Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-04-16
AYRES OPTIMISTIC
ON BUSINESS TREND
Cleveland Economist Sees
Further Improvement With
Spring Season.
Special DISPATCH to The star.

Special Dispatch to The Star.
CLEVELAND, Ohio, April I6.-Con-
tinued improvement in business condi'
tons, combined with a decrease in un.
employment, due to the activities which
are opened UP by Spring, are seen In
the April is Business Bulletin of the
Cleveland Trust Co., edited by Col
Leonard P. Ayres, vice president. Com.
menting on the trend of stock and bond
prices on the New York Stock Ex-
change, the Bulletin says that there
evidently has been a change in public
opinion regarding the relative values OF
these two classes of securities.
Discussing general conditions, the
Bulletin says:
with the coming of Spring business
sentiment is more optimistic. In part
this is justified by the mere fact that
Spring Is here for agricultural work is
getting under way, building operations
are increasing, more people are think
ing about buying automobiles, and
highway repair and construction can
now go forward There Is more work to
be done in the Spring than in the Win
ter, and as a result employment condi-
tons are better and will improve fur
Their In the Spring the march OF
business always strikes swifter pace.
SYMPTOMS of Retirement.
During DeCSTup6Iy
airy and March the level OF general bust
ness activity. as measured by the more
reliable composite indexes of industry,
has remained at about 8 or per cent
below its theoretical normal. There is
not much actual statistical evidence OF
Improvement, but there are some
symptoms of betterment which are
hopeful Building constructor is In
creasing; activity in the steel indus
lor1{niV1o and has
turned up; the declines in the whole
sale prices of commodities appear to
have been checked. and the weekly hg-
ures for coal output are larger.
zone important element in the i'm
provement Of business sentiment Is to
be found in the advances on the Sc
cIrity markets. The prices OF bonds
moved up vigorously during the early
part of March, and the advancing
trend still continues. Stock prices
have made important advances in re-
cent weeks. so that some issues have
actually exceeded their 1929 prices, and
many Others have regained much OF
what they lost last Autumn: Such an
advance of stock prices as this during
slow times has always in the past oeen
followed by business improvement not
much later on.
"As q foundation for business i'm
movement we have an abundance OF
credit readily available on easy terms
This will not of itself cause business
to improve, but it does facilitate the
coming of better times. In the present
instance 1t promises to be effective, tor
the value of new bond issues noateo
during March was not only much
greater than in February. but actually
we'll In excess of that of March OF
1929. Money raised by the sale OF
{, bonds is, as a rule, promptly spent for
new construction and equipment. ana
such expenditures are components OF
better business"
The Bulletin reviews the relation Of
the trend OF bond and stock prices for
the past 80 years, and in this regard
says: m .,,o
ueriod the stock line regularly rose
above the bond line in times OF bull
markets, and fell below it in periods
of bear markets. 1t did this so con-
siStently that It was possible to con-
slider the bond line as a normal level
for the stocks and to compute the per-
w1nLages by which stock prices rose
above normal during the bull markets
and fell below normal in the bear
moves.
During all this long period stock
prices never rose as much as 20 per
cent above the normal at the peaks OF
bull markets.
an the great decline Of last Autumn
stock prices did not decline as far as
the bond line, and they have now ad-
vanced until they are relatively about
as high as they were at the peaks OF
any Of the old-time bull markets. APP
parently q genuine change has taken
place In the relative valuations which
the American investor places upon
stock and bonds"