Evening star., 1931-06-27
TOO RAPID ADVANCE
IN STOCKS Feared
Recent Gains May Tempt
Many Traders to Over
speculate.
aneciaI nispatch to The star.

the American public-at least that
part of it that buys stocks or bonds for
Investment or otherwise-has learned
from bitter experiences since the his
toric crash of 1929 remains to be seen.
To the more conservative Wall Street
observers recent scenes on the Stock
Exchange were q little too reminiscent
of the days before the break to seem
healthy.
More than 100000 shares changed
hands Wednesday. Only once before
this year has there been day when
trading reached that total, and that
was in the February rise. A new and
vigorous boom seems to be in progress,
stimulated of course, by President
Hoover's plan for debt postponement.
All comodities have advanced.
Postponement of war debts will be
great relief to the entire world and give
diSjointed trade a chance to recover.
But a runaway stock market will not
help matters.
Bear Raids.
While the spectacle Of rising prices
always is cheering, a too rapid rise will
tempt the bear traders to try again
their raiding tactics, the market will
go through new convulsions instead of
advancing in an orderly manner, and
new uncertainties will be created.
Let it not be supposed for one min
ute that in the matter of stock market
manipulation the bulls are any better
than the bears. 1t is overdone bull
manipulation that sets the stage for
successful bear raids. A man who bids
so for stock when he knows he can
buy it for 40 is just as blameworthy as
the man who sells the stock for 40
when he could sell 1t at so.
Rumor Factory Busy.
There hive been several develop
ments of a favorable nature, but not
as many as rumored. The bulls have
apparently been working their rumor
factory overtime, doing the very thing
they blamed the bears for. Rumors
are misleading, be they favorable or
unfavorable. A man who loses money
on a stock he bought on false good
news" rumor is just as badly off as
man who was scared into selling at
loss by a fearsome one.
Just how sensitive traders in stocks
have been was shown by the reaction
to an erroneous statement printed on
one of the financial news tickers con-
cerning the dividend of the Westing-
house Electric & Manufacturing Co.
The regular dividend of this COM
pany is S4 a year. After the directors
meeting one ticker enormously flashed
westinghouse So basis" Traders
Jumped to the conclusion that the
dividend had been reduced 81 a year.
Before the ticker could correct its
error and flash that 81 quarter had
been declared, Westinghouse shares
dropped from around 651a to 81. The
selling was from shorts and disap-
pointed traders who had bought for
the rise.
In few minutes the true state
ment appeared and shares were up to
SO. That move spelled losses for some
traders, losses that could have been
avoided.
This little anecdote shows that those
who now play with the stock market
are just as speculatively inclined as
before the crash. The lure of easy
mpney still is as strong as ever.
Lure of Easy Money.
It Is this typically American desire
for easy money with its resultant ten
dency to live high that is at the bottom
of most of our troubles. Some of the
older and wiser heads in the country
believed that the Sufferings of the last
two years may have sobered the rest
less ones who want wealth without
working for it.
Has it? If the country has not
learned sense from the recent disaster
it never will The following story was
told by one of the speakers at the
New York State Bankers Association
convention. AS a youngster he said he
knew an old English stable helper who
used to say: "If you earn 20 ShillingS
and spend 19 you will be happy and
contented. But If you earn 20 shil-
lings and spend 81 you will be worried,
restless and unhappy"
1t is because many of the people
of this country are earning 20 shillings
and spending 81 that they rush into
the stock market in an effort to catch
up, and they rarely do catch up. There
is an old saying in Wall Street that
there are many tracks to the tigers
lair, but none away from 1t.
Those with surplus capital who buy
stocks after careful investigation are
helping things along. 1t Is necessary
for money to come out of hiding. But
the man who can in moment be
frightened into letting go his stock be-
cause of flash on news ticker never
should have bought In the first place.
A great part of the gloom of depres-
sion existed in the minds Of people who
had lost only paper profits. Their earn
ing power was not diminished Yet the
gloom generated in their minds became
a material manifestation causing fac
tory shut-downs and unemployment.
OverspeculatiOn.
The evil of overspeculation is distor-
ton in every direction, exaggerated
thought, exaggerated speech and exag-
gerated action. In the midst of this
distortion ordinary business loses itself
in a maze of abnormalities.
There has been plenty of good news
without considering the manufactured
variety A wholesale advance of As
cents per 1000 on cigarettes, from $640
to S6.85, indicates considerable in
crease in the earnings of the big tobac-
co companies.
Then there was the announcement
that the Federal Radio Commission
had decided to renew the licenses of
the Radio Corporation and its sub
sidiaries. Word came from Dayton that
the Dayton Rubber Co. would increase
prices on all types of tires in the near
future. Tires have been selling at
ridicu1ously low figures
Bankers of the more conservative
type are hoping that the world will not
go on a spree now that definite turn
has come in economic affairs. The
recovery on the New York Stock Ex-
change has already gone a long way.
In about three weeks stocks have done
what it took almost year to do in
1921. The Dow Jones average of in
dustrial stocks has touched 153.42 at
its high point, having advanced from
the low of the bear movement on June
2 Of 1879.
In 1921 it took more than a year for
the averages to rise from $3.50 to 103.43.
Cigarette Price Advance.
The result of the advance of As cents
per 1000 cigarettes, announced by lead
ing manufacturers, may be that small
independent retail tobacco stores will
come into their own again.
When a customer buys package OF
cigarettes he does not realize just how