Evening star. [volume] (Washington, D.C.) 1854-1972, 1928-09-09
MARKET PUZZLES
|. EXPERT OBSERVERS
Broad Upward Trend With
Frequent and Violent
Changes Mark Week.

BY CHARLES r. SPEARE.
Special Dispatch to The Star.
NEW YORK. September 8.-1t is a.
difficult to read the stock market will
its background of high money. hisl
average prices and prestige that goe
with long success as 1t is to analyzi
the present political situation. confused
by the new elements Of religion AND
prohibition. Those whose business |
is to interpret the one are AS muddlet
in their minds as this years reviewer
of the presidential campaign.
The most visible fact this week is &
market OF broad proportions. of violen
and transitory movements in groups o.
industrials and public utilities and yer,
little Roadway by the general list
Compared with the previous week, wher
transactions were smaller and the
average advanced five points. the me-
results since last Saturday have beer
negative. This would indicate that the
pools are distributing stocks and thai
the public is again buying them as the,
rise from day to day to new high
records.
Precedents Cast Aside.
All precedents by which a norma
market might be interpreted are beine
set aside, just as are the usual indica.
tors of the political trend. No atten.
ton is being given to money rates or tc
the correlative factors of money
Brokers tell one that their customer:
have such large balances and are
so strongly margned that they have
no fears Of 10 or Is point break
With the country prosperous they see
no reason to sell their securities ever
though they are eXtravagantly high
and from an income standpoint, un-
week has had to pay Az per cent to
is so per cent above the average return
on a group of industrial stocks that are
the favorites of speculation.
No suspicion can be cast on the
legitimacy of the stock movements from
the standpoint Of increasing profits b.,
the three most important groups OF
American corporations. An analysis Of
both income statements and balance
sheets for the first half of 1928 ind
rates q remarkable recovery from the
last quarter of 1927 and the first thrcs
months of this year. This reaches into
nearly every conspicuous field OF In
dustry.
1HCEC@SGu
A compilation recently made shows
that $40 business corporations had an
increase Of s per cent In profits IN inc
first six months of 1923, compared WIN
the same period of 1927. Reduced 10
groups the following percentages OF ao-
vance were Indicated: Copper, 40; mo-
tor equipment, IS: motors. %: cnemlcai'
10: retail chain stores, II; 1000 PROD
ucts, 6, and petroleum, per cent. Inc
only groups whose earnings decIneu
between January and July were tnose
representing coal, railroad equipment
building materials, iron, steel ana Tex
tiles.
In the public utility field 50 COM
psnies showed an average gain OF IL
per cent, with a rising trend In the
second quarter of 1923 over the first
quarter. Railroads had net operat-
inc income In the first half OF the year
2 per cent less than last year. Begin
ming with July their results we're much
better and are expected to improve
throughout. the remainder OF 1928 in
comparison with the Summer and
Autumn months of 1927.
The debatable questions, therefore.
have to do primarily with the present
high average range of prices and the
permanency of bull campaign that is
being carried on in the face of opposi-
ton by the bankers of the country and
their official representatives.
Treasury Bows to Markets.
The bankers are in the position of
the reformer and are, therefore, UNI
popular. They are against the present
gambling spirit of the public because
they more accurately than the public
appreciate what it means to divert from
commercial channels the present
enormous volume of money invested i'll
securities and experimenting the earlier
lookup of capital in real estate and in
instailmcnt purchases. If support of
the reasonableness of their position
were necessary 1t would be amply sup
pliSd by the terms Of this weeks Treas
Try financing and the fact that Secre-
tary Mellon has, for the first time
since he took Office, been compelled to
knuckle down to actual conditions In
the markets tor money and for bonds.
Those who, looking back over the
history OF recent Government financing,
thought they might witness some con-
cesSions by the money market to the
Government emergency have seen this
week a continuous rate of 712 per cent
for call money renewals and an APP
proach TO 81 per cent for long time
money.
The only exception to the general
tendency in mediums of credit has been
a decline OF u per cent in bank accept
ances due to the efforts OF the Federal
Reserve to extend its facilities to the
commercial world during its season of
maximum money requirements. This
they may do by purchasing bills and
releasing their credit which, In turn,
will be multiplied four or five fold by
member institutions. 1t does not mean
any easier rates for those who are
borrowing for speculative requirements
and who are likely to pay more for
accommodations at the end of Septem-
Der than at the beginning of the month.
What seems to be a contrary attitude
Is the support that the Federal Reserve
is giving to sterling exchange, now at
the lowest OF the year, in order to pre-
vent the import of gold, which also
would act In relief of credit
During the discussion of brokers' loans
and what they represent, 1t has been
claimed that a separation of them into
loans on stocks and loans on bonds
would indicate that much of the expan-
sion was due to borrowing by invest
ment houses against securities issued in
the first half year and substantially
unstable. The fallacy of this argu-
ment is proved in the steady rise in
brokers' loans, and particularly the in
crease Of $214,000,00O In August, re-
ported by the Stock Exchange, although
there was every indication that during
chat month there had been a large dis
tribution of these new bond issues SO
that on September l the shelves of
dealers were sufficiently bare to war;
rant them in taking up this week about