Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-02-24
RECOVERY IN STOCK
PRICES IMPRESSIVE
Decline in Volume of Trading
Follows Shakeout of
Small Investors.
BY CHARLES F. sPEARE.

year. The conspicuous industrialS anc
rails and those public utilities not iden'
tilted with consultations were from Il
to nearly so points below the quota
tons of January and early February.
The average of the market was down
20 pointS-not quite so much as last
June, but equal to the decline in De.
cember, though, from a higher leve
than prevailed in that month. The
public that first entered Wall Street
after the turn Of the year and followed
stocks up had seen from one-quarter to
one-half of its ample margins disappear
in the liquidation forced by high money
and the fear that the Federal Reserve
might raise its rediscount rate to 51S
or 6 per cent
At the end of the week, shortened by
The double holiday, the picture is a
different one. Stocks are again strong
New high records in limited group OF
securities have been established. The
rediScount rate remains at per cent,
where it has been for over eight months,
The market seems to have been re-
treshed by its purging and shows some
thing OF its old vitality. That 1t is not
yet convincing to many and that it has
sucked dry the financial resources OF
small army of late recruits and cast
them aside is apparent from the steady
decline in the volume of trading since
its high average was established three
weeks ago.
Market Like Einstein's Theories,
Few understand the market. It is
as difficult to interpret as Einstein's
last mathematical formulate. Even those
OF the younger generation who have
championed it for the past two years
are beginning to doubt its legitimacy.
AZ does the reverse Of what it is ex-
pecteo TO do, advancing just when it
seems to be on the point Of collapse.
OBVIOUSLY, it is market built llp IN
the Ioundauon OF good business. excel
tent earnings, larger dividends and
prospective consultations. It began in
9 PERIOD OF easy money and has pros
perea IN one OF high money. The
pIontS OF speculation or investment
whichever one they choose Ia call If
nave unquestionably stimulated indus.
Try and contributed to the Optimistic
Ieeling that permeates nearly ali
prancneS OF modern business. There is.
tnereIore, basis for the argument that
STOCKS Will not decline to any extent 81
long as business Is satisfactory. end
business viii be satisfactory SO long as
STOCKS advance. Just where and when
lt VIII be possible to break through this
circle the Shrewdest bankers and n1er-
chants do not know.
The Federal Reserve Board would like
20 check speculation Some of its mem
bers are willing to attempt this through
the medium of higher rediscount rates.
To this directors of Reserve banks in
the interior make protest and there is
good reason to believe that the Secre-
tary OF the Treasury is opposed to any
ectlon that runs counter to successful
reIundlng OF Government notes. No
one IS willing to suffer a temporary
loss In order to attain a permanent
advantage and with the banking world
SO mixed in its opinion and SO much
out of discord 1t will be difficult I'd
arrive at decision that Wall Street
can take as unanimous and final and
make its speculative adjustments ac-
cordingly.
Brokers Loans Decline.
A certain amount of correction of an
inflated price situation has been accom-
plished in this months decline, which
has brought about a shrinkage In
brokers loans amounting to nearly
5000, 600, 900 in the last fortnight. Loans
are still S82. 900, 600 higher than month
ago and $1,656 100000 greater than a
year ago. This, however, has been true
in the past, only to be followed by a
fresh outburst of speculation and a
higher range Of prices than the previous
one.
Except in the building trade there is
no evidence that business is being
greatly injured by the high rates for
money. Those who maintain that these
high rates are due entirely to the
absorption of funds by Wall Street are
supported by the most recent figures
81 the Federal Reserve member banks,
which show loans on securities to have
increased nearly 81 900 900 900 in the
past year and those of all other charac-
ter to have gaineL1 only 100000, 600.
The rate for acceptances this week has
been advanced to level where this
paper is attractive as an investment.
In spite of all that the Federal Re-
serve can do by way of kindly sugges-
ton or implied threat, institutions will
continue to put out their money on
call and try and make up in earnings
from these high rates portion of the
loss they are sustaining from the steady
decline in the price of their invest
snentS.
Rail Merger Plans Up.
The most constructive development
this week has been the filing with the
Interstate Commerce Commission OF
applications by the Baltimore g. Ohio
and the Chesapeake 81 Ohio for a
grouping of lines owned, controlled OF
TO be acquired into systems that viii
balance those of the New York Gen.
trail and the Pennsylvania. This Is a
new way of bringing about the same
results that might have been accom-
plished years ago had the four East
ern systems arrived at a common lln-
derstanding. They have all learned
their lessons since then and now real.
lie that they cannot go out anc
overnight take possession Of an indie
pendent line and expect to retain il
without authority from the Interstate
Commerce Commission. They also have
accepted the commissions verdict thai
the short lines must be generously deal
with.
In the recent New York Central de.
ciSion, a favorable verdict was giver
contingent on the purchase Of such
lines. In the Baltimore 81 Ohio anC
Chesapeake g. Ohio petitions both ap
plicants stated in advance that the!
would concur in the commissions ap
praisal of the value of such lines. AL
together there Is more compromising
and conciliatory attitude on the par
Of the railroads seeking to broaden thei
territory than has heretofore beer
shown.
Umpire Needed for Settlement.
1t will not be smooth going, however
for either of the two systems that hav
outlined their proposed plans. To
certain extent they have an ally IN tn
New York Central but a stubborn oppo
nent in the Pennsylvania Railroad.
may be possible to bring about harmon
h this situation If all parties concerne
are willing to trade with each other o
a reasonable basis and Gin the publ
interest" More probable is it, howeve
that there will be a long and bite
fight among them, for their ideas {
what they should give up to the other c
hold for themselves have been strongl