Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-01
WAR DEBT HOLIDAY PROPOSAL
REVIVES DROPPING MARKETS
Business Sentiment Greatly Improved
'Throug hout World as Half Year Ends,
Due to President Hoover's Action.
BY CHARLES F. sPEARE.

BY CHARLES F. sPEARE.
Special Dispatch to The Star.
NEW YORK, July Until q week
ago it could be said that there was
not enough evidence of Improvement
in the business situation or in the
mood Of the public to support the
arbitrary statement that turn in in
dustry, in markets for commodities and
In securities had arrived. However, the
sudden injection of the one-year mora
torium proposal has had an immense
effect on markets and on sentiment, and
In the closing days Of June there has
been witnessed the most radical turn
about in Wall Street attitude on record.
A crisis in Germany that was leading
to a request for a moratorium has
been averted and international psy-
chology has undergone a complete re-
have been added to domestic and for
eign securities, commodities have rail-
lied sharply, corporations that were
q reduction in their divi-
bends have been influenced to main
tain the status quo because of the bet
ter conditions ahead, and there has
also been some translation of this good
feeling into larger volumes of trade.
The situation is not altogether con-
vincing, however, inasmuch as there is
strong opposition in France to the
Hoover proposal, and a nationaliStic
policy there may ruin the full value of
the accommodation which the United
States is giving Germany. If it could
be known at this writing that France
would make the concessions necessary
to the fulfillment of the Hoover plan
one could say positively that the low
point in the bear market for stocks
had been reached on June 2 and that
not only had the end Of the business
depression been witnessed, but that
permanent, though slow, recovery was
in sight.
There had been indications prior to
the moratorium proposal that stocks
were liquidated and that there was
new degree Of resistance in the market
for many commodities. 1t was also
the opinion of many judges of condi-
tons that business had struck bottom.
basis for slow recovery in
securities had been established, though
this might have been upset again had
the German crisis been allowed to run
TO its full consequences. 1t was on a
that from the domestic
standpoint was growing STRONGER month
BY month that the international situa-
ton was imposed, with a response reg
lstered in values that was tremendous,
More Disposition to Buy.
There are a number of merchan-
dising and producing situations that
have improved materially in the past
month. These are symptoms Of the ex-
of supplies that have taken
place and of a disposition to release
for goods that have been ad-
justed to manufacturing costs. The
public is not likely again to be spend
thrift for some time. On the other
hand, it is not boarding quite so much
as it was earlier in the year.
The big industries, like iron and steel,
automobiles and building construction.
face a quiet Summer. The broader
of trade embrace those
things which the average householder
needs and has been dispensing with
for so long. Parallel may be found in
the preference which those who are
buying stocks show for the issues of
that deal in the necessities
Of life. They also exhibit strong in
clination to buy shares moving in the
lower price ranges, say from $40 up to
s25.'
Between the early part of last Sep
TENDER and the middle of December the
average price Of stocks declined over
70 points. From December II to the
end of the year there was q recovery OF
then was technically due for an even
greater Improvement This it had dur
ing January and February, when it
moved up on the optimistic statements
from Washington and by industrial
leaders regarding the imminence Of a
business expansion. In the last week
Of February average prices were nearly
40 points above December prices. Then
began the 100 days Of liquidation which
ended on June 2, with the average Of
the market IS points lower than that of
December and IS per cent below that
Of September, 1929.
In some respects this was the most
trying period Of the entire 20 months OF
declining security prices. 1t was the
one in which confidence in the outlook
for values was at its lowest and fear
and fright took strong hold of the aver
age investor Stocks that had been in
most demand in 1929 were sold with
the greatest difficulty until a list of IS
issues, two years ago quoted at an aver
age of 1924 share, dropped to an aver
age of $40 a share. Less than Is COM
mon stocks were then listed at prices
above 500 share. At this time 200
foreign and domestic bond issues were
being offered from so cents to Is cents
on the dollar. It was rich mans
panic" similar to that Of 1908, except
that it was of much greater proportions
and started at a level where stocks,
based on their low averages in 1880,
had been regarded as most attractive
following year and half
of deflation.
Since June and mainly following
the Hoover proposal on June 70, the
stock market has had an average adj
vance of nearly 80 points, which can
GELS about so per cent Of the decline
that had taken place in the period OF
quiet panic between February "a and
June 2.
Outruns Previous Depressions.
We may consider the present de-
preston as having extended over pc
Rod of 2 years, Of which 81 months
have reflected its worst phases. In
point of time this outruns the depres-
sion of 1920-21 and Is about equal to
that of 1893-1895. It's severity is greater
than that of either of these early
panics; the intensity Of its effects on
business and on personal fortunes
greater than that Of any other depres-
sion in the country's history.
Because 1t has run so long and car
ried prices of securities and commodi-
ties so low as well as reduced the pro-
ductive capacity of the country to a
point where supplies are becoming
scarce, 1t may reasonably be argued
that the critical aspects of both the
market and the business situation have
been endured. It does not mean, how
ever that even If we have touched bot
tom in all markets there will be an i'm
mediate or substantial rebound. The
illness of the country and of the world
has been intense and prolonged and
will be slow and cover
Ing many months.