Evening star. [volume] (Washington, D.C.) 1854-1972, 1928-03-10

uOuS UcCduSC IA COIltEdSC 10
average conditions. A large proportion
lished from week to week are unsatis-
factory. Current returns indicate the
slowing down In production. Even the
public utilities have begun to show
signs of restricted use of electrical
power in industry.
Cheap Money Boosts Prices.
Is the reversal of the market then
to be traced back to the predominant
cause for price initiation in 1927,
namely. abundant capital at lower
rates of interest? To a degree the
answer is in the affirmative. The
governor Of the Federal Reserve Board
this week. in his testimony before the
Senate committee investigating brok-
ers' loans, manifested little anxiety
over this item in bank accounts. Sew
eral economists expressed the opinion
that the present imitation was the
Soundest Of the postwar period. In
other words. II there is to be specula-
ton 1t Is safer for the banks to center
It In securities which are readily sale
able than in real estate or in commo-
dities which may. eventually become
the collateral in frozen loans" There
Is much to be said in favor of this
argument
AS Wall street has been watching the
thermometer OF brokers' loans through
out this year tor variations In the specu-
lative fever, the diagnosis made by Gov.
Young brought encouragement, Which
was quickly translated into terms of ex-
panding transactions and rising Secur-
ity prices. Along with this came the
Treasury's announcement Of Spring
financing. which did not include any
provision for taking up or exchanging
another portion Of the third Liberty
4L per cent bonds. The influence from
this was that, as money rates are now
higher than IN the Autumn. when the
last short-term notes were issued on a
better basis than the new notes. Sec
rotary Mellon must postpone his long
term arrangements until Spring In ex-
pectation OF easier money rates. So,
with an official decree that brokers
loans are not extravagantly high and an
official suggestion that money rates may
be lower two months hence. the pro-
fessional element started out on an
other speculative jamboree.
Opinions ON Trade Conflict.
1t has been difficult at times to know
whether the Washington Interpretation
of the business and financial situation
was the correct one or whether the
emphasis which New York banking in
terests have been placing on certain
weak elements In speculation. In credit
and In industry deserved most attention.
The former Is obviously colored by
political considerations and desires.
Frequently the washington viewpoint
has been Numerically opposite TO that
Tt1nwn DC hatfauAA tn no
conflict OF opinion between the two on
the question OF discount rates and on
the preferential treatment OF foreign
money markets over American markets:
Good business Is good political capital
in a presidential year. So the issue
may arise as TO whether an extended
position In brokers loans and a high
average of stock prices. compelling an
artificially stiff discount rate. should
take precedence over any aid to bust
ness or TO agriculture that might come
In the next six months from a lower
rate than that now quoted by the Fed
eral Reserve Banks. In the enthusiasm
OF the moment. Wall Street Is basing
its market commitments on the pros
pect OF lower rather than higher money
and Is betting on the dominance OF the
Washington over the New York banking
policy.
Motors Hold Spotlight.
A corporation whose stocks have
market value OF nearly $4,000. 600, 600.
as Is the case with General Motors,
stands out distinctly even In crowd
Of Industrial giants. This may be said
to have been General Motors week In
the market. The publication OF Its an
nual report for 1927. showing such
items as assets. 81 .098 100000: cash
and United States securities. $208 .000.-
900; inventories, si72.000.000: wages,
5000, 900 900: net earnings, $23S. 600 600,
and cars sold here and abroad 1885,
SIT, furnished q new enthusiasm for
the securities of the company. But
there was O further factor in that Cen
erai Motors and all other producers OF
medium priced automobiles were feeling
less effect from Ford competition than
they had anticipated two months ago
and were shipping out cars in larger
volume for this season Of the year than
at any time In their history.
For instance. last month the Chevrolet
production was approximately ll7.ooo
cars. about IS per cent greater than
year ago. and nearly five times the re-
ported output of the Ford Co. for the
AAbFhA@'e" -
January and February were close To
10000 cars. or about 90 per cent In
excess of the same months In 1927
Studebaker sales In this period were 80
per cent larger than year ago. And
so II has been with other producers.
which would explain the movement In
their securities after taking into account
lower profits per car as the result OF u
potential competition.
Steel Trade Improves.
The iron and steel trade has for weeks
benefited from this Increase In motor
production. sd that ut present shipments
or steel products over the railroads IN
Chicago and Pittsburgh are. In some
instances. larger than u year ago. Just
now there ~ heaitaney On the part OF
buyers who have covered their require
ments and are not disposed 10 force up
prices through urgent demands on pro"
ducers. A few Of the railroads. espe-
ciaily those In the Northwest and IN
the territory OF the transcontinental
lines are loading more cars Of freight
than "a year ago. In general, February
trafflc returns will he unsatisfactory.
February building permits were about
per cent higher than In the same month
last year, This. IN time. viii be trans
lated INTO iron and steel tonnage ana
into purchases Of other building mate
rails.
This week has Witnessed improved
conditions IN the market for sugar with
higher prices for the product and for
sugar securities. II has seen the de-
veiopment Of better attitude toward
oil stocks growing out of the actual
decrease In oil production and arrange
ments for further contraction IN the
Oklahoma and California fields tome"
thing may come Ia the henent ot the
bituminous coal trade and IN The large
body Ut those dependent an H. for III"
come and for "A livelihood from the
Investigations now taking place, What
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