Evening star., 1929-06-30
BY GEORGE T. HUGHES.
Dispatch to The star.

BY GEORGE i. HUGHES.
Special Dispatch to The Star
NEW YORK, June 29.-Whatever the
story told by the averages and whatever
deduction may be drawn therefron as
to the future, one thing is certain about
the stock market today and that is that
the public attitude toward it has under
gone a great change since January l
last Caution has replaced confidence.
Apprehension has taken the place of
assurance.
All this may be changed If the re-
covery of the last two weeks of June
is sustained. That is a matter for the
future. as to which no opinion is ex-
pressed here. The rally has been the
result. for the most part. of professional
operations and it is doubtful whether
the great outside public realizes how
much progress has been made. Mean
while it is still true that in the popular
mind the feature of the first half year
in the stock market is the break in May
rather than the recovery in June
The emphasis is no longer, publicly or
privately, on huge winnings in the spec
ulatiVe field. Stories of this or that big
operator who made a killing" in the
bull market are seldom heard. Instead.
it is whispered in Wall Street that SO and
so was badly hurt in one or the other
of the market breaks during the past
six months. On the outside the anna
teur is not Dragging so much about his
perspicacity as to matters financial. He
does not talk about his losses, because
that is not human nature, but his
friends are not so reticent.
The story that gets the big play in
the newspapers is not the spectacular
advance in prices. It is the violent
break which now gets all the attention.
Instead of figuring out how much Mr..
Rockerbilt has made by the rise in the
quotation for the stocks with which his
name is connected, the computers are
busy fixing the amount that has been
cut off from values" by the denatlon
in one or more specific issues.
Faulty Estimates Made.
A good deal of the basis for these es-
Inmates is nonsense. To take, for m
stance, the difference between the high
price of General Motors this year and
it's low price and to multiply that dif-
ference by the number of shares out
standing and then 10 say that the re-
suit is the amount by which the value
of General Motors has been diminished
is absurd. In the first place no conSid-
erable proportion of the stock could
have been sold at the high price, nor
could any large amount have been
bought at the low. 1t is only the float-
ing supply which has made material LOT
the manipulators. Investment holdings
have been for the most part undls-
turbed
Then. too. If there has been any
change in the value of General Motors
it has been on the side of advance,
whatever may have happened to the
market price Current estimates OF tnaC
value have changed, but that is all.
Nevertheless, it may be admitted that
there have been huge losses sustained
and not all of them on paper either;
The question then arises as 10 now ~
ali came about The answer tnat Is
most widely accepted in Wall Street,
using ''Wali Street to mean the active
trading element and its outside follow
ers. is that the Federal Reserve Board
is to blame. ...
probably the majority who hold this
view have only the vaguest notions as
to lust what are the functions OF tne
Federal Reserve Board and just now
1ish rt5eral Reserve system operates,
,sssr tf,eg are none the less fixed in their
OOiniof1s. The Federal Reserve Board
is pictured as huge ogre eager TO
deyour innocent and hapless SPECTATORS.
Reserve Boards First Warning"
This general statement is subject to
the qualification that the odlum at-
[aCneQ 10 LIE oGlNC 1SOoAA 49, SAAS @NA-
of the speculator has been transferred
during the past month to that OF the
directors of certain of the Reserve
hanks. who wanted to raise the reolS-
count rate and who were prevented from
so doing by the central body at WASH
ington. But that is minor dlstlnc-
ton. In any case 1T Is the banker
who is held to be at fault.
Suppose we review briefly the facts
Tr1.. <laR,ita r110up made IN
February when the Federal Reserve
Board gave out a warning" that II
the stock market continued to absorb
credit as it was then doing business
would be injured and it would be neces-
sary for the banking authorities to take
restrictive action. Strong Endorsement
was given to this view by various emil
nent economists and practical bankers,
among them Paul M. Warburg. In May
the Federal Advisory Council made
public its recommendations to the Re
serve Board that permission be given
to such reserve banks that asked for
1t to raise their discount rates, again
stressing the danger to business OF the
speculative mania. incidentally, IT was
allowed to become known that the re-
serve banks of New York and Chicago
had made this request and that the
board at Washington had denied 1T.
Now one does not have to be an eX-
pert in banking or economics to get the
idea that there was powerful opposition
to further advance in prices for STOCKS.
1t was enough to shake the nerves OF
the most daring trader, but that was
not all. These official statements were
supplemented and accompanied by news
of secret Reserve Board sessions, as to
the proceedings of which nothing was
ever officially made public.
Uncertainty Irks Wall Street.
The policy seemed to have been well
thought out and consistent. The first
Federal Reserve warning, which was
given on February Z, was preceded by
notice on February 6 that an impor-
tant announcement was coming. The
market weakened on the first day and
broke violently on the second.
Before there had been time thoroughly
to digest this February warning, notice
was given of special meeting on Feb
ruary II of the board of the New York
Reserve Bank. Nothing was ever given
out as to what happened at this spe-
cial meeting. The regular meeting on
February IA was prolonged until $3.50
pm, whereas it generally is over two
hours earlier, indicating to Wall street
that serious matters were discussed
but again the outsider never learned
what those matters were. He couio
only surmise. and from market stand
point that kind of uncertainty is worst
than the facts would have been, nc
matter how unfavorab!e.
More or less the same thing went or
during March. Washington dispatches
would tell of meetings of the Reserve
Board generally attended by important
representatives of the various Reserve
banks without, however, any detail al