Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-02-23
Securities Bought in Panic
Sold in Rising Market of
Recent Weeks.
DECLINE IN COMMODITY
VALUES is DISTURBING
Business Situation Is Favorably
Affected by Abundant Sup
ply of Money.
BY CHARLES F. SPEARE.

0peC4dl OlSpatcn 10 The star.
NEW YORK, February ga bull
position in stocks which had grown
stale and unresponsive to stimulation
met with its first reverse this week
since the early part of January. Average
prices on Thursday showed the heaviest
loss in two months. This change in the
market situation recognized the fact
that speculative securities had been
rising faster than was warranted by
earnings and prospects and that the
improvement in industry as a whole
did not justify as much of recovery in
stocks as had taken place since the
middle of January.
The high average prices established
the week previous had permitted the
resale at profit of stocks purchased in
the October and November breaks.
This selling was of large enough
dimensions to hinder the operations of
those who were making the most of
the more cheerful business sentiment to
distribute special issues.
Evidence that banking pools and
finance companies were feeding out
stocks in the upper price ranges of the
institutional group that bought between
$4,000, 900 and $75,000,000 of selective
issues last Autumn took advantage of
the markets strength to HQuidate one
third of them. 1t was apparent that
pools that had overStayed their markets
in half q dozen conspicuous industrials
were reducing their commitments, being
convinced that the outlook for these
stocks in the next few months Is not
an encouraging one.
Commodity Index Low.
OF greater influence on stocks than
heretofore was the decline Of prices OF
wheat and cotton and the general at
tention directed to the falling level OF
all commodities. Not since 1922 has
the commodity price index been as Low
as 1t Is today. In January wholesale
prices were per cent under the year
previous. While the downward move
ment is due primarily to the shrinkage
In value Of farm products, the tendency
runs through nearly dozen important
items and affects economic and political
conditions IN many parts OF the world
Not only are commodities here nearly
as low as after the war defiation, but
the same is true in Great Britain and
in France.
Associated indirectly with this is the
matter of unemployment. The in
crease in the number of people out OF
work in January was well above the
seasonal percentage. The figures COM
piled by the Bureau of Labor indicate
that q ] per cent decrease In unemploy-
ment in October was followed by de-
creases Of over 8 per cent in November
and December and 1.8 per cent In jan
uary.
We are probably In the trough of the
depression and, with the coming OF
Spring, conditions will change for the
better.
Political Effect.
The decline in wheat has a political
as well as an economic reaction, but
with the fall in the price of nearly IS
cents a bushel from the high point OF
last Summer, q condition has developed
quite similar to that brought about
when stocks in November had fallen
so far below their intrinsic values that
they were rescued from a further col
lapse by an enormous volume OF in
veStment buying.
Wheat this week has been under the
cost of production. Consequently. there
has been a demand for it from source:
that would not respond to the decline
until wheat reached a level where II
could be purchased at little risk, ever
though its statistical position remained
bearish. To less extent, the same i
true of cotton.
On Friday the Interstate Commerce
Commission supplemented its general
scheme of railroad consultations BY
approving the unification plan set ur
lust three years ago, by which the
Northern Pacific and Great Northern
lines were to merge in order to effect
economies estimated at $4,000, 900 q
year. The decision could not have beer
other than that rendered. It had beer
fully anticipated. But it acted as g
spur to a market that had beer
weighted down by other influences
toward the end of the week
The legal aspect of consolidation o.
corporations has undergone quite &
change since the United States Supreme
Court ordered the dissolution of the
Northern Securities Co., in 1904, with
which were identified the Great North.
ern and Northern Pacific, and since thu
court in 1911 separated Standard OF
of New Jersey and Vacuum Oil, To-
the latter now Is returning to the
bosom Of the Rockefeller family.
Money Supply Abundant.
The release of funds from specula.
tive markets and from industry is Still
large enough to counterfeit other de.
mands. Where there are no serious
frozen situations, there is an abun
dance of capital at low rates of interest
With the exception of slightly lowe
total in 1927, the present volume o.
member bank borrowings at the Fedora
Reserve is the smallest since 1925 anC
their ratio of reserve the highest
Everything has been done for business
that could be done in the way of pro
viding it with cheap money and sur
rounding it with an atmosphere of pub
lie confidence. If, with such a corp
of distinguished nurses. it cannot ge
up from its sickbed quickly, it will b,
because the illness from which it il
suffering took a deeper hold than ha
been admitted and will require a longe
period of recuperation to correct 1t.
Copyright, 1s30)