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

clude losses suS-
tanned In curb val
George T. Hughes. ues, in value of
over the counter
securities or those recorded on out-of-
town exchanges. They do not take into
account the break in the bond market.
They do not cover the month of De-
cember, when the low prices were made,
because the official calculations covering
that period will not be available until
late in January. They refer only to the
stocks dealt in on the New York Stock
Exchange, but they tell the story.
Striking Contrasts With 1929.
Nineteen hundred and thirty presents
both contrasts and similarities to 1929,
but the contrasts are the more striking
In 1929 the bull market reached its
peak, and in 1929 it collapsed in panic.
In 1880 the early Spring saw resump-
ton of the upward movement, and the
closing months saw prices break vio-
lently through their resistance points of
the 1929 decline.
But these resemblances are superficial
The differences are more interesting.
In both years enormous losses we're in
Cured, but in 1929 it was the outsider"
who suffered, and in 1880 it was the
"insider" or professional trader. When
the bull market of 1929 dissolved in the
october and November break of that
year it left its trail of devastation across
the entire United States and showed in
practically every civilized country OF the
world Spectators in all ranks of life
were left stranded by the receding tide.
This year the losses were concen-
trated The small trader had been
wiped out IL months ago, and it was his
big brother who took the blow. In 1929
there were only two failures on the New
York Stock Exchange. In 1880 there
were five suspensions. Stock Exchange
seats at the high of 1880 sold for
$3.50, 900, on which the carrying charge
at per cent would be $4,000 annually.
BY the end of the year the market value
of seat had dropped almost so per
cent, a staggering loss.
In 1929 the outside trader with too
thin margin was sold out. He retired
from the market and Is now out OF the
picture. His comrade who was better
protected by liquid resources has either
taken up his stocks, paying for them
in full, or has transferred the loan to
his bank and is on the sidelines wait
ing for the recovery which every one
knows must come in time. The market
activity of 1880, such as 1t was, was
provided by the professional and semi
professional.
When the big break came in 1929 it
was the fashion to say that the specu-
lative bubble had burst, but that fun
damental conditions were sound"
There was no reason why business
should be affected. Commodity prices
were not inflated and merchants had
not been touched as far as the conduct
Of their own affairs was concerned by
the Stock Exchange mania. That line
Of reasoning has been abandoned. It Is
now conceded that the business depres-
sion preceded the stock market break
and was a cause and not result Of
that break.
Stocks Respond TardiIy.
Analysing the bear market Of 1880,
we start then with the premise that the
phenomenon Of declining stock prices
can be explained by an industrial de-
preston, and that not confined to any
one country, but worldwide in extent
and comparable in depth to the most
serious of the recorded downward move
ments of the business cycle. The stock
market accepted this premise tardily.
For the first three months of the year
its course was irregularly upward, so
much so that there were those who had
the assurance to claim that the break
OF the preceding Autumn was only an
interruption in the bull market that
mad been under way since 1925.
But business did not experience the
seasonal upswing it should have had
ana by April the market recognized the
iact and headed downward, reaching a
low late IN June. That low was well above
the panic low of the preceding Mo-
vember. Throughout July the trend
was upward and the Street pinned its
talth to the proposition that the 1929
lows were not to be broken The market
moved uncertainty all Summer and then
In September it began to decline, reach
ing new low in November, and still
another and yet lower price level in
december. In both the latter months
the resistance level of the 1929 panic
was penetrated.
:. While the underlying reason for the
liquidation in stocks was business re-
ceSslon, that recession was presented
70 traders in the market In different
aspects and from different standpoints
ana varying phases directly Influenced
prices. It Is interesting to review these
obstacles TO recovery and influences
mat depressed prices to continuous new
low levels.
Loss In Railroad Revenues.
The seriousness Of the outside situ-
alton was first brought home to the
street by the losses in railroad revenues.
a sCeaoy drop In car loadingS, trans
Iated INTO decreases In gross and in net
Of nearly all the great transportation
systems, was the initial shock. That
lnnuence was present all the year, as
enect1ve In December as In MAY. and
railroad stocks sank back not simply
to the lowest Of 1880 or 1929, but for 4
longer time.
Next attention was conferred ON the
commodity collapse. Here it was the
grain and cotton markets that were
regarded with alarm. Sugar, coffee and
rubber had been In the doldrums for
much longer. but the stock market took
IIlgnt wnen wheat and cotton began to
break and there were DAYS when prices
Tor securities moved with the grain and
cotton markets. This situation also
had its effect to the end Of the year,
with special emphasis placed thereon In
December
Curicusly enough IN Midsummer
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