Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-02-02

NEW YORK, February 2.-During
the next few weeks it will be more i'm
portant than ever before that the stock
market keep we'll aware of events in
the banking world. 1t Is, however, ire
mendously difficult to weed from the
mass of weekly bank statements those
vital figures which indicate the true
state of affairs.
Market Needs Further Loans.
Many are of the opinion that in
creasing brokers loans show only nor
NAL growth and do not signify that stock
prices are inflated. But the Reserve
banks firmly believe that any further
expansion of brokers loans by banks
would be most unwise. Since Federal
Reserve policies will determine future
money rates to a large extent, their
opinions carry a good deal of poEer.
If the stock market Is to continue to
rise It must have larger brokers loans,
and since the Federal Reserve banks
refuse to expand their facilities, the
stock market must turn for additional
funds to the New York or "out-of-
town" member banks, or else to other
lenders.
There seems to be little possibility
that member banks will expand their
brokers loans greatly in the near future,
because in spite of moderate decline
in rediscounts during the past three
weeks they are still heavily indebted to
the Federal Reserve banks. In adj
dition. the demand for commercial loans
for Spring business will soon begin and
the banks will be more eager to meet
these demands than stock market
loans. Here they will have the backing
of the Reserve banks.
"Other" Loans.
The stock market, 1t seems, will be
forced to depend upon outside lenders
for larger loans If the general market Is
to continue its rise. No one knows the
lending resources Of these corporations,
investment trusts. and private individ-
uals who are lending In the call money
market but since business interests also
compete for loans from these sources,
the stock market will probably have to
pay q higher price for accommodation.
II it were not for the large sums of
money supplied by Others" during the
past year, call money rates would be
much higher. Since the future stock prices
depend upon new supplies of credit the
resources of the Others" who must
furnish the credit, become of tremen-
dous Importance. AS long as loans by
Others increase as rapidly as they did
during January there need be no cause
to worry about stock market credit. But
If the upward trend Of "others" loans
in the weekly bank statement stops, or
turns downward, there will be some
doubt as to where the stock market will
get the necessary funds for further ex-
pansion.
A Spring Rise?
1t Is unwise to expect the stock mar
ket to- follow a predestined course at
any time, but since each year so much
Is said about the possibilities of
Spring rise" 1t is interesting at this
point to examine the figures for any
inclination OF a regular tendency to
rise each year.
The Spring rise theory seems plausi-
BILE enough since a rise in early Feb
ruary and March would naturally pre-
cede Spring expansion In industry and
trade. But the records of the past
six years at least show that for only
three Springs-l925. 1927. 1s28-the
market actually rose. During 1928,
1924 and 1926 the market fell. Going
back over a longer period of years, the
same lack of uniformity makes 1t evil
dent that there are more vital factors
Affecting the trend of stock prices than
the seasonal swings in business activity.
(Copyrisht, 1929