Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-08-11
SEVERE REACTION
!. IN STOCK MARKET
Manhattan Electrical Shares
!: Break 60 Points and
+. Spread Alarm.
BY GEORGE +. HUGHES.


Special Dispatch to The Star
NEW YORK. August 1l.-Throwl
into confusion by the perpendicular
break of more than so points in Man
haitian Electrical Supply. stock tina
had been eXtravagantly bid up agans
the short interest, the stock marke
experienced a severe reaction today.
The session had begun with SOM
advances, in the utilities, in a few o
the high-sra rails and in some in
dustrial specialties, but with heavines
in the old leaders. General Motors ant
United States Steel. For time it wa:
a two sided affair. Then the spectacu
lar performance in Manhattan Elec
trical Supply brought selling orders il
volume.
In some quarters the Manhattan
Electrical Supply incident was likeneC
to the break in Devoe and Reynolds il
March, 1926, although the two were
mot precisely comparable. Manhattan
Electrical Supply had closed on Wed
nesday at 1902. 1t opened un
changed, but soon began gradually tC
give way aid then dropped abruptly
In the second hour the stock was
fhrown overheard regardless of price
finally touching so. where it was off
more than 60 points on the day.
Warning Goes Unheeded.
The market had some time ago the
word of the president Of the company
that the rise was unjustified by earn
tngs, but no attention had been paid
10 the warning. When the collapse
came it spread fear that other stocks
which had been spectacularly strong
IN recent markets might be in a SINH
lar position.
Houston Oil was one of the hardest
hit Thinker Roller Bearings was an
pther to feel the weight of urgent
liquidation. In the case of Houston
Oil the price broke a point between
sales. Baldwin went down with other
stocks in which the shorts had been
made to suffer. Baldwin was one of
the stocks that had been loaning at
b premium. The rise here had been
based not on current earnings, but
upon the value of the company's Phlla'
nelphia real estate.
While ii was the high-priced indus
trial specialties that were under the
greatest pressure, sound investment
Stocks sold off more or less. All the
steels were down, even Bethlehem
which had been so strong earlier in
the week on predictions of dividend
action early next year. Crucible lost
ground and so did United States Steel.
General Motors Slumps Also.
General Motors had acted uncer-
family from the start. Evidently the
market had been none too sure about
the much-talked-of split-up supposed
to be scheduled for the dividend meet
Ing after the close today. For time
It held around the preceding close or
Sust above, but when the rest of the
list turned downward General Motors
went along.
By noon the losses in the Specula-
tive industrialS extended to around II
points in Houston Oil, s points in Tim
ken Roller Bearings. 21a points in
Colorado Fuel. about as much in
General Electric. points in Atlantic
Refining, nearly points in American
Smelling and Refining and over 3
points in Woolworth. There were in
termittent rallies, but little sustained
support.
Considering the weakness in the
rest of the market. the steel shares
held we'll So did the utilities. Early
In the session Southern California
Edison had been bid up to new high
for the year and what appeared to be
confident buying had gone on in Con-
solidated Gas. In the railway list
New York Central has been strong.
It was a severe test. however, even
for the best of stocks.