Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-05
ADVANCE IN STOCK
MARKET IS LAID TO
HOOVER DEBT PLAN
Business Takes More Cheer
full View, With Evident
Signs of Recovery.
RETAIL SALES REFLECT
IMPROVED CONDITIONS
Traders in Securities Foresake
Bear Side as Long-Term
Outlook Brightens.
BY CHARLES F. sPEARE.
,.cial Dispatch to The Star.

BY CHARLES r. SPEARE.
Special Dispatch to The Star.
NEW YORK, July 4.-Business and
markets are entering the second half
of 1881 animated by the faith that all
people now have that the Hoover plan
Of "debt holiday" will eventually pre-
vail.
The memorandum Of the American
Government to France published on
Thursday states that the purpose OF
this is ito give general relief to the
world" and that 1t would prove an
important step In advancing world re-
covery from the present economic de-
preston" In sum, the purpose Of the
proposal, which has been before the
French government for consideration
since June 20, Is to relieve the strain
on world economy and to give the next
year over primarily TO the release Of re-
Cooperative forces ALREADY in motion"
The situation in this international
ARRANGEMENT has been most delicate
for the past week. In has seemed ut
times as though all Of the benefits Of
q change In business psychology. OF
buoyancy Of securities, or rebound In
commodities and the lifting OF pressure
from German banks might vanish in
tbs insistency Of France to have her
way in carrying out the letter Of the
American proposal. Much irritation
has been displayed over the unwilling
ness Of France to make sacrifices that
every other country involved has gen.
erously concurred in.
Looking at the problem from the
French viewpoint and realizing that
what has taken place marks the be-
ginning Of q general program for can
ceiling all war debts, one may have a
considerable degree Of sympathy for
France without respecting her attitude
In the immediate crisis. The issues in
volved are so tremendous and affect
French financial solidarity so much,
and her political position in equal de-
gree, that it Is not conceivable she will
definitely reject the modified terms
that have been submitted TO her.
Signs Of Uptrend Appear.
On the premise that the plan, wiz be
accepted and that the relief from twill
be effective this month, one may again
take the stand that markets have seen
there will appear definite signs Of re-
covery in the industrial world. While
the occasion for the moratorium was
the impending crisis in Germany-and
this crisis In similar form Is likely to
recur, so France has been notified by
the American Government, II the debt
proposal Is not accepted-it conceded
with O hquidated condition in the mar
ket for American securities and In the
first traces Of an improvement In COM
moditieS and in certain lines Of bust
ness. Industry has been waiting for
some move to give leverage to the in
cipient STRINGS within It. It never
anticipated that this would come in q
form that would impress and concern
not only this country but Europe and
would have ramif1cations Immediately
bringing benefits to as far-distant cor
ners Of the globe as Australia and the
South American republics. 1t is to dc
what the American Governments men,
orandum this week says Of it-namely
give general relief to the world
Marketwise there has been substan-
tial response. In about three weeks
following the low level for the depres-
sion made on June there was o gain
in stocks Of over IS points. The greater
part Of this took place in the week
after the June 20 debt plan announce
ment. A moderate portion Of this has
since been lost. It is significant Of the
absence Of pressure on securities that
with all Of the feverishness In the Do
htical world this week and with recog-
milton Of what might happen should the
moratorium proposal be shelved, stocks
have held most Of the ground gained.
The most striking feature in the re-
covery has been in stocks of low price
Of which there are about 125 from the
New York Stock Exchange and the New
York Curb Market lists that have dou-
bled and trebled In value in q compare
lively short time. This bears out the
theory, on which many new investment
portfolios have been developed this year,
that the highest percentage Of appre-
citation during the next market recoy-
cry VIII be in stocks selling below $40
q share and even more in shares quoted
below $40.
Business Looks TO Future.
We are by no means out Of the woods
even when the debt proposal is signed
and sealed and all Of the participants
In the arrangement shake hands with
each other. The impression of June
quarterly statements on stocks will be
unfavorable, though with the market
technically stronger and the interna-
tional situation greatly improved and
prospects Of q definite turn in business,
this will be minimized compared with
the effects In April and May of the
statements for the three months ending
March 81. Business and market makers
now reflect an attitude where the future
rather than the past excites their In
terest and directs their energies. The
bear on the market and the pessimist
in business are steadily passing out of
the picture after having been at the
center Of 1t the greater part Of the last
two years.
Concretely there is little in evidence
that a change has occurred. The differ
ence Is in sentiment and in mood
These. however, control events quite as
positively at times as do facts. This is
one Of the times. We have to face the
situation. among the railroads where
the net operating income in May was
50 per cent less than year ago, though
slightly better than in April. The IS
per cent average ratio Of production in
iron and steel of the country and only
80 per cent In one Of the largest steel
centers. The steady addition to the list
OF dividend reductions and omissions
which, in the SIX months Just ended.
numbered over HOO. Little improve
ment In the employment conditions. A
monthly loss in purchasing power
through reduced wages, salaries and IN
comes that runs into the hundreds of
millions OF dollars. A recent increase
in bank failures, though a decrease in
the mortality record among corpora
tons. A. greatly lowered percentage Of
May and June automobile output.
Stagnation in the building industry.
and none too good crop prospects In
the northwestern tier Of States.
None Of these conditions viii. change
quickly. Some Of them. win lead To
even greater distress among security
(continusA on Second Pase.)