Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-10-03
SELLING
DEPRESSES STOCKS
Further Test of Market Ex.
peCted With Fourth Quar-
ter Reports.
BY JOHN L. COOLEY.
Associated Press Financial Writer.

NEW YORK. October 3-Heavy
liquidation from several sources crum-
bled the security markets this week,
creating an atmosphere of pessimism
which many observers felt was noG
wholly justified by events in other di-
rections.
Much selling was attributed to for
eign holders of American securities. who
were eager to repatriate their funds.
Thus while stock and bond prices de-
clined here foreign exchange rates
firmed. and a substantial amount Of our
gold was either exported or set aside
for shipment abroad.
Liquidation by Banks.
Liquidation by American banks seek
ing to strengthen their positions against
an expected bank call and against the
rising tide of currency boarding was re-
garded as another important factor.
Such selling would account to con-
siderable degree for the extreme weak
ness Of investment bonds. which were
dumped in large volume. In addition,
many out-of-town banks which had
met financial difficulties were sellers in
the New York market.
There has been, of course, little or no
change in the business picture and the
fourth quarter opens with hopes for
real improvement postponed until next
year. Bank failures. wage reductions
and adverse dividend announcements
continue to accentuate the pains of de-
flation, but however distressing such
news may be, it represents no new turn
in affairs. There is Immediately ahead
period of third-quarter earnings
which are expected to be the poorest Of
the depression. To what extent the
stock market has been able to do its
usual discounting of these reports is
problematical; in Wall Streets opinion
they will represent something of a test.
Loss Of gold is regarded by bankers
| as a constructive development, since 1t
has long been recognized that distribu-
ton OF the worlds reserves was badly
| out of adjustment. Our credit struc-
ture is SO strong that bankers believe a
billion or more could be surrendered
without giving cause for concern but ii
is not thought the loss will run so large
| unless foreign selling of securities con-
tinues. Gold already lost has been
Offset by heavy Reserve System pur-
! chases Of acceptances. There is little
doubt but that the easy money program
i Is TO be maintained
Repercussions of the British suspen-
sion dislocated the foreign exchanges
early in the week when the Scandi-
navian countries followed London's lead
However. rates began to readjust them
selves later and foreign bonds accom-
plished fair recovery.
Rail Rate Plea.
The railroads figured prominently in
| the weeks news. for the Intersts te
Commerce Commission finished its
hearings on the rate petition and lead
ing Eastern roads. after eight years of
intermittent negotiation, finally agreed
| on their four-System merger plan. Wall
| Street Is not taking it for granted that
the freight rate increase will be grant
ed. and discussions as 10 whether the
wage question will be taken up by the
carriers are frequently heard
Structural projects continue to feed
orders into the steel plants. but opera
tons OF that industry hover around the
! depression low. Automobile production
has slackened considerably and pros
poets Of pickup within the next few
months seem to be slim. The steel
wage cuts are said to have stirred up
expectations that prices, too. will be re-
duced, although trade circles report the
large makers are resisting pressure for
such step.