| Show I PROFITS GIVE BEST ST ANSWER I Observer Thinks Wall WallStreet WallStreet Street Of Often tell Guesses Wrong BY nY STUART P WEST WF-ST WF L 0 of or The I NE E Oct 13 The The qu que- que ou s t Ion may well nell ell be asked again after what has hu happened not only durIng dur- dur during I ing ng the la last l week eel but for some It ItC months put past whether the stock C exchange movement mo can any longere longer I be e looked upon as a a ft trustworthy orthY exchange barometer of or business conditions There ere erp tv two to I occasions a ear carago ago one in September and another In No XO ember when hen it turned out to tobe tobe tobe be a ft false raIse prophet Day after arter da day stocks rell fell In November the losses ran from 10 to 20 points Tet no adequate explanation appeared In business or In any other quarter of the news Wall street at a loss how to ac account Sc- Sc account count for the do downward n nard ard mo moe moie-ment moie e- e ement ment accepted the theory that th ad ance In the early part of 1922 had been based upon hopes hope of If a trade re re val which were ere destined to be deceit ed It took the autumn decline in stocks as an expression of disappointment and as a prep prep- preparation preparation for tor a dull ear in 1923 The sequel was as that In tn less than three from the when the 1 market was sas In the worst of or its Hs blues trade was aJ expanding with lIh ith a rapidity never before known In so short n II time It I ii Is not suggested that there Is Isto Isto Isto to be a a similar outcome now There are many differences he- he bet be between teen tween t een the present situation and that of last ear ear and they are arc not notto notto notto i to the ad of the former what shat hat happened in No- No November November No November vember 1922 may Inay properly be re- re recalled re recalled called aa M an Instance of h ho how I the modern market under highly spec spec- speculative speculative speculative influences can abandon Its ordinary functions and completely misrepresent business changes to come I niGH SURTo There ar are t two to 0 reasons for the slackness of bu busing Ing PO power poter er has repeatedly exaggerated down down- downard downard downward ward ard gainge Ings on the stock exchange The first is the absorption of an unusual amount of investment In cap cap- capItal cap capital ital hal fy by new security offerings The second Is the paralyzing effect ot of big s lx-s upon the market ac- ac activities ac activities of people of wealth During the first half halt year nearly 1 1 of new stocks and bonds bond ere listed In the New ew York mar mar- market market market ket an Increase of ore re the same period in 1922 and of over OHr the first halt half haltof haltof of 1921 Under the urge url of oC com corn competing bankers and antI banking syndi syndicates cates government gO and private bust busi bustness business ness enterprises rushed to sell se- se se securities to 10 then eager cager public RICH HIGH BUYERS I bLO LO LOThe The out outpour pour eventually e became became excessive e At the start of the new fiscal year there has been a no- no notIceable noticeable no noticeable letup In this new But In the meantime the I result has lias been to dh divert ert Invest Invest- Investment investment Investment ment funds runds which normally 1 would kae e been attracted by bv a tailing falling stock market As for tor t he wealthy Income taxpayer er his polity policy I Is to hold on to the security he 01 owns ns but butto butto butto to be he slow about engaging In fresh operations In which he must take tahe all the risk and receive only halt half the profit The weakening of ot these two ele- ele elements dc- dc ele elements ments of ot support although not at- at af affecting the final adjustment of market price to values a ue does ex- ex explain ex explain plain the tendency of ot mo to be carried too tar far CURRENT BUSINESS ESS The opposing views of the busi buI- buI business ness outlook remain at the close of the week as s they have haH all aJl Ir If comparison be made with Ith the activity of ot last lut winter and spring there has been a consider consider- considerable considerable abl able reaction In many Jines lines But If the comparison is made with normal situations the current vol- vol vol volume 01 ume urns of production and p consumption consumption tion Is not only satisfactory but is 18 unusually large This together with the caution against loading up with surplus goods and U tite unprecedented unprecedented credit reserve e of ot the coun coun- countrY coun- coun country country try are are the points dwelt upon by those who ho express confidence In 1 the future PROFITS QUESTION Those who see se things thInKS the other ay ay maintain that production production will slump as soon a as ae old orders are used up an SO consumers will continue reluctant nt to pay the higher prices prien demanded on new contracts contract Finally they maintain that unable to pass th the Increased costs of labor and materials on to the public business will have to tobe tobe tobe be content with a 0 slim profit proUt On this latter point the third quarter earnings statements of the big Industrial companies should throw a a good deal of light Th steel producers producer were ere at work all through the period on low priced old contracts while paving 15 per percent percent I cent more In wages ages ages Their reports report ought to establish Just how much I there is so tar far in the argument ot of I the dwindling profit margin 1 CARRY NEW l EV BUSINESS ESS The contention that the record record- record breaking I breaking railway are area area area a measure of business booked six I months ago rather than of present I Is getting all the time harder to substantiate This might be tru true If It the bulk of ot the country country's business were taken on long term contracts but it Is not The mass mus massof massof of the merchandise traffic PASsing PASsing- passing over over the railroad calls for tor corn com com comparatively quick payments and ts is tsI therefore of recent origin More More- Moreover I 0 over oer er according to the latest latet official I figures this class of ot business la is the Increase It If further corroboration I tion it li ii afforded in the sales salu of the chain stores the mall mali order I concerns and other agencies of die dis- distribution dis distribution which certainly show no letup The main question consequently is not as to reality o of the present lis business volume but as to whether lit it is being conducted at an ade- ade adequate adequate ade adequate I I quate profit 00 o |
