Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-01-11
STOCKS CO HIGHER
AS j. S. INDUSTRIAL
PICTURE BR|GHTENS
Rebound in Market Reflects
Better Feeling in Trade
Circles.
BANK STATEMENTS SHOW
HIGH RATE OF LIQUIDITY
Evidences Are Now Apparent That
Investors Have Become More
Confident.
BY CHARLES F. sPEARE.

BY CHARLES +. SPEAHEs
Special Dispatch to The Star.
NEW YORK, January 10.-The pro-
nounced change in the trend of the
security markets since the first of the
year may be attributed to a new set of
technical conditions and to the
healthier mental attitude of the public
toward business prospects generally.
The one has had equal influence with
the other in bringing back prices of both
stocks and bonds from the Subnormal
averages to which they had declined.
AS the distribution of securities has
increased in this country, business has
been more and more affected and trade
opinions more colored by the fuctua-
tions in corporate shares. The mood
to buy goods or to withdraw from the
market has been much influenced by
the current report of the state of
affairs in Wall Street. Therefore, 1t is
fair to assume that not little of the
circles the past 10 days, in spite of
the commercial mortality figures now
being published, has been generated by
the substantial advances in nearly all
classes Of equity" issues as well as by
the pronounced improvement occurring
in domestic and foreign bonds.
In his thoughtful and candid analysis
of the financial situation this week,
Paul M. Warburg says that the so-called
business cycle" forms a subject of
study for psychologists rather than for
economists.
Fears Are Overcome.
Fear has been the most dangerous
element in the recent situation and the
one most difficult to overcome. There
has been fear on the part OF bank
depoSitors for the stability Of their
institutions; fear by holders of rail-
road securities that the transportation
industry was breaking down and rail-
road credit being permanently de-
stroyed; fear that former sound govern
ments in Europe might be replaced
with those inimical to capital; and fear
of a spread in this country of social and
economic principles from which most
of the rest of the world Is now suffering
Outwardly, at least, there are strong
evidences this week that these obses-
sions have been thrown of and that a
public that was in the panic of the
man who finds himself slipping down in
Quicksand has discovered solid ground
under his feet. The suspension of the
Chelsea Bank g. Trust Co. just before
Christmas was received with calmneSs
in Wall Street that was significant
over other failures that occurred at
about the same time In Philadelphia
and IN the South and West. 1t was
then known that the banks throughout
the country had put themselves in posi-
ton where they could command, in an
emergency, the highest ratio of cash,
call loans and United States Govern
ment securities since 1907.
The statements that have since been
published showing their condition as
Of December 81, reflect an astonishing
degree Of liquidity.
Bond Liquidation.
The early mystery as to the source
of bond liquidation has been entirely
lifted since bank statements have been
appearing, with their expanded items
of cash and Government securities and
their contracted figures Of corporation
bonds and stocks.
In the industrial world the week has
produced signs Of improvement. Elk
banding and frmer markets are rep
resented by an advance in iron and
steel production to Al per cent from
about 30 per cent last month; in high
er prices for scrap iron, in an increase
in automobile production in December
over the seasonal tendency, in consid-
cradle unemployment in the Detroit
district since the first Of the year and
in an agreement effected in Germany
on Thursday between the sugar pro-
ducers there and those of other coun-
tries who had already done their part
in the effort to restore the equilibrium
between the worlds production and
consumption Of sugar.
Unfortunately, the value of some of
these developments Is nullifled by the
decline in commodities, such as silver
and base metals, and in the uncertain
character of the market for agricul-
tural products. The general commodity
index this week has reached the lowest
level since 1t started downward at a
rapid pace in 1929 and Government
figures on unemployment, Just made
public for the first time, approximate
the maximum estimates of labor organ
iZationH.
Money Rates at Bottom.
During the next three months money
rates will reach the minimum witnessed
in this country for the past 10 years.
It Is not unlikely that we shall see
call loans at one-half of / per cent.
This week the Federal Reserve Banks
in Chicago, Atlanta, st. Louis and San
Francisco have reduced their redis-
count rates from 3la to 8 per cent
following the earlier action In New
York and Boston. Time money and
acceptance rates have been shaded.
(Copyright. le3i)