Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-02-03
CREDIT SITUATION
AFFECTS MARKET
Speculative Movement I'm.
certain, but Gain in Loans
Continues.
By CHARLES F. SPEARE.


Special Dispatch to The Star.
NEW YORK, February january,
the second largest month Of trading in
Stock Exchange history, Is now 1oilow-
ed by one additionally known as
period of uncertain speculative move
ments.
But, as Wall Street has persistently
ignored all precedent factors IN meaSur-
ing the trend of markets and In eStl-
mating the value of securities, 1t Is
necessary to deal with the stock sit
nation as it appears on the surface
rather than to try to sound the depth
and force of the strong currents That
may be surging underneath 1t.
The primary force urging prices up
ward is the constant flow of capital in
the control of individuals OF large and
small means, and under the direction OF
institutions and trading corporations,
into the market for equities" The sup
ply of such funds appears inexhaustible.
Not only Is It directly employed In the
ABSORPTION of stocks, but accommodates
speculation In the form of loans. with
out which this speculation could not
continue at its present pace.
The item of brokers loans this week
for the account of ''others" reached the
fifure of $2,Sl5, 100000. comparing with
81 .O52, 000, 900 a year ago. IT 1t goes on
growing it will soon be equal to the
aggregate of loans of the New York
banks and of all the interior institutions
that are lenders on call IN thls market.
Business Reports Favorable.
Secondary influences are more funda-
mental and give a degree OF legitimacy
to the rise in price that can not be
ignored. They include the favorable
business reports. such as that from the
iron and steel industry, which has had
the best January in its history; rail-
road earnings, which in December ex-
ceeded by 65 per cent the net returns
of the corresponding month In 1927; a
fairly large return flow of gold from
Europe that has eaSed the tension on
money and for the first time In some
weeks reduced long-term money quota
tons: and expectation of business
program under Mr.. Hoover that Will De
as constructive and as protective to
American industries as that which Is
now closing with the Coolidge admin
iStration.
still another development of stimuli
lating character was the decision OF
the Interstate Commerce Commission
approving the merger of the New York
Central system with the big Four"
and the Michigan Central While this
has no bearing on the general railroad
consolidation scheme, it shows, for the
first time in several years. a disposition
on the part of the commission to har-
monte railroad conditions rather than
to disrupt them. This gives encourage
ment to those who are convinced that
it is in the public interest to merge
various railroad groups and that, under
proper limitations of purchase, this
movement should be encouraged rather
than opposed.
The sequel of this decision and Of
the public offering of securities backed
by portion of the stocks which have
been held in the various companies of
the Van Sweringens has given stimu-.
lus to railroad shares such as they have
not had during the present bull market.
Note Of Caution Heard.
With all the hilarity that expresses
Itself in enormous transactions and the
VIGOROUS daily upbidding OF prices Of
stocks there is a degree of apprehen-
sion In Wall Street that increases as
the price level rises and the ratio of
bank funds in stock operations expands.
1t is difficult to SEE how Wle vicious cir