Evening star., 1928-12-30
BULLS HOLD SWAY
IN STOCK MARKET
Public Interest in Trading
Slightly Reduced, but Prices
Are Forced Up.
BY CHARLES r. SPEARE.


is miniature Of that at the end of
November. The public is not in it
to the extent it was a month ago, but
those who are propelling prices up
other times during the year and are
as little concerned over IL and IS per
cent money rates as they were earlier
with rates at and 10 per cent.
The handicap of the current high
charges is partially balanced by the
improvement in the technical position
of the market, and this carries the
greater weight, for a period of credit
relaxation in some degree is antici-
pated shortly.
Scores of stocks today are higher
than they we're during the movement
leading to the top average of Novem--
ber 80. In fact, the general level OF
the market is nearly back to the point
at which the average decline of about
% points took place early this month.
On the first rally following this de-
cline there was an average gain OF
8 points: then secondary decline of
points; later an almost perpendicu-
lar rise from December II of II points.
There have been few periods in the
present bull market when it showed the
vitality and the recuperative power OF
the past two weeks. This may or may
not be reasonable or traditional, but 1t
must be accepted as fact and dealt with
accordingly. 1t represents the speedy
return of confidence in securities that
had gone through one of the most
sudden and extensive declines in market
history without producing any effect on
business or causing fatal injury to those
who participated in it. What it did do
was to reveal more strikingly than ever
the enormous cash resources of the
public that is interested in stocks as
well as the latent buying power con-
centrated in various groups of corpora
tionS and individuals whose faith in the
future of the country is stronger at
year was young.
A market such as that now under
way may break sharply without caus-
ing serious damage, for never has the
average of brokers' margins been so
high or the prices at which banks lend
on securities so low in relation to mar
ket prices. Between the one condition
and the other, representing policy of
ultra-conservatism toward market ap-
praisals, active shares have been mar
gined at from 40 to so per cent of their
going prices. The wonder is that the
public. whose cost this month for money
to carry stocks will be between 9 and
10 per cent, retains its bullishneSS in
the face of the highest charges in near
ly nine years and approximately the
highest average for industrial stocks
on record.
Credit Sources Ample.
These two factors constitute the only
bearish elements in the situation.
Eventually they must lead to another
reaction if the public resumes the spec
ulative pace that was maintained dur
ing October and November It will be
difficult, however, to unsettle the mind
of this public so long as business con-
tinueS to show such strong features
and while lenders of all sorts and con-
Gitions from all over the world are
willing to supply Wall Street with
credit to carry on this speculation.
The craze of the people for indus
trials is exenplified in the demand for
the new Ford Co. of England stock.
Nearly the total amount of the 100000
shares issued has already been turned
over at a 400 per cent premium Cash
purchasers of this stock, in odd lot
amounts alone, in the first three days
after it was listed here, were 100000
shares.
Every time the market breaks there
are powerful interests standing by to
pick up what they consider bargains"
1t is safe to say that nearly every
investment trust in existence bought
stocks on December 6, and g. A con-
siderable portion of the purchases made
then have since been reSold and the
foH iy1fn iy1r
of these corporations Their potential
buying power may be illustrated by the
returns from a QUESTIONABLE sent out
this week to 200 trusts. This showed
that these trusts have between $780,
100000 and $400,000,000 out on call
awaiting favorable opportunity for in
veStment in stocks or in bonds.
New Financing Restricted.
With the stock market absorbing
more credit again and only small
percentage of the years increase in
brokers' loans contracted by reason of
the liquidation of three weeks ago,
there is not much prospect of easy
money. This will have deadening
effect on the bond market and prevent
new financing except as it may be done
through the medium of stocks.
From one or two directions the in
ability to borrow and to sell securities
has restricted development and pro-
duced quiet conditions in industry.
There is always the fear that sus-
tanned period of high money rates,
growing out of an eXtravagant Specula-
ton in stocks. will, in the end, develop
some unfavorable conditions in the COM
mercial world and that out of these
will come pronounced liquidation in Sc
curitieS.
Railroads Show Gains.
Industrial developments this week
have not had the importance that has
been given to the November statements
OF railroad earnings. The latter have
been brilliant and fair reason for an
advance in railroad shares. While 1923
VIII not realize by about / per cent the
return on railroad property investment
obtained in 1926, it will be decidedly
higher than in 1927, and with the
momentum that traffic has gained, the
comparison OF figures in the first half
OF 1929 with the similar period of 1923
VIII be as favorable as ths~s between the
sa"cnd six-month period of 1927 and
The efficiency with which the rail-
Dads are being operated accounts for
che much greater increase in net than
IN gross earnings, IN TACT, not few
lines have been able recently to enlarge
their net while their gross has been de-
creasing and without injury to their
physical property.
If the courts are fair and logical in
their decisions next year and if the new
administration breatheS some life into
the Interstate Commerce Commission,
1t would be reasonable to expect a de-
velopment of public confidence in car
rier securities that would place them
nearer parity with the public utilities
and the industrials.
ReparatiOns Question Important.
There is one situation with which tn
markets must take account shortly, for
it will demand great deal of them