Reaction

The long-prophesied "reaction" on the Stock Exchange has come; it is yet too early to say that it has gone.

Since the election almost a year ago, market trading has been on a greatly expanded scale. Up to Sept. 1, total sales there in 100-share lots have aggregated about 358,759,900 shares. This figure, however, does not include numerous "odd lot" transactions in from 1 to 99 shares, which contribute about a third again as many shares sold. As a result, true total sales on the Exchange since election have amounted close to 500,000,000 shares altogether.

Since election there have been 171 days when sales on the Exchange exceeded 1,000,000 shares, and 34 days when they exceeded 2,000,000. For million-share days 1919 still leads with 152, but 1924 holds the annual record for two-million share days--which is 19.

For about five months stocks have scored a practically uninterrupted advance, and as a result the market became listless and top-heavy. Suddenly, and largely of its own weight, it toppled over. Leading shares, speculative favorites in the previous advance, showed a wide decline of from 10 to even 20 points from the year's high levels.

There has been no development in the money situation to call for extensive security liquidation. Stock-market funds continue abundant and cheap. Likewise, stock brokers report customers' margins greater than at almost any other time in the recent history of Wall Street. From these facts, "market diagnosticians"--as they sometimes call themselves--generally consider the recent decline a reaction in a "bull" market rather than the inauguration of a "bear" market.