Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-05-05
FURTHER ADVANCE
/. IN STOCKS IS SEEN
Industrial List Climbs Back
to March Level During
Week.
BY CHARLES F. SPEARE.

| Special Dispatch TO The star.
NEW YORK, May AT some time
or other during this week nearly every
group of stocks, except the rails, has
been buoyant. The industrials have
climbed back to, and then above, their
previous March average.
To Wall Street this breaking through
the former level is highly significant,
for it means that ell of the stock that
has been for sale has been absorbed
and OPPOSITION to a further advance has
broken down.
It was apparent a week ago that
the market was not to be unsettled
again by high money. When it held
its ground against Is per cent call
rate it displayed a technical strength
Of which the professional element took
full advantage and which the public
was quick to appreciate. Conditions
within the market were supplemented
by evidence of great prosperity in near
ly all lines of business, such as the
March quarter statement Of the U.
S. Steel Corporation, the month of
March earnings of the railroads, al
most universal gains in gross and net
revenues by the public utilities dur
ing the early Spring weeks, higher div
idendS and another series of valuable
rights" offered to the shareholders OF
prominent American corporations.
Testimony to Industrial Well Being.
Testimony to the industrial well
being of the country came from other
quarters, such as the Department OF
Commerce the Treasury Department,
the Federal Reserve Board, banks and
trust companies reviewing the outlook
in their monthly circulars. and from
the gathering in washington OF the
| IL T,1;A fntn
of Commerce.
On top of these bullish factors was
the easing Of call money rates early
in the week and the ability OF the
banks to keep a supply sufficient Tor
Wall Streets needs and under the
high figure of the previous week.
It is true that time money rates
hardened slightly and that accept
ances were firmer; also that brokers
loans increased $40 .000, 600, adding 10
the expansion of 100000 the week
| before. The money strain Is not over
This is evident from the fact that 10
per cent is being paid we'll after the
May / financing has been completed.
The public attitude toward the cost
of money for carrying stocks Is the
same today as it was last November
and December and in March. 1t makes
no difference to this public how high
the rate goes so long as stocks go
up with 1t.
| Academic discussion of the effect
| of credit conditions steadily broadens
| to include more individuals and
larger number Of organizations Reso-
lutions are being framed by the score.
They do not produce much practical
effect, nor will they so long as the
mind of the Federal Reserve Board on
rediscount policies is as much divided
as it has been since Jass@-1ry and
while equally intelligent and well in
formed men take opposite views on
the current value of securities.
Public Wants to Speculate.
The plain facts Of the situation are
that the American public wants to
speculate. 1t Is intensely bullish on
| the United States and its corporations.
1t has the money with which to specu-
late. The promising field for Specula-
| ton today Is in common stocks. There
is more money available for specula-
ton than legitimate business requires.
| Until business shows tendency to
! contract, earnings to decrease, divi-
dends to shrink, there will be OPPOSE
ton to any sustained declining in
| stocks.
There Is very little use try.ro to
/ frighten Wall Street over foreign affairs.
| NOLlQlJlOIlS dUIOdu willy OdllhClo d4lN
exporters and importers, but they have
no place in the market calculations of
the present Wall Street public. The
| threatened break of the negotiations in
| Paris had little effect on stocks, but If,
| as now seems possible, the genius of
owen D. Young can bring about COM
promise between Germany and the al
lies on annuities this is likely to be
used as another excuse for bidding up
| No A1f hat lone
| in Germany at the present moment
are more acute than they have been In
several years and that Berlin this week
has been sitting on the edge of VOL
cano, and that both from the stand
point of foreign trade and foreign loans
our financial and commercial affairs
are closely tied in with those Of Ger
many, eXcites little interest in world
where domestic securities can be moved
up or 10 points in a day.
Money Market Control Changing.
Every one is talking about the passing
| Of control of the money market from
the Federal Reserve and its members
to the corporations and other lenders
exceed those of the New York and out
of-town banks. But nothing is being
| done about the situation. This is out
Of hand and can not be corrected until
the rate for money declines to a figure
where it is more profitable to use it
outside than inside Wall Street. The
supply of this money is being steadily
| fed into the market by companies that
do not need it for their own immediate
development but whose credit gives
them the opportunity to sell stocks or
convertible bonds at moderate service
cost. The proceeds Of these loans are
then put out on CALL
Take the case, for instance, of one
of the largest of the investment trusts
which proposes next week to issue $15,-
600 000i new preferred stock. The cor
poration and its affiliates already have
between 5000, 900 and $50,000,000 in
cash and call loans which 1t has raised
through various security issues in the
last year. Its management is extremely
bearish on the stock market. Obvi-
ously, therefore, it is not selling new
stock to go bargain hunting in Wall
Street. Nor would one expect in the
present disturbed conditions in Europe,
In South America or in Japan that it
would go out seeking an investment
for its new funds in the internal secur-
tiles of foreign countries. Domestic
bonds would not attract, for they do
not yield enough to justify borrowing
at 6 per cent or better. The only con-
clusion is that in the good Judgment
of the management of this corporation
1t is wiSest business policy to sell more
| Nd IN 10 NroRfe m tho on,-,.