Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-09-15
MARKET BENEFITS
BY SHARP REACTION
Secondary Drop During the
Week Seen as Correc.
tive Influence.
BY CHARLES r. sPEARE.


Special Dispatch to The Star.
NEW YORK, September 14.-The
stock market this week has been afa
fected like the man who. after an acute
attack Of indigestion, seeks to satisfy
an artificial appetite with lobster salad.
A relapse from such indulgence is cer-
tain to occur.
There was not long enough period
Of purging q week ago to correct In
ternal market conditions and with Wall
Street absorbing stocks in a wholesale
fashion after the break, It was In no
position to counteract the effects later
Of such untoward developments as the
heavy decline in the unified orders of
the United States Steel Corporation and
the increase in brokers' loans Of
1920, 000, 900.
Consequently, we have had for sew
eral days choppy market and indica-
lions Of heavy proflt-taking sales from
those interests who are popularity sup
buy them, regardless of price and OF
return. The fact that these periods Of
market staleness have been more fire.
quent Is o sign that a two-sided opinion
concerning the future of securities Is
developing. This may lead to further
liquidation.
There is nothing in the situation,
tive reaction. The primary factors Of
good business. general employment.
high wages, large corporation earnings,
an active foreign trade, ever present
buying power for O comparatively small
and select group Of securities and an
abundance of credit serve to protect q
market status that appears vulnerable
from price standpoint, but Is strength
ened as never before by the public's
common consent that American cor
poration stocks constitute the best out
let for earnings and savings Of any
form Of wealth.
These disorders representing changes
in technical market conditions are
bound TO continue where a publics en-
thusiaSm carries 1t of It's feet and
prompts 1t to mass buying power IN
one or two sections of the list. ST.
long as there is sufficient reserve de-
mand for securities on these frequent
reactions there Is no danger in them
and the market can be kept under
control.
Reviewing all of the situations or cpl
sodes on which other markets at high
average levels have reacted when least
expected to do so, 1t is difficult to find
In the fields Of credit, of industry, Of
politics, or Of international relations
any self-evident facts that would in the
near future bring about q radical mar
ket change. There are always condi-
tons hidden below the surface whose
influence cannot be estimated and
been expected to come from some other
source.
Stocks Relation TO Trade.
1t would seem, therefore. as though
the stock market and business were re-
volving In the same orbit, with the one
closely following the other and the cir
Gle OF speculation not likely to be
broken through until there are visible
indications of industrial reaction. The
intimate relations between stocks and
corporation activities were strongly
limited at this week in the reactionary
tendency of United States Steel COM
mon prior to and following the state
ment of untitled tonnage in August
showing decrease of about 100000
tons and of 1884, 900 tons since April.
The apparent strike Of stock buyers
against the shares Of corporations
Is leather, sugar, rubber, automobiles
and fertilizers and with section Of.
business devoted to the retailing Of dry
goods; also the more recent withdrawal
from the stocks Of aviation companies,
indicates the alertneSs Of the investor
and the speed with which he abandons
an unpromising situation and masses
his resources to more favorable bust
ness situations.
Some day he will sit down quietly
with pencil and paper and figure out
whether he can afford to buy or hold
o stock on which there may be no in
come return, or as little as ! or 2
per cent, and whose prospects are be-
ginning to be dimmed by an inevitable
showdown in industry. This time has
not yet arrived, however, and with in
vestment trusts multiplying from week
to week and more and more limited in
what they may buy to advantage, 1t
Is dimcllt to see where basis for more
than these frequent and mild squalls
In the market Is to develop.
Pivot on Investment Trusts.
The investment trust is the main
pivot on which the price movement Of
stocks must turn for some time to come.
Following the creation of trusts and
trading corporations In the first eight
months of 1929 with q capitalization
OF approximately $1,000, 900, 900, there
have been others Of great size pro-
NOTED during the first half Of Septem-
UCEs 4AIlS WCCA SAAOlC tWOp WAt&4
sources In excess Of 500 200, 900 each,
have attracted the public's attention. A
third has q capital of $65,000, 900. and
another $4,000, 900, fifth $40. 1000, 900,
several others of $15,000,000 to $25,-
600 900 and numerous companies, about
which the public hears little, with q
capital between 100000 and $1o,-
100000.
Not all Of them are buying stocks
at this level. This is proved In the
increase In the brokers' loans OF
Others" which are mounting up rapid
ly, and they are fed by the proceeds
of investment stock sales held in re-
serve against more favorable oppor.
tunity for buying selected issues OF
securities. Conditions are such today
that II group Of men .'perating an
investment trust or trading corporation
can assemble, say $15,000,000 or $25.-
000, 900 Of the public's money for which
it pays nothing, they can realize a
higher rate Of return on the capital
simply by lending It in the call money
market or even by buying bankers
acceptances.
The public appears to have lost its
sense Of proportion with respect to what
it has . right to earn on its capital:
It is in very much the same frame OF
mind as it was in the six or eight