The Washington times., 1928-12-08
PRICES TUMBLE
IN WEEk-EN
TRADING
By W. S. COUSINS

NEW YORK, Dec. 8 u.N.S.l.-A
break in the industrial stocks near
the weekend sent the higlEpriced
stocks tumbling from / to 80 points,
wiping out millions of dollars in the
paper profits of the big and little
traders all over the country and
stirring up a state of nervous ten
sion that has not been duplicated
in Wall Street since the Hoover
boom started in November.
After ignoring all of the warn
ings of the bankers and business
men for two or three months chas-
ing the speculative bubbles far
up into the clouds and holding on
for dear life on the expectation OF
fortune-making on a thin capital,
thousands of small traders were
practically wiped out by the ava
lanche of selling which swept over
the board on Thursday.
12 Per Cent Money
A IL per cent. call rate was the
immediate cause Tor the selling
CIebacIe, but any other excuse, cause
or reason would nave been as good,
under the conditions. The truth of
the matter is that the market has
been oyer-bought by a speculatively
crazed public that has known as
much about the intrinsic values Of
the stocks they were buying as
they do of the temperature OF Mars.
There was no doubt that the
Tightening UP of Tie money market
was the most important develop
menf of the week affecting the
movement of stock prices. Instead
~ ra i111yiT1o- a hnnrr
brokers loans expanded 500, 600 900
for the week, showing that the
load Of carrying thousands nf
shares of speculative stocks had
been transferred TO the small, or
margin trader, whose borrowings
are proportionately larger than the
big professionals and pools. who
supply a good share of their own
Ammunition. .
That fundamental business and
industrial conditions are sound is
evident from the extremely favor
able earnings reports and dividend
assumptions and increases an
nounced during the week. On a.
single day a total of Is such in
creases, assumptions or granting of
stock dividends were passed on Of
ficialIy by the directors of prom.
inent concerns.
The banking houses ard Industrial
corporations have already begun to
make up their summaries Of the
years business. Most of them will
find that 1928 tops the best previous
year in history, IN the matter of
industrial output, home and foreign
sales, profits. and dividends. Com
pared with the early postwar years,
corporation profits have risen ali
the way from 300 to / $50 per cent,
which forms an important back
ground for the tremendous upward
in stock prices which has |
been in progress since the first part |
Of 1924.
Natural Break
"A break or two In the progress |
Of a bull market is a natural de- |
velopment and its severity depends |
On the degree of recklessness with |
which stocks have been purchased
by big and small traders all over
the country. When the storm
breaks, these traders are unable 10
protect themselves, and their stocks
are thrown on the market for what
they will bring. Since they must
compete with thousands of other
shares many of them also in the
distress selling" class they are not
likely to receive anything very flat.
tering in the way of prices, and
often huge losses occur.
Fridays vigorous rally followed
the influx of buying demand from
traders all over the country. The
barga1n-hunter was on tap, and the
big bears were busily engaged in
covering up their tracks.