Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-06-07
OversoId Market Responds
Quickly to Reappearance of
investment Demand.
BUSINESS CONDITIONS
STILL UNDER HANDICAPS
Railroad Situation and Approach
ing National Election Affect
Future of Trade.
BY CHARLES F. SPEARE.

NEW YORK, June 6.-The reign Of
terror that for the last three months
has possessed holders of securities came
to an end this week, temporarily at
least. after much the lowest level es-
tablished during the depression had
been reached on Tuesday.
In Wall Street vernacular, the mar
ket had been sold to standstill."
From the professional standpoint there
was not much wisdom in going short OF
4 and per cent dividend stocks selling
at a range between $25 and $45 share.
Those who owned them outright and
had stood pat during the breaks of No
vember, 1929, and December, 1880, must
then have come to the conclusion that
they could not replace in other form
the values that they would be sacri-
fcinp il they sold their securities at the
current prices.
A number of incidents outside of the
market had the effect OF changing the
speculative mood. Fitted together with
the technical market, they served 10
accelerate the advance, which began on
WnnneSOaV
gain before the end of the week Of about
Il noints. These were the withdrawal
nv the Department of Justice OF It's
MAN to oppose the merger OF Standard
Oil of New York and the Vacuum on
| Co. the more favorable terms on which
banks and brokers agreed 10 carry
stocks, with special treatment Tor the
scores of issues selling in the lower
nrice ranges: the news that a banking
undertake. IN nnAnCe
the july maturity of the st. Louis-San
Francisco Railway, tremendous demand
for the new Government 31s per cent
bonds and a decided Improvement III
the Austrian banking situation. out OF
which much foreign liquidation OF
American stocks has developed IN the
last few weeks.
Three Market Episodes.
There have now been three great
episodes in the stock market since IL
began its descent in october, 1929. Each
has had the same effect on common
stocks, but from a different angle. The
break which eliminated on November
IL. 1929. was one III which the specula-
tive public lost its paper profits ana
some part of its capital when prices nao
an average decline of nearly so per cent
which might be said TO have been a
panic Of the professional and SEMI
professional public.
The second climax came in the mid
die of last December out of the emer-
gency liquidation in the series OF
American bank failures and the closing
of the Bank of United States. The
bankers were then the ones whose
nerves gave way and who went to great
lengths in transferring all but Govern
ment and high-grade short-term Sc
curitieS into cash.
A third episode, which had continued
since the end of February, has had the
characteristic of the rich mans panic
IN 1s03-1904, in that there has been
persistent and perpendicular fall in
stocks of the highest grade, with no
recovery and no specific explanation of
why or from whence came the selling.
1t was this lingering illness OF the
market that did more to frighten in
Vestors and to bring them to the point
of letting go their best stocks than any
other factor.
Rail Stocks Sacrificed.
OF course, there are conditions in the
business world, in domestic politics and
in international affairs that have
caused, and are likely to go on produc-
ing, nervousness among holders OF
American securities. The railroad sit
uation has come to be known as a
railroad crisis" Many railroad stocks
that have been in strong boxes from
10 to IS years have been offered this
month for whatever price they would
bring. The reverse mood Of 1929 has
had its play upon market affairs.
Holders Of securities cannot help
thinking of the possible delay to bust
ness recovery from the approaching
presidential election and the next ses-
sion of Congress. They quite naturally
fear continued suspension of industrial
activity and prolonged unemployment
due to the radical social and political
reactions which these factors will
nourish People have been selling stocks
because they say the country is going
bolshevik." This is as little likely as
that the American railroads are going
bankrupt.
Then there is the unfavorable polit-
ical and economic conditions that exist
in a majority of European and South
American countries, with threats of
revolution and debt reputation, all
tending to shatter business confidence
and to delay the necessary sterilization
of commodity prices.
Copyright, 193l.)