Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-11-03
RECOVERY IN STOCK
VALUES IS RAPID
Market Regains Part of
tuesdays Loss as Conf
dence Is Restored.
BY CHARLES F. SPEARE.
Special Dispatch to The Star.

utility and industrial stocks declined
an average Of 40 per 'cent between the
top Of the market in September and
the hour when 1t came up out OF the
throes of panic last Tuesday after.
noon. Expressed another way, the av-
erage of this group was down more
than $50 points. In the same period
railroad stocks declined % per cent
or an average of AZ points.
The dollar depreciation in market
values at one time was in excess OF
! the United States debt at its maximum
figure at the end of the war.
In the two market sessions this
week following the collapse public util-
ity and industrial stocks appreciated
20 per cent, or an average of AZ points,
while railroad stocks recovered about
8 per cent, or an average Of IL points.
In this same time, due to emergency
erage decline in domestic bonds of 3H
points and in foreign bonds Of about
half this amount.
Investment Mint in Stocks.
On the basis of what had happened
during the year there are many COM
mon stocks today quoted on . rea-
sonable price basis. In points and In
percentages the recovery has not yet
attained the dimensions of the upward
swing that additionally follows every
cataclysin such as has Just occurred.
There is not only speculative oppor-
tunity in these shares, but an invest
ment merit that has not obtained for
many months. Above all, there Is
present ownership Of stocks of diff
ferent quality than that which \ has
been dominating the situation. II
represents complete ownership rather
than a partial and precarious equity.
1t is not a time, however, for Atndis-
criminate buying of stocks, even
though they may be resting on q more
solid and safer basis than at any time
since prior to March, 1928. They
should not be bought because they may
have sold many points higher than
present prices, but only as they repre-
sent an approach In market value to
book values and as the prospects for
the corporations sponsoring them are
promising In the approaching period
Of business recession.
It also should be remembered that
whenever rapid recoyerieS follow Sc
we're declines secondary reactions In
liQuidated and change In the for
tunes Of those who previously had
been conspicuous in speculation limits
their capacity both to promote and
to support the securities for which they
are primarily in the market" It is
fair to say that the banking selling
on Thursday was remarkably well alb
sorbed by public buying, of which most
was on a cash basis.
Effects ON Industry.
A frank consideration Of all the fac
tors that have entered into the great
est decline in stock market values in
history leaves one with the conviction
that 1t must have important collateral
effects. Primarily these will be on In
dustry. There had been distinct eN-
dences of an approaching trade recess
sion before the october decline in Sc
curities set in. This has been accel-
Grated, and will be emphasized, by the
losses that have been taken in stocks,
gripping thousands of people. It will
have its first effect on the so-called
luxury, or non-essential trades. The
reduced proportions and profits In this
direction will tend to temper the buy
ing capacity which comes from other
groups, as The spirit of caution and
disposition to save replace a long period
OF adventurous operations with spend
ing mania Consequently, the theory
that stocks justiied their old prices
not on the basis so much as to what
they were earning this year as to what
they would earn next year or the year
after, has been exploded.
The experiences of the week have
also made abortiye many plans for re-
capitalizaing or financing with stocks.
with already a considerable number Of
such proposals temporarily or perma-
nently abandoned. This change of
policy In itself means a reduced supply
OF capital to go in undertakings that
would give stimulus to industrial life.
Confidence in the Future.
On the other hand, there have been
this week expressions of confidence in
the future in the form of increased
dividends by such prominent corpora
tons as United States Steel. Consoli-
dated Gas and Standard Oil of Indiana.
More are probable in the commendable
campaign TO effect a psychological
change in the attitude OF the public
toward a market that so recently has
had to be rescued from its own exc
ceSseS.
The improvement in the money situa-
ton should also conteract q part of the
damage caused by market losses. But
here again there Is another side to be
considered in the prospect that. with
there is every likelihood of a large ex.
port of gold to Europe This may
reach proportions nearly equivalent to
the total of gold imported when ex-
change favored this operation. The
money market position of the entire
world Is still a long ways from being
adjusted to the point where healthy
international relations can be again
established.
Causes of Market COLLAPSE.
1t will be easier year from now than
at present to explain accurately WHY a
stock market that was buoyant In
August and that in September had
reached its apex could so quickly turn
about and come down with a crash.
There were a number of obvious con-
tributions to this change aside from
the entire loss of perspective as to
values on the part of the uninitiated
pubic and supposedly Sound-minded
bankers. There were:
!: The HAIRY collapse in London.
WHICH was made the occasion for
sweeping condemnation of the specllla-
i've situation in America by the British
chancellor of the excheouer.
y. the adverse and critical decision
OF the Massachusetts, Utilities Commits
SION on the application of the Edison
Eiectrlc Co. Of Boston to recapitaIize
when turned the searchlight on other
similar public utility explorations.
8. Inc congestion of new stocks
especially those of trading corporations,
=. The mounting total of brokers'
loans In the face of shrinking market
There were other situations that had
sIaouaiIy taken on a dangerous aspect