Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-09-28
DECLINE IN STOCKS
is AGGRAVATED BY
COMMODITIES DROP
Speculative Markets Slump
in Week of Adverse DeveI-
0pmentS-BearS Active.
SYMPTOMS OF RECOVERY
IN BUSINESS APPARENT
Recent Heavy Selling Movement in
Securities May Bring Tenn
porary Rebound.
BY GEORGE T. HUGHES.

NEW YORK. September 27.-To pre-
serve a judicial frame of mind, with
speculative markets presenting the pic
ture OF hysteria they have this week,
mas been difficult matter. Certainly
wall Street has found it so. Optimists
are as scarce as the proverbial hens
teeth and the peSSimiStS have held the
center of the stage.
On the face of things there has been
little reason for cheer. In the first
place the commodity markets have con-
tinued their steady decline until wheat
has sold at the lowest since the depres-
sion year of 1907 and cotton at the
lowest in Is years. Sugar and silk have
sold at new lows and about the only
exception has been coffee, in which
there has been some recovery.
UneaSlneSS over the foreign situation
Is still in evidence, although the con-
Germ is not as great as It was when
the results Of the German elections
were first received. German dollar
bonds dealt in on this side have had
another setback, although they have
held above the low point of the year.
The specter of Russia overwhelming
the world not alone with grain, but
with goods at prices under the cost of
production and at level rendering
competition impossible, has been an
other strain on overweight nerves.
Stocks Break August Lows.
Then there has been succession of
omitted dividends and of poor earnings
statements, with predictions, more or
less well informed. of Others vet to
come. It is no wonder that the stock
market was unable to resist the on
siaught of short selling and it is not
surprising that this short selling uncov-
cred real liquidation, with the result
that the averages have broken through
their August lows and are almost down
to those of June.
OF course there are some offsetting
considerations. Money seeking employ
ment Is in excessive supply, judging not
alone by the rates charged for day-to-
day loans, but for accommodation over
a longer term. Six-month collateral
borrowings were made this week at
"a per cent, rate unequaled since
November, 1915. Call loans on the ex-
change have held oficially at per cent
all week, but in the outside market
they have been made as low as / per
cent.
This surplus Of money has made
itself felt in the bond market, where
prices have gone to further new highs.
but so far only for obligations of the
highest grade. In the stock market
preferred issues of unquestionable
quality have followed the same course.
1t Is curious commentary on the exist
ing condition that on one day this
week International Harvester common
stock, representing one of the corpora
tions doing business with the farmer
and in great speculative disfavor on
that account, should sink to a new low
price for the year while the preferred
stock of the same company went to a
new high.
Money Seeking Investment.
Capital Is timid, but it must find
something to do and that something
takes the form of bidding comparatively
for gilt-edge Investment bonds and IN
VeStment preferred stocks. II prece-
dent is any guide, this inquiry will
eventually spread to the best Of COM
mon stocks.
The business news of the week, as
differentiated from the market news,
has told of q moderate Improvement,
seasonal perhaps, but welcome just the
same. The most encouraging report
has come from the iron and steel trade,
where the authorities have been tell
ing OF operations at 81 per cent Of ca
pacity against So per cent In the two
previous weeks. A growing interest in
forward buying and q consequent stiff
fleming In finished steel prices, with
the gain in bookings coming without
the aid of the two largest consumers,
the automobile industry and the rail-
roads, but from miscellaneous sources.
In some cases, 1t is said that consumers
stocks have been so badly depleted that
replenishment is imperative"
Sentiment in business circles, again
as contrasted with that in speculative
quarters, is a little more cheerful. The
textile trade is a case in point, but as
rule there is little tangible evidence
on which to base an opinion that the
real turn has come. OF one thing
there Is no doubt. Weakness in stocks
and falling prices for commodities react
unfavorably on business and retard the
Improvement which must eventually
come. 1t Is all very well theoretically
for the banking interests to stand aside
and let the stock market take care of
itself, completing its liquidation. That
Is the way to clear up bad speculative
situation, but 1t does have the effect
of leading the business man to believe
there is something overhanging both
the market and business, the nature of
which has been kept dark secret.
Until he is disabused of this idea, ie
will be a dead weight on trade re-
| covery.
Iecnnicat Recovery Due.
Coming down to the immediate situa-
ton: After the succession of days of
violent declines, the stock market is en-
titled to some recovery on technical
grounds If for no other. No price move
ment ever makes straight line and the
trend downward this week has been so
continuous that 1t Is bound to turn,
temporarily at least. The best resist
ance has been shown by the investment
and reimbursement industrial and
utility shares. just where 1t would be
expected to be shown IL the market
were about to stage a comeback
For the present, however, the oils, the
metal stocks and the motor shares have
few friends. Overproductio nof oil is
still an apparently insoluble problem
The price of copper is down again and
below the production cost of all except
| the most efflcisnt. Motor companies
will report third quarter earnings that
are sure to make unpleasant reading for
stockholders and meanwhile production
is being held down to a minimum. New
lows for the year or longer have been
made in many stocks in all three of
these groups.
| Much the same situation exists in the
railroad list. The first A railroads to
report August earnings had a net
| operating income 27.4 per cent lower
1 than IN Au0Tlef and IN lrxx,a,.