Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-10-08
SMALLER EARNINGS
|CAUSE STOCK DROP
Third Quarter Reports Re-
suit In Heavy Selling of
Shares.
BY JOHN #. SINCLAIR.


NEW EONh, OcGoDer 6.-Wuy 40
stocks continue TO decline?
ter statements of business corporations
are showing up poorly. They will show
up much better in the fourth quarter,
since the fourth quarter Of 1929 was the
first quarter Of the present depression
to show real drop. Still, business has
been slow in picking UP. Only few
companies are making records COM
parable to last year.
The thick pessimism which surrounds
Wall Street has had a depressing effect
on the traders, who have been waiting
become discouraged and recently have
been selling stocks at the best prices
possible.
There's a third factor that Is grow
ing in importance and that Is the
foreign one. Stocks of many sound
companies are affected by adverse news
from various countries In which they
operate.
A fourth factor-and this Is the one
which is most spoken about-is the con-
tinuing and increasingly vigorous raids
of the short sellers, who realize that
the mob psychology u all on their side
and who are taking advantage Of 1t TO
reap huge profits.
Exchange Makes inquiry.
The New York stock Exchange, in
taking official notice of this so-called
"oversold" condition, has started an in
vestigation through its business conduct
committee.
Public agitation against short selling
is growing. II the Stock Exchange
does not correct the abuse Of the bear"
raids 1t will be done by outside groups,
who may wreck the whole machinery
by attempting to correct something that
they are not familiar with.
It's unfortunate that such action was
not started year ago. Now it's Ike
closing the barn door after the horse Is
stolen. The temper Of the American
people Is such that It would take but
very little more to start q real drive
against short selling Of all kinds, max
ing no discrimination against hedging
or any other form of legitimate selling.
And this would be unfortunate In the
extreme.
Position Of Leaders.
The stock market may be conva-
lescing, but it's still pretty sick. Scan
the record Of some stock favorites q
year ago and today.
The United Corporation sold for $65
a share a year ago, now it's S26; Gen.
eral Electric 500 then, now $50; Radio
was $50, now S25; International Nickel
$50, now $40; American Foreign Power
$161, now SAT; Montgomery Ward
SIP, now $25; American Telephone 81
Telegraph 1891, now 5000.
These are but a few. It's better to
consider the averages, for they tell a
composite, rounded story.
Last Fall the Dow-Jones industrial
averages in the lows Of November were
-
cred and moved up gradually until June
last, when, in another stock drop, the
averages moved back to 21l.84. On Sep
TENDER 80, IN the last break, they
moved down to 204.90. Last Monday
they were down to 202.76.
WIN stocks break their average re.
sistance point of last November? They
are within 4.07 points of it now.
That's the question every trader
would give lot TO know. Watch 1t
closely in the next few days.
Standard Stocks.
"I have 16 standard stocks, all OF
which, on the market, show q loss to
me. but am selling none Of them.
This Is q buyers and not seller
market" said one Of the wisest Wall
street operators to me yesterday.
Many people expect another big
drop. Do you?"
"Ill answer that by saying that be-
street banker, who In times like these
always used to remark that one cannot
cut or dogs tail twice.s That's how
I fell about 1t now. Some stocks, COM
pared with the highs Of last year, look
awfully low now. But II you compare
them with what they were q year or
two before they look reasonable"
Telephone Stock.
James r. Bancroft Of the American
Institute of Finance brings this out in
connection with the International Tele-
phone g. Telegraph Co., one of the
largest public utility organizations in
the world.
In 1924 the International Telephone
q Telegraph sold around $40 share
and paid So annually in dividends. In
1929 the stock was split three for one,
The current price level of $28, there
fore, Is equivalent to $64 on the former
stock. Paying 50 q share. the dividend
Is equivalent to So on the old stock.
While the stock has declined from
si49 last year to $2e, it looks very
low now, but basing it on the 1924 fig-
ure 1t doesn't look bad.
ut Is our opinion that the stock
for the long pull should double and
treble from present price levels" says
Mr.. Bancroft.
We make no stock recommendations,
but there are plenty Of good stocks go
ing begging now-stocks which viii
look very cheap a year from now.
Oil Merger.
"A menace" says John Lord O'Brien,
Assistant United States Attorney Gen.
eral, pleading in Federal Court against
the proposed billion-dollar merger of
the Vacuum Oil Co. and the Standard
Oil Co. CT New York.
The United States Government holds
that the merger of these two companies
would not only secure strangle-hold
distinct violation of the 1911 decree,
dividing up the Standard OIL companies.
The Standard Oil Of New York Is a
500, 000, 900 concern, while the Vacuum
Oil Is a $200,000,000 one. Up to 1926
the Vacuum Oil confined itself largely
to the field of distributing lubricants.
Then 1t spent millions to buy out GER
tain retail oil stations in New York
and has since spent great many more
millions in expanding this retail bust
ness.
Walter Hines, who succeeded william
@. McAdoo as United States director
general of railroads, is one of the coun-
sci for the Standard Oil.
The business interests are following
the case closely in the hope that the
outcome will still more liberalize the
Interpretation Of the Sherman anti
trust laws.
Eliminate destructive competition"
said President Hoover to the American
Federation Of Labor gathering at Bos-
ton, ''but maintain that degree Of COM
petition which induces progress and
protects the consumer"
The drift Is Enthusiastically toward a
reinterpretation Of the Sherman anti
trust laws.
Wheat Situation.