Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-09-21
Market Undergoes Sharp Re-
action During Week on Poor
Business News.
DISTURBING REPORTS
AID AGGRESSIVE BEARS
Prices Declared in Sounder Posi-
ton After Prolonged
Recession.
BY GEORGE t. HUGHES.

SpecihI sDiSpatcn TO Inc SGars
NEW YORK, September 20.-A COM
bination OF unfavorable news develop
ments and the disclosure of an unex-
pectedly weak technical position were
too much for the stock market this
week and it gave way sharply The list
was reactionary all the time and weak
part of the time.
At the close on Friday prices meas
ured by the accepted averages were
much above those reached on the June
break. which was the low of the year,
and safely above those reached in the
August decline. Nevertheless they had
failed to make good the promise OF a
fortnight ago, when the averages had
touched new high since the late
Spring.
The ret result was to unsettle senti-
nent, to discourage operations for the
rise and to increase the short account
And yet, looking at the situation from
the long-range standpoint, there was no
reason to be disheartened. Trade re-
covery is in progress, slow and some
times almost imperceptible but 1t is
there. The healing effect Of easy money
is constantly at work. 1t Is more than
year since trade depression began
and it is almost year since the market
had the most violent collapse IN its
history. Time works on the side OF
business improvement and therefore for
eventual market recuperation.
Slow Revival Disappointing.
These general considerations, how
ever. do not prevent relapses such as
that of this week. On the surface
everything was against the stock mar
ket. IN the first place, rightly or
wrongly, Wall Street had counted on
more rapid trade revival than the
indices show is in progress. 1t was
frankly disappointed.
Some authorities make It out that
the commodity price decline has been
checked, but the figures do not support
the view. Agricultural products are at
approximately the years low, for wheat
the lowest since before the war. Cop
per is selling, according to some calcu-
iations. at the lowest since 1896, which,
incidentally, was the low of the price
cycle, for beginning in 1896, there was
a long gradual rise eliminating in the
postwar imitation.
Dun's compilation Of wholesale quota
tions shows out of 81 changes, 81 de-
clines against 20 advances. Doubtless
we are near the low, but there has
really been no sustained or important
advance and reports of purchases by
important consumers, such as that OF
copper announced this week by Western
Electric and that of steel by General
Motors, have had no effect on the mar
ket for the commodities concerned,
Foreign Events Disturbing.
The news from abroad has been dis
turbing. At the height of the selling on
Friday wild rumors spread through the
financial community of revolutionary
movement in Germany. The cables
showed that this was false, but there
is no Disgusting the unfavorable effect
on international markets Of the Ger
man political situation.
Finally, to cap the climax, Thursday
nights statement Of the Federal Reserve
Board showed an increase of SIC ,000,-
600 in brokers loans on top of series
of stock market sessions of declining
prices. A resourceful and aggressive
bear party capitalized all these items
with a successful onslaught against the
market.
1t is not TO be wondered at that prices
| yielded. There Is now no concerted
| support from banking sources or any
where else for the stock market. II
| has to take care of itself. That is,
! however, a point of strength as well
as of weakness. Artificial support is
good for time, but when the effect OF
| the stimulant wears off, the patient Is
worse than ever Stocks bought solely
! to prevent a violent break come back
| for resale when the crisis is past.
Nothing of that sort is going on now.
Attitude of Investors.
On the other hand, there are multi
| tude of individuals who believe that
| If they buy sound stocks now, not going
| beyond their means, and hold them, re-
gardless of intermediate fluctuations,
| they will be richly rewarded sooner or
| later. The trouble is that. like all
| spectators, they are impatient and
they overtrade. Then when reaction
comes, such as that of the past six
days. they are forced to tighten the load
at sacrifice and begin over again. The
theory is sound but the practice is
| faulty.
1t is great temptation to accumu-
| late stocks which pay dividends suffi-
Gent TO yield more than the brokerage
charge on the debit balances. 1t looks
as If all one had to do was to stand
pat and wait for the profit which was
sure to come. The unknown factor is
! the time element and that is what
wrecks these seemingly well laid plans
Strong Banking Position.
The weekly bank statements show a
| continued strong position. For the Fed
eral Reserve, bills rediscounted were at
new low for the year. Member banks
have increased the loans which come
! under the head "all others"-that is
| commercial accommodation-and have
decreased loans on securities. The
changes are small in both instances, but
| they are in the right direction.
| The Street watches almost feverishly
| for the reports on car loadings and for
! the trade journal summaries of the
! iron and steel outlook. 1t gained little
| cheer from the railroad statistics this
/ week, but it found some encouragement
| in the statements as to an increas-
ing willingness on the part of consum-
ers to make forward commitments in
steel 1t is prepared for poor third
| quarter reports and it expects unfavor-
able railway earning statements fol
| August, but ii does scan eagerly every
item of news that bears on the bust
ness situation. After this weeks break
in prices the market is in a better
| position to respond to anything thai
looks like improvement.
| Copyright, 1901