The Washington times., 1930-07-12
DECLINE,
PACING DROP
Of STOCKS
BY LESLIE GOULD

about kept pace with the fall In
stock market values since the
first Of June.
Brokers' loans have dropped
21.8 per cent. The market value
Of all stocks listed on the New
York Stock Exchange fell 14.8 per
cent.
Brokers loans are now down to
their lowest level since August 81.
1927. The total is $3,203, ,00O, 900,
o drop Of $4,000 900 for the week
and $89S, 100000 since June 4.
This Is the fifth consecutive
weekly drop in loans.
Stock values in June declined
$11, 1,126,S2S224. The total value
on July was $63, ,S92, ,327 .059,
against $76.018,355,283. The drop
was sharper than the figures In
dicate, as 10000, 900 more shares
were listed on the Exchange on
July than on June l.
New York Banks Reduce Loans
The reduction in brokers loans
was confined to the Federal Re.
serve member banks in New York.
Loans by local banks we're down
$147, 600, 900. but those of out-of-
town banks increased $106. .00O. 900,
and for the account Of others
loans made for corporations and
individuals in the New York mar
ket-jumped $24.0O0.000.
This Is a reversal of the trend
of the last few weeks, when New
York banks were forced to take
ever loans called in by the out-of-
town banks and corporations and
individuals. The higher call
money loan rate this week at
tracted outside funds and gave
the local banks an opportunity to
shift some Of the loans back onto
the outsiders.
Direct Loans
While the drop in brokers' loans
reported by Federal Reserve, has
been satisfying. there is another
angle to the situation that is not
So pleasing.
This is the direct loans by banks
on securities. These loans are not
included in the Federal Reserve
report on brokers loans, although
they actually fit in that category.
The Federal Reserve figures cover
only loans to brokers and dealers.
The direct loans are made by the
banks themselves to customers.
Brokerage house customers have
been shifting their margin &C.
counts to the banks.
These loans, totaling So, ,498, ,000..
600. are off only SGT ,O00,00O from
the amount outstanding on May
% last and are $749. 900 900 above
the loan total on July last year.
The drop since May 28 is only
1.8 per cent, while the increase
from year ago is 27.2 per cent.
Other direct loans-that is loans
for commercial business, such as
mortgages, ETC., show a small in.
crease, indicating revival in com.
mercial demand.
The ratio of the commercial
loans and direct bank loans on
securities is way out of proportion.
The commercial loans total only
$2,4lS,O0 10000, a gain of $4,000.
900 over last week, but a decrease
Of $324,000,000 from a year ago.
Unless the direct bank loans on
securities are reduced, business
when it starts to expand will
again be forced to bid against
stock market spectators for
money, sending money rates up.
This might retard business re.
covery. This would defeat the
purpose Of the Federal Reserve In
reducing the New York rediscount
rate to ease credit conditions.
War and Mergers
Several mergers will be the re-
suit of the gasoline price war be-
ing fought on the Pacific Coast
from Mexico to Canada. The price
IN San Francisco for motor fuel
was down to 8 cents a gallon to-
day, including the 3 cents State
tax. Every so often the independ-
ents kick over the traces in Cali
tornia, and then bigger companies
Start slashing prices. This time
the Independents are understood
TO have the backing of one Of
the bigger companies.
Worthy of note is the fact that
every time Harry Ford Sinclair'S
company-Sinclair Consolidated
Oll-gets all set for a merger
some one cuts oil or gasoline
prices in the territory he is seek.
Ing to enter. The crude oil price
cut in the mid-continent the first
OF the year did not help his
Prairie Oil & Gas merger plans.
which, by the way. are still on
the fire. The gasoline price war
comes Just at time when he was
reported seeking to absorb a Cali
fornia company. Cities Service
also is seeking entrance in the
California field.
Trade Reviews.
Little change in the trend of
business is noted by the weekly
trade reviews. July business is
dull in line with expectations.
Some lines Of business. however,
are showing signs of picking up.
Radio companies are speeding up
production. The first Of the year
this industry was at a virtual
standstill, while stocks were being
cleaned up. This has been prac.
tlcally accomplished. Road build.
inc iS giving NAnnAnt aud rnaanrAAn