Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-12-28


of the reaction in
Industry. A year later emphasis is be-
ing given to the production OF
goods and commodities, the political
disturbances in Europe and South
America, the unequal distribution OF
gold supplies and the various artificial
methods employed to counterfeit the
operate in the field of agricultural
products, metals, minerals and other
raw materials. There are additional
factors that now have an influence in
retarding trade and depressing securl-
ties, such as the tariff, increasing
competition between steam transporta-
ton companies and unregulated car
riers, political prejudice against the
new public utility holding companies,
and the frozen condition of banks and
investment trusts that expanded their
portfolios with real estate and corpora
ton securities and for which there Is
now only a nominal market
Influence of Foreign Crises.
In dividing the year into two parts,
AZ NAV be said that the influences act
ing adversely on business and on Sc
curities in the first half were mainly
of a domestic origin while, in the sec
ond six months, these factors were
supplemented, and at times over
shadowed, by such incidents as the
revolutions in Peru, Argentina ana
Brazil, the success of the National So
cialist Fascist party In Germany, the
tions in Great Britain, Spain, Italy and
japan and the constant threat to
world trade of dumping" by Russia.
II we accept the figure Of 0,O0O,-
900. 600 as a correct estimate OF the ma
tonal wealth of the United States IN
1929. we may say that the equivalent OF
a is per cent reduction in this mas &C.
Cured in securities alone since the
stock market touched its high point IN
sentennber of that year. This Is not
A irrecoverable loss, for both stocks
and bonds are now selling as much be-
low their actual values as they were
previously above such values. Inc
ahrinkage, however, has made the
country feel poor although the actual
loss In income from its securities mas
been small.
The man who owns United STATES
steel or American Telephone d Iele-
Cranh. Atchison, Consolidated Gas,
Pennsylvania, New York Central, Gen.
eral Electric, General Motors or numer-
Gus other sound shares, or German
Argentine or Chilean government nonos,
or the second-grade American rallroao
obligations, has not suffered loss OF
dividend or interest. ellis state OF mlno,
however. as he figures the II months
depreciation in his securities, has
4 positive effect when buying propo-
eition is placed before him. Conse-
ouently, the potential purchasing power
az the country has been seriously cut
into by this condition. 1t will sufter
from it so long as securities remain
depressed.
Abnormal Caution Develops.
There Is little doubt that q consider
able portion Of our prosperity In the
two years preceding the collapse was
due TO actual or paper protits realized
from speculative ventures, Inc pene-
ficiaries regarded these profits as IN
come and adjusted their standard OF
living accordingly. At the same tlme'
mechanics and clerical forces were en-
loving the highest average of wages IN
their history. Their purchasing power
likewise increased. With reverse condl-
tions, securities dropping instead OF ris-
ing and losses substituted for gains, the
public that had been in the market not
only stopped buying luxuries but pc
came abnormalIy cautious in the mat
Ser of purchasing necessities.
The rapid drop in employment ana
9n pay rolls, with scant adlustment IN
retail prices TO those at wholesale, au-
Homatically reduced the movement OF
goods from the producer to the con.
9rlYner. This was further accentuateo
~ the distress in the agricultural sec
tons Of the country, where the low
level OF farm products and months OF
drought prevented the buying OF any
thing not required for day-to-day needs.
Roughly speaking, the average price
Of several hundred stocks has declined
about SO per cent since the high Level
was established in September, 1929:
Prom the peak of last year list OF
about 20 important commodities inoi-
Gated a drop of 80 per cent to the END
Of November. This months average OF
stocks was the lowest since the Sum-
nner Of 1927. That of commodities has
not been duplicated since 1915.
Stability In Commodities.
There has recently been rather more
evidence Of sterilization in commodi-
ties than in securities. It may be OF
no Importance, but at least 1t is OF
interest that the drop in copper, cot
ton, silk, rubber and wheat has been
about the same relatively as the aver
age decline in stocks. From an inter-
national standpoint the fiabby condi-
ton Of the commodity market has pro-
duced greater economic and political
disturbances than any other factor.
Therefore, slight indication that con-
sumption is overtaking production and
that means have been found for keep
ing superabundant supplies Of commod-
tiles from the market Is onesof the en-
couraging signs Of recovery.
Those who bought stocks in the 1928
panic believed they had secured re-
markable bargains. Those who at the
same time sold them shortly afterward
felt that they had been foolishly timid
Each might have held to his views until
April, for securities slowly advanced and
then became buoyant in the Spring as
oVefconfidence in a business recovery
promoted by unfortunate predictions
from Washington and abetted by the
exploitation OF certain pooled shares on
the New York Stock Exchange. carried
the average of stocks up As points from
the low Of the previous November.
The story of the market for the
next eight months is one Of prolonged
liquidation. resembling that during the
"rich mans panic" in 1907, with only
occasional moderate rallies and tho
averages each time declining below
those of the previous slump. and with
monthly losses In quoted values for In
dustrtai, railroad and public utility
shares Of staggering size. The ma
phase a. the decline has been asso-
ciated with distressed selling, growing
out Of the bank failures In the interior
the whispering campaign" in Wal
Street directed against scores OF per-
feotly solvent institutions and private
firms and the emergency that devel'
oped q fortnight ago when the Bani
Of United States was closed involving
the largest sum of deposits TO be az
1ected in any bank suspension here OF
abroad this year.
Il Is safe to say that there are al.
most no regular individual or institu.
bienai buyers Of stocks who have not
Il