Evening star., 1932-04-24
Rail Shares Fail to Maintain
Advances Made Early
in Week.
FORCED SELLING GIVEN
AS CAUSE FOR LOSSES
Wall Street Gloom Deepens, With
an Increase in Bearish
Trade Reports.
BY CHARLES F. SPEARE.

NEW YORK, April 23.-The hope
fulness Of Washington this week con-
trasts with the helpless feeling in Wall
Street, where the perSistency Of eco
nomic influences that cannot be under
stood or measured has again caused a
whiting down of stock prices and new
low averages for the depression period
The financial district would be dis
posed to share Washington's belief that
better times are approaching If it could
see evidence of a satisfactory settle
ment of the tax and budget questions
and an early adjournment of Congress.
Important as it may be at some later
time to dig deeply into the speculative
methods employed in rigging and de-
pressing markets, it is unfortunate that
just now, when much larger issues are
at stake, so much time should be wasted
on and SO much publicity given to the
subject of short selling.
Liquidation Extensive.
The largest single average change in
stocks this week was on the upside Of
the market. Holders of securities have
had for nearly two months one day Of
encouragement each week and flve
days of discouragement. Liquidation
goes just so far and then meets re-
Sistance. 1t never seems to be COM
pleted. There we're indications that a
week ago the selling wave in railroad
stocks had run its course and that this
group was beginning to respond to an
attractive level of prices and to the
improvement in the net earnings re-
ported for February and now coming
in for March. But, after q 20 per cent
recovery in their averages, they broke
down again on Friday. with the extreme
declines in the standard dividend-pay-
ing shares and those that can main
tain their credit without recourse to
Government aid. This Is but another
evidence that the liquidation originates
with holders who are in a crippled
financial condition and are compelled
to sacrifice securities Of recognized
merit.
Stocks Solidity Ignored.
the industrial and public utility list
of stocks Frequently they are most
conspicuous in shares that are solidly
grounded and have made little or no
change in their dividend rates for the
past 21a years. There Is no question,
but that banks are selling out the stocks
constantly lower level OF prices, the
margin holdings carried by individuals
with their brokers are hurried of to the
exchanges for sale, with this sale fire.
quently effected, Of late, somewhat after
the manner Of merchandise on the auc-
tioneers' block.
Happily the trend in bonds Is more
satisfactory than in stocks. The heavy
O af
the Federal Reserve and by member
banks have been supplemented by the
first strong movement into corporation
securities in months. The controlled
credit policy of the Federal Reserve
Board is having its effect in reducing
the Indebtedness of banks to the system,
the contraction since early April hav-
ing amounted to about $500 900 900. 1t
is also creating such an abundance of
liquid capital that it is a question how
much longer loaning institutions, with
huge unemployed assets, can Withstand
the temptation to buy securities that
yield from 3 to 5 per cent rather than
accept the minimum market rates for
paper.
The Federal Reserve Board has al
ready purchased over $3.50, 900 900 of
government bonds and treasury notes
and certificates. Apparently it proposes
10 carry out prolonged campaign on
the lines recently inaugurated. At the
same time the London market is COM
petmg with it for an easy credit posi-
Ion, having this week seen a reduction
IN the Bank Of England rate to 3 per
cent, With the same trend toward lower
interest rates in continental centers.
Drive to Check Defation.
1t is realized that the present Federal
reserve pollcy Is to be the final test
OF the ability of the banking world to
checK oenatlon and that 1t must sup
port ana supplement what has already
been accomplished for the benefit of
weak banks, railroads and finance and
mortgage companies by the Reconstfuc-
ton Finance Corporation. Those who
are directing this campaign are con-
hdent that it will succeed: that in the
course OF few months the abundance
OF nquld capital and the attractive
rates of1ered to commercial borrowers
Will replace the present timidity with
Sufhcient confidence to arouse industry
from its long sleep.
Gen. Dawes, who is in a position to
sense any change in conditions stated
this week that there is a growing mass
confidence. He is probably right in
saying that too much Importance is
attached to what goes on from dav to
day in Wall Street. However. there
can be no great change in the public
attitude until securities show an ability
to rally and to maintain at least a
moderate degree of stability for two or
three months
The season Is rapidly passing when
there should be normal enlargement
in trade. Iron and steel prodnction
this month Is less than half that of a
year ago, when it was only so per cent
OF capacity. The General Electric Co
reports that its operations are between
20 and 70 per cent Of normal Rail
road car loadings, which advanced
sharply during the cold weather in
March, have abruptly turned down
ward again. compelling some of the
Eastern railroads to reduce their esti-
mates Of gross earnings for 1882, which
they MADE at the end of 1881, by as
much as 10 and is per cent, Promises
held out a month ago for an active
Spring in the automobile trade have
| not been realized. There has been
, nothing so far to support the enthusi-
, astic business announcement made by
Henry Ford in March. The most salts
! factory development is the slight up
! turn in power and light production
This, with the full exposure of the
conditions in the insult holding COM
panies, has brought some market ad-
vantage to public utility securities.
The coming week has an importance
| in that the question OF the dividend or
United States Steel common will ther