Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-12-14
SELLING OF STOCKS
DURING LAST WEEK
IS LAID TO BANKS
Institutions of interior De-
cIared Anxious to Improve
Cash Position.
RAIL ISSUES BEAR BRUNT
OF HEAVY LIQUIDATION
"Racketeers" in Securities Are
Reaping Profits From Droop-
ing Market.
BY CHARLES F. SPEARE.

BY CHARLES f. SPEARE.
Special Dispatch to The Star.
NEW YORK, December 13-This has
been week of more critical events
and tendencies than any in the past
year of depression. Fortunately, both
have been held under control and their
influence modified as the support that
Wall Street had expected to appear
earlier, but which was perSistently with
held, was finally granted when the acute
phase of the situation developed.
It is now known that much of the
mysterious liquidation of stocks and of
bonds during the past month originated
with banks in the interior of the coun-
try that were compelled to improve
their cash position, though it was in
greatest volume from New York in
situations that have had facing them
for some time. the conditions culminat-
ing in Thursdays closing of the Bank
of United States
Fear had overtaken the banking
world. This was communicated to those
in touch with it. The tension at times
this week has been greater than since
1910 and 1907. Today it is greatly
lessened. People are again beginning
to regard securities in the light of what
the standpoint Of what they might
bring at auction.
Rails Lowest Since 1925.
It should have been a harvest time
for those with funds to invest. (The
answer to this will possibly be that no
one thinks of gathering crops into barns
in the midst of an electrical Storm
Standard railroad shares have been de-
Ginning month by month until this week
they reached an average the lowest
since the Spring of 1925. Since Sep
TENDER, 1929, the market value of the
entire rail group listed on the New
York Stock Exchange has declined so
per cent, or roughly about $4,000, 000,0 900.
In the years 1924-29 the carriers had
shown a surplus in excess of dividend
requirements of over $4,000, 000, 900.
This may be reduced by from 10 to is
per cent when the net results of this
unfortunate year are cast UP.
Among the, following 10 railroad
stocks there is none whose dividend is
likely to be reduced in the next nine
months, If at all next year. Yet this
week the yield on Baltimore & Ohio
was Ills per cent, on Louisville &
Nashville, 7.50 per cent; on Great
Northern, $50 per cent; on New York
Central, per cent: on Pennsylvania,
7.30 per cent; on Chesapeake & Ohio,
$50 per cent; on Atchison and on Union
Pacific, $40 per cent; on Southern Pa
cif1c, $50, and on Norfolk g. Western,
assuming the present extra" will be
continued, also $50 per cent. The
average return on these shares is well
over per cent.
blue Chip" List Shrinks.
In the palmy days of 1929 a stock
that did not sell above 500 share
was nothing for the Spectator to look
at He was always in a hurry to place
his borrowed money In the blue chips"
that scared in the realm of inflated
values. In order to be in the who's
who" OF stock status a figure of at least
5000 had to be established, with the
blue bloods ticketed at $500 and $500.
Today there are just 20 common stocks
that now appear regularly on the New
York Stock Exchange list at over 500
share. The same people who could
not buy 5000 and $500 issues fast
enough are saying that $50 to $50 prices
now are extravagant
There has, for instance, been a deeper
beartshness this week on the public
utility holding company junior issues
than in months, in spite Of the fact
That the average price of American g.
Foreign Power, American Power g.
Light, American Water Works, Electric
Bond q Share and United Corporation
mas dropped to $37 a share from SAB a
snare last year. Here is a 70 per cent
average shrinkage in the common stocks
OF properties whose gross earnings are
In excess Of those a year ago and whose
dividends are so far undisturbed.
"Racketeers" In Securities.
There is enough in all this to suggest
Two possibilities. One is that the pub
lie has lost all sense Of values. At such
times the shrewd investor laws the
foundation Of fortune. The other is
tnat the New York Stock Exchange is
not following as carefully as it might
the operations of band Of "racketeers"
In securities who take advantage of
every critical corporation and banking
situation to increase their profits.
Almost every broker tells the same
! story; namely, that his customers have
not been liquidating to any extent. but
rather have been buying stocks for cash
| and having them transferred to their
names. All of the benefits that may
come to business sentiment from Gov
| eminent plans to aid business are lost
on public that has had a $50, O0O,-
| 600, 900 depreciation in its securities in
the past 16 months and sees further
| exploitation of its misfortunes in sue
cessive market attacks.
Trade Trends Encouraging.
There have been some encouraging
signs this week to offset partially the
effects of bank troubles and the lower
averages Of stocks and bonds. The ad-
vance in iron and steel prices is slow
ly improving the position of producers,
who are confident that increased buying
from the railroads and automobile man
| ufacturers will develop after the first of
the year
The drop in car loadings has been
less than seasonal. Dividends that Wall
Street was positive would be reduced
have been declared at the old rates.
Difficulties that we're rumored have not
developed, nor are they likely to. Della
ton of brokers loans continues until
they have reached figure 70 per cent
lower than last year. Holiday trade Is
fair in volume, If not so satisfactory in
profits. There are further evidences
that consumption is overstepping pro-
duction and that year-end inventories
! Of merchandise will be abnormally small