Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-12-15
|STOCKS LOSE PART
| OF RECENT GAINS
Rapid Market Comeback and
BeariSh News Cause
Selling Movement.
BY CHARLES F. sPEARE.

mately one-third of their recent maxi
mum gain.
The question may be asked: Why
should there have been such a sudden
and pronounced turn downward? The
answer is to be found primarily in con-
ditions within the market. which had
become unfavorable through too fast
moving recovery and in external devel-
opmentS that were regarded as bearish.
The first of these developments was
associated with a resumption Of pool
operations and extravagant rumors af-
fecting certain stocks: also there was
an increase in floating supply from
those who had relieved firms and indi-
viduals Of embarrassing speculative
commitments and who took advantage
of the higher range of prices to feed
stocks out. Others turned sellers to
realize a portion Of their CsIickly made
profits.
Bearish Item in News.
In the way of bearish news we're the
copper statistics. showing rising to-
tai of unSold metal and falling exports:
abroad, a continued sag in the percent
age of iron and steel production, de-
creased railroad car loadings, slightly
firmer rates for time money, higher
brokers' loans, and one quite serious
financial situation In an industrial COM
pany that had greatly overextended it
self Just prior to the fall in stocks.
With the experience of only last
month still most vivid in its mind. the
public has not had SUFFICIENT time to re-
cover its poise. 1t has been more dis
turbed by little incidents that seem to
suggest price drop than 1t would have
been had 1t not recently gone through
major reaction. It Is quick to take
fright and to reduce its holdings, al
though there is every indication that 1t
expects to see materially higher prices
within the next six or nine months.
This state of mind Is being capitalized
by a number of bold operators who
have recently resumed the campaign
that was nipped in the bud by the New
York Stock Exchange QUESTIONABLE on
short selling.
Bankers Turn Back Stocks.
For some time the market must deal
with the supply of stocks In the hands
of the bankers who did good piece Of
rescue work in October and November
as we'll as with widely scattered amounts
held by individuals and corporations
that bought at the recent low price
range, but did not commit themselves
then to a permanent investment.
1t has been possible this week for
any one who made purchases on Octo-
Der "a and October 29, the two days
of most violent declines during the Au-
tumn, to have sold out at fair to
substantial profit A study of the stock
list on those days will establish this
fact beyond dispute. Furthermore, out
of approximately $50 different issues all
but about 30 were much higher last
Monday than they were on october 20,
the exceptions being mainly in the
metal stocks and In those Of the small
manufacturing and distributing compa-
mics. Obviously, there has been much
advantage taken of this profit possible
ity during the recent sharp rise in
prices.
The comparison of quotations on No
vember Is with those of last Monday Is
even more favorable to the later buyer
of stocks than to those who came into
the market on q larger scale when they
thought the low days had been reached
in October. UnQuestionably, there has
recently been a return to Wall Street
on a considerable scale of stocks pur-
chased during the final week of the de-
cline. All of this has had pronounced
effect on the internal market situation
and has brought about readjustment
there that was quite necessary.
Pool Buys Few Issues.
There have been most extravagant
statements made concerning the scope
and operations of the bankers pool
which came into active operation late
in October. The commitments to this
consortium were $3.50, 100000. 1t is I'M
derstood that less than half of the
available resources were employed in
purchases of stocks. The total holdings
of the pool at their maximum were be-
tween 1000 900 and ,250, 900 shares. A
large part of this was in comparatively
few issues, such as United States Steel,
Anaconda Copper and General Motors.
The policy of the bankers was to
support the general list by influencing
the market for leading issues. It is
known that there has been some liQut-
dation by the pool on strong days, but 1t
still has control of substantial blocks
of stocks which have been nearer this
week to their purchase price than have
the three major industries most affected
directly or sentimentally by the stock
market collapse.
If there is to be a secondary reaction
in the general market carrying prices
down to, or below, the November level,
as some observers claim, 1t will be the
result of fear produced by bear attacks
on prices rather than consequence Of
diminishing intrinsic values. Those who
look at the outlook without bias can not
see how business is to escape a brief
period of quite sharp readiustment to
stock market losses and to the more
cautious attitude Of producers and con-
sumers that this has created. There are
differences of opinion as to the dura-
ton of the industrial decline, ranging
from three months to nine months. Few
anticipate a major recession, as for
tunately the conditions that would ordi-
narily bring this about following a
Wall Street smash are not present at
this time.
Strange as 1t may seem, the indus
tries that are most likely to suffer are
those that have been well managed and
in which the element of financial
strength Is most conspicuous. Among
them balance sheets may show up more
favorably for time than current earn
ings. One fact to be remembered is
that there was a considerable shift In
the control of stock holdings in Octo-
Der and in November, which will mean
in the future more conservative and ef-
ficient management and less emphasis
upon speculative operations. Out of this
the individual shareholder will be the
gamer.
Interest Rates Harden.
In the field of banking this week
there have developed several important
events. AS the year closes the demands
for currency and the shifting Of funds
between banks and corporations Incl
dent to the January financing have had
tendency to harden interest rates.
Time loans have advanced from AZ to
S DER cent. A substantial movement of
gold to Europe is under way. Both Lon
don and Paris are retaining gold from
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