Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-06-01
STOCKS RULE FIRM
PENDING EXPECTED
RECOVERY IN TRADE
Wall Street Looks for Re-
vivaI in Industry Later
This Year.
SOME OBSERVERS SEE
BOTTOM OF DEPRESSION
Unfavorable Second Quarter Re-
ports May Be Followed
by Upturn.
BY CHARLES F. SPEARE.


Special Dispatch to The Star.
NEW YORK, May 31.-Wall Street
has loafed through a four-day week
without making much impression on
the prices of securities. The average
of stocks today stands almost exactly
where it was last Saturday. Bonds are
down Il point. The mystery of why
bonds do not react to the strongest
set of favoring conditions in two years
puzzles the best minds in the invest
ment world.
To use the common expression, "busi-
ness is scraping bottom" From some
points of view, 1t reached its low stage
at the end of March: from others it
would appear that the decline had ex-
tended into May. During the past three
weeks there has been more uniform
trend and a more pronounced indica-
ton that industrial conditions are be-
ing stabilized Recovery, however, is
and probably will be slow.
Trade Outlook Brighter.
Later on it may be found that the
limit of the industrial decline was
reached coincident with tbs months
break in the prices of stocks. Certainly
the improvement in equity" issues es-
tablished has been based on the convic-
ton that the extreme phases Of the
industrial depression are behind us and
that, while the effects of this depres-
sion will be evident for some months
in decreasing earnings and smaller divi-
dends, 1t is time to be hopeful for the
future and to begin to anticipate it in
discriminating purchases of good Sc
curities.
In considering the outlook for the
next three months 1t Is necessary to
take into account the fact that this is
normally a slow period in business and
one of indecision in security markets
This condition is likely to be emphasized
more than ever this year The late
April and early May break in stocks
reflected an overbought market and
the abrupt discovery that widely her
and that corporation reports for the
second quarter of the year would be as
unsatisfactory as those In the three
months ending March 81.
Cure for OverproductiOn.
BY that time. however, there should
be a visible Weakening in the business
world and more than seasonal prepara-
tons for the turnover that comes after
the first definite estimates of probable
wheat, corn and cotton crops have been
made. There will then have elapsed a
period of nearly nine months since the
stock market panic began to affect bust
ness and at least six months during
which production had been curtailed
and the country had started in to use
up its surplus of commodities and of
manufactured goods. AS matter of
fact, 1t Is nearer year than nine
months since business recession first be-
came visible and began to affect certain
If Efn he TTNln hn NJ
situation is greatly different from all
others in the past quarter of century
a years reaction is the maximum that
need be expected, and there Is actually
more basis for a quicker recovery now
than when national conditions were
less favorable in other reactionaTy pc
RODS.
Several years of overproduction on a
large scale are finding a cure, to the
temporary injury of both capital and
labor It is safe to say that the en-
forced rest will have benefits that will
be much appreciated later on.
Tariffs Effect on Trade.
Quite as much as the decline in COM
modify prices as a factor IN causing
business depression has been the tariff
situation. From the standpoint of do
mestic and foreign trade, the proposed
upward revision of the tariff schedules
is a handicap which those more versed
in politics than in economics do not ap-
pear to realize. A policy of nursing
business along through a period of a
serious illness and maintaining employ
ment and wages at a high rate is not
consistent with one that introduces into
our industrial situation set OF tarln
changes that will affect trade relations
with some of our best customers abroad
and impose additional hardships on
American manufacturers and consumers
(CopyriRht, l930)