Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-03-09
Recovery During the Week
Pushes Price Average to
New High Level.
REVIVAL OF INVESTMENT
DEMAND NOW FORESEEN
Reparations Loan Would Be Aided
by Increasing Strength
in Bonds.
BY CHARLES F. sPEARE.

By CHARLES +. SPEARE.
Special Dispatch to The Star.
NEW YORK, March st may be
well to go back over the events of the
four months that have elapsed since
the November panic and briefly point
out the market trends and their causes
that have eliminated this week in the
highest average of industrial and pub
lie utility prices in the present recovery.
Investment buying on the greatest
scale ever witnessed in this country,
draining savings banks, insurance COM
panieS and commercial banks of their
funds and drawing down the call loans
of corporations and individuals by as
much as $l00,000,000 within month
advanced prices to a peak on December
8 that encouraged a great deal OF profit
taking by pools and others who had
been able to accumulate securities
when the entire world seemed to be
selling them. Subsequently heavy
liquidation partly for income taxes and
partly to relieve those who had been
carried through the bad times of Octo-
Der and November brought secondary
reaction which continued for nearly a
month.
About the middle of January signs
appeared on the business horizon indi-
eating the beginning of a recovery
from depression that had started in
September and had been intensified by
the November crash. The specific in
stance of revival was in the iron and
steel trade, which expanded rapidly
with the ratio of expansion doubling
between the middle of December and
the end of January. Other industries
reflected q better sentiment If larger
orders and stock went on gaining
throughout the first half Of February
until both industrials and rails had
gone through their previous high point
in December. Then the situation In
commodities became an active one from
day to day, leading to series Of trend
less markets and small daily volumes
up to the first of March.
Money Ease Aids Stocks.
The present situation is one in which
Wall Street admits that stocks had
overdiScounted a business recovery that
is proving to be slower than indicated
in January and apparently have shaven
of the effect of commodity price dis
turbance but may be just beginning to
reflect conditions in the money market
that ordinarily would mean a great
deal to bonds but are now being used
to greatest advantage in stocks.
With the public so strongly stock
minded. it is not unreasonable to expect
a greater expansion In stock buying
and in stock transactions under low
interest rates than in fixed interest
obligations. Judging from all the evil
dence at hand the November panic did
not cure the public of its desire for
junior securities. It believes in them
1t will buy them as it is able to ac-
cumulate funds for this purpose and
irrespective of the present temporary
lull in business, which may produce a
crop Of quite unfavorable corporation
reports for the first six months of this
year. From the bears standpoint, easy
money is one of the toughest nuts to
crack. as it overbalances the influence
of other unfavorable factors in the
speculative situation.
It has been quite logical therefore
to see stocks advancing with so many
proofs of reaction in the business world
figuring In the daily financial and COM
mercial reports. This week we have
street loans" at per cent, 90-day
loans at 4 per cent and succession of
declines in bankers bills.
While brokers loans have increased
$225. 000,000 from the low point of last
Autumn the borrowing of the Federal
Reserve member banks have declined to
the lowest point since 1925. Compared
with the high figure of last July they
are down more than rs per cent. Al
though the Federal Reserve Bank in
New York disappointed Wall Street on
Thursday by not reducing its rediscount
rate to 31a per cent such action cannot
long be delayed in view of the uni
versal trend to lower level reflected
in the lowering OF rediScountS by five
central banks Of Europe in the past 40
hours.
Investment Revival Foreseen.
Credit conditions throughout the
world are obviously shaping themselves
Tor strong revival in investment
securities even if they do not have as
great an effect on relieving interna-
tlonal trade as might be hoped of them.
The downward trend of interest rates
IN this country and in Europe reflects
not only the absence of demand for
| money for speculation but for business.
In such situation it is natural that
flXed interest rate securities should
benefit The application of this to the
repair ttions loan is quite pertinent.
This loan will probably be timed with
| the season of normally easiest discount
/ rates here and abroad 1t is already
! being foreshadowed in the steady i'm
| provement in the prices of those dollar
| bonds that most nearly represent the
| quality and terms of the new issue.
| ICODyriRht. lQ3n