Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-01-18
RECOVERY IN STOCK
PRICES IS CHECKED
DURING LAST WEEK
Investors Display Feeling of
Caution as Annual Reports
Are Published.
COMMERCIAL FAILURES
COMPARATIVELY SMALL
Trade Statistics Show Corrective
Process Is Reducing I'm
employment.
BY CHARLES F. SPEARE.

Special Dispatch to The Star.
NEW YORK, January 17.-As Deem
Der was month when suspensions OF
banks throughout the country developed
pronounced fear among holders of
securities, so are January and February
likely to reflect the spirit of caution
among investors over reports that cor
porationS will be making in that period
of their 1880 results and on account of
the probable increase in the commercial
mortality record. This has already had
it's effect on prices of stocks, which
were off this week an average of near
ly 10 points before recovery set in.
Depression Term Passed.
It is now the probable breadth of
the depression, rather than its depth,
that most concerns those who are
studying the financial and industrial
outlook. We have long since passed
that term of IA to 16 months which
additionally has marked the average
length of a major business reaction
and have nearly covered a range of
two years since the declines in numer-
Gus low-priced industrial shares called
attention to the fact that we were on
the eve of bear market.
The receivership this week for the
Richfield Oil Co., with liabilities OF
$35, 100000, represents the greatest
commercial disaster that has grown out
of a period conspicuous for a decline
in commodity prices and in the diff
cultieS that corporations with an in
different credit have had in financing
their requirements. 1t is surprising
that with all the shrinkage in inven-
tories, the loss of gross business, the
cut in net profits and the banking re-
sistance to commercial loans, except
those of an exceptional character,
there have not been greater number
of large-sized insolvencieS in the bust
ness world.
This, in itself, Is testimony to the
fact that business has been more con-
servatively managed since 1921 and to-
day has the benefit of a higher pro-
portion of capital stock in its financial
structure and less fixed obligations than
In any of the earlier years Of depression
Corrective Process Extended.
Some progress is being made in cor
recting conditions that have been re-
sponsible for the present difficulties
Current production figures Of oil and
copper suggest a better control Of the
output of industries whose earnings have
been shattered by price wars. There
is again this week another increase ir
the percentage of iron and steel pro-
duction. Reports come in day by day
from different parts of the country Of
a pickup in the activities in widely di'
versif1ed branches of trade. Perhaps
these are more emphasized than Others
showing an opposite trend.
On the basis of the minimum figures
of unemployment at the end of 1896
there has been to 10 per cent return
OF workers to industry since the frs
of the year The Bureau Of Labor Sta.
tiSticS has Just made its report for De-
cember. This shows that employment
in the manufacturing industries las
month was 1872 per cent below Deem
Der, 1929. OF more significance is the
fact that total pay rolls in December
1880, were 1858 per cent smaller than
II months previous. This indicates thai
not only has the wage unit been lowered
in many cases, but that a considerable
number OF workers are on part time.
Cheapest Money in 50 Years.
Time money this week has been avail.
able at the cheapest rate for six-month
maturities in over so years. We have
previously recorded the fact that such
COIIlInOQlLleS as silver ana sugar nave
touched the lowest prices in their his.
tory, that wheat in this country Ia;
been selling at figures not duplicated In
nearly 40 years, that copper has beer
at the lowest in 81 years, and that
prices of number of standard rail-
road stocks last month were at levels
that had not been witnesses in 40 years
We do not believe that the entire ma
chinery of production and distribution
has been SO much upset as to justify
these conditions nor that the channels
Of consumption have been stopped ur
to that extent where such prices will
become permanent.
They are the extreme manifestations
Of the extreme mood of a people that
becomes depressed In proportion as II
has been too greatly exhilarated.
Then there is the fact that the cur
rent spread between commercial paper
rates and yields on stocks and that be-
tween the yield on stocks and the re.
turn on bonds is abnormal. Financia,
history proves that, under similar con-
ditions, markets are approaching the
period when they will begin to show
permanent recovery.
(Copyright. 1919
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