Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-10-25
A Wholesome Readjustment.

While it Is unsafe to forecast any
stock market movements, 1t would seem
that the downward slide of prices which
yesterday developed into q veritable
panic has been checked, and that re-
covery of stable conditions Is ut hand
The situation is still delicate. The fac
tors making for decline remain as pos
abilities of sudden revival. Still. there
are evidences that the shaking down
process has been about completed.
This decline has been long coming.
The market has been doomed UP and
I'D for months, with only occasional and
slight setbacks, until prices have gone
beyond their legitimate range, as meas.
ured by the investment yardstick. Sc
curities that have paid small, II any,
dividends have been rolled up to record
prices, under the influence Of spscula-
tive competition. In such conditions the
break, making for the restoration Of q
sounder level of prices, more nearly CO.
incident with actual values, is to be re-
garded as wholesome corrective.
There have been some heavy losses
to speculative stock buyers in this COL
lapse. Those who bought late on the
rise, on margins, or who bought earlier
and held too long, were caught In the
avalanche of precipitously falling prices
They had to sell or be sold. their mar
gins wiped out, their stock swept away.
Nobody will ever know how much money
has been thus lost in the bear market
OF these past few days.
But as far as today is known there
have been no business failures directly
attributable to this panic" Brokerage
houses have evidently been we'll pro-
tected by the margins Of customers, and
have been able to secure themselves
from losses by timely action in defense.
Banks have not been strained to the
breaking point, although credits have
been severely extended
A peculiar feature Of this collapse of
market prices has been that 1t has
come in series Of slips and bumps
each one carrying the general level
below that of the preceding one,
with alternating recoveries temporarily
easing the strain. Perhaps this
phenomenon has been saving factor
against a really disastrous panic. Had
the slip occurred without any. tenn
porary recoveries. carrying prices down
the whole distance from the peak TO
yesterdays low points, the country
would perhaps have been actually
harmed. AS it is, only those who have
been gambling with stocks, on margins,
have in the main suffered.
Market prices will probably now be
restored In terms of intrinsic values.
II the bottom of this movement has
been reached and the present check Is
not merely another breathing spell to
be followed by another bump, there
will be steady, perhaps an increasing,
how of buying orders, from those who
believe that the street" Is full Of bar
gains, and who are taking them for
either investment or for speculation.
Such concerted buying movement al
most inevitably results in o steady
upward tendency. If it is not carried
too far the reaction will for the present
definitely restore equilibrium.
So long as confidence In the basic
conditions Of the country Is not dis
turbed such a panic" as that which
has just swept through Wall Street is
not unwholesome. 1t is rather a de-
sirable readjustment.