Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-05-31
Dollar Loss During Month Is
Largest Since Break
in September 1929.
ATTEMPTS TO ARREST
DECLINE PROVE FUTILE
Troubles Abroad and Selling by
Large Investors Have Beat
en- Market Down.
BY CHARLES F. SPEARE.

the break began in September, 1929.
This is most significant inasmuch as
the average of values had declined
nearly 80 points in March and April
following the elimination Of the rally
in February.
May has been a month OF extenced
liquidation. 1t has witnessed several
unsuccessful attempts to check the
selling of both common stocks and
demon alization in half a dozen groups
OF foreign dollar obligations. The
source Of the offerings OF stock is a
universal mystery Probably the
greater part of 1t is from the army Of
large and small investors whose stocks
cost them much more than current
prices and who have not been able to
endure the constant whiting away of
values and have in despair sacrificed
the little they have remaining.
Troubles Abroad.
There are other contributors to the
liquidation. Undoubtedly the banking
and political troubles abroad. and also
the effect on the foreign investor OF
unsettled American markets. have led
to the disposal Of securities held in
London and on the continent OF Europe.
At times during the week there has
been heavy Canadian selling. 1t would
not be unreasonable to suppose that
banks were dtsposing of stocks and
bonds that have been carried as coll
lateral and on which they felt the
time had come when they should be
liquidated.
There has been evidence Of selling
by general management investment
trusts, which also have had their pa
thence taxed by the decline of nearly
year. during which the average fall in
common stocks has been over 100
points. 1t is a matter of record also
that fixed trusts have had to dispose
of some of their securities in order to
meet thu demand upon them from their
certified holders. whose attitude
toward these trusts has been affected by
the position the New York Stock Ex-
change has taken on certain Of their
practices.
53-P0int Decline In Averages.
Whatever the source of supply. the
effect on the prices of common stocks
during Nay hs7 been most damaging.
The top of the Winter rise was reached
on February "a. At the end Of May
average prices were off SO points. or
about 81 per cent from this peak. This
is exactly the same percentage Of de-
cline that took place from the end Of
August to December II last rear, when
the fury of liquidation spent itself.
The market then quoted down for about
60 days.
There is little blame to be attached
to the individual who fears that his
investment may be worthless unless
there is early evidence of sterilization
of prices, particularly as he sees no in
dication of support for his is'ues by
interests that have sponsored large
groups Of common stocks and foreign
bonds in the last few years. The few
voices that are raised in acclai.ning
an approaching era of better times
have not penetrated very deeply into
the public mind, for there is general
disposition to suspect the motive for
such utterances, inasmuch as those of
similar inaccurate character have
been too frequently broadcast in the
past year and a half.
Bottom May Not BE Passed.
On the question whether business
has touched bottom. there has been
rather common agreement that this is
the case. although again this week
commodity prices have dropped to the
lowest level so far established and the
Wholesale index today pictures curve
of prices that is again distinctly down.
ward Smaller railroad car loadings,
now running 20 per cent under year
ago. a lower degree Of activity in the
iron and steel industry, which is at
about ~ per cent of capacity, another
sag in electric power production and in
automobile production in the latter
part of this month. combine to force
the general index of business back to
the equivalents Of last February and
December.
@ l. u 1T kI.A1 ~
tom Of the valley of depression has
yet been reached, or whether it may not
eventually be June or July, rather than
December or February, when the down.
ward trend will have been checked.
The main incidents this week in in
fiuencing prices of securities have been
the reports of the railroads of April
earnings and the rejection by the In
terState Commerce Commission OF
proposal that they should institute an
inquiry into higher freight rates.
Stock Exchange on short selling"
banking difficulties in Austria and a
recurrence in Germany of the agitation
for war-debt reduction, together with
a number of railroad and industrial
dividend reductions and corporation re-
ports for the month of April. These
have influenced liquidation in various
sections OF the market, causing the
average to decline to the lowest level
since 1925 and bringing additional
shares below the 500 mark, while en-
larging the list of those now quoted at
prices from $50 down to $40. A high
percentage of the active list now moves
in the price area between $40 and $25
a share.
Railroads in Dilemma.
The position of the railroads is one
of extreme difficulty. To increase
freight rates at this time is not pop
ular move. 1t has the same effect on
the average mind as would an agitation
for increasing wages and salaries in
general. Yet there is no other al
tentative If the credit Of the roads is
to be maintained and the enormous in
vestment of the savings banks and life
insurance companies in railroad bonds
is not to be violated. In April the net
operating loss of roads that have now
reported was over IS per cent, compared
with year ago. On some of the lead
ing systems like the Pennsylvania and
New York Central the decrease Is much
greater than this. Obviously, transport
tation companies that are maintaining
dividends are doing so from surplus re-
serves. If there is no source Of increased