Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-08-26
BULL DRIVE is HIT
!. BY DROP IN STOCKS
Bank Failures and Unfavor-
able Developments Abroad
Check Price Advance.
BY CHARLES W. STORM.

Editor. the News Service OF Wall Street.
Special Dispatch to The star.
NEW YORK, August 26.-Decline OF
the general stock market late last week
dissipated much Of the bullish enthu-
siasm generated by the aggressive oper-
atoms of the big group that had been
trying to lift the general list by buying
of stocks for the last fortnight.
The fact that prices reccded sharply
on Friday in the face of the strenuous
efforts being made by the bull oper-
ators chilled their enthusiasm and ex-
pectations, although they will continue
to adhere TO the long side, believing
that liquidation has been about COM
pleted and that the market, based on
its strong technical position alone,
should show an advancing tendency.
Renewed selling and fleaviness Of the
market. however. was due to develop
ments over which the big bull operators
had no control Confidence in an up
ward movement was first badly shaken
when bank failures we're announced in
Toledo Other small bank cloSings sub
seduently announced also contributed TO
reducing the morale of the general pub
lie, whom the big bulls were hoping to
induce into the market.
There was also some real liquidation
on Friday, due to the selling of stocks
by some wealthy individuals. who are
reported TO have raised large sum OF
money in an effort TO bolster up GER
tain banking condition. reports Of which
have been in circulation for weeks.
This situation rs now understood to
have been so materially strengthened
as to obyiate any thought CT trouble.
Trade improvement Expected.
One OF the main influences making
/ for sterilization Of the market at pres
ent levels is the general expectation
that seasonal Fall improvement in gen.
eral business should shortly begin
Many potential buyers Of stocks are
waiting for expansion IN business be-
fore making purchases. No signs OF
Improvement in trade have come to
hand the last week, but they are conf
IDENTIFY predicted with the beginning OF
I next month.
The fact. however, that there is agi
tation in the steel industry for a re-
/ duction in wages leads the Street to
believe that the steel manufacturers do
not look for any improvement in their
] business in the immediate future. The
/ reduction in steel operations at Youngs-
town announced the last week also
/ tended to lend color to this thought.
The general market the last week had
I much 10 contend with that was unfa-
/ yorabie, and the fact that II did not
/ show more pronounced weakness than
/ it did Is considered an indication that
1 liquidation has been very thorough.
! The unprecedented small amount Of
: stocks being carried on margin In
/ brokerage houses also shows the extent
to which liquidation has gone.
Bright Spot.
The one bright spot in the industrial
situation is the improvement which is
Z beginning to appear in the oil Industry
Z by reason OF the unusual steps taken TO
/ reduce production Prices Of crude oil
ana gasoline have already started to
! advance and further price increment
l is expected. The oil companies have
! been making a poor showing in earn
| ings not because Of any lessened de-
inand for their products but because Of
! the steady decline in prices which has
( reduced profits
Another factor which has contributed
70 reduced earnings OF oil companies is
The necessity for steadily writing on
! losses on big inventories. Conditions
are now believed to have been reversed,
and this accounts for the outburst OF
! speauI1tire enthusiasm which has
broken cut In the oil shares the last
! fortnight.
Depressing Factor.
One Of the most depressing influences
In tiln stock market is the STEADY
| liquidation of railroad stocks due TO
the continued poor earnings being re-
! ported by the common carriers. The
FIRST six railroads TO report earnings for
July showed q reduction in net operat-
ing revenues OF 544 per cent. ceaparee
with the same figures for July. 1890
The July net also showed reduction
Of 75.2 per cent for the same railroad;
comparea with July, 1929.
When consideration Is given the SiZ'
II these shrinkages there Is It'll.
wonder that the holders Of transport d
ton securities have become apprehen-
s.ve. The only hope would seem TO lii
either in an advance in freight rates Of
reduction in the wages OF railroad
employees.
Those big operators who have beer
working strenuously on the constructive
side Of the market are expected to re.
sumo their aggressive tactics again thh
week. A reduction In steel wages would
! undoubtedly contribute largely towarC
crowning their efforts with success.
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