Evening star., 1931-06-04
Is This the Turn at Last2

For long time Wall Street has been
waiting for turn" in the stock mar
ket that would indicate that the bottom
of the depression had been reached and
the return to prosperity was at hand.
At least on half dozen occasions there
have been reactions of recovery that
have sent stock prices up several points,
only to be checked and followed by
plunges to lower levels. Quite recently,
after a period Of comparative stability
and even of slight gain, the market has
been in a severe slump, marked by some
of the lowest points of quotation re-
corded in years. Yesterday change
came suddenly, with so many evidences
Of real recovery that at the close Of
the days business the Street" cheered
the record of transactions as an indi-
cation that the turn for the long
upward pull had at last occurred.
This may be fallacious hope. There
have been so many checks and diSap-
pointments since the great break came
In October, 1929, that the public" is
not readily reassured. 1t will take weeks
OF stability or steady upward move
ments to induce large volume buying
Of securities, whether for investment or
for speculation. Undoubtedly the
street" is full of bargains if prices are
ut the lowest point and if recovery is
certain to come. Lack of faith in ulti-
mate recovery Of the country's pros
perity and of the real value of securi-
ties is a desperate pessimism that can
not be cured by ordinary measures OF
reinsurance.
Several factors contributed to yester-
days recovery in the stock market, COM
ing together by coincidence to impinge
upon a technically weak position of the
short interests" The market was
heavily oversold Commitments by bears
had proceeded to the point at which
the demand for stocks actually exceed
ed the immediate supply. There would
probably have been a reaction to some
extent II the other factors had not de-
veloped. One of these elements Of re-
covery was the wholly unexpected an
nouncement that the Government had
withdrawn further opposition to the
Standard Oil-Vacuum Oil merger. An
other was the almost simultaneous &C
ton of large banks in the East in
reducing the margins on brokers' loans
Declaration of the Rock Island dividend
on common stock, whereas an omission
had been expected, helped. Authorita-
tive reports that refinancing arrange
ments had been completed on early
bond maturities Of the st. Louis-San
Francisco Railroad contributed to
strength in rail groups. Strength
developed in the cotton markets with
an Improvement Of prices. Most def
nitely, however, was the tone of the
market strengthened by further evi-
dence that half-billion-dollar buying
pool had been formed and was at work. A
factor not to be ignored in the summary
of causes of this change Is the $780,
100000 bond issue announced by Sec
retary Mellon few days ago at 3ls
per cent, the lowest rate ever known
for q large loan, this oner1ng peng
regarded as the Secretary's expectation
that the interest rate would soon rise
with industrial recovery and increased
demands for loans.
If this is indeed the turn Of the tide,
It will mark fairly normal recovery
in proportion to the depth and period
OF the depression. The economic his
tory Of this country has produced a
certain rhythm of such changes, and
the length of time elapsing from high
point to low point and back to normal
Is predictable with reasonable accuracy.
1t is in recognition of this rhythm of
action and reaction that the wisest of
the Wall Street prophets have for some
time been forecasting return of pros
pertty" by about the first Of September.