Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-04-05
Hoped-For Recovery in Bust
ness Is Apparently Lacking
in Stimulus.
THOROUGH LIQUIDATION
OF MARKET COMPLETED
Spread Between Wholesale and
Retail Prices Held Cause of
Buyers Strike.
BY CHARLES F. SPEARE.

NEW TURK, April Sine mOoQ VI
those who make markets, and of others
who are Influenced in their business
policies by how markets perform, has
been a fearsoGle one this week. 1t has
| reSembled in a degree that prevailing
in November and December, but with
no cause for it, as there are none of
the disintegrating influences at work in
securities. in banking, in commodities,
or in industry such as combined to
develop the hysteria prevailing during
| the last quarter of 1880.
The trouble now is that conditions
have not improved at the anticipated
or predicted rate. This compels more
conformity in business policies to cur
rent earnings and to the long term
outlook 1t unquestionably leads to
greater lassitude among producers and
consumers.
Market Well Liquidated.
The public has not been selling its
stocks. Liquidation which has erased
| about 65 per cent of the market advance
in January and February is coming from
the professional operators who had built
up market structure on sand rather
than on solid foundation. So long
as they limited their movements to an
adjustment of prices that took into
| account the overseeing both by inves-
tors and traders last year and assisted
the market to correct its technical
faults, they worked on a sound basis.
When, however, thsy went further and
by the accepted methods of rigging"
and "pyramiding," began to discount a
| betterment in business that was not in
sight. they overTan their mark and are
now paying the price of their indiscrs-
| ton. Fortunately, the public was not
inveigled into the speculation this year
as it was in the Spring of 1880. This
fact is helpful in a situation that will
need all of the technical strength that
can be assembled during the next few
months.
The position has been taken here
from time to time that the market was
thoroughly liquidated last December.
! There is nothing that has developed
since speculation changed from a bull
ish to bearish trend early in March
TO reverse this opinion. The liQuida-
ton Of securities late last year was
| based more on fear than on realities.
The number of unpleasant facts about
corporation losses Is greater now than
! it was then, but Wall Street and the
/ rest of the country are not now seeing
| ghosts at every turn. They have re-
gained their nerve and are increasingly
| taking the philosophical attitude that
4
of and that this might as we'll be
accepted and the necessary adjustments
to 1t made as quickly as possible.
Rails at Lowest of Year.
It would have been easier to have
swallowed the numerous dividend re-
auctions and unpleasant testimony in
corporation reports Of the 1880 depres-
sion If there had been evidence of a
| gradual increase in the volume of trade
in sight for the second quarter of the
| year: The lack of this has been re-
| sponsible for the change of mood and
! for the reversal in the trend of security
prices. The small gains that occurred
in business between New Year and the
! middle of March. and with them an
increase in employment and in pay rolls
were no more than seasonal, whereas
, 1t had been anticipated that trade would
reflect the low inventories. the stabilize
! ton of certain groups of commodities
+, the stimulus of public improvements
and the influence of quite heavy
financing by the public utility companies
Actually iron and steel production has
fallen of this week to SIS per cent OF
capacity from 81 per cent two week,
ago. 1t compares with over 80 per cent
a year ago. This Is accounted fol
mainly by the more cautious buying BY
| the automobile manufacturers whose
output last month was the largest since
the Summer of 1880 but who apparently
anticipate only moderate consumer de-
niand during the remainder of the
Spring. Wall Street has been inclined
to put the entire responsibility for {
business revival on the motor industry
at a time when it could find little K
encourage it in the field of building
construction or in transportation, CO.
4 ~ Hrffta orfT1 ~
the oil trade and in agriculture. Tli
week the price OF wheat has dropped II
the lowest in IS years and corn anC
oats to quotations not duplicated since
1922 for the one and 1911 for the other
Because their reports interpret thu
immediate situation much more accu
rately than those of most other corpora.
tons, the railroads have suffered NOR,
in the latest market decline than in
dustrials or public utilities; The average
price of the shares in this group o
united stocks is today at the lowest o
the year and within 5 points of tn,
bottom figures Of last December. Thu
weakest stocks recently have been thost
Of carriers whose dividends have so ia,
BEEN maintained but whose continuance
is in doubt.
Fewer Dividend Cuts.
The list of dividends reduced o
passed this week has been relativel
small. In only two or three instance
: has it affected the stocks of well know
companies. The president of a larg
corporation. who reluctantly recon
mended a substantial cut in his com
pany's dividend recently, said to tn
writer: Our board Ct directors feel
obligated to maintain our property ii
as strong physical condition as possibl
and to employ as large a part of GU
force as is reasonable, and we are ask
ing our stockholders to make the frs
sacrifice"
This unquestionably puts the burdel
where it may be carried with creates
casa more generous policy than Ina
prevailed in other depressions. How
ever, this country is experiencing TO
, the first time in any major depression
, sharp and substantial decline in com
modities and in the cost Of living wit
practically no adjustment in the rate
Of union wages or in those of rents
Labor has, however. tricked itself int
believing that it has won a victory Il
maintaining the unit scale of wages
: although pay rolls indicate that tn
/, employer has cut down sharply on tn
number on days of work per week an
the number Of hours per day.
: 1t took the public a long time I
paying too much for articles at reta
/ in comparison with wholesale prices. i
, a sense 1t Is now on a strike, becaus
1t stiH feels that the margin bctwee