Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-10-11
Vigorous Upturn of Week
Proves Dramatic Event in
Wall Street History.
HOOVER CREDIT AID PLAN
ROUTS FEARS OF PUBLIC
Investors Beginning to Respond to
Real Values Of American
Securities.
BY CHARLES F. SPEARE.
oecial Dispatch to The Star

VI IOpS1eSSIlehS III Tie OUTLOOK ana Tears
for the banking structure of the coun-
try, with intimations that business on
the exchanges might be suspended;
subsequently, elation and confidence and
great buoyancy in markets following the
several credit relief measures which To-
cuSed at the White House conference
Tuesday night. Such are the strong
contrasts in one Of the most momentous
and dramatic weeks in American finan-
cial history.
The tree never quite grows to
Heaven" This was as true in 1929 as
in other years of great speculative en-
thuSiasm. Likewise, no country, its
commerce and its evidences of material
wealth drop so deep into the trough of
depression as its people predict This
is the lesson to be learned from 1881.
There Is kind of automatic reduction
OF leadership and of ways and means of
taking care of a crisis, political or flnan-
cial, when 1t reaches the point, as it
did few days ago, Of involving all Of
the people in all parts Of a nation.
Unfortunately, conditions frequently
must get so bad that credit is univer-
sally affected before relief measures are
conceived and put into effect. The
country has paid a tremendous price
for temporizing with situations over
which control is now being exerted and
for lack Of individual initiative. The
events of the week emphasize the de-
gree to which responsibility everywhere
in the world is being put up to the gov
eminent when it should be assumed,
and in the past was accepted, by men
of courage and capacity to organize
and deal with emergencies.
Steps In the Recession.
Tn the senuepca NJ averts a reactiop
from inflated prices Of securities two
years ago had brought about a quick
and drastic decline In common stocks
This caused such destruction in mar
ket values that it quickly contracted the
buying power of the public, so that bus
mess began to suffer from the first phase
OF the market panic as early as Deem
Der. 1929. Out Of this developed the
decline in commodities which eventually
played its part in the troubles abroad
The reduced earnings of corporations
alarmed holders of securities, especially
those of railroad stocks and bonds, so
that steady and unprecedented depre-
citation set in in domestic issues coinci-
dent with the general disintegration in
the prices Of South and Central Ameri-
can and Central European dollar obi
cations.
As high proportion of the assets of
American banks is represented in cor
poration bonds, the shrinkage affected
many institutions throughout the coun-
try. Eventually there was general alarm
among depoSitors in banks, reflected In
Withdrawals of currency that was being
boarded each week at a rapidly increas-
ing rate. The situations in Chicago and
vicinity last Spring and in Philadelphia
and its neighborhood the past two weeks
were Of the kind that compelled imme-
n a 70 rs, III
developed comprehensive and most
elastic plan for dealing with this phase
OF the crisis and at the same time bring
ing about many collateral advantages.
Confidence Is Restored.
There is no alchemy in this program
to turn what is brass into gold. The
first benefits from the announcement
of bankers pool" of $500, 00O, 900 were
psychological. They evidenced con-
structive effort and the formation of a
plan whose supplements had been
thought out in advance. On Monday
the American people seemed to have lost
their faith. Now they have recovered
their nerve and are willing to await
patiently the practical reactions from
an application of oxygen to numerous
members of the banking business world
whose life was fast ebbing out.
survival of the fittest" will apply now,
as in the past, and that the new plan
cannot make poor assets good assets or
re-create out of inferior managers a
body Of men endowed with great bust
ness wisdom. A lot of bad and ire
trievable situations must go by the board
and be liquidated. 1t is those that are
fundamentally strong, but embarrassed
by narrow markets for their assets that
Will bka I1ryf he
distributions of additional credit through
regional banking agency.
A week ago this writer stated that
'the stock market will not stabilize until
bonds stop declining. Business will
never recover until stocks are stabilized
Because of the Government plan there
already has been new life injected into
the bond market and new hope reflected
in the stock market and, to some ex-
tent. in the market for commodities. It
Is fair to presume that these changes
will gradually modify the point of view
of the producer and consumer and that.
while no great enlargement of business
activity is to be expected this year. it
may be confidently predicted that the
period of constant recession in the trade
barometers has ended and that little by
little the volume Of goods moving into
the hands of the public will increase as
their alarm over their bank deposits
and their investments lessons.
Basis of Permanent Rise.
The stock market has not yet had an
improvement of the duration or extent
equal to that which came out of the
debt holiday" proposal last June. It
is in a position, however, to benefit
more from its latest relief measure, as
this specifically concerns the domestic
situation. than it did from the earlier
one, because 1t is more understandable
and directly applicable by and to the
American public. Furthermore, the
market position is technically stronger
than it was four months ago, due to the
tremendous liquidation that has taken
place meanwhile, thus establishing q
basis of real values to which investors
are now willing to respond. If, out of
the conferences that are to be held here
next week between representatives of
the Federal Reserve and the Bank of
France and later between President
Hoover and Premier Laval, there Is the
supplementary advantages procured of an
understanding both on credit distri-
button and the subject of international
debts and disarmament, the basis of a
sound and permanent improvement In
American investments will have been
created.