Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-08-14
TRADE CONTINUES
! ON AN EVEN KEEL
Pessimism Prevails, How
!. ever, Where Optimism
Reigned Before.
BY GEORGE T. HUGHES.

NEW YORK. August 13.-The in
dustrial and economical outlook re-
manned unchanged this week. Bust
ness continued on an even keel III
there were trades where the prospect
was not altogether pleasing, conditions
certainly were no worse than they
were a week ago. Money remained
easy. The fact that rates are not de-
clining further is not disturbing in
view of the great abundance of credit
But there was a decided change in
the attitude of the speculative element
toward the Stock Market. Where opti-
mism reigned n fortnight ago and
guarded caution a week ago, pesSi-
mism now prevails. Ii is only short
time since wide acceptance was ac-
corded the argument that with easy
money and large investment demand
no important reaction in stocks could
be anticipated. When AtchisOn, for
instance. was selling at 1879, it was
complacently explained that SO good
stock, representing so stable an indus
try as transportation, was entitled to
sell on a per cent basis under the
changed conditions prevailing since
the United States became a CreditoTy
Nation. Now with Atchison 10 points
down little is heard about that invest
ment demand which was to put all the
$40 dividend-paying rails up to zoo.
Reasoning Is Abandoned.
A month ago when objection was
made that the Stock Market, after
so long a rise. had overdiscounted
values, it was answered that stand.
ards had changed; that the bull mar
ket which began late in 1924 was diff
ferent from other markets and the
fate that had overtaken other pro-
longed advances was not to be the
experience this time. All this line of
reasoning has been aba ndoned and
the altered viewpoint is due solely
and entirely to the action of the
market itself. The big break was
precipitated Thursday when a pool
in one industrial stock which had been
extravagantly bid up-Manhattan
Electrical Supply-collapsed with the
loss amounting to some 60 points, a
decline seldom matched in one days
trading on the Stock Exchange. The
parallel with the Devoe & Reynolds
incident in March, 1926, was too close
to escape attention. and on Friday as
two other speculative movements in
individual industrials broke down
alarm spread through the whole list
and general and severe decline
set in.
What then of the future? The an.
things may be said. In the first
place, the market has received
shock from which it will not quickly
recover. There probably will be no
repetition of the bidding-up process
IN stocks which was never warrant
ed by values. 1t has been demon.
strated that this market is lust as
Vulnerable as any other which has
mad SO long an advance without sub
-
nor spectators are going to rush in TO
buy stocks regardless of price for fear
that II they do not act at once they
VIII have to pay more
Attention to Trade Conditions.
Secondly, more attention will be
pald TO business conditions. The
STOCK Market is not likely to move
as unit, even to the extent It has
been doing. There is no good rea-
son, fQr instance, why unrestrained
competition in the motor car trade /
should affect unfavorably the mar
Ket as whole. On that point the |
actlon or the General Motor board |
OF directors seems to show that they |
at least have no disturbing doubts |
ABOUT the outlook. The weekly re- |
views of the iron and steel trade are |
not particularly encouraging, but |
united states Steers untitled tonnage |
statement showed another increase |
the second after a long series of de- |
cIneS. Hallway gross earnings are |
falling off, but the railroad execu- |
ives expect better things in the Fall |
The market from now on is going |
to take into account these alters |
IN greater degree than it has been |
doing.
Finally there is still the money sit |
uation to appraise. The backbone of |
the market has been the abundance |
OF credit. Any substantial harden |
ing of rates here would be imme- |
diately reflected in the price of Sc |
curities. So Hfar there has been no |.
danger signal Call money has ruled |
at 5A per cent, with funds obtain |
able at concessions in the outside |
market. On the other hand, there is !
no sign of any further weakening /
in rates. The reduction in the re- |
discount rate of the Federal Reserve |
banks has accelerated the movement
OF capital abroad, where more IA
vorable terms are to be had. Au- |
tumn business ought to make some !
demand upon the banks which will |
hold rates steady, if it does not |
harden them.
In short, it seems reasona BILE to |
believe that for some time to come
rates are at their low and that anv
change must be in the direction Of
advance. II this reasoning is sound |
spectators for the rise in stocks have
a new element to take into consid- |
eration