Show STOCKS RETAIN HIGH GROUND Cheap Money Rates Aid to Speculation Ig Ig- Ignore Ignore Ig- Ig Ignore nore Trade News BY Bl CHARLES F. F SPEARE Special lal Correspondent of at The TheS Standard S Standard Copyright 1927 Consolidated Press Pr Association NEW YORK Nov one 6 26 One must musts 4 s I respect the tho manner m in which the stock market conducts Itself even en though one may not have much faith in to the lasting quality of tho present rise rUe Given Ol on An Inch In the way of business Improvement the market takes an ell in price advance It Is easier to bid up than to force don down n. n This weeks week's market has possessed the qualities of great breadth and strength In tome somo ways it has 1113 been b n the most mast remarkable of any this year vear It has repeatedly violated the prece prece- precedents precedents dents that are supposed to govern speculative e movements in rushing e up p to a new high average after a a. session cession or two of enormous transactions and ond obvious liquidation in stocks that pre previously had governed the action of the entire list list It has risen on news that was good g O 1 on reports that were vere bad and on symptoms of fatigue In Ih both General Motors Moto s and United States steel teel stocks The one fact tact that it demonstrates is 13 that the public has not yet had its fill fm of speculation for a rise case 1 e and x still sUU sees lees en on the business 3 and political horizons events that are arc promising rather ratter than depressing VARIOUS GROUPS TAKES TAKES' UP Distinct D from others of the past month this weeks week's market has gath gath- gathered gathered gathered ered to itself all classes chases of securities ties Ues and given gI each one opportunity an opportunity to display its strong points There have ha been vigorous campaigns In the Important motor company stocks la In spite of the approachIng shadow of the new Ford car With oil production filling all reserve storage capacity in inthe inthe Inthe the country and further dividend dI re reductions reo re- reductions on oil oU stocks threatened the oil oU group has shown 11 confidence and a a. substantial average advance Rail Rall Railroad Railroad road stocks have been buoyant co coincident co co- coincident incident with large percentages of de- de decrease decrease crease In October gross grass and net earn cam earnd d logs ings Tr The c improvement In the metal sit sit- situation situation lIt and the possibility of cop cop- copper copper per before long have justified a dif dif- different different ferent attitude toward copper stocks although some come of them are selling telling higher today than when copper was much above the current price and the earnings per share in some cases caus were double present earnings Stocks of chain stores of national distributing houses agricultural im Im- implements Implements Implements fertilizers food supplies electrical and radio manufacturers have ha enjoyed a legitimate response to the broadening or the markets and the betterment in prices of their prod prod- products Here again it is to be remembered remembered remembered that they have hav e for months been discounting Counting the future and had fairly well nU caught up with It The element of stock and of ru rumored ru- ru rumored mored snored consolidations has lus entered into the appraisal of market values to a greater extent than warranted The examples that have been given In 1927 of industrial combinations do not bear out the original estimates of or economies mies created c by merging one manu manu- manufacturing manufacturing factoring concern with a a. competitor CHEAP MONEY MO IY AIDS If the existing facts of business do donot donot donot not justify a rise in prices pr of stocks above the level at which they stood when trade was good what other ele do- element ment mint than that of cheap money is I there to support the present speculation lation It Is 13 repeating old eld statements to say tay that money is cheap that It will remain at low rates and that there there- therefore therefore fore prices of cf securities must contin contin- continue ue to adjust themselves to a discount rate te of 34 3 per cent and to an income vet vel not very much above 3 per cent for United government bonds This Th however howe Is about all there is in inthe inthe Inthe the situation Perhaps nothing more mere is I needed to explain it If II a a. man has hasa a II normal blood pressure and a strong heart his hs chances of coming through pneumonia or typhoid fever are ore ex cx- cx The Inconsistent phase ph of Wallstreet Wall Wallstreet Wallstreet street reasoning is 15 that thet which predl predicates predicates cates the present and prospective e rise in stocks on a considerable expansion of business b ln If It trade broadens ap- ap apI apt t I I money coney rates must advance The rediscount discount rate of the federal reserve bank must go up Logically t I stocks that have been rising on easy money must come down It would be bo a much healthier condition if 11 we had a discount rediscount rate today t ay of 4 or ore e 4 per cent The former condition would reflect activity in lines of in industry In In- Industry where here there is now noV stagnation and reasonable profits in to contrast with t 1 1 returns that jeopardize the position of many securities LOANS LOA S AT STANDSTILL STA Just how ho much longer the expansion e on of credit against securities can con continue without affecting the entire banking bam situation Is ls I a a. question that worries those at the head of large institutions but is 15 evidently a a. mat mat- matter matter matter ter of little concern to the majority This week a statement of loans on stocks clocks and bonds to broken broker and deal- deal dealers ers ere indicated an Increase of over oyer 25 which brings the total close to In the past put 12 I months these loans have ha expanded nearly or almost 35 per percent percent cent 4 j f The significant fact fut In this great enlargement of borrowing is that tha t while lt Kit it is taking puce place there is little r ton lon on In loans for commercial purposes fhe hie re discounts of the various federal reserve member banks banka are about a u as low as es they have been at any time in their history Not only Is 15 the public I loading Itself up with securities at high Wih prices but the same policy is IS' IS being carried out from necessity so it I it argued by many banks and trust companies which are more concerned with ith increasing the earnings on their stocks than in maintaining a liquid ti position r Gold in the amount mount U y OO was exported this week wuk to Canada 3 I rod ind South America with the be ex ex- hanges hanges of Europe steadily favoring fa J I II 1 from New York t 1 DECEMBER If RINGS BRINGS TEST We are approaching a period which stock market history h tory contains contaiN many man of violent fluctuations fluctuatioN and leant price trends For a a- anum num- num I ber of j years ears December w was as a month of heavy liquidation to establish h Income I tax losses lossO It has not been so for some time In spite of the fact that the appreciation on securities in the 1 past 12 months has been greater than ever er before it is doubtful it If holders of stocks will reduce their lines a agnat great gnat deal so long as the surrounding conditions of the market appear as favorable as at present There are areno areno areno no indications that congress will wUl in inject In- In InJect any new and unsettling elements into the business situation and if the proposed reduction in corporation tax tax- taxes taxes taxes es is 15 carried out the advantage that this will 1 give ghe e both boUt sentimentally and practically will ill offset other legislative measures that may be regarded as In Inimical In- In Inimical to the commercial life of the country A concrete illustration of the extent ex extent ex- ex extent tent to which American Ameran corporations corpora lions are now taxed by federal and local governments so may be given In the case of one of the tram continent ad rail rail- railroads railroads roads which is 13 paying paving out annually in taxes compared with 12 required of the two trans trans- transcontinental transcontinental transcontinental continental railroads in Canada oper oper- operating operating operating nearly four times as much mile mile- mileage mileage age as the American road |