Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-02-01
Market Shows Firm Resist
ance to UnfavorabIe Bust
ness Reports.
AVERAGE GAIN IN MONTH
PLACED AT 10 POINTS
Recovery Reflects Changed Att
tude of Public Toward Cor.
poration Securities.
BY CHARLES F. SPEARE.

Special Dispatch to The Star.
NEW YORK, January 81 The
month ending today has brought a
10-point average advance in stocks
For the first time since last July the
New York Stock Exchange Monthly
Compilation of Market Values will show
an increase, after an uninterrupted de-
; crease to December 81 amounting to
100000 100000, or approximately rs
per cent.
All things considered, January has
satisfactorily withstood the tests that
throughout the month have faced the
markets for securities. None has been
more severe than those of this week.
| The ability of stocks to stand up under
the combined influences of distressing
corporation reports, reduced and passed
dividends, lower prices for commodi-
ties, and the new and unexpected de-
mand for immediate payment of SOL
diers' compensation certificates is fur
ther evidence that the market has be-
hind it a period Of liquidation. 1t is
clearly in a sold-out condition. There
is today a greater degree of mental agi-
tation on the part of those who are
short of stocks than among those who
are long on them.
First Step Toward Recovery.
This does not mean that prices will
continue to rise or that there is enough
warrant in the business situation to
promote a speculative movement in
any one of the three important groups
of common shares. There are condi-
lions in the oil industry, in metals, in
iron and steel, in chemicals, and in
the trades allied with agriculture, that
make for caution and discrimination
in market operations. There is also
enough evidence that recovery by the
railroads will be slow this year to COM
pei a conservative investment policy
toward their securities.
The recovery that has occurred re-
fleets a change of mental attitude on
the part Of the public rather than any
upward turn in the trend of business
profits. The process of mental stab
ilization has been going on quietly for
the past month. AS this was necessary
before price sterilization in securities
or in commodities could take place, it
represents the first important step in
recovery which may not become very
apparent for another six months.
The backwash from 1880 conditions
has been shown in such statements as
we're published this week by the United
States Steel Corporation, Bethlehem
Steel Corporation. Montgomery Ward.
Sears Roebuck and du Pont and by all
of the important railroad systems of
the country. They emphasize and con-
firm statistics of business volumes in
the last quarter Of the year, and partic-
ularly in the month of December, that
were the smallest since 1915. Some
M fhnEn their
net earnings cut in two. Others show
in excess of a so per cent reduction
in profits compared with 1929.
Few Dividend Reductions.
The remarkable thing is that there
have been, and appear likely to be, so
few adjustments in dividend payments
to the tremendous shrinkage in profits
available for stockholders. The Wabash
Railroad is the first important carrier
that has been compelled to pass its
dividends after the most trying year
that the transportation industry has
experienced in a decade. AS a group,
the investment trusts and trading cor
porationS, whose business is wholly with
securities, have shown a relatively
larger number Of dividend changes than
companies producing commodities, man
ufacturing goods or engaged in trans
portation.
Having gone through the period when
attention was conferred on the day-to-
day decline in stocks and bonds, the
public is now giving ear to various
reforms as well as to proposals OF
methods that will bring industry back
to normal. The hearings in Washing
ton, whose purpose it is to discover
why over 800 banks failed in 1880 and
why the Federal Reserve Board did not
check the speculation in stocks before
it passed beyond control, has developed
as many ideas as there were witnesses.
Government controlled commodities
have so far failed to sustain commodity
prices, which this week have established
the lowest average in is years.
There is a great deal Of CONVERSE
ton about unemployment. The figures
of idle workers in this country, as well
as all over Europe, increase from month
to month. There is more academic
paternaliSm in Washington than actual
patriotism at a time when people are
suffering physically from want of food
and mentally from loss OF work.
Bonus Bills Influence.
Into this situation has been injected
the demand for passage of bill pro-
viding for immediate cash payment OF
soldiers compensation certificates. There
is a certain amount of justice in the
claim that war veterans, at present
members of the army of the unem-
ployed, should be permitted to have the
full money value of their certificates
when they imperatively need it. On
the other hand, there Is no justification
for accommodating with cash those who
can get along without it.
1t is not unlikely that some form OF
compromise will be reached which will
satisfy the proponents of the bonus bill
and at the same time prevent the ex-
IRENE Generalization in the market for
Government securities that has been
pictured by Secretary Mellon and other
Government and Federal Reserve Of
ficialS.
The general aspects of the invest
ment situation have shown little change
this week, except for a slight rise in
bankers acceptances in sympathy with
the decline in Government securities.
The shrinkage in brokers' loans con-
tinueS and now amount to rs per cent
from the level of early october, 1929.
Suggestion has been made lately that
rediscount rates in New York be adj
vanced in order to correct this condi-
ton of overextended bank loans on
stock and bond collateral.