Evening star., 1931-12-20
.UPSW|NG IN STOCK
MARKET RELIEVES
INVESTORS FEARS
Sudden Turn in Trend Fol-
lows Six Weeks of
Sagging Prices.
WAvERING SECURITIES
UNDERMINE CONFIDENCE
Business and Industry Reflect Un-
certainty Prevailing in
Wall Street.
BY CHARLES F. SPEARE.

Special Dispatch to The Star
NEW YORK, December 19-The |
morale Of Wall Street, the center from
which Is supposed to emanate direction
and genius for the good of institutional
and corporation credit, has this week
been at its lowest stage since Novem-
Der, 1929. 1t parallels the condition
OF shattered nerves and of despond-
ency that existed among the allies in
France in March, 1918. Out of the
latter situation there arose a leader
with indomitable courage and the power
to coordinate his resources and to
turn threatened defeat into victory.
The serious fact of the current credit
and market disturbance is that it has
not yet produced its Foch Conse-
quently, the public has lent a willing
ear to every passing rumor and has
accepted the price list on securities as
an evidence that a world collapse in
values IS pending and that nothing can
stop 1t. There is no measurement of
value found accurate in past times that
is acceptable to the present generation,
which, with fatalism that has been
rapidly spreading, considers current
quotations for stocks and bonds as
much too high as it considered those
OF september, 1929, too low.
There could at least be some gestures
at leadership, some effort to divert
the pubic mind away from the un-
favorable factors prevailing. The
emphasis has been all in one direction
That OF describing and celebrating
the grievous ills likely to come out of
German breakdown and from a COL
lapse In the credit of American rail-
roads. What appeared at the time to
have been splendid job between 1925 |
and 1929 in selling the United States,
lts products and its securities to the
American people has been followed by
a campaign of discredit of all the |
evidences OF wealth that were formerly |
so much to be desired.
Investors Lack Facts.
1t is difficult to understand hou
bankers and corporation managers can
permit statements to be made of their |
condition which they know to be false.
but which they allow to be exaggerated
by refusing to deny them. One witness |
before the congressional investigation on |
lorelgn loans IN Washington this week |
pointed out that the current idea of |
German credits held by American banks
was fantastic" He said that It was |
unfortunate" that there had been such |
misunderstanding by the people as |
to the extent of these credits. This. and |
other similar situations have done a |
great deal to unSettle and unnerve in
vestors, frightening them into the
liquidation of securities which are worth !
as much today on the basis of earnings
and dividends and interest paid as they |
were or IL months ago.
AS one phase of leadership, it is sug-
gcSted that from now on a campaign /
OF rebuttal, carried on in the open, be
naugufated against statements and |
rumors, both vicious and innocent that |
tend to undermine the confidence of |
investors and have more to do than anv |
other factor in producing inertia on !
the part of producers and consumers
alike.
Support Given Market.
squirt in the market at the end of |
tne week lndlcated the value of giving
support even IN small amounts at those |
points that have been most vulnerable /
and at which resistance makes most
impression on the speculative element
1t has been obvious for some time that
this could have been accomplished had |
there been the right sort of leadership. |
1t is to be regretted thai such support !
was withheld until the depreciation in
securities since December l has wiped
out billions of dollars worth of value in
bonds and in equities and for a lifetime
has crippled the credit of institutions
and left thousands of formerly Well-to- |
do individuals penniless
The only new influence, aside from |
the mechanical ones that have been ap-
piled to the market, is a better outlook |
for reduction in the rates of pay
among the railroad labor unions. I'm
less there IS some kicking over the !
traceeo 0p tho nart Of cr,oU oro,,,,
of railroad presidents satisfactory |
entente will be arrived at in the next !
few weeks This means that. with the |
increased freight rates granted by the !
Interstate Commerce Commission, the !
carriers are promised additional net !
operating income in 1882 of about |
S300,000000 on the same level of gross !
earnings as in 1881. This should in
sure the solvency of several carriers !
that are known to be in weak finan-
cial state. While 1t may not prevent |
further dividend reductions, it will |
guarantee to a majority of the roads |
the covering of their fixed charges.
Current Trade Trends.
The degree to which the. unsettle- |
ment in Wall Street contributes to the |
dullness in business is indicated in cur
rent trade statistics. Industrial pro-
GuCClOn LIllS I1OIlCIl Will De nearly 10 |
per cent below that of June and we'll |
under the average of last December |
which hGd been for some time though: |
to be the bottom of the valley of the !
depression. The iron and steel trade |
this week is off to Is per cent of pro- !
ductive capacity and may go lower be- !
fore the end of the year A ray of |
hope has finally penetrated the clouded |
copper metal outlook.
While the season IS one in which |
business concern is normally focused !
on retail trade, the general opinion is |
that among manufacturers and distrib- |
utors there is a degree of inertia not |
previously witnessed and that this is |
most pronounced where the influences |
of the security markets operate with |
most force. The commodity index is |
now at the lowest since the war and |
appears to be gradually breaking away |
months ago.
week has been an outbreak of banking |
troubles in New England, where until |
now there had been immunity from |
those reverses that had affected every
other section of the United States i,
Nearly score of banks in Boston and |
vicinity have been closed or merged in |
order to prevent their suspension. The !
underlying cause has been the deprecia- |
tion in holdings of real estate and Sc
curities. This is the first serious bank |
ing disturbance that has occurred since |
the formation Of the National Credit |
Corporation two and one-half months !
ago. It is understood that the corpora
(Cpyfin,,od. Az, rrhird Eooo