Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-05-19
MARKET IS ERRAT|C
IN WEEKS TRADING
Price Average Remains
About Same as on May |.
Trend Uncertain.
By CHARLES F. sPEARE.


Special Dispatch to The star
NEW YORK. MAY 1s.-At the end 81
this week the average price Of stocks
stood almost exactly where II vas 1T
the first Of the month. If it had not
been for few shares conspicuouslv
strong the range Of the industrisls
would have been lower than on Nav
!. Actually rails are down an aver
age of points.
Bonds have lost nearly all Of the gain
made in April. with their average an
proximately that Of March. which was
the lowest in several years.
There is general lack of sterilization
course. IT is either very strong or 50
weak that it seems to be on the edge
OF an extensive decline. There have
been few periods during the entire
range of years covered by the present
upward movement that have produced
such violent fluctuations in averages az
those of the last four months. This
represents the conflict of opinions con-
corning current prices for securities.
More and more do these violent move
ments synchronize with equally erratic
changes in money rates.
Lack of StabiIiza ton.
There is genera lack Of sterilization
In prices of securities. in prices Of COM
modlt1es and in interest rates This
makes for confused situation and e3-
plains the steadily narrowing down If
speculation and the passive attitud.
OF public that has its accounts
strongly margined but is not disposed
TO increase its stock market commit
ments.
The conditions in the markets for
securities and for money are the on
posits Oh those obtaining in the business
world. where unsusl equilibrium pre-
walls and on which there has not vet
been any visible impact from high
money or the consequences of over
specuIatlon. An exception must be
mace Tor the copper industry. which
got INTO bad company and is now uav-
ing the penalty for tWo-month spree.
Coppers was the one important com
moolty lp which imitation cieveloned
fortunately it did not infect other com
mooltles and 1t was Debated so uuickly
coVery IN grain and cotton, though not
consumers or producers.
The sharp decline in the eenera,
commodity index in recent weeks has
neen checked by the Temporary re-
coyery IN grain and cotton though not
oeTore causing embarrassment to the
growers Of these staple products.
Oil Industry Looks Up.
announcer picture fast developing favor
anle aspects Is that of the oil industry.
1nls week several Of the producers and
reflners found themselves able IN in
crease their dividends from the profits
or 1913. Standard Oil Of New JERSEY
mas Just made one of the most remark
able reports for the year of any Ameri-
can industrial corporation, comparable
10 tnat OF General Motors and United
States Steel. At the end of 1928 1t
had cash and marketable securities of
nearly S264000. 900 against about $40
OOO, 600 at the end of 1927, and it added
S12,O0O,0O0 to its surplus. The 6istinc-
tive feature of the balance sheets of
the larger oil corporations today is the
size of their current assets and the
moderate amount of their inventories.
Last week the average rate for call
money was 11$4 per cent; this week
1t has been 9 per cent For one hour
it vas Is per cent. This may be arti-
f1cial or the result of an actual scarcity
of supply. 1t SUGGESTS an extremely
delicate situation to be faced by bor-
roWers at the approaching periods of
heavy financial transactions in June
and July. The Minneapolis and San
Francisco Federal Reserve Banks have
brought their rediscount rate into line
with the other 10 districts quoting
per cent. Brokers loans slowly expand
az corporations and Others" feed their
idle funds into market that pays
them so well and from which they will
be reluctant to withdraw until rates
drop below 6, per cent and stay there.
Federal Reserve Stands Fast.
So long as the political motive gov
erns the majority opinion of the Fed
eral Reserve Board there will be no
increase in the; rediscount rate, al
though the business men and bankers
who direct the affairs of the regional
banks favor such an increase. The
board is like a holding company, more
powerful than its constituency. al
though not so we'll informed nor so
predetermined as its constituent men,
bers. When men who dominate the
money markets OF New York and Chi
cago feel that speculative conditions
have become so serious as to demand
an eStoppal in the form Of a higher
discount rate but are Checsmated by
those seeking political favor, or who
are welded 10 economic theories, the
impotency OF the Federal Reserve SIS
TEN becomes apparent In the Sum
mer OF 1927 the Federal Reserve Boald
compelled the Chicago Federal Reserve
Bank to reduce its rats against the
Judgment of the local directors. Now
il refuses 70 consider the recommen-
dation of this same body of shreWd
bankers and merchants for a higher
rate
Speculation always precedes the de
vslopment OF new industries and al
ways overdiscounts the early posi-
bilities FOR profit in pioneer fields. This
has occurred III the last IS years in
both automobiles and radios. In each
case more companies were created and
more capital ventured than were war
ranted. The sequel was the elimira-
ton OF high percentage of the man
ufacturing units and serious losses TO
investors, then an indignation by
an industry stabilized and its Securi-
ties assumed an investment rather than
speculative status.
Aviation Attracts Investors.
The same conditions are now taking
place in the youngest of Americas
conspicuous industries, namely, aviation.
New companies to manufacture air
planes and their accessories, to build
airportS. TO develop transportation by
air routes. to facilitate credit purchases
of airplanes and, finally, in the form
of Investment trusts to hold the Sc
curities of manufacturing and operating
concerns. are being incorporated from
month TO month.
So far this year approximately
Sl35.000,000 of new capital has been
publicly offered 70 attract investors into
this alluring field. This is about }
times more than the value OF airpiare
products manufactured last year and
IL times greater than the 1927 proouc-
ton. The capital outlay for this infant
industry compares with only s150,000.-
900 asked for by American railroads
between January and MAY.
There are hetWeen Is and 30 airplane