The Washington times., 1930-06-18
ADVISES BUYS IN
CERTA|NB|G
STOCKS
Reports that Tariff Will Hurt
Motors, If True, He Says
viii Cripple industries
BY THE SPECTATOR

By THE SPECTATOR
I would not bank too strongly
on any sharp extension Of the
rally that came into the stock
market yesterday. It must not
be forgotten that the underlying
cause of the break in stocks is
the depression of business, rather
than any technical factor in the
market.
While grain and cotton prices
were somewhat stronger yeSter-
day, silk futures hit new lows.
Copper metal sold at 11A cents
q pound delivered, a new low,
with little indication of an early
gain in demand for copper.
Investors and traders alike are
afraid Of the market, a feeling
that augurs no sustained advance
in the immediate future.
do think, however. that the
current wave Of liquidation is
near it's end, and that stocks
bought around current levels FOR
trading turns will show profits
within a few days, or at the
utmost, two weeks.
At present prices, I would not
hesitate to buy U. s. Steel.
American Can, American and For
eign Power. American Power and
Light, Borden, Byers. Pipe, Con-
solidated Gas, Electric Power and
Light, or Public Service OF New
Jersey. I also think United Cor.
poration will move up sharply
on the first sustained recovery.
Buying in Rails
One of the most encouraging
features yesterday was the high
caliber buying that came into the
gilt-edge investment rails, which
had broken sharply due to re-
ports of unfavorable earnings in
the current quarter. Wealthy i'll
dividuals and powerful invest
ment groups picked up stocks like
Atchison, Baltimore and Ohio,
Chesapeake and Ohio, and Union
Pacific on the strength Of thei'
comparatively high yields and
with the practical certainty that
dividends will. not be reduced by
railroad companies.
Investment trusts, banks and
wealthy individuals are forced at
this time to buy high-yield COM
mon stocks, because the call
money market offers only 2Ea to
8 per cent, and it is impossible tn
find borrowers for large amounts
Of funds. Such investors have
their choice between bonds and
high-grade common stocks, AMI
presumably they are putting their
FUNDS into the latter.
There really was rally in yes.
terday's market, but at the close
the losses were about as numer-
Gus as the gains, which indicates
to me that meritless stocks are
following the natural course and
receding to their proper levels.
Banking Support
It was apparent that the lead
ing bankers thought the break
had gone far enough. United
States Steel opened higher. while
the rest of the recognized leaders
were lower at yesterday opening
When the early selling had run
its course, the list followed steel
common in the erratic fluctu-
ations that continued through
out the day. The constructive
forces, however, held the whip
hand and kept the rallying ten
dency predominant all day. After
all it would not do to destroy
entirely what remaining conf
dence the public has in Ameri'
can business.
There are few market students
who do not consider Montgomery
Ward attractive at current levels
The new management has done
much to inspire confidence in
the company and its securities.
Motors and Tariff
Some of the most important
motor magnates tell us that the
Smoot -Hawley tariff bill will de.
feat it's purpose by smashing the
American motor industry. If this
be true, other industries will Suf.
fer all along the line. If auto
mobile manufacturers cut produc'
tion, it will bring increase Of un'
employment and reduced public
purchasing power. There will be
q shrinkage' in demand for steel
thereby striking at the basic In
dustry. The leather and woolen
industries, which supply materials
for automobile upholstery, viii see
darker days. Reduced consunap
tion of gasoline viii hit the pc
troleurn, producers. And finally,
the railroads will suffer by re
duction. Of shipments and conSe.
quent shrinkage of revenue. The
motor industry is an important
link in an endless chain, and
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