Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-08-03
HIGHER PRODUCTION
WILL AID RECOVERY
IN NEXT 3 MONTHS
Low Point of Depression Is
Believed Reached With
Stocks at Dead Center.
DROUGHT BRINGS NEW
ELEMENT OF DANGER
Irreparable Damage to Crops Al
ready Reported-Wall Street
Matches Trade Trends.
BY CHARLES F. sPEARE.

NEW 101OHA, august e. LlcIc udNC
been new discouragementS this week for
the holders of securities; also elements
in the surroundings of business and
/ finance to encourage him to hold what
he owns and possibly justify his taking
| advantage of sharp declines that have
occurred in the stock list. The market
| has reached another dead center. This
| is always reflected in q condition Of ex-
IRENE dizziness, such as is now being
witnessed.
Better things are expected in August
for industry than obtained during July.
| There is reason to believe that the low
point in the depression has been
reached. The average of the various
index numbers did not get quite so low
in June as at the emo OF December.
When they are available for July 1t will
be discovered that they went below
those of the previous month. The re.
action then was more than seasonal
one. 1t represented the cumulative ef-
fects on producers and consumers OF
half year of hard times.
During this period, however, the low
ebb of production is believed to have
been more than balanced by the vol.
ume of buying for actual necessities OF
business and Tor domestic requirements.
Gradually, therefore, the factor OF an
oyersupply of commodities and manu-
well known that slight change IN the
attitude of buyers Immediately quickens
the pulse of all commercial enterprises.
There is q modest hope that the same
thing may happen this month.
Definite Recovery Indicated.
The question at issue now Is whether
business is to enjoy more than a sea-
sonaI recovery. 1t is generally accepted
that 1t is entitled to this and that IT
will be reflected in a higher percentage
of production in the latter half OF Au-
guest and will carry through until the
end of october. Opinions diner as 70
the outlook after the slack has been
taken up and accommodation rendered
to the industrial, transportation and
agricultural activities that normally
take place in the Autumn. There Is a
disposition again to postpone the date
of permanent improvement beyond the
present year. Some statistical organ
izations put it OF as far as the mioole
of 1881.
Obviously new element has been in
troduced into the situation IN the past
few weeks by the drought, which has
been more severe in sections OF the
country than for the past half century
and has already done irreparable dam
age to the corn crop. An adjustment TO
this during the week Is found in price
for corn above that of wheat, though
still 20 cents lower than year ago,
wheat selling at the same time about
As per cent under its quotation OF last
August.
Stocks Watch Trade Trend.
The stock market continues to look
to business for leadership. 1t will be
slow to discount any but the most posi-
tive indications of improvement IN that
direction. 1t makes false starts but
quickly corrects them. 1t appears to be
limited in the extent of It's advances.
Declines go but a short distance before
they are checked.
This week we have had the statements
of the railroads for June and for the
first six months of 1880. For the shorter
period the net operating revenue has
averaged "a per cent under that of
June, 1929. For the longer term nu-
merous roads have indicated q reduc-
ton in revenues applicable to fixed
charges and dividends ranging from 20
per cent to 70 per cent.
At no time since they came under
Federal control, except during the strike
Of shopmen year or so later, have the
carriers been up against conditions so
hard pressing as those for the six
months already reported as we'll as dur
ing the month of July.
Industrial Earnings Down.
Preliminary figures of industrial earn
ings for the first half of the year do
not make so poor showing as those
for the carriers, but they are enough
to unsettle the minds of holders OF in
dustTial securities. A compilation pub
lished today by the National City Bank
indicates net profits of 275 corporations
in the January-June period about 2412
per cent under those of the compare
tive term in 1929. 1t Is worth noting,
| however that while this reduction
amounted to $204 900 900, the same cor
| porationS this year had a decrease from
| 1928 of only $19,000,000
This record, and the dividend reduc-
lions actually made this week and 9TH
ers threatened provided plenty of am
| munition for the bears to use with the
market as their target. They made q
| few bull's-eyes. Generally speaking,
| their operations were not successful.
| The only conclusion that one can gain
| from this is that weeks ago. holders OF
securities who did not care to nurse
them through the depression period sold
| them. Those who held them have a
strong faith in the ultimate recovery in
| the earning power of American indus
| tries and American railroads. There is
all the time a steady flow Of money into
| the market and an absorption Of securi-
ties that return a good weld and show
every indication of continuing present
payments to their owners.
tcopyright. 1s30)
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