Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-06-14
Mood of Wall Street Becomes
Optimistic as Prices
Point Higher.
LOW COMMODITY PRICES
INDICATE REAL VALUES
Defation Of Securities Has Now
Put Best Issues on Bargain
Counter.
BY CHARLES F. SPEARE.
Special Dispatch to The Star.

SAAAAASA~A@S @~@@@~@~s
Special Dispatch to The Star.
NEW YORK, June 13.-This Is the
first week in several months that the
railroad bonds could feel he was on
solid ground. There have been none
of those sinking spells in the two
groups of securities that did so much
to alarm investors between the end
Of February and the first Of June.
Liquidation has either dried up tenn
porarily or has been completed. No
signs Of aggressive short selling have
appeared. The market has been natu-
raj. making its own way without sup
port or guidance and, obviously, without
resistance. The only real sore spot in
the entire situation has been in German
bonds, whose depreciation now. averages
about IS per cent Of the original offer
ing prices, while the 5l12 per cent gov
eminent bonds have sold down into the
area occupied recently by the better
grade Of South American credits.
This may be just one more Of the
stages in a bear market when prices
steady and fright is allayed, or 1t may
represent a permanent change TO which
may be linked a stabilized market for
commodities and more activity in the
way Of filling the gap between consump-
ton and production.
Domestic Stocks Debated.
1t is reasonable to assume that, with
Wall Street loans reduced 80 per cent
since the FIRST week in October: 1929,
and with the general average Of stock
prices at the lowest since 1925 and those
of railroads about equalling the average
OF 1921, securities had pretty much dis
counted the domestic debility In BUSH
ness when they struck bottom on June
2. At that time a list of IS common
stocks, selling in 1929 at an average of
1924 share. was quoted at an average
Of $40 a share, or a deflation Of over
10 per cent. This is the difference be-
tween notions of values in an era of
prosperity and those during hard times.
The defiation in securities, however
has not been greater than in numerous
| commodities. 1t Is, therefore, Just as
probable that commodities have struck
| bottom, or are approaching it, as that
| common stocks have reached their mini
mum. The practical application of low
| commodity prices to retail distribution
has been exhibited in q striking way
the past two weeks in department store
! sales. The results of these are phe-
| nomenal. There is no question that the
public Is eager to buy and to replenish
| exhausted stocks Of merchandise when
1t is shown that the right price adjust
ment has been made on retail goods to
the cost of material and the cost of
manufacturing.
There are q number Of industries,
notably cotton goods and shoes, in
which the increase In production has
given ample proof that the public had
been wearing out its clothes and had
come to a point where 1t was necessary
to reStock its wardrobe. In some of
the metals that have established new
low prices a buying movement has de-
veloped on the sole basis that metal
at current figures Is a good investment
even If there is no immediate trade de-
mand for it.
Better Sentiment Seen.
Sentiment has been improved by the
decision Of such outstanding corpora
tionS as the New York Central Rail-
road and the Western Union Telegraph
Co. to maintain their regular dividends;
by the application Of the carriers for
IS per cent increase in freight rates.
which it is expected will be granted by
the Interstate Commerce Commission,
and by better conditions in various agri-
cultural regions throughout the United
States. There is a disposition to mag
nifty news that is promising and to
minimize developments Of an unfa-
vorable character. This is one of the
changes in the mood Of the public that
generally precedes recovery. The psy-
chology of today throughout the finan-
cial district Is greatly in contrast with
that Of fortnight ago.
(Copyright, 1917