Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-06-02
BY CHARLES F. SPEARE.


major declines. From the record high
industrial average of May there was
a drop of "a points. This compared
with the average loss in the same group
In March of "a points. Neither of this
years reactions was so severe as that
OF last December which was 80 points.
However, the slump in December and
March was followed by an abrupt rally
and successive new tops" for the pop
ular equities"
AS a group the motors are now ma
terially lower than they were six
months ago. The coppers are higher
than in November, but much lower
than in March. Iron and steel shares
were this week cheaper than in March,
but dearer than in November. The
rails, with few exceptions, are below
the quotations of last Autumn, but
their upturn which began on Wednes-
day might easily bring them back
soon to the late March level. Stocks
affected by farm conditions in the
West and the Northwest have latterly
lost nearly all of the ground gained
during the Winters campaign. There
has been a drastic revaluation Of the
stocks of airplane companies, of chain
stores and various other distributors,
of trade mark concerns and of those
manufacturing radios and their &C
cessorieS.
On the other hand the vitality of
the public utilities is astonishing con-
sidering the ratio of price to earnings,
while there are selected securities like
those of the electrical and chemical
industries and certain of the oil pro-
ducing and refining companies whose
values APPARENTLY have not yet been
fully discovered by an investigating
public.
Money Market Calm.
The peace that has prevailed this
week in the money market, with
per cent call rate day after day, con-
trasted with one of the stormiest
periods of the year in stocks. So far
as the month of May is concerned 1t
will be remembered for the havoc that
it wrought to margins and for "a de-
probation in stock market values esti-
mated at several billions Of dollars
larger than in any other month be-
cause of the comparatively slight raj
lies from its low levels in contrast
with the immediate recoveries after
the December and March declines.
And to this figure might be tackled an
other impressive one of deprecated
dollars invested in high-grade domestic
and foreign bonds, whose average Is
the lowest since the era of high money
began to affect it.
The study of some Of the important
changes that have occurred in the past
six months in the credit and specu-
lative markets and their effects COM
bined with a study of present condi-
tions may assist in forming an opin-
ion of what is Immediately ahead with
respect to rates for money. prices for
securities and the volume Of trade.
When the average of industrial stocks
at the end of November was 1888, or
exactly the same as Tuesdays low Az
erage, rates for time money were Z per
cent, for commercial paper 512 per cent
and for acceptances 43s per cent, COM
pairing with current rates of 9 per cent,
per cent and 55s per cent, respective
ly Brokers' loans were $5,289, 900, 900,
having increased in the year from So
510,849000. This week they were
S5.288 100000.
The significant fact in the trend of
these loans during the six months is
not the total but it's source. In Novem-
Der the New York and interior banks
were carrying 81 per cent of all Of the
loans. Those of "other" lenders were
AZ per cent Today, after having cut
down their loans by about $3.50, 600, 900
New York institutions alone having
reduced so per cent-the loans of banks
aggregate only As per cent of all loans.
Those of Others" are SIS per cent. This
is the nub of the credit controversy. SO
far there has been no practical solution
of 1t suggested.
Banks Improve Position.
Between November %, 1928, and May
%, 1929, the bills discounted by all the
Federal Reserve banks decreased $685.
100000. The combined holdings OF ac-
ceptances and Government securities
fell off $420,o0o,000. Gold reserve in
creased $242 900, 900. The ratio of total
reserves to deposits and note liabilities
advanced from 65.2 per cent to 1853 per
cent. Obviously, the position of the
Federal Reserve banks has materially
improved within the half year 1t is a
fair statement that on the basis OF the
current Federal Reserve status alone
high money rates are not justified.
Now let us take the additional securl-
ties that have been created since the
stock market reached its high level last
November. The complete figures for
May are not yet available. Those for
the five months to April 80 are suf-
GENTLY Illuminating. They reach to-
tai for new capital alone, excluding re-
findings, of $4,593 900 900, or about SO
per cent more than in the same period
Ul 1898. All Analysis vi Lllcih ACNSuLo
| the fact that of this total $2750, 000,0 600
we're stocks and that between IS and
| 70 per cent of all new stocks were COM
mon stocks. This compares with only
a 25 per cent addition to common
stocks in the 1928 period. 1t is esti-
mated that so far this year nearly
! $3.50, 100000 or investment trust stocks
alone have been either publicly or pri-
vately placed.
The weight of this great mass of new
! stocks has finally made its impression
| on the general market, so we are today
nearer to the condition described by
the late j. P. Morgan a quarter Of a
| century ago, of "undigested securities
| than we have been since in so far as
| common stocks are concerned. The cure
| for such condition is similar to that
| in all ailments of the digestive tract,
merely, period of rest and abstention
| from more new stocks.
Farm Products Slump.
A marked change has also occurred
within the six months in the country'S
agricultural situation. This week cash
wheat sold at the lowest price since
1915. Around 90 cents bushel it COM
pared with $1.22 bushel few weeks
after the election. In tkse same period
corn has declined from around 81 cents
/ to about rs cents and oats from "a
cents to about Al rents Counared wit