Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-11-02
new BUYING POWER
IS NOW IN MARKET
Unfortunate Spectators and
Investors Replaced by
Army of Purchasers.
BY CHARLES F. SPEARE.

By CHARLES r. SPEAhE.
Special Dispatch TO The Star.
NEW YORK, November with the
stock exchanges of the country closed
today and brokers and their clerical
forces working to clear up before Mon
day the accumulated business of the
most critical week through which Wall
Street ever passed, those who were sold
out in Tuesdays panic and the more
fortunate who had resources to apply
to bargain purchases of stocks on that
day and in the two following sessions
had time to think calmly over their re-
Spective positions.
The tragedies Of Tuesday have been
intensified by the fact that many of
them could have been avoided and also
by the sequel of rise in prices of such
a sensational nature that about 40 per
cent of the losses in market values oc-
curing between october "a and 90 have
already been recovered. This has en-
Uttered thousands of sufferers who feel
that they have been the victims
of plot to get their stocks cheap and
so add to the fortunes of those who al
ready possessed them.
Warnings Recalled.
This has undoubtedly caused much
i'll feeling against Wall Street in spite
of the constant warnings that were is
sued to the public to trim its sails
and to cease following market that
was heading toward the disaster that
finally overlook 1t.
lions on Tuesday that the public had
been wiped out" in the decline and
that Wall Street would now have to go
along without the assistance of the
great army of little spectators and
investors who had made up such large
percentage of its supporters. This turns
out to have been another error Of judg-
ment and an underestimate Of the
latent buying power of the country.
The facts are that when stocks drop
ped to a level that represented about
the average prices of a year ago and
were again on basis where those who
could buy them could realize an income
return of 10 to 100 per cent greater
than during August, new public with
apparently unlimited means immediate
" took the place of the old one. It was
a public that bought primarily for cash.
It had to. Brokers would not deal with
it on any other basis. Banks would not
lend against collateral loans, as they
had Just been through experiences with
former security holders that had turn
ed the hairs of their officers gray.
So this public came down to Wall
Street on Wednesday morning. but in
even greater numbers on Thursday,
with currency and certified checks and
bought those stocks which it had seen
soaring for months, but were now on
the bargain counter" There is no
question but that the statement OF john
d. Rockefeller that he and his son, John
D. ir., were buying common stocks and
would 90 on buying them, had more 10
do with exciting this public than any
other factor.
Enormous Savings.
Where did this money come from
which had been withheld from the
market for a period of several years
while American stocks were attracting
the interest of the entire world?
If one had gone into any savings
bank. safe deposit company, national
bank or trust company, life insurance
company. loan department OF mortgage
COMPANY on these days he would nave
found the answer.
The savings banks had to pay out
money at a faster rate ana In larger
totals than at any time except when a
run" was in progress. SO dlo ali Oh II,e
national and State institutions in nearly
Insurance companies had the biggest
demand for loans on policies at any time
in their history. Holders of mortgages
offered them at discount in order 10
obtain immediate cash. Those VINO mao
been cautious and had bought oonos
while they declined went to their SAFE
denosit vaults, Withdrew them and OF
fered them for sale, so that the bona
market suffered the greatest decline IN
three days that it had since bonos Went
to a discount with the beginning OF tne
high-money period. This slump was also
intensified by liquidation on the part OF
savings banks and others who had to
have cash to pay their depositors.
New faces and new names by thou-
sands appeared in Wall Street ofnces
Brokers were dumfounded over the EVIL
dence of untouched wealth that came
tn the surface after the stock markel
began to rally and it was realized tina,
the worst of the crisis had passed.
They had no conception OF the
enormous buying power that was m
reserve or the numbers OF individuals
that were still anxious to get into the
market in spite of what had happened
to the great army Of "sold-outs.
Monday Prospect.
There have been many wealthy men
| who have retired from business AND
who have been nominally bears on the
market, who appeared in Wall Street
this week for the first time In several
years. They bought stocks on Tuesday
and Wednesday on a scale that amazed
their brokers. When the market opened
with such a rush on Thursday, however
they withdrew unexecuted buying orders
| feeling that the advance was going toe
| fast and too far. The evidence today
among brokerage houses was that the
general public that could command
buying resources was sending in 1t:
orders to execute Monday morning
| when the market will have the first
opportunity to express its satisfaction
over the reduction in the Fedora
Reserve rediscount rate in New Yorl
and the colossal reduction in brokers
loans reported after trading officially
ceased Thursday afternoon.
!