Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-10-10
HOOVER Plan ACTS
AS MARKET TONIC
Securities Respond at Once
With BroadeSt Gain
in Months.
BY JOHN L. COOLEY,
Associated Press Fiuancial write

ASSOClateo FTeSS FuanClaI WrltCr.
NEW YORK, October 1o.-The road
back to confidence was opened for traf-
nc this week, and the security markets
celebrated with the biggest splurge in
two years.
President Hoover's plan for immedi-
ate credit relief cut at one of the most
obstinate roots of the situation-frozen
bank asSets-and the speed with which
his proposed $500 900 900 Emergency
Corporation was formed gave assurance
that the practicability of his program
would be tested without delay.
Wall Street went home in fear after
the close of business on Monday; stocks
and bonds had dropped dizzily, and
| there seemed to be no bottom. Banking
circles were alarmed, brokerage houses
frightend Twenty-four later the finan-
cial community closed its ofices after
the largest one-day advance the stock
market had had since November IA.
1929, and in point of percentage gain
the largest loss indicated in available
records covering many years.
Recent Decline Extensive.
Seldom in recent market history has
there been so complete a psychological
reversal When it became apparent
that the fruits Of prolonged White
House conferences among banking and
political leaders were to be made public.
inferring that constructive plan had
been worked out, securities stampeded
upward without waiting for details.
Tuesdays gain in the stock averages
was nearly points although 1t was
not until late that night that the Presl-
dents long statement, outlining broad
recuperative measures, was issued.
While Wall Street dared TO hope that
the corner had been turned, 1t was en-
phasized in many quarters that the
plan for relieving banks, however Valu-
able it might prove to be as restora-
tive, did not constitute an immediate
cure-all Nevertheless the point was
stressed that the corner stone OF recoV-
cry was confidence, especially in the
banks which have suffered severely
from Withdrawals and the market de-
probation of their security assets. Hence
the development of means for their pro-
lection was widely acclaimed.
Events Abroad.
Events abroad were obscured by the
swiftly moving scene at home. Great
Britain is to have an election late this
month. Germany has been forced TO
tighten her regulations governing for
eign exchange and has suffered heavy
losses of gold.
Indications are that any move for an
extension of the debt moratorium will
be opposed in France, however much 1t
may be desired in some circles here.
With the increase in the New York
Federal Reserve Bank rediScount rate
to 212 per cent, some observers see an
end to the period of artifcially cheap
money, although none expect funds to
become particularly firm.
When the rise was announced 1t was
said bankers hoped there would be no
interruption in the outward flow OF
gold; If that movement continues the
Federal Reserve would probably offset
any possible effect by expanding its out
standing credit, which has already been
swelled by more than $700, 1000 900 in
less than a month.
Bankers believe the f1rming money
rates will prove helpful. The extreme
easineSs of recent months proved in
effectual as an Offset to extremely ad-
verse influences in the bond market, nor
did it encourage lending; it may have
encouraged Withdrawals of deposits.
The slight trend upward, 1t is felt,
brings the level nearer to normal and
allows the banks fairer return with
out imposing any undue hardShipS on
seekers Of credit.
Cautious Attitude.
Some brokerage houses are adopt
ing a wait and see attitude toward
the stock market recovery. They point
out that whatever the gain in conf
dence already achieved. there are still
obstacles to be surmounted and that
better idea of just how much is being
accomplished will be obtainable when
the recent buying fever has abated.