Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-03-01
35-Point Average Rise in
February Is SharpeSt in
Market History.
SENTIMENT IN STREET
HAS GREATLY IMPROVED
Liquidated Condition of Securities
Held Likely to Stimulate
Advance.
BY CHARLES F. sPEARE.
Special Dispatch to The Star.

| NEW YORK, FEBRUARY 26.-Ine sec
end month Of the year is ending with
points since the first of January and
IS points above the low average Of last
December.
The forward sweep Of the market has
been the greatest for such q short Pc
Rod Of any on record, being twice as
large as that in 1921 and about S points
more than in 1907. It correctS much
of the abuse Of market values that took
place between October ! and December
| Is last year. At the same time it seems
to have sufficiently discounted the i'm
provement in sentiment on that part OF
| the public which owns securities It
also recognizes the slight gains that
have occurred in business.
The market Is now passing out OF the
hands Of the public that buys for cash
and for permanent investment to the
control Of that other public element
| which SpeculateS on the basis Of tech
meal market conditions and builds up
pools in stocks that are later to be re-
tailed to Tom, Dick and Harry. The
| market is out Of its static stage. It
responds more quickly to good news
than to bad news. ct has some of the
dangerous tendencies Of last March
and April, but there is protection for 1t
| against q repetition Of the Summer and
| Autumn decline, following the Spring
rise, in its thoroughly liquidated con-
dition and the manifold evidences that
| industry and commodities are on the
upgrade, where as last year at this
| time they were headed downward for
the final plunge.
Outlook More Cheerful.
The 35-point average advance In
stocks has been accompanied by q sub
stantial recovery in domestic corpora
ton bonds and in foreign dollar loans.
Together this appreciation IN securities
has relieved the strain on individuals
carrying stocks or bonds and on banks
| that have loaned against them or had
them In their investment portfolios. So
| far the effect of this has been In q
change in sentiment rather than in de-
yeloping greater initiative in business
| or in looSening the purse strings Of the
average consumer It has created q
healthier state Of mind, a more cheerful
| outlook into the future and helps to abb
| serb the shock from day to day Of cor
| poration reports and the action on cor
| poration dividends, which, by them
selves. make an extremely bearish COM
bination.
It is probably true that much Of this
was discounted in December prices. It
| Is not 50 clear, however, whether at this
level the market can ignore the fact
that 1881 earnings to date have In many
| instances been even worse than those
In the final quarter Of 1880 and may
require an adjustment In dividend pay
n1ents not reckoned with q short time
ago.
| the next rev months VIII determine
| wnether It Is TO be the policy OF Ameri-
can corporations TO go on paying divi-
oenoS from surplus reserves accumu-
iated netween 1879 and 1929 or cut
snen CioIn 70 Inc 1891 pattern. Inere
Is notnng IN the current reports OF the
[anroaoS. tne IRON ana steel, metal, OH.
mercnanolSIng' auDomoDle OF electrical
SVMpaIues 10 cuggeSt nigner, II as
nsn, 1eIuLn per snare On Lner SOCKS
IN tne nrSt nan OF THIS year e. Ia the
secono nan o. IaSs year. Inc number
o. m1sceuaneous olH1oeno re0uctionS u
increasing
R.I.u.~ ah..h. u..uL
there = mucn 70 De SAD IN favor OF
MAINTAINING olVloenos 1t the expense
OF surplus over . reasonable period Of
Time II the evidence Is clear that the
oencits are not TO be prolonged. A
feature OF many corporation balance
sheets Is the high ratio Of cash and
assets, EouaIIv s;gnif,cant is the lou
volume of inventories. In this respect
conditions following one Of the severest
depressions in American history are
unique. 1t may be that stockholders
will suffer q comparatively small re-
duction in their income during q period
when corporation profits have declined
an average Of between 80 and IS per
cent. It is quite apparent that those
who are buying stocks today are pri-
marily interested In appreciation and
not In income return.
Stocks have at no time been adverse
" affected by the agitation over the
bonus bin, which this week has been
passed over President Hooyer'g veto
They held steady while Government
bonds were reactinR. The broadcast and
strongest markets for them took place
coincident with the arrival Of this meas
ure to that stage where its success was
inevitable. This suggests, of course, that
out of the cash proceeds of the bonus
bin there will develop a certain amount
of new business. If this is logical reason.
ing. whv should the market have beer
so much stronger when the maximum
to be given away and to And its outlet
In trade circles was cut down to $780,
OOO. 600 or 470O. 600 900 from the orig.
mai r,ronosai Of a. 400 600 600?
Commodities Go Lower.
Commodity nr,cea have failed tr
estahIish . yo,ysinoI,n, level Thev ars
| =, 49, -,