Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-01-19
STOCKS WITHSTAND
SHARP BEAR DRIVE.
Attacks During Week Reveal
Steadiness of List Despite
Business Recession.
BY CHARLES F. SPEARE.


NEW YORK, January 18.-The mid
die of January brings into clear view
the effects of the slow recession in
business which began months ago and !
was accelerated by the November break
in stocks.
It also permits a better Judgment on
money conditions in the country and
abroad in the next half year. Both
situations, that of corporation profits
closely than any others To the stock
market, which had severe tests and met
them satisfactorily in four of the six
sessions of the week.
The significant elements in business,
or at least the ones to which most at
tention are being given, are those of
overproduction, the decline In commod-
ity prices and decreasing employment. !
1t is these that have been furnishing
ammunition to the bear element in Its
operations against limited number OF
shares.
A surplus of supplies over require
ments has been visible for some time IT.
the metal trade and has affected quo-
tations there, except for copper. Latest
copper statistics are unfavorable. They
indicate an accumulation of metal
stocks in spite of the fact that De-
cember output from the mines was the
smallest since September, 1929 They
have caused the Anaconda Copper Co.
to suspend operations at its largest pro-
ducing units.
Commodity Prices Weak.
Overproduction of oil has again be-
come an embarrassment to the oil COM
panies, with the sequel a sagging price
list. The motor industry and that de-
voted to the manufacture of radios ap-
KNn0 70 AA kNNN 81 - L -
condition. Stocks of both of these
groups have been suffering because of
it. Commodity prices in general have
been weak. This has a direct bearing
on business, not only in this country,
where 1t leads to postponement of pur-
chaseS OF raw materials, but it affects
other nations whose trade balances re-
spond directly to supplies and prices of
ccdee, rubber, sugar. wheat and silver
With overproduction and the neces-
sity for counteracting the effect of it
through curtailment of raw materials
or manufactured products, there has
been less employment. The December
figures Of the Department of Labor
indicate decrease of slightly more than
3 per cent from November in the num-
b.r of workers in manufacturing in
dustries. The shrinkages were largest
where identified with iron and steel,
terial production. Comparatively speak
ing, there is no unemployment problem,
with only about one-fourth as many
idle among skilled and common la
borers as in the early months of 1928.
There undoubtedly will be an increased
number, however, before the end of
Spring.
Belief in the outlook among indus
trial SITS and bankers continues strong,
while recognizing the possibility of
slack Winter season. Three weeks ago
Secretary Mellon made this Statement:
Il have every confidence that there
will be a revival ofA activity in the
Spring and that during the coming year
the country will make steady progress"
Bankers Exhibit Confidence.
On Monday A. H. Wiggin, chairman
of the board of the Chase National
Bank, in his report to shareholders
said: "A moderate business recession
was already in evidence before the stock
market break, and has gone further as
a result of the break. But the business
situation is strong. No business crisis
Is possible, because the business COM
munity has very little quick debt. Busi-
ness morale is good"
A few days later Charles E. Mitchell,
chairman of the National City Bank of
New York, in addressing his stockhold-
ers said:
THE correctives have caused the new
year to begin with a somewhat dimin-
ished business activity, but the busi-
ness organization is not incapacitated
in any respect, nor is the physical
wealth of the country impaired.
A general feeling of confidence exists
throughout the country. In view of
these conditions 1t does not appear
probable that business will remain
below the normal stage of activity for
any protracted period"
Dividends Hold Well.
The momentum of several years OF
good earnings and the careful admins
tration of their finances meanwhile will
permit a great many corporations to
continue paying present dividends. al
though current earnings may not cover
these dividends. An evidence OF this Is
available in the record of dividend dis
bursements from the end of November
to the middle of January. This shows
ratio of about to / OF dividends in
augurated or increased to dividends re-
duced or passed.
Out of this slowing down of industry
and the policy of restricting production.
and as a result of the defiation In
stocks, has come a condition in the
money market of comparative ease, so
and acceptances, but decided flrmness
when related to commercial borrow
ings or real estate mortgages. Brokers
loans are so per cent lower than in the
first week of October. 1929. In contrast,
the loans on securities by the reporting
member banks in the Federal Reserve
system were approximately OO.OOO,OOO
greater on January this year than on
October 8 last year and are $2,4OO,-
600 900 in excess of the figure for such
loans in September, 1927. although
brokers' loans are about the same as on
that date. This Is one OF the d1fncult
problems with which the banking world
must deal this year. 1t represents
condition of overloaning on securileS
owned by bank customers that can only
be corrected through LIQUIDATION. un.
fortunately, a considerable amount of
the collateral in such loans Is not read
lily marketable and will remain In
frozen" state for a long time and con-
tinue to restrict the loaning powers OF
individual institutions. The improved
status of the member banks at the Fed
eral Reserve is indicated in reductlon
Of rediscountS this week to $442 1856 uOO'
or a reduction of so per cent from the
peak of last year.
Slow Liquidation Process.
The same situation obtains abroad,
where money is becoming easier in the
open market and is readily available for
loans that are liquid, but remains tight
otherwise. The banks of England ana
on the continent are also overloaned
on securities and on business paper.
The one class cannot be sold or the
other paid off at maturity. The SLOW
process of liquidation following f1ve-
year period of intense speculation in
nearly every part of the world fur
nishes the argument to those who, while
expecting only moderate and brief
recession in business this year. believe
that 1t will be some time before the