Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-02-02
STOCKS DISCOUNT
GAINS IN INDUSTRY
Market Stages Broad Recov-
cry During Week as Trade
Conditions Improve.
BY CHARLES F. SPEARE.
AciaI YoisDatch to The Star.

business has improved on the heels Of a
rising stock market. or whether stocks
have advanced in sympathy with more
favorable reports from the industrial
world is not so important as the fact
that both trade and securities this week
have shown positive recovery.
Individual stocks must still 60 I'D
Considerably to gather in the slack in
prices that occurred during December.
On the average, however, industrial is
sues on Friday advanced through the
high average of December 9, which is
of Importance in technical interpre-
tation of the stock markets trend.
The week has witnessed not only bet
ter prices for stocks, but q volume of
trading that would have been consid-
cred most satisfactory to commission
houses two and three years ago. One
after another of the important share
groups have been supported and pro-
NOTED, such as the steelS, copper,
motors, public utilities, electrical manu-
featuring and even the indifferent
oils. Out of this has come q recov-
cry which amounts to an average of
nearly 10 points in the industrial and
public utility divisions Of the market,
compared with the minimum prices of
last November. Put in another form,
this is to say that whereas these stocks
were of an average of SO per cent last
Autumn from their high prices of the
year, the shrinkage from that level
today is only 80 per cent.
Steel Earnings Encouraging.
There have been q number of de-
velopmentS to which the stock market
could not fail to give respectful atten-
ton. The one that had most i'm
mediate effect was the annual report
Of the United States Steel Corpora
ton, which included those weeks in
1879 when the iron and steel industry
was at the lowest ebb since 1922. OBJ
V1ously, the momentum of earlier
months had much to do with the sur
priSing results shown by this company
In the December quarter, and If the
presidents Of other years are worth
anything as a guide, the March quar-
ter, in which the steel industry is hav-
ing rapid comeback, will be less
favorable than that just presented.
However, earning three times its cur
rent re- dividend rate of 81 a share on
It's common stock, which supplements
the equally good statement of the
Bethlehem Steel Corporation, the United
states Steel Corporation continues to
snow the vitality that has attracted so
many hundreds Of thousands of in
VeStorS to its securities, AS an tndi-
cation that the steel industry is far
from sick, one independent producer
re-eStabliShed the dividend on its
STOCK and another increased its rate
during the week.
encouragement has been given by
the adviceS from Washington on the
gam In employment, which means
notnlng more than that industry Is
picking up; by the ability of the COP
per producers to maintain an l8-cent.
rate for metal though other comnodi-
Ties are falling; by the sharp contrac-
tion In crude oil production, and bv
the evidence OF more active buying in
the automobile industry, as well as bv
agencies identified with the CONSTRUCT
tlon Of buildings and of ships.
Money Situation Favorable.
Quite as fundamental in their value
20 securities as the expanding trade
Lnolcatlons are those that have APP
peared this week in the money mar.
kets Of the world. For the first time
In two years call loans on Friday were
renewed at 4 per cent, which is of
particular significance as the rate was
established at the month end. when
demands normally are on a rising
scale. Bankers acceptances also have
been Lowered. The position of the Fed
eraI Reserve steadily grows better as
member banks reduce their borrowings,
Wnlcn are now IS per cent less than
tney were at the peak In 1929 and
ABOUT as low as they have been in
the last three years.
Tnere IS an 1nSistent demand in some
quarters Tor reduction in the Federal
reserve rediscount rate in New York to
: per cent. II business Is to 60 on ex-
banding, such a policy would not be
justified. "e
The reduction In loans on securities
continues at substantial weekly pace
being helped along by rising prices for
STOCKS which permit borrower and lend
er 70 cancel their contracts to mutual
advantage. There Is still, however. a
great mass Of unmarketable securities
In the portfolio of the banks through
out the country. One of the explana-
lions OF the weakness In prices of grain
ana cotton Is that interior banks have
peen trying to improve their condition
through liquidation Of commodities for
which there was q ready market COM
pared with the frozen" condition Of
loans on securities.
Weakness In Commodities.
The situation in commodities is un-
satisfactory. Temporarily, there has
been slight recovery In the commodity
index. Conspicuous weakness, however.
has developed IN many quarters out of
overproduction and a falling of In both
domestic and foreign demand for manu-
factured goods. The condition In wheat
and In other farm products, as well as in
cotton, has attracted attention in Wall
street this week by reason OF its eco
nomic significance and its possible DO
ntical reactions. If this were a presi-
Dental year there would obviously be
much political agitation and argument
based on the poor performance of the
major farm staples. This might lead to
q reopening OF the war policy of price
fixing. A collateral feature of falling
prices Of farm products Is the bearing
this may have on railroad rates In the
modern congressional adaptation of
rates to the going prices for such prod
ucts.
The railroads, always sensitive to in
dustrial currents, had q poor month in
November, O poorer one in December,
and, judging from the carloading fig
ures, their earnings were still running
on in January. This would explain to
some extent the relatively small recov-
cry IN the prices Of railroad stocks to
that which has taken place in public
utility and industrial issues.
In all, however, 1929 was one Of the
best years in the history of the Amer
lean carriers. Never were they so en-
GENTLY administered with a ratio OF
operating expenses to gross earning OF
TIA per cent, which the director OF
the Bureau Of Railway Economies states
is the lowest since 1917, and with q re-
turn On property investment, IN spite
OF the decreases of November ana De-
cember, Of nearly per can't compared