Evening star., 1928-11-25
ADVANCINGMARKET
PUZZLES EXPERTS
Observers Fear Handicap to
Industry in Wave of
Speculation.
BY CHARLES f. sPEARE.


public daily, reached stage this weel
where it could not be accommodates
with present Stock Exchange facilities
Since the election there have been J.
sessions in which the average day
transactions have been In excess o
5,500,000 shares, This is a 30 per cen
increase over the volume of husines
done in March and April, when th
congestion of long period of BIZ
markets forced Wall Street to Shu
down at the end of each week and
finally, brought about four-hour trad
ing day.
The Stock Exchange has now over
Eaken the improved methods and the
expanded facilities introduced since thai
time. What could not be accomplished
by sound advice may have to be EN-.
phaSiSed TO the public by a partiaI
breakdown OF the machinery through
which it operates.
Reaping Industrial Harvest.
During the brief period since No.
Vember average prices of stocks have
risen Is points, making the total aver
age gain since last February so points
and nearly 100 points in less than twt
years Until three months ago most oi
them had been diScounting what NIGH
take place at some future time, fol
there were insufficient facts in the way
OF larger earnings and higher dividends
to justify the pronounced and contin-
ued advances being made In individual
stocks and IN specific groups OF Securi-
ties. Latterly, however, the fruits OF
this years industrial harvest have begun
to be reaped. Even these do not warrant
the extravaganza of the current move
Iment in prices, which on Tuesday was
represented in an average gain of so
points in four issues and of nearly rs
points in q similar number on Thurs
day.
Parallels for the present speculation
are only to be found in the history OF
other centuries and of other countries.
None has ever occupied the attention
of as large proportion of nations
people as the present one. Many who
two years ago thought the market was
, dangerously high, and a year ago con-
verted all of their securities into cash,
nation of market that plunges on
from day to day and whose followers
are never so aggressive as when the
news is unfavorable to them.
1t is O period when better speculative
advice comes out of the BARRIERS chair
than from the parlors Of the banker,
This has always been true in every
/, similar period Of inflated markets, but
never in SO great a degree or for so
lang time as now,
Big Money Behind Market.
There Is this difference, however. be-
tween the present public and that Of
other days. 1t Is not operating "on
shoe string" This Is the protective fea.
ture Of the situation. It Is the one, also,
which makes brokers who have been
through numerous stock market crises
wonder what sort of credit catastrophe
would be necessary In order to produce
sufncient decline to force extensive
hquidationof margin accounts.
/. The brokers are equally well protected
with their banks, as the latter have
margined down collateral to abSurdly
low levels and are demanding q degree
OF protection even at these levels that
is considered ultra-cenServative. How
ever, as the public moves in one direc-
ton under favorable circumstances
and like sheep tries TO get through the
same gate at the same time, so they
are likely to be governed by a single
desire, when, for technical or other rea-
sons. q wave Of selling breaks over the
market.
Therefore, while there may be, and
many expect there must be. decided
are few who see in the situation any
suggestion Of break greater than that
IN June and considerably less than that
which occurred IN March 20. 1926, and
test behind 1t great deal of wreckage.
A Prosperity Complex.
The statement has been made this
week that the country has q prosperity
complex, II other words, the American
people are fooling themselves into be-
nevlng that they are better off than
l the facts indicate, The argument Is
that the only industries doing well are
EnoSe that cater to the non essentials
OF life and those of the few new SELL
ing and distributing organizations that
ere rapidly replacing the old-time
merchants.
Abundant evidence is available to
4 prove that the country is prosperous,
by and large, and that those who do
not recognize this prosperity simply
smut their eyes TO the transformation
tnat has occurred in our industrial life
in the last few years. The fact that
three or four industries have fallen be-
nlnd and that some Of them may be
headed toward permanent decay does
not mean that those that have re-
placed them are transient or are not
IS accurate tndices of prosperity as
the others.
One of the striking features in the
progress of the last half year has been
the rapid recovery in three of the
major industries which were fiat not
many months ago. Take copper as ar
illustration. There have been more in.
creased dividends on copper stocks
lately, due to the advance in the price
OF copper metal, than in a long period
OF years. II the oil industry progresses
at its present rate 1t will make similar
showing In 1929. From every angle
the iron and steel trade exhibits con.
oitlons that will be expressed in higher
dividends later on.
Motor Industry at Peak.
This year may mark the height oi
the earnings per share Of a number oi
the prominent manufacturers of auto.
mobiles, for they are entering q perioc
OF intense competition. Their pros.
perity in 1927 and 1923 is real; it has
added to the increased wealth Of the
Nation and hundreds of thousands oi
the owners Of automobile stocks have
benefited thereby and have contrib.
uted from this income TO the sue,
cess OF other industries. Nearly all o,
the great public utilities are prosperous
Much complaint is heard of the Low
average return on the property invest
ment OF railroads. While this does no
compare favorably with the return or
other forms of capital and never will
4 under our present system of rate regu.
lation, it is, nevertheless, fair and the
opinion is ventured that there will bt
numerous advances in railroad divi.
dends in 1929
The main question is not that O
present prosperity but continuation o.
prosperity. Students of economic con
ditions seem TO agree that the mo-
mentum of business will carry it vel
over the first of the year and into tn,
first quarter of the coming year.
= Beyond that time they are not willing
Ia 90 hacausn they can not reckon or