since the placing of a large amount of American corporation collateral back of the British loan. Some bond t houses have reported considerable difficulty in filling substantial orders at prices around the prevailing quotations, it becoming necessary nec-essary to bid from one-half to a full point above in order to bring oitt securities. This is regarded as a distinctly favorable sign In the trade, and the outlook la con- , sidered promising. |