Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-01-12
Absence Of Public Pending
Business Trend Leaves
Trading to Professionals.
BY CHARLES F. SPEARE.
.SioI INisnntch ~ The star

age of transactions ana III Cne laCh VI
a sustained price movement IN eltner
direction. The market is in the handS
of the professional element. The bull
leaders of the last two years were so
much crippled in the November panic
that they will not be active factors Tor
some time. Their contribution to the
brokerage business was substantial
one. The lack of it is being seriously
felt in commission house circles.
Aside from one or two conspicuous
operators the bear element is not espe-
cially strong and is represented by in
dividualists in speculation rather than
by a co-ordinated group.
Banking Attitude Passive.
The attitude of the banking interests
is a passive one, with strong senA-
ment for slow but permanent recon-
struction of the market with an oppor-
tunity in the next few months to
strengthen the weak spots in this situa-
ton as we'll as to recast some OF the
present unfavorable features in the
financial set-up of recently created cor
porationS.
This involves the simplihcation of
corporate structures and the question
able practice being INDUCED in by
finance companies of bringing up the
liquidating value of Junior securities
through the retirement, with portion
of their investment assets. of preferred
stock. 1t also includes the quiet dis
tribution of blocks of stocks salvaged
during the panic, either directly into
the market or into the hands of those
who agree to put them away for perma-
nent investment.
On the side of business it Is also a
time of cautious buying and careful eX-
penditures and close study of all sug-
gestions making for more efficient and
more economical operations.
The fact that bank deposits, aside
from those influenced by the liquidation
in stocks, have been rising recently
after a sharp decline is evidence that
the public is saving once more on a
substantial scale and that reserves OF
funds are being accumulated for REIN
vestment at a later time when the
clouds now over the business skies dis
appear.
Easier Money in Prospect.
Money rates this week have been
easier as currency has returned after
employment over the holidays. This
has influenced another decline in the
Federal Reserve member bank redis-
counts, which are now nearly $780,
000, 600, or IS per cent lower than two
weeks ago and are approaching the
level of $500, 900 900 at which
comfortable state of credit Is estab-
lished. The Government program of
keeping business on an even keel must
be supported by one which the Federal
Reserve Board can dictate-that Of
making money easy for those who must
borrow that, this program be carried
out. Consequently, even lower rates
Of interest than those current are ex-
pected during the Winter, and with this
decline in rates, broader and higher
market for prime investment securities.
The beginning of this movement Is to
be seen in the $150,000,000 issue of
American Telephone & Telegraph S
per cent bonds at the end Of this week.
Easier money conditions are devel-
oping steadily in other parts Of the
world as the. effects of deflation in the
United States spread over wider circle.
While the Bank of England rate of re-
discount was not reduced last Thurs
day, 1t was not from lack of q strong
statement by the institution or a wide
spread between the present per cent
rate and the open market rate. Japan
this week has removed its embargo on
gold. She has been assisted in this
by the decline IN the worlds level of
interest rates following the deflation
In American securities.
The French money market, already
the easiest in Europe, has witnessed
within the last few days additional
evidence of an over-abundance of funds
both in a decline in rates for money
and an advance to the highest prices
since the war in a number of the
French internal loans, which are soon
to be refunded at a great saving of
interest to the government.
The unfavorable incidents in the in
ternational situation this week have
been the decline In silver to the lowest
price on record, which has had disturb
ing effect in China, India and MeXi-
co, and drop in Spanish exchange to
a figure that had not been approached
in 80 years, and which grew out, in part,
Of the serious political conditions within
the kingdom.
Traction Decision Important.
Among the constructive departments
this week was a decision by the United
States Supreme Court giving the United
Railways 81 Electric Co. of Baltimore
the right to charge a 10-cent cash fare
and a ruling that a return of 744 per
cent on the present value Of this com
pany's property Is not excessive. This
is still another verdict from the high
est court in the land that invested
capital has a right to a fair return. 1t
again confounds State commissions that
for political or other reasons attempt
to force rates to a level improbable
and cQnfiscatory in their effects.
There should be sufficient legal prec-
edent after the decision in this latest
case and In those Of the Southwestern
Bell Telephone, indianapolis Water Co..
Consolidated Gas of New York and
others to stand as a barrier against
attacks on property rights for all time.
In their bearing on the values of public
utility securities they are more impor-
tant to the investor than such dis
closures as may be made by the Fed
eral Trade Commission in its investiga-
tions of the alleged irregularities of the
public utility holding companies.
Rail Mergers Mark Time.
Those interested in railroad securities
have been waiting for some one to
make the first move that will indicate
official recognition of the Interstate
Commerce Commissions consolidation
plan. This may come in an unexpected
way and along constructive lines. 1t is
more likely to develop out of the East
ern situation than in those affecting
other sections of the country. The
general impression is that while the
commission made close study of
grouping east of the Mississippi, it did
not exhibit the same care and under
standing of the problems of the West
ern roads 1t Is becoming more evil
dent as time goes on that there is
comparatively little public demand for
railroad mergers either among shippers
or bankers and that their value as a
means to effecting economics has been
overestimated. Therefore, the different
combinations that have been set up by
the commission have an academic in
tereSt.
OF more Importance to the holder OF
railroad securities is the enthusiasm