Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-12-22
STOCK PRICES LOSE
PART OF RECOVERY
Market Affected by Pessi-
miStic View of Traders.
Business Sound.
BY CHARLES r. sPEARE.

SpeCl&l DISpALcn TO Inc star,
NEW YORK, December 2I.-It has
been a discouraging week in the mar
ket for those who held stocks through
the Autumn break and for the banking
pool that supported 1t at that time;
also for the recent bargain hunters"
Prices have been dropping on small
volumes Of sales until Friday, when the
turnover In a session that was con-
spicuous for its substantial net de-
clines surpassed that Of the previous
week, when the averages touched the
high point OF the recovery.
The market is now IS points lower
than on December 8, but 80 points
higher than on November IS. One
prominent stock has fallen well below
Its former low price. Others have ap-
preached intentionally near 1t.
Undue Pessimism Rules.
Wall Street is always overconfident
or unduly pesSimistic. It had been for
months placing the emphasis on bust
ness profits, mergers, "Split-ups," trad
ing corporation purchases, the puhlic's
preference for common stocks over
bonds. the financial supremacy for the
United States, etc, and translating all
OF these into extravagant stock valua-
tionS. Now 1t lends its ear only to
rumors Of business failures. the predica-
ment Of overeXtended trading COM
panies, the effect on money of q loss
Of part Of our 5000, 600, 600 gold, etc,
and sells its equities" at q 40 to so Der
cent decline from the prices at which
1t rushed to buy them four or 1--WE
months ago.
It is now admitted that the market
was rushed up too rapidly after the
break and that 1t is feeling the effect
OF this false start. which gave the bear
element an opportunity to resume its
operations and the pools the adyan-
tage Of prices on which they could sell
at a profit. The decline has been as
sisted by the heaviest selling to estab-
liSh losses for income tax purposes since
1924, by the receiverShip for one much
exploited and nnismanaged company, by
the financial troubles of another whose
commitments during O period of pros
perity are slowly being worked out, when
more attention Is being given to i'm
mediate returns on investments than
on long-term possibilities.
Gold Shipments Are Factor.
Other factors that have led to de-
clining stock prices are heavy ship
ments Of gold to France, the dramatic
action OF the President of the Argen-
tine government in closing the gold
exchange office and thereby forcing
Argentina OF q gold basis, unsettlement
in the leading American commodity
markets, the sharp drop in the per-
centage Of iron and steel production SO
far this month, with predictions Of a
further decline before the end Of De-
cember. and a hardening in money
requirements during the holidays. Rail
road earnings for November that have
been reported indicate traf1c losses both
In the agricultural and industrial sec
tons Of the United States.
The financial and business situation
however, has had its brighter aspects.
All OF the evidence goes to show that
holiday trade has held up well in spite
Of the fact that the weather over large
areas this week has been most unfa-
vorable for it. Corporations and busi-
ness firms have been recommending the
payment OF bonuses to employees on as
large and, in many instances, q higher
basis than q year ago. Not so many
dividend increases have been announced
this week as q week ago, but none Of
has been reduced or passed,
and scores are daily being reported from
all lines Of business that must by this
time have had some indications as to
whether they suffered from or are to
be materially affected by the stock
market panic.
New Financing Heavy.
The total volume Of new financing
this week was the heaviest for the year,
with practically all of the $225, 900 900
offered for subscription in the nature
Of high-grade bonds or preferred stocks.
This contrasts with what has been hap
pening since January. In the IL months
TO November 80 over so per cent of the
entire corporate financing arranged was
in common stocks, with the ratio of
Junior to senior securities in the four
months between June 80 and october
81 nearly rs per cent. So complete has
been the change In sentiment that, in
the amount of new stock Of
fered by finance companies was only
81, ASS 900, compared with more than
81 .614 100000 in the previous four
The securities now being sold are Of
q kind that lend themselves to con-
sentative investors. They are being rap
idly absorbed. Nearly all are Of do
nestle origin. Not until there is greater
in the American bond
market can there be any hope for re-
Stunning the issuance Of dollar bonds.
Every week there seems to be some
new episode in foreign finance or politics
that makes it just so much more Diff
ficult to interest investors In the Sc
curitieS of other countries. The eX-
posure Of the German governments
deficit last week was not encouraging
to the American holders Of ITO issues
Of German dollar bonds aggregating
81 ,1O0, 000.0 900. The Argentine incident
was highly disturbing to American in
vestorS in the score of Argentine gov
eminent, municipal and provincial loans
held In this country in the amount Of
1855, 900 900. From time to time in
recent months there have been de-
velopments Of q political or economic
character elsewhere that have shaken
confidence in the obligations of other
South and Central American states. OF
Brazilian loans $500 900 900 have been
sold here. Loans of Chile aggregate
$220, O0O, 600: Of Colombia, $3.50, 0O0, 900;
Of Peru, $4,000, 900, and of Bolivia,
$4,000. 900. On the total dollar loans
to South and Central American coun-
tries Of $l,250. 900 600, the shrinkage
from the original subscription averages
between is and 20 per cent.
All of this has O relation to our ex-
port trade, which has been stimulated
by foreign loans to the benefit Of the
exporter, but which have 80 far been
O Door investment for the individuals
who purchased them at any time within
the last two years.
Rail Consolidation Helpful.
The rail consolidation plan reported
by the Interstate Commerce Commits
sion should be a helpful influence. al
though the main features of 1t have
been given wide publicity in advance
It ut least offers the carriers a means
of getting together and endeavoring to