Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-03-31
MARKET WEATHERS
IS
! VIOLENT CHANGES
- HHH I'LL MHsAA
r4
Stock Exchange EmergeS
Us From Near-PaniC in Bull
p
ish Demonstration.
By CHARLES F. SPEARE.
cial Dispatch to The Star.

valleys IN between. CnarL readers place
much emphasis on double tops" as an
evidence Of market trend, but recent
ly they have been confused by triple
peaks suggesting a previously unknown
market vitality.
This week there have been greater
upheavals and rebounds than ever, with
the market on Tuesday on the verge OF
q panic and on Wednesday and Thurs
day boiSterouSly bullish. From an aver
age decline of 40 points In industrial
shares between March 18 and March 26
there was a rally before business closed
for the three-day holidays of nearly 80
points in this same group, while IT OF
the % points average decline in the
general list had been recovered.
This gives concise and graphic pic
ture Of what has been taking place in
markets upon which the eyes of the
banking and business world have been
centered the last few days. 1t indicates
that while the small public and the
powerful professional groups were near
" knocked out on Tuesday, they had
SUFFICIENT stamina to come back and
fight their battle over again. There
may be more courage than sense in this.
They have had the applause and the
Federal Reserve the condemnation OF
the loose thinking portion OF the crowd
that has been looking on.
Previous Panics Different.
Conditions approaching panic de-
Veloped Tuesday afternoon. There
have been other market situations OF
greater seriousness and with heavier
declines. notably those Of the Northern
Pacific panic in 1908, of the money
panic in 1907 and most ominous OF all,
on that memorable day in late July,
1914, when stocks came pouring into
Wall Street from every section OF this
country and from Europe, compelling
the Stock Exchange to close throughout
the first five months Of the war.
The difference between those occa-
sions and Tuesdays situation is in the
greater participation Of the public in
the present market, not only in stocks
listed in New York, and always salable,
but in scores of outside issues traded
in on numerous new exchanges through
out the country and in Canada, and
locally financed. This latter aspect has
been. and still is, one of hte most Serl-
Gus Of the many unfavorable develop
ments with which the Federal Reserve
has had to deal in secret sessions, and
over which it has not yet secured ade-
Quate control.
The market is popularity supposed to
have been rescued on Tuesday by the
loaning of a considerable sum OF money
at 20 per cent after the supply of funds
appeared to have vanished. 1t recov-
cred mainly because of the banking
support which it received at that time,
and from which it was bailed out by
the usual group Of salvagers. They
were assisted to some extent, though not
to the degree supposed, by the invest
ment trusts which have kept themselves
liquid and have been among the largest
lenders on call for the past nine months.
Their Judgment of what stocks are
worth and the prices which they feel
justified in paying for them may be
indicated from the fact that even at
Tuesdays lowest level a comparatively
few of the buying orders which they
had in under the market" were
executed
Secondary Reaction Possible.
The market. has had a good clean
ing out. Many dangerous elements in
1t have been eliminated. It is still one
in which operations must be made with
the greatest caution and where care
full selection of securities will bring the
greatest rewards. If it follows prece-
dent it will go through a secondary re-
action.
Some believe that the high average
of prices will represent the permanent
peak of the market: others that the
Industrial average will later In the year
over-top that peak A group Of nearly
100 of the most active industrial shares
Tuesday showed an average decline OF
26 points from the high figures made
in the three months previous. with ap-
proximately an ii per cent depreciation
in these prices. This happens to be
about the same degree of shrinkage
big decline. namely that Of February
and March, 1926. However, the pres
ent average for this group is 100 per
cent higher than it was three years ago
While we have never had situation
that involves so many induStrials nor
one where there we're such large num-
Der of acute local financial problems,
similar to those in Chicago and in
Montreal, there are other conditions
that are new and which help to over
balance the effect of "SroZen' security
loans in the interior of the country.
in every other period of market up
heaval the United States has been
debtor. Now she Is a creditor. The In
vestment trusts have tremendous re-
sources which they can use to ease the
effect of serious decline in prices,
though as 1t turns out, their with
drawal of funds from the call money
market in order to make purchases this
week aggravated money conditions and
unsettled prices.
The concentration of banking power
as we'll as the GENERALIZATION that has
been going on in the insurance world
offer further means of protecting
markets in collapse. Unlike other per-
iods, too, there is no commodity infla-
ton, inventories are rational and buSi-
ness In nearly all Of its important lines
is highly prosperous. And Europe has
almost completed the last of the read
tustments necessary to re-establish her
in full credit with the rest of the world
and expand her foreign trade.
Business In Good Health.
The proposed limitation of oil produc-
ton in the United States, Mexico and
South America brings into line this
week another established major in
dustry. This cuts out a diseased part
of the industrial body and emphasizes
the glowing health of business life. An
analysis published this week Of corpor-
alton earnings in 1928 indicates that
approximately 1000 different industrial,
corporations had profits that year, 1919
per cent higher than in 1927. Supple
mentary reviews of the March quarter
now closing suggests that corporation
profits in this period may be Is to 20
per cent over those in the same three
months of 1928. This is important,
though not significant, as all trade then
was rather fiat.
In the midst of so much speculative
excitement this week, attention has
been drawn from the February earnings
of the railroads as they were published.
They show gains in net revenues IN
practically all sections except the North
west and Southwest, where weather
conditions have affected them, and a
sharp recovery in the profits of those
roads that have for a long while been
disturbed by the Florida collapse. The
net increase for the month so far re-
ported is about 20 per cent.
The conditions in business and the