Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-07-21
BULLS ENCOURAGED
BY EASING CREDIT
New High Average Prices for
Stocks Reflect Confidence
in Industry.
BY CHARLES F. SPEARE.

~
postponed until after the crop-moVing
season.
Strong buying Of prime equities has
taken place, much Of 1t for cash. with
an upward revision of ideas Of values
by interests identified with the coun-
trys largest industrial, public utility
and railroad corporations.
The proportions Of the market have
been moderate, indicating that specu-
lation is being held within bounds and
that the earlier phases of indiscrimi.
eliminated. One of the popular argu-
nlents for a sustained rise is that the
market holds to an even keel and will
only become topheavy again when the
public re-enters 1t actively and $780,
600 and 100000 share sessions be-
come common.
Business Volume High.
AS remarkable as the sustained high
level of stock prices Is the volume OF
business reported from many sections
of the country indicating that this
year the usual Midsummer dizziness has
not developed The iron and steel
companies have just completed the best
half year since the war and this month
are operating at capacity. The car
loadings of the railroads and their
gross and net earnings exceed in the
aggregate those of other periods, while
the records Of the amount of electric
energy produced for commercial as well
as for domestic uses indicate ooth
high degree of industrial activity and
a rising ratio of purchasing power
among all classes of American people.
These facts are not only being evalu-
ated by students of securities in this
country, but by the heads OF foreign
banks and investment trusts who are
constantly taking common stocks OF
the American market with the pro-
ceeds of less promising European
issues
The persistent strength of stocks and
the momentum of business have tend
ency to minimize the effect OF con-
tinued high money rates. This week
the average of call loans has been
slightly above ga per cent. Time
money is moving back toward 8 per
cent after declining l per cent from
it's peak. Brokers loans have just IN
creased again and are higher than ever.
large distributing organization. IN
immediate need Of about $l5.0OO,Oo
was compelled this week to pay per
cent for accommodations: There y
constant complaint from interior DOT.
rowers that they cannot obtain the
usual seasonal supply Of money as their
banks are lending on Wall street.
By the same token these banks are
not in position to buy bonds, ano
bonds not convertible into stocks sag
day by day, being at the lowest average
price in years.
New Basis Of Stock Values.
All of the reputable business barome-
tiers for weeks and months have been
pointing to foul market weather. Tenn
porarily. at least. they are discreolteo.
The professional economists now ais
cuss the business situation and leave the
stock market alone. The credit and in
dustrial position of the United States
with respect to the rest OF the world,
the inventive capacity and restless en-
ergv Of her people. which amaze all for
eigners, the modern methods OF proouc,
ton and distribution and the universal
demand for stock rather than for bonds
or bank deposits have established new
basing point for security values which
may be permanently correct or sublect
to complete change later on. wan
streets disposition at present is TO rice
along on the flood tide.
The outstanding development in this
weeks stock market was the sudden and
vigorous substitution of railroad shares
for public utilities as speculative leaders.
prominent rails made an average gain
of 9 points. which placed them at
level IS points above the 1929 low. Such
stocks at Atchison. Southern Pacific.
Union Pacific. New York Central. Penn
Sylvania, Baltimore & Ohio, Reading a.
Norfolk e. Western sold even above the
figures of the last conspicuous bull
movement In rails Is years ago, though
several have since added to their capi-
tai account. Rock Island. Missouri Pa
cif1c and Missouri KanSas-Texas COM
mon shares are now more valuable to
their owners than at any time since the
reorganizations which. with their pros
poets. we'll compensates the holders Of
the old stocks and junior bonds of these
Southwestern properties for their orig
inal financial losses.
Rail Groups Reverse Position.
The only conspicuous exceptions in
the list of high record price rails are the
members of the Northwestern group
Great Northern. Northern Pacific, Chi
cago q Northwestern & St. Paul. The
dividends on the first three were reduced
from per cent to or 4 per cent after
the war by reason of the conditions that
finally brought the st. Paul into bank
ruptcy. When New York Central was
selling at about ITS quarter of GEN.
fury ego. Great Northern was quoted
around $50. Northern Pacific about $50,
and Chicago Northwestern at 27l. The
economic changes of the country at
large, or from an emphasis on agricul-
tural development to the present intense
as we'll as the opening Of
the Panama Canal and motor transport
tation are contributing factors In sit
Iation that causes such contrast today
between the prices OF the Northwestern
group Of rails and those Of other car
riers.
From the standpoint of earnings,
rails" have been entitled to more
respect than has been given them.
This fact is finally appreciated and has
in larger participation by
trusts and individual in
vestors in the stocks of the long estab-
lished and well-managed transporta-
ton systems. In the first five months
of this year the net earnings Of the
railroads showed an increase Of $751;
100000 or al per cent. while in the
same period the net of the public utili-
ties increased $50. 000, 900 or Is per cent.
The cash dividends Of the railroads
and the percentage of yield on capital
Invested make them more attractive for
the investor. They still lack the fare
that comes from the possibilities of con-
and division of their stocks
into smaller units.
Wheat Rise Affects Rails.
Associated with the rise in portion
Of the rails this week was the spectac-
ular advance In wheat. The July
option. which sold below 81 bushel
In Chicago at the end of May, was
back to $1.46ia on Thursday, and 20
cents a bushel above the price of the
year previous. In the Canadian mar
kets wheat was nearly SIS cents a
change followed one Of the quickest