Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-01-06
MARKET DISPLAYS
AMAZING STRENGTH
Heavy Refreshments ir
Stocks Cause Enormous
Price Gains.
By CHARLES r. SPEARE.


short span of five weeks the curve Q
stock market prices has shown tn
most abrupt changes of the past fou
years.
On November 80 the highest Ieve
for industrial shares in history wa
reached. On December the averag
Of these same shares was % point
lower. On Thursday of this week tn
average was higher than at the emf
of November, and Friday that of rail
road stocks rose above the high o
1928, which means that it overtoppet
the average for the rail group sine,
- 1916.
II Both in vitality and in volume thu
market In the closing days Of 1872;
and in the opening sessions of 1872!
strongest advocates and brought con
fusion to the minds of those who arr
conscious of its dangerous tendencies
Investors Buying Stocks.
Some of its vitality is due to thu
Injection into it of funds released
from January interest and dividend
payments, which have sought out stock;
for investment rather than flowing in.
to the traditional channels of the
bond market. It is significant of the
trend of the times, as well as of the
contradictions that are to be founc
r in security markets these days, that
while high money rates have caused
several hundred bond issues to sell
lower than they did during the quiet
panic of last Summer. scores of stocks
that yield only half as much as these
same bonds are higher today thar
they were in November
urfN
Age passing out at the end of the year
and Buoyant Youth coming in might
also be employed to contrast the pres
ent bond market with the market fol
stocks. At the end of 1929, however
the caricatures may be reversed
The psychology of the speculative
situation seems to favor higher prices
though increasing Selectivity in stocks
rather than discriminating gambling
In them. It is argued that with the
steady and heavy volume of new listings
There will be sessions of high total
transactions. One session of 5000 OOC
shares may be considered dull: one OF
100000 shares normal. This is in line
with the expansion in all units of bust
ness measurements in country whose
ratio of growth in the past 10 years
u not readily comprehended even by
research.
Market Values Startling.
For those who feel, however, that
there is no limit to prices of stocks
1Rd that however much these prices
nay have risen in 1928, they will ap-
pTeciate as much in 1929, it would be
well to look over the change in market
values of some of the leading shares
kSaa =
question whether expected new bust
ness, possible increases in dividends
the benefits of consolidation or any
other favorable factors would justify
even one-half as much again of price
expansion as has recently taken place
To illustrate: During 1928 the value
Of the stock Of the Anaconda Copper
Co. increased 5000, 100000. With this
weeks gain that of General Electric,
since the end of 1927, has arisen $780,
100000. Chrysler stock was worth
$500, 000. 900 more on December 81 than
a year earlier. and that of the du Point
Corporation 500,000,000 more. During
1928 the valuation of General Motors
Corporation common was $1,150, 00o, 900
over the same period the year before.
This appreciation equals the total
amount Of the bills discounted of all
the banks In the Federal Reserve Sys-
TEN.
International Nickel stock increased
$3.50, 000, 600 and Kennecott Copper
about the same. The gain in the value
of Montgomery Ward and Sears-Roe-
buck stocks was between $3.50, 000, 900
and $400, 100000 each, or much more
than the total gross sales of either
company. In a comparatively poor
year for the industry, the stocks Of the
Standard Oil of California, Standard
of New Jersey and Standard of New
York showed a combined market gain
Of $1,000, 100000.
81 Packard Motor stock was up $780,
eD0, 900, or two and half times the to-
tai gross earnings for this company for
the year ending August 81. Radio Cor
porationS value increased by $325, 000,-
600 and that of its associate, Victor
Talking Machine. by $75.000,0 Union
Carbide & Carbon stock rose $780,
100000. Alladins Lamp has never
been rubbed to greater advantage than
IN this era Of eXtravagant estimates OF
stock values. Its efficiency has been
reduced by overuse.
Money Strain Passes.
Judging from subsequent movements,
the break in stocks in the early part of
December was not due SO much to the
rise in money rates of 10 to IL per
cent as to the weak technical condition
of the market at that time. The mar
ket was overbought and overweight.
Money has been higher since and just
as scarce as 1t was then. With a
sounder technical condition the market
has borne this burden and risen in the
face Of 1t. It Is again getting in some
what the same state that it was in a
month ago. Therefore, another break
Of considerable proportions is not i'm
probable, although the strain of the
year end money settlements has passed
and rates today on call are only half
as high as they were on Wednesday.
There is, however, slowly creeping
over the business situation the shadow
: Of these same money rates. This time
1t casts itself on commercial commit
mentS as well as on those for Specula-
ton. If the Federal Reserve has not
been successful in the past 10 months
in checking imitation in stocks by the
use of its rediscount policy, it has given
business fair treatment in keeping down
the rate for commercial loans. It can
not, however, continue to do this when
volume of credits absorbed into specu-
lation is so high and so insiStently
tending to expend. Rates for accept
dnceS THIS week are approximately al
the rediscount rates. The next step is
likely TO be an advance in rates on
commercial paper. Unless there is a
correction in the speculative market
a further advance in the Federal Re-
serve rate is probable.
Gold Outflow Foreseen.
This country faces another consider
able drain of gold for French account
1t would not be surprising if France
took back from $100,o0o,000 to $780,
100000 Of the credit of 100000 ,00C
which she still has here. There is nc
effect in any direction for this loss
except that which comes from the
liquidation of securities. Sooner OF
later the volume of trade will be at.
fected by the difficulty that high inter.
est rates impose on business, which car
not today borrow to advantage. Thi'
is true most of all with the State anc