Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-04-14
MARKET IMPROVES
ON EASIER CREDIT
Prices Recover After Second
airy Reaction-BrokerS'
Loans Still High.
ny CHARLES F. sPEARE.

Special Dispatch to The Star.
NEW YORK, April ls.-!The contro-
versy over credit conditions has been
more subdued this week. Motions IN
stocks have been narrowing down to
the proportions Of earlier markets,
prices have gone through secondary"
downward movement and then have re-
covered, and brokers' loans have been
Heduced $135 100000.
An average call money renewal rate
of Sl4 per cent for the week compares
with that of 10h per cent the week
previous. Time loans are mostly at
9 per cent, but the demand Is smaller,
with concessions mainly to the Dor
rover. The bond market has shown
greater resistance to the influences
that have been producing successive
waves of liquidation since the first of
the year.
It is only as current money rates
appear easy in comparison with those
of last month that the credit situation
seems to have improved. The quota
ton of o per cent prevailing the second
half of this week is close to the maxi
mum for all of last year. From the
record total of March 20, the decrease
in brokers :.~SlS has amounted to
$366,000,0 900, but they had expanded
$702,000,000 in the three months pre-
vious.
Loan Figures StiH High.
If it is the aim of the Federal Re-
serve to reduce speculative borrowings
$1,000 900 900 as the first requisite of
credit stability, there must be further
liquidation of securities. Even should
this loan readjustment be accomplished,
the total would only be down to the
figure of last September, when stock
averages were considered high. In his
statement early in March, Paul M.
Warburg emphasized the fact that the
market value of 30 corporation stocks
had increased in two years over $15,-
600, 1000, 900, IAN accreticn," he said,
quite unrelated to respective increases
in plant, property or earning power"
Comparing prices of stocks at their
low point this week with the high
levels reached at different times dur
ing the first quarter of the year, 1t Is
obvious that much liquidation has oc-
cured and that quite q slice has been
pared of the excess valuation Of favor
tie issues. This does not mean, how
ever, that they have been reduced to
an investment basis. In this connec-
tion the statement of the president of
one of the largest investment trusts
this week is Illuminating. His COM
pany, he remarked, had the same
amount of it's resources in cash or in
call loans now as it had during the
March break and did not take advan-
tage of panicky prices then, for the
: season that it did not believe them
attractive.
The popular share prior to the March
break were the coppers, which benefited
from the advance in copper metal from
1tr -
break in these stocks Anticipated the
sudden decline in metal from "A cents
to about 10 cents. 1t was due more to
an over extended speculative position
than to conditions in the trade. The
effect of 1t was a cutoff from Is to 20
per cent of the market valuation OF the
members of this group. Earlier there
had been a broad speculation in the
motors. The operation in this active
list OF stocks has amounted to from
10 to S3l3 per cent and to even higher
percentages among some of the smaller
producing concerns. The companies
manufacturing motor accessories have
seen their stocks reduced in market
value by one-quarter to one-third.
Utilities Stocks Shrink.
Coincident with the great public de-
mand for copperS was that for the hold
ing companies of public utilities, with
the relation between earnings and prices
per share becoming much distorted.
Naturally, therefore, in the readjuSt-
ment there had to be a radical shrink
age in public utility stock. This ranged
from 20 to 40 per cent. Another group
that experienced an extravagant over
appraisal was composed OF the radio
companies One of these stocks this
week was down 60 per cent from the
high of the year and another over 80
per cent. The airplane issues likewise
had to be debated. Two of the most
important in the listed group were of
18 and "a per cent respectively.
1t has also been a period of recasting
of opinions concerning the worth OF
some of the amusement company
shares. In going over the list Of tnem,
one finds such declines as 80 per cent
in one, 40 per cent in another, As per
cent in a third, and nearly so per cent
in fourth. Others are down from %
to IS per cent. This is correcting over
valuations with vengeance. Trade
mark securities that have been popular
and have been selling at more times
their earnings than prospects justify,
have likewise settled back to q closer
parity with actual worth. The ma
tional distributing company stocks are
railroads that have had the widest
market, the declines range from 8 to
13 per cent.
Many of the stocks in these different
groups had previously increased in
market value from 100 per cent to 300
per cent and although the declines from
the high level of this year appear large,
they still leave q majority Of specula-
tive shares at figures representing con-
siderable discounting of future pros
poets.
New Factors in Situation.
For months Wall Street has operated
on three major facts; namely high
money, which was hearish. and indus
trial prosperity and the Republication
and the consolidation of corporations,
which were bullish. From now on there
are likely to be other factors entering
the situation to divert attention from
those that have been controlling.
Among them are the new Congress
which convenes Monday, crop con-
ditions In the Winter wheat and Gotten
belts, evidences of over production In
the motor industry, over stimulation
lin the price Of copper and a slowing
Ndown In the pace Of the iron and steel
trade.
II The decision Of the United States
Supreme Court this week in the Inter-
borough Rapid Transit case was Of q
sweeping character. It had q pro.
nounced effect on Q large body Of Local
! traction securities and SOLDERING one
where there are attempts being made
to establish higher surface line fares
The same body of jurists are likely al
any time to hand down their opinion In
the st. Louis & O'Fallon Railway
case. In this they may establish lega
precedents affecting railroad security
values for years to come.
Still another influence will be thai
developing out of the plan of the repa-
rations committee, for this cannot bl
successful without assistance from ths