Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-07-06
MOVES IN MARKET
ARE UN|MPORTANT
BEFORE HOLIDAY
Liquidation Absent in Weeks
DeaIings-Dividend Pay
mentS Increase.
MONEY RATES LOWERED
TO ABNORMAL LEVELS
Violent Defation Reflected in
Many Factors-Commodity Prices
Show Big Decline.
BY CHARLES F. SPEARE.
cial Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, July 5.-Such markets
as have been witnessed this week are
to be expected before a holiday period
and especially at the beginning of the
vacation season and at a time of the
year when industry normally slows
down.
Transactions on the Stock Exchange
have been in small volume, with move
mentS of prices of little significance
and still rejecting the bearish DISPOSE
ton of the professional element, which
contributes most to them, and the
timidity of the public body of investors.
One good sign has been the slow i'm
provement in the bond market, which
has worked up consistently day by day
after duplicating at the end of June,
its low average for the year made six
months previously.
Liquidation has been absent in this
weeks transactions The number of
new low prices for stocks has daily
diminished. Special issues have been
affected by special causes, such as poor
statements of earnings or dividend re-
auctions or anticipation of less favor
able news for stockholders during July.
All in all, these conditions appear to
have been quite well discounted for the
time being. More attention is now being
given to the effects on high-grade
securities, of the vast amount of income
money available for investment and the
yields on stocks whose dividend pay
mentS are not likely to be disturbed.
Dividend Figures Rise.
Figures of the six months dividend
payments by American corporations re-
veal the momentum of the last two
years of business prosperity. Although
more than 400 dividends were omitted
or lowered in the half year, there was
an increase in dividend payments over
the same six months in 1929 of 1929
100000, or is per cent, and of $818,-
100000. or so per cent. over 1928.
Altogether, approximately $2,500,000,-
900 was distributed to the owners of
American corporations in the January
June period. It is a fair assumption
that a considerable portion OF this
amount has been employed in the pur-
chase Of securities or has added to the
deposits of the savings banks.
AS stocks have declined and money
rates have dropped to abnormally low
levels, the return on diyidend-paying
securities has increased and the margin
between this return and the money
rate has rapidly expanded. This is
always one of the basic influences max
ing for a stabilized investment mar
ket- 1t may be minor factor today,
but it has helped to absorb the flow OF
long stocks into the market and, there
by, modified the shock Of heavy liquida-
ton. A study of the relation between
yields of money and yields on stocks
indicates that 1t is today more favorable
to the investor than since 1924, the year
remembered as inaugurating the bull
market which terminated last No.
vember.
Intensity of DeflatiOn.
Some of the outstanding incidents of
the week having a bearing on what has
happened in the stock market and in
the business world. and also giving
a clue to what may be revealed later
on, are: A further decline of COM
modify prices. lower pig iron produc-
ton, a higher percentage of decrease
in railroad car loadings, additional re-
auctions in the Federal Reserve Bank
rediscount rates, Shrinkage in Wall
Street loans in June as indicated by the
New York Stock Exchange figures of
more than $1,000 10000 900, and a drop in
brokers' loans this week to $l97 900, 900.
or total of 100000 in the past
four weeks. In point of intensity, de-
flation in various forms in the last
of other years
In the last half century there have
been six major declines in business and
in securities. They we're in the years
1888, 1893, 1903, 1907, 1921 and 1880.
In some respects the one through which
we are now passing is as violent as the
others. Judgment on its ultimate
effects and its chief causes must be
postponed until after it has terminated.
The features of the earlier declines are
of current interest and permit of an
Interpretation of present events and, to
some extent, allow of deductions re-
garding the possible length of the ex-
listing depression. The facts given be-
low are from study of the business
recovery following depreSsions, made by
Col. Leonard B. AyreS in 1922.
One of the strongest arguments pre-
sented in proof that the depression
which began last August and is now
approaching a years duration, is termi-
mating, is that past panics have run
their course in about IL months. In
some instances the recovery has been
followed by secondary reaction, as in
1896, following the rebound in 1895 from
the low point reached in 1894 AS a
rule, however, once improvement has set
in 1t has been rapid. It's collateral eff
fects have been important to securities
and to interest rates.
Perpendicular Drop in 1893.
From the peak in the middle of 1888
there was gradual decline until Janu-
airy of 1885. Then occurred a recovery
OF moderate proportions and a slight
reactlonary movement, which ended in
Autumn. From that point there was
striking rebound from basic line of
about 80 toward the end of 1885 to one
Of lao year later.
The depression of 1893 is represented
on charts as of an almost perpendicular
character. The low point of it was
reached in October and was followed by
an abrupt recovery into the middle of
1894 Another decline well below that
of 1893 followed, with rise to the end
of 1895, represented by the change from
a basic line of about As to one of las.
The violence of this recovery had much
to do with the secondary reaction in
1896, when business went back to about
the basis of the Summer of 1894.
The depression of 1908 was of shorter
duration and less violent than that in
the two previous periods. 1t began in
the Spring of that year and reached its
low point at the year end, followed by
recovery and then second less ex-
treme dip in the Summer of 1904. Sub
sequently there was steady expansion
until business and finance were dis
turbed by the banking panic Of 1907.
This was also another instance of an
abrupt decline, with business affected by
serious credit conditions. 1t did not last
long. In the Summer Of 1908 the force
Of the depression had expended itself