Current Situation

Business was, last week, marking time and watching the stockmarket for indications as to future developments in trade and industry.

Everyone can, of course, see what is going on in the stockmarket, at least on the surface. Trading is becoming less active, prices are stabilizing on a lower level than obtained a few months ago. This much every ten-share trader can see. But the inner significance of it, the perception of the economic forces which are responsible for it--these are less obvious.

The truth is that two contradictory forces are now at work in stocks, and at present just about offset each other. The bears argue, and with reason, that the recent price advance in shares discounted more than amply any likely increase in the earning power of most U. S. listed companies for 1925; and that the subsequent fall in prices represents an adjustment from over-optimistic hopes to saner and more realistic estimates. But the bulls still urge, and with equal force, the ease in money. The U. S. is piling up steadily huge amounts of capital which virtually seek investment. Last year, much of it flowed into foreign loans, and much into home securities, driving up their price rapidly in the Stock Exchanges. Although the latter movement has apparently halted, for the time being at least, the public still clamors for new securities and absorbs them readily. The Dodge financing is proof of that. With money as easy and abundant as it is, trade may languish for a time, but it can scarcely experience any severe jolts or curtailments.