Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-07-14
WEALTHY BUYERS
IN STOCK MARKET
Violent Upward Movement Is
Stimulated by Huge Deals.
Small Traders Few.
BY CHARLES r. sPEARE.
Special Dispatch to TT. star.

examination, it would be found that In
the markets of the past six weeks, or
since the May decline in prices, 1t has
| been the individual with large means,
the banking corporation and the invest
, ment trust. rather than the small spec
ulator or the professional operator, who
have been the important buyers OF
securities.
The testimony of managers Of many
Wall Street firms confirms this and
i 1t is obvious from study Of the type
of stocks that have been in the van OF
the upward movement.
It requires capital on a large scale
to trade in shares priced from 800
to $500 and to finance transactions
! of the size that have been daily con-
Spicuous in the public utility and in
dustrial groups. One hears little now
Of the Meehans. the Durants and the
Smiths who headed various 800 ,0o0, 900
tracing pools last year, and had no
9TH" thought than to sell out quickly
to another pool. or of smaller profess
SIGNALS who overstayed their markets
and who since have endeavored to re-
coup their losses by playing the short
side of the account.
PROFIT Taking Period Near.
While the leadership Of the market
i" mind to current prices as IL was
vh"l stocks we're advancing under
{ dcrent auspices. The fact Is that
cSociS continue to ri-C and TO get fur
ther away from tho Ia on which VAL
ne were reckcned pre- -lously. Many OF
tn II are in q ""''o area that repre-
sents an extra ut claim to future
earnings and to their worth for con-
soltdation purposes.
f,.ka ~.,{A -
ward at the end Of the week, both in
listed and in unlisted shares. and the
breadth of the trading in them, Sug-
gests the approach Of another heavy
profit-taking and liquidating period
similar to those in December, March
and May.
It is of interest to note that in the
first three Of the four years Of the
present bull market. stocks advanced
primarily on the improvement in credit
conditions, on the steady increase in
net earnings, on the recognized value
! OF certain new inventions and methods
of merchandising and on an inflowing
into the share market Of capital that
formerly had resided almost entirely
in bonds and notes. Along with this,
as a natural accompaniment, were high
er cash dividends and numerous stock
dividends to give increased income and
to justify a second cycle Of rising prices.
Merger Comes Into Play.
Just when the effects of this combi-
nation seemed to be wearing OF and the
high rates for money appeared to be
discouraging further speculative or IN
veStment purchases the element Of cor
poration mergers came into play. In
the short time that it has been promi-
nent this factor has created in the pub
lie utility field additional market values
| of colossal size. 1t is also working in
the world Of industry and banking and
in that of merchandising. ell the time
building a pyramid of prices on a mar
row base. Whatever its future eco
nomic and social consequences may be,
1t has IN intoxicating effect on the pub
lie that buys and sells securities, and
one that will not soon wear of.
OF the three new factors that have
had a part in stimulating stocks since
the May decline-namely. the successful
conclusion of the Paris debt conference,
the United States Supreme Court deci-
sion in the st. Louis 81 O'Fallon Rail-
road case and the recovery in the price
Of wheat--none has carried the weight
Of the spectacular purchases in the pub
lie utility field by the United Corpor-
alton. These have led to a revision
part Of their holders, although these
| values had already reached a level
where few could comprehend them.
Utilities Stir Inaginations.
AS the youngest of Americas major
industries. the largest employer of new
capital and the one with the best rec
ord for sustained earnings, the public
utility has captivated the mind of the
modern investor. He. on the one hand,
sees manufacturing capacity in excess
Cling with small profits a railroad stu
alton constantly disturbed by I'M
friendly forces without and within and
little new territory or traffic to develop;
on the other hand, the power. light
and communication companies working
closely together increasing their net
profits while reducing their rates and
with scarcely more than half of their
territory developed.
1t may not be amiss TO recall that rs
years ago another generation was
the steam carriers and disregarded
prices and income return. On the aver
age II still has heavy loss on the
securities it then fought.
Business Continues Healthy.
than most had expected 1t would be
with the approach Of Midsummer. An
analysis this week indicates that no
fewer than IS major industries reached
their highest peaks Of production in
the SIX months ending June 30. The
statements presently available for the
half year or for the June quarter will
justify the confidence with which secur-
tiles have been bought In spite of the
cost of carrying them.
For the first time employment in the
early Summer has been greater than
in the late Spring, which tends to
freshen and augment the reservoirs of
surplus capital and to maintain the
country's purchasing power at q high
point. The slump in the estimates of
wheat yield this season has had no
serious effect as in other years, as 1t
represents the most natural means of
offsetting conditions caused by too
much old wheat.
Call Money at High Point.
With the exception Of the month of
March, the average rate OF call loan
renewals so far in July has been the
highest Of the year-about ga per cent.
The reduction this week in brokers
loans was too small to define trend
1t leaves the total at level too high
| 70 permit Of relaxed policy by the
/, Nederal Reserve over credit conditions
It also further postpones the period OF
improved bond prices.
Last weeks threat Of an increase in
the Bank Of England's rate OF redis-
count has passed over, as the reserve
| ratio of that institution has moved out
of the danger zone. European bankers,
however. will be compelled to watch
their reserves so long as the New York
market puts the present premium on
| its call loans. This 1t has been able to
do more effectively since the era OF